<PAGE>
 

                                   KAP-AAFC
                             PRODUCTION AGREEMENT


        This Agreement (the "Agreement"), entered into this ___day of July 1997,
by and between KING ARTHUR PRODUCTIONS, L.L.C. ("KAP") and AMERICAN ARTISTS FILM
CORPORATION ("AAFC").

                                  WITNESSETH:


        WHEREAS, KAP owns the rights to a documentary film/television program
called
                      WINDOWS OF HEAVEN ("WINDOWS"), and

        WHEREAS, AAFC is a film production company that regularly produces
documentary film/television programs, and

        WHEREAS, KAP and AAFC desire to work together to produce and distribute
the WINDOWS documentary.

        NOW, THEREFORE, for and in consideration of the mutual promises,
obligations and agreements contained in this Agreement, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by each party, the parties intending to be and being legally bound,
do hereby agree as follows:

                                  ARTICLE ONE
                                  -----------

                             PRODUCTION OF WINDOWS

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

        1.1 PRODUCTION RESPONSIBILITY OF AAFC.  AAFC agrees that it will be
            ---------------------------------
responsible for the production of the two-hour film/television documentary and
home video called "Windows of Heaven."


        1.2 AAFC's COST OF PRODUCTION. AAFC agrees that it will be responsible
            -------------------------
for all of the costs associated with the production of WINDOWS, subject to the
provisions contained herein below.

<PAGE>
 
        1.3 REIMBURSEMENT OF PRODUCTION COSTS BY KAP. AAFC agrees to submit to 
KAP adequate documentation for all expenses incurred in the production of 
WINDOWS. Provided KAP receives in excess of its capital contribution in third 
party royalty payments from the sale of rights to WINDOWS, KAP agrees 
to reimburse AAFC, from those royalty payments for all its production expenses 
incurred in the making of WINDOWS.


                                  ARTICLE TWO
                                  -----------

                        OWNERSHIP OF WINDOWS OF HEAVEN
                        ------------------------------

        The copyright of the Program, and in all material contained therein, is 
and shall be jointly owned by KAP and AAFC, subject to the provisions in this 
Agreement. AAFC shall be responsible for obtaining all clearances and other 
rights necessary in order to deliver WINDOWS to third party broadcasters. 
Neither party shall produce or grant to any other party the right to produce any
production based on WINDOWS or any of the material contained in WINDOWS without 
the written consent of the other party to this Agreement.


                                 ARTICLE THREE
                                 -------------

                         INVESTOR FUNDS RAISED BY KAP
                         ----------------------------

        KAP has informed AAFC that, by virtue of a private placement offering, 
KAP will obtain funds from investors which will be used to produce WINDOWS. 
Production of WINDOW as a term and condition in the offering, the investors 
shall receive one hundred per cent (100%) of their original investment before 
any production costs are reimbursed to AAFC pursuant to Paragraph 1.3 above.


                                 ARTICLE FOUR
                                 ------------

                            DISTRIBUTION OF WINDOWS
                            -----------------------

        KAP and AAFC shall negotiate and enter into a direct marketing agreement
with third parties regarding the broadcast rights, film rights, and home video 
rights to WINDOWS. In addition KAP and AAFC shall negotiate and enter into a 
direct marketing agreement with a frilfillment house regarding the distribution
of the home video of


<PAGE>
 
WINDOWS. KAP and AAFC shall have the right and duty to consult with each other 
in connection with such negotiations. With regard to any other distribution of 
WINDOWS, the parties shall consult with each other and explore all other 
distribution opportunities including, but not limited to, foreign, home video,
and free, satellite and cable broadcasts. All prospective distribution
agreements shall be reviewed by KAP and AAFC and shall be subject to the
approval of KAP, which approval shall not be unreasonably withheld or delayed.
Subject to all of the provisions of this Agreement, AAFC shall be responsible
for entering into the distribution agreements with third parties. The parties
shall promptly provide to the other party, a copy of each distribution agreement
as provided herein, and each subsequent draft or modification thereof.


                                 ARTICLE FIVE
                                 ------------

                           DISTRIBUTION OF REVENUES
                           ------------------------

        All revenues received shall be applied and paid in the following order 
and manner:

1)  First, all sums raised by KAP by virtue of its private placement offering 
    shall be repaid to those investors;

2)  Second, all sums spent by AAFC in the production of WINDOWS, including 
    production costs and out-of-pocket expenses;

3)  Third, all remaining sums received pursuant to contracts with third parties
    covering the period from June 1, 1997 through December 31, 2000 shall be
    divided so: thirty-three (33%) per cent being paid to KAP's private
    placement investors, forty-six and one half (46.5) percent being paid to
    AAFC, fourteen and one half (14.5) per cent being paid to Arthur Cohen, and
    six per cent being paid to Randall Carlson; and

4)  Fourth, all remaining sums received pursuant to contracts with third parties
    covering the period from January 1, 2001 into the future shall be divided
    equally between KAP and AAFC.


                                  ARTICLE SIX
                                  -----------

                                    CREDITS
                                    -------

        Credits to the parties shall be provided  on all forms of WINDOWS, 
including but not 


<PAGE>
 
limited to the video tape, film, laser disk, and computer disk as well as in all
paid advertising and other printed materials in the following form:

        "American Artists Film Corporation in Association with King Arthur 
Productions, L.L.C."

        The credit set forth above shall be provided on separate cards or their 
graphic equivalents on the tape in an approximately equal size and with all 
other equal characteristics whenever a credit is given. If both KAP and AAFC 
logos are used in the closing credits, the KAP logo shall be the last logo 
shown. All other credits will be in the customary form and shall be subject to 
the approval of both parties, which approval shall not be unreasonably withheld
or delayed.

                                 ARTICLE SEVEN
                                 -------------

                           MISCELLANEOUS PROVISIONS
                           ------------------------

        7.1 NOTICES. Any notice contemplated or required under this agreement 
            -------
shall be deemed sufficient only if in writing. It shall be deemed made when it 
is either hand delivered to the party or deposited in the United States Mail as 
Certified mail, Return Receipt Requested, with sufficient postage prepaid, and 
addressed to the party entitled thereto at the address shown herein for AAFC to 
Rex Hauck, American Artists Film Corporation, 1245 Fowler Street, N.W., Atlanta,
Georgia 30308 or if for KAP to Arthur Cohen, King Arthur Productions, 544 N. 
Angiers Avenue, N.E., Atlanta, Georgia 30309. Such notice shall also be deemed 
complete when actually received by whatever means.

        7.2 REMEDIES FOR BREACH. The parties hereto agree that any controversy 
            -------------------
or claim arising out of or relating to this Agreement, or the breach of this 
Agreement, shall be settled by arbitration in accordance with the commercial 
arbitration rules of the American Arbitration Association in Atlanta, Georgia, 
and judgment on the award rendered by the arbitrators may be entered in any 
court having jurisdiction thereof. The costs and expenses of arbitration, 
including the fees of the arbitrators, shall be borne by the losing party or in 
such proportions as the arbitrators shall determine.

        7.3 ENTIRE AGREEMENT. This Agreement contains the entire agreement of 
            ----------------
the parties with respect to the matters covered by this Agreement. No other 
agreement, statement, or promise made by any party, or by any employee or member
of any party, that is not contained in this Agreement shall be binding or 
valid.

        7.4 VALIDITY AND SEVERABILITY. If any provision of this Agreement is 
            -------------------------
held by a 



<PAGE>
 
court of competent jurisdiction to be invalid or unenforceable for any reason, 
the remaining provisions shall remain in full force and effect as if this 
Agreement had been executed without the invalid provision.

        7.5 GOVERNED BY GEORGIA LAW. This Agreement shall be governed by and 
            -----------------------
construed in accordance with the laws of the State of Georgia.

        7.6 AMENDMENTS. This Agreement shall not be modified or amended except 
            ----------
by a writing properly executed by each party hereto.

        7.7 CAPTIONS. Captions of the articles, sections and paragraphs of this 
            --------
Agreement are for convenience and reference only, and the words contained shall 
not be held to modify, amplify, or aid in the interpretatiin of the provisions 
of this Agreement.

        7.8 ASSIGNABILITY. This Agreement shall be not be assigned, in whole or 
            -------------
in part, by either party without the prior written consent of the other party.

        7.9 COUNTERPARTS. This Agreement may be executed in multiple originals, 
            ------------
each of which shall be deemed an original as long as it is fully executed by 
both parties.

        IN WITNESS WHEREOF,  the parties hereto have subscribed their names the 
date and year first above set forth.


                                        AMERICAN ARTISTS FILM CORPORATION


                                        By: /s/ Rex Hauck
                                           --------------------------
                                           Rex Hauck, President


                                                [CORPORATE SEAL]




                                        KING ARTHUR PRODUCTIONS, L.L.C.

                                        
                                        By: /s/ Arthur Cohen
                                           ----------------------------
                                           Arthur Cohen, Member