

                              INVESTMENT AGREEMENT

          This INVESTMENT  AGREEMENT (this "Agreement") is made and entered into
this 19th day of April 2001 by and among (i) AMC ENTERTAINMENT  INC., a Delaware
corporation  (the "Company"),  (ii) APOLLO  INVESTMENT FUND IV, L.P., a Delaware
limited  partnership  ("AIF IV") and APOLLO OVERSEAS PARTNERS IV, L.P., a Cayman
Islands exempted  limited  partnership  ("AOP IV") and any other  partnership or
entity  affiliated  with and  managed  by Apollo  over  which  Apollo  exercises
investment  authority,  including  voting and dispositive  rights;  and to which
either  AIF IV or AOP IV assigns  any of their  respective  interests  hereunder
(collectively,  the "Apollo IV  Purchasers"),  (iii) APOLLO  INVESTMENT  FUND V,
L.P., a Delaware limited  partnership  ("AIF V") and APOLLO OVERSEAS PARTNERS V,
L.P., a Cayman  Islands  exempted  limited  partnership  ("AOP V") and any other
partnership  or entity  affiliated  with and managed by Apollo over which Apollo
exercises investment authority,  including voting and dispositive rights; and to
which either AIF V or AOP V assigns any of their respective  interests hereunder
(collectively,  the  "Apollo V  Purchasers",  and  together  with the  Apollo IV
Purchasers  the  "Apollo   Purchasers"   and/or  sometimes  referred  to  herein
collectively as the "Purchasers" and individually,  a "Purchaser"),  (iv) APOLLO
MANAGEMENT  IV,  L.P.,  a  Delaware  limited  partnership,  in its  capacity  as
investment manager to the Apollo IV Purchasers  ("Apollo IV Management") and (v)
APOLLO  MANAGEMENT V, L.P., a Delaware limited  partnership,  in its capacity as
investment  manager  to the  Apollo V  Purchasers  ("Apollo  V  Management"  and
together  with Apollo IV Management  and their  Affiliates,  "Apollo").  Certain
terms used and not otherwise  defined in the text of this  Agreement are defined
in Section 10 of this Agreement.

                               W I T N E S S E T H
                               - - - - - - - - - -

          WHEREAS,  the Company  desires to issue and to sell to the Purchasers,
shares of Series A Convertible  Preferred Stock of the Company,  par value $0.66
2/3 per  share  (the  "Series  A  Preferred  Stock"),  and  shares  of  Series B
Exchangeable  Preferred  Stock,  par value  $0.66 2/3 per share  (the  "Series B
Preferred Stock") (the Series A Preferred Stock and the Series B Preferred Stock
shall be referred to collectively as the "Preferred Stock"); and

          WHEREAS, the Purchasers,  severally,  desire to purchase shares of the
Company's  Preferred  Stock  on the  terms  and  conditions  set  forth  in this
Agreement.

          NOW,  THEREFORE,  in  consideration  of the  premises  and the  mutual
representations,  warranties and covenants herein contained,  the parties hereto
hereby agree as follows:

          1.   Sale and Purchase of the  Preferred  Stock.  Subject to the terms
               -------------------------------------------
and subject to the  conditions of this  Agreement,  the Company agrees to issue,
sell and  deliver  to each  Purchaser,  and each  Purchaser,  severally  and not
jointly,  agrees to purchase  from the Company,  at the Closing,  on the Closing
Date (as hereinafter defined), (i) 92,000 shares of Series A Preferred Stock for
an aggregate purchase price of Ninety-Two Million Dollars  ($92,000,000.00)  and
(ii) 158,000 shares of Series B Preferred Stock for an aggregate  purchase price
of One Hundred  Fifty-Eight Million Dollars  ($158,000,000.00)  for an aggregate
purchase  price of Two Hundred  Fifty  Million  Dollars  ($250,000,000.00)  (the
"Purchase  Price").  Each  Purchaser  shall pay its  respective  portion  of the
Purchase Price and shall receive such number of shares of Preferred Stock as set
forth in Schedule 1 hereto.
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<PAGE>

          2.   Closing.  The  closing  of the  sale to,  and  purchase  by,  the
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Purchasers of the shares of Preferred Stock referred to in Section 1 hereof (the
"Closing")  shall occur at the  offices of Akin,  Gump,  Strauss,  Hauer & Feld,
L.L.P.,  590 Madison  Avenue,  New York, New York 10022,  at 9:00 a.m., New York
time, on or before the next business day after the satisfaction or waiver of all
of the  conditions  to the  Closing  set forth in Section 5 hereof or such other
location,  date and time as agreed upon by the  Purchasers  and the Company (the
"Closing  Date").  At the Closing,  the Company  shall issue and deliver to each
Purchaser certificates  evidencing the Preferred Stock (in such denominations as
shall be  specified  in  writing  by each  Purchaser),  each of  which  shall be
registered in each  Purchaser's  name,  against  delivery to the Company by each
Purchaser of the Purchase  Price payable by (i) wire  transfer,  in  immediately
available funds to an account that the Company shall designate in writing to the
Purchaser at least two business days prior to the Closing Date,  (ii)  certified
or cashier's  check payable to the order of the Company or (iii) such other form
of payment as may be acceptable to the Company.  In addition,  the parties shall
execute and deliver the documents referred to in Section 5 hereof.

          3.   Representations and Warranties of the Purchasers.
               ------------------------------------------------

          Each Apollo  Purchaser  severally,  and not  jointly,  represents  and
warrants to the Company as follows:

          3.1  Organization.  It (a) is a partnership  duly  organized,  validly
               ------------
existing and in good standing in the  jurisdiction of its  organization,  (b) is
duly  qualified  or  licensed  to do  business  and is in good  standing in each
jurisdiction  where  the  nature  of the  property  owned or leased by it or the
nature of the  business  conducted  by it makes  such  qualification  or license
necessary, except where the failure to be so qualified or licensed (individually
or in the  aggregate)  would either  prevent or materially  delay its ability to
consummate the transactions  contemplated by the Transaction Documents,  and (c)
has all power and authority to carry on its  operations  and to  consummate  the
transactions contemplated by the Transaction Documents.

          3.2  Authorization;  Enforcement.  It has the  requisite  corporate or
               ---------------------------
partnership  power and has taken all necessary  corporate or partnership  action
required for the due authorization, execution, delivery and performance by it of
this  Agreement,  each of the  Transaction  Documents  and other  documents  and
instruments  referred to herein and to consummate the transactions  contemplated
hereby (including,  without limitation,  the purchase of the shares of Preferred
Stock). The execution, delivery and performance by it of this Agreement, each of
the other  Transaction  Documents  and  consummation  by it of the  transactions
contemplated  hereby and thereby,  have been duly  authorized  by all  necessary
action  on the part of it.  This  Agreement  and each of the  other  Transaction
Documents have been duly and validly executed and delivered by it and constitute
a valid and binding obligation of it, enforceable  against it in accordance with
their  respective  terms except as such enforcement may be limited by bankruptcy
or similar  laws  affecting  the  rights of  creditors  generally  or by general
equitable principles.

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<PAGE>

          3.3  Consents. Except for filings, permits,  authorizations,  consents
               --------
and approvals as may be required under, and other applicable requirements of the
Exchange  Act, the Delaware  Revised  Uniform  Limited  Partnership  Act,  state
anti-takeover laws or under relevant state blue sky laws, neither the execution,
delivery or performance of this Agreement or of any other  Transaction  Document
by such Apollo  Purchaser,  nor the  consummation  by it of the  obligations and
transactions   contemplated   hereby  or  thereby   requires   any  consent  of,
authorization  by,  exemption from,  filing with, or notice to any  Governmental
Entity or any other Person.

          3.4  No Conflicts.  The  execution,  delivery and  performance of this
               ------------
Agreement and each of the other  Transaction  Documents and the  consummation of
the transactions  contemplated  hereby and thereby will not (a) conflict with or
result in any breach of any provision of its  agreement of limited  partnership,
operating  agreement or other  organizational  documents,  (b) conflict  with or
result in the breach of the terms,  conditions  or provisions of or constitute a
default (or an event  which with notice or lapse of time or both would  become a
default)  under,  or give  rise to any  right of  termination,  acceleration  or
cancellation under, any material agreement, lease, mortgage, license, indenture,
instrument  or other  contract  to  which  it is a party or by which  any of its
properties or assets are bound,  or (c) result in a violation of any law,  rule,
regulation,  order,  judgment or decree  (including,  without  limitation,  U.S.
federal and state securities laws and regulations)  applicable to it or by which
any of its  properties  or assets are bound or  affected,  except in the case of
clauses (b) or (c),  where such  conflicts  or  violations  would not prevent or
materially delay its ability to consummate the transactions  contemplated by the
Transaction Documents.

          3.5  Investment Representations and Warranties.
               -----------------------------------------

          (a)  The shares of Preferred Stock being purchased by it hereunder are
being acquired for its own account, for the purpose of investment and not with a
view to or for sale in connection with any public resale or distribution thereof
in violation of applicable securities laws.

          (b)  It is an "accredited  investor" within the meaning of Rule 501(a)
promulgated under the Securities Act.

          (c)  It (i) has been  furnished  with or has had full access to all of
the information  that it considers  necessary or appropriate to make an informed
investment  decision  with respect to the shares of Preferred  Stock and that it
has  requested  from the Company,  (ii) has had an  opportunity  to discuss with
management  of the Company the intended  business and  financial  affairs of the
Company  and to obtain  information  (to the extent the Company  possessed  such
information  or  could  acquire  it  without  unreasonable  effort  or  expense)
necessary to verify, any information  furnished to it or to which it had access,
and (iii) can bear the economic risk of such investment in the Preferred  Stock,
has such  knowledge and  experience  in business and financial  matters so as to
enable  it to  understand  and  evaluate  the  risks of and  form an  investment
decision with respect to its  investment  in the Preferred  Stock and to protect
its own interests in connection with such investment.

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<PAGE>

          (d)  It has no need for  liquidity in its  investment in the shares of
Preferred  Stock and is able to bear the economic risk of its  investment in the
shares of Preferred Stock and the complete loss of all of such investment.

          (e)  It  understands  that  the   transferability  of  the  shares  of
Preferred Stock is restricted,  and that such  restrictions will be reflected in
an appropriate  legend on the instruments  representing  the shares of Preferred
Stock.

          (f)  It recognizes that an investment in the Company  involves certain
risks and has taken  full  cognizance  of,  and  understands  all of,  the risks
related  to  the  purchase  of  the  shares  of  Preferred   Stock.  It  further
acknowledges  and  understands  that no  federal  or state  agency  has made any
recommendation  or  endorsement  of  the  Preferred  Stock  or  any  finding  or
determination as to the fairness of the investment therein.

          3.6  Information Supplied. None of the written information supplied by
               --------------------
it specifically  for inclusion or incorporation by reference in any documents to
be filed by the Company with the SEC or any  Governmental  Entity in  connection
with the  transactions  contemplated  hereby  (including in connection  with the
Company's  solicitation of shareholder approval of an amendment to the Company's
Certificate of Incorporation  increasing the number of authorized  shares of the
Common Stock) will, on the date of its filing and on the date any such materials
are mailed to  stockholders,  contain any untrue statement of a material fact or
omit to state any material  fact  required to be stated  therein or necessary in
order to make the statements  therein, in light of the circumstances under which
they are made, not misleading.

          3.7  Ownership of Capital Stock of the Company.  As of the date hereof
               -----------------------------------------
and  prior  to  giving  effect  to  the  transactions  contemplated  under  this
Agreement, the Purchasers do not in the aggregate, own of record or beneficially
including by virtue of  membership in a "group" for purposes of Section 13(d) of
the Exchange Act (i) a number of shares of Common Stock which  exceeds 1% of the
outstanding  shares of Common Stock on the date  hereof;  (ii) any shares of the
Company's Class B Stock; or (iii) any debt securities issued by the Company. The
Purchasers shall not acquire or dispose of any shares of Common Stock or Class B
Stock or any debt  securities  issued by the  Company (i) before the Closing and
(ii) thereafter, except in the case of clause (ii), in compliance with the terms
of the Standstill Agreement.

          3.8  Financing.  On the  Closing  Date,  it will have  adequate  funds
               ---------
available to pay its portion of the Purchase Price.

          3.9  Brokers.  Except as set forth in Schedule 3.9 hereof,  it has not
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engaged a broker,  investment banker,  financial advisor, finder or other person
entitled to any brokerage, investment banker's, financial advisor's, finder's or
other fee or commission for which the Company will be liable in connection  with
the  execution of this  Agreement or the  performance  by the parties  hereto of
their respective obligations hereunder.

          3.10 Hart-Scott-Rodino.  Each Purchaser is a separate  "person" within
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the meaning of the HSR Act.

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<PAGE>

          3A.  Representations and Warranties of Apollo.
               ----------------------------------------

          3A.1 Control of Apollo  Purchasers.  Apollo is the investment  manager
               -----------------------------
of, and  possesses  the ability to direct the  investments  of, each  Purchaser.
Apollo  controls the Purchasers and has the authority to cause the Purchasers to
perform their respective obligations under the Transaction Documents. Apollo, in
its capacity as  investment  manager,  general  partner or manager of the Apollo
Purchasers,  has the requisite  power and has taken all  necessary  corporate or
partnership  action  required  to cause the Apollo  Purchasers  to  execute  and
deliver this  Agreement  and the other  Transaction  Documents and perform their
respective  obligations hereunder and thereunder.  The execution and delivery by
Apollo of this Agreement and each of the other Transaction Documents to which it
is a party  has been  duly  authorized  by all  requisite  action on the part of
Apollo.

          4.   Representations and Warranties by the Company. The Company (which
               ---------------------------------------------
term as used in this Section 4 shall, unless the context otherwise requires,  be
deemed to include any Subsidiary of the Company) represents and warrants to each
Purchaser and Apollo as follows:

          4.1  Capitalization.   (a)   Immediately   before  the  Closing,   the
               --------------
authorized  capital stock of the Company shall consist of (i) 45,000,000  shares
of common  stock (the  "Common  Stock"),  par value  $0.66 2/3 per  share;  (ii)
30,000,000  shares of class B stock (the  "Class B Stock"),  par value $0.66 2/3
per share; and (iii)  10,000,000  shares of preferred stock, par value $0.66 2/3
per share,  which are undesignated as to series.  The Company has no other class
of capital stock authorized,  issued or outstanding.  The  capitalization of the
Company as of the date  hereof,  including,  without  limitation,  the number of
shares issued and  outstanding,  the number of shares  issuable and reserved for
issuance  pursuant to the  Company's  stock option  plans,  the number of shares
issuable  and  reserved  for  issuance  pursuant to  securities  (other than the
Preferred  Stock)  exercisable  for, or convertible into or exchangeable for any
shares of capital stock is set forth on Schedule 4.1(a).

          (b)  Except as set forth on  Schedule  4.1(b),  as of the date of this
                                       ----------------
Agreement,  (i) there are no outstanding options,  warrants,  scrip,  dividends,
rights to subscribe  to, calls or  commitments  of any  character  whatsoever to
which the Company is a party  relating to, or securities  or rights  convertible
into or  exercisable  or  exchangeable  for, any shares of capital  stock of the
Company,  or  arrangements  by which the Company is or may become bound to issue
additional shares of capital stock, (ii) there are no agreements or arrangements
under  which  the  Company  is  obligated  to  register  the  sale of any of its
securities  under  the  Securities  Act of 1933,  as  amended  (the  "Securities
Act")(except  as provided  hereunder),  and (iii) the Company has no  obligation
(contingent  or otherwise) to purchase,  redeem or otherwise  acquire any of its
equity  securities or any  interests  therein or to pay any dividend or make any
distribution in respect thereof.  Except as set forth on Schedule 4.1(b),  there
                                                         ---------------
are no securities or instruments  containing  antidilution or similar provisions
that will be  triggered  by the  issuance  of the shares of  Preferred  Stock in
accordance  with the terms of this  Agreement  or any of the  other  Transaction
Documents. Except as set forth on Schedule 4.1(b) and other than this Agreement,
                                  ---------------
the Company is not a party to, and has no  knowledge  of the  existence  of, any
voting trust or other voting  agreement with respect to any of the securities of
the Company or to any  agreement  relating to the  issuance,  sale,  redemption,
transfer or other  disposition of the capital stock of the Company.  To the best
of the  Company's  knowledge,  no  stockholder  of the Company has any agreement
obligating such stockholder to transfer shares of the Company.

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<PAGE>

          (c)  The Company has furnished or made available to the Purchaser true
and  correct  copies  of  the  Company's  and  each  Subsidiary's   articles  or
certificate of  incorporation or other governing  document (the  "Certificate of
Incorporation")  as in effect on the date  hereof,  and the  Company's  and each
Subsidiary's  bylaws or other governing  document (the "Bylaws") as in effect on
the date hereof.

          4.2  Issuance; Authorization.
               -----------------------

          (a)  All of the issued and outstanding  shares of capital stock of the
Company  have  been duly  authorized  and are  validly  issued,  fully  paid and
nonassessable.  The issuance, sale and delivery of the shares of Preferred Stock
to be purchased  hereunder have been duly authorized by all requisite  action of
the  Company,  and when  issued,  sold and  delivered  in  accordance  with this
Agreement,   such  shares  of  Preferred   Stock  will  be  validly  issued  and
outstanding,  fully paid and non-assessable with no personal liability attaching
to the ownership thereof and will not be subject to any lien,  claim,  judgment,
charge, mortgage,  security interest, pledge, other encumbrance or preemptive or
any  other  similar  right  of  the   shareholders  of  the  Company  or  others
(collectively, "Encumbrances").

          (b)  Except  with  respect  to the  Common  Stock  to be  issued  upon
conversion  of Series A Preferred  Stock that,  in turn,  would have been issued
upon the exchange of Series B Preferred Stock, the issuance,  sale, and delivery
of the shares of Common  Stock to be issued  upon  conversion  of the  Preferred
Stock in accordance with the terms of the Certificate of Designations  have been
duly  authorized  by all requisite  action of the Company,  and when issued upon
conversion  of the  Preferred  Stock  in  accordance  with  the  Certificate  of
Designations,  the  Conversion  Shares will be validly  issued and  outstanding,
fully paid,  and  non-assessable  with no personal  liability  attaching  to the
ownership  thereof and not subject to any Encumbrance or preemptive or any other
similar rights of the shareholders of the Company or others.

          (c)  The Company has all requisite  corporate  power and has taken all
necessary  corporate  action  required  for  the due  authorization,  execution,
delivery and  performance  by the Company of this  Agreement,  each of the other
Transaction Documents and the other documents and instruments referred to herein
and to consummate  the  transactions  contemplated  hereby  (including,  without
limitation,  the issuance of the shares of Preferred  Stock (but  excluding  the
issuance of any shares of Common Stock issuable upon  conversion of the Series A
Preferred Stock that, in turn,  would have been issued upon exchange of Series B
Preferred  Stock)).  The execution,  delivery and  performance by the Company of
this Agreement and each of the other Transaction  Documents and the consummation
by the Company of the transactions  contemplated  hereby and thereby,  have been
duly  authorized  by all necessary  corporate  action on the part of the Company
except  for  Shareholder  Approval.  At  the  Closing,  except  for  Shareholder
Approval,  the Company  will have taken all  actions  under its  Certificate  of
Incorporation  and its Bylaws as may be  necessary  or  advisable to provide the
Purchaser with the rights hereby contemplated.

                                       6
<PAGE>

          (d)  This Agreement and each of the other  Transaction  Documents have
been duly and validly  executed and  delivered  by the Company and  constitute a
valid and binding obligation of the Company,  enforceable against the Company in
accordance with their respective terms except as such enforcement may be limited
by bankruptcy or similar laws affecting the rights of creditors  generally or by
general equitable principles.

          4.3  Organization.  The Company (a) is a corporation  duly  organized,
               ------------
validly  existing and in good standing  under the laws of the State of Delaware,
(b) is duly qualified or licensed to do business as a foreign corporation and is
in good standing in each jurisdiction  where the nature of the property owned or
leased  by it or  the  nature  of  the  business  conducted  by  it  makes  such
qualification or license necessary,  except where the failure to be so qualified
or licensed would not reasonably be expected to have a Material  Adverse Effect,
(c) has its principal place of business and chief  executive  office at 106 West
14th Street,  P.O. Box 419615,  Kansas City,  Missouri and (d) has all corporate
power and  authority  to own or lease and  operate  its  assets and carry on its
business  as  presently  being  conducted  and to  consummate  the  transactions
contemplated by the Transaction Documents.

          4.4  Subsidiaries.   (a)  Schedule  4.4(a)  lists  the  name  of  each
               ------------
Subsidiary in which the Company has a direct or indirect equity interest. All of
the  outstanding  shares of capital  stock or the  ownership  interests  of each
Subsidiary  are,  except as set forth on  Schedule  4.4(a),  owned  directly  or
indirectly by the Company free and clear of any Encumbrances. Each Subsidiary is
(i) duly organized,  validly existing and in good standing under the laws of its
jurisdiction of organization;  (ii) duly qualified or licensed to do business as
a foreign  corporation  and is in good standing in each  jurisdiction  where the
nature  of the  property  owned or leased  by it or the  nature of the  business
conducted by it makes such qualification necessary,  except where the failure to
be so  qualified  would not  reasonably  be expected to have a Material  Adverse
Effect and (iii) has all requisite corporate power and authority to own or lease
and operate its assets and carry on its business as presently being conducted.

          (b)  Except  as  provided  on  Schedule  4.4(b),   there  are  (i)  no
outstanding securities convertible into,  exchangeable for or carrying the right
to  acquire  any  class of  securities  of the  Subsidiaries  (whether  from the
Company, the Subsidiaries or otherwise),  or subscriptions,  warrants,  options,
rights  or other  arrangements  or  commitments  of any kind  that  relate to or
require  the  issuance,  sale or other  disposition  or  transfer  of any of the
Subsidiaries'  respective equity securities (whether or not presently issued) or
any  interest  therein,  (ii)  no  arrangements  by  which  the  Company  or any
Subsidiary is or may become bound to issue additional shares of capital stock of
any  Subsidiary,  nor are any such issuances or arrangements  contemplated,  and
(iii) no  obligations  (contingent  or otherwise) of any Subsidiary to purchase,
redeem or  otherwise  acquire  any of its  equity  securities  or any  interests
therein or to pay any  dividend  or make any  distribution  in respect  thereof.
There are no outstanding options,  warrants or other rights to acquire shares of
any Subsidiary's stock.

          4.5  Absence of Certain  Changes.  Except as set forth on Schedule 4.5
               ---------------------------                          ------------
or as disclosed in the Company SEC Documents,  since March 30, 2000, neither the
Company nor any of the  Subsidiaries  has suffered any change or  development in
its assets, business, operations, condition (financial or otherwise), or results
of  operations  (but not  prospects)  which has had a Material  Adverse  Effect.
Except  as set  forth  on  Schedule  4.5 or as  disclosed  in  the  Company  SEC
                           -------------

                                       7
<PAGE>

Documents, since March 30, 2000, the Company and the Subsidiaries have conducted
their business in the ordinary and usual course  consistent  with past practices
and have not (a) sold,  leased,  mortgaged,  pledged,  transferred  or otherwise
disposed of any material assets (other than  dispositions in the ordinary course
of business  consistent with past  practices),  (b) terminated or amended in any
material respect any Material  Contract or Real Property Lease (or any series of
related  contracts or series of related leases that are, in either such case, in
the aggregate,  material) to which the Company or the Subsidiaries is a party or
to which it is bound or to which its properties are subject, (c) made any change
in the accounting methods or practices it follows, whether for general financial
or tax  purposes,  (d) incurred,  created or suffered to exist any  Encumbrances
(other  than  Permitted   Encumbrances)   on  its  assets,   (e)  increased  the
compensation  payable or to become  payable to any of its Executive  Officers or
increased any bonus, severance,  accrued vacation,  insurance,  pension or other
employee benefit plan,  payment or arrangement made by the Company or any of the
Subsidiaries  for or with any such Executive  Officers,  in each case outside of
the ordinary  course of business,  (f) suffered any labor  dispute,  strike,  or
other work stoppage with respect to their  respective  employees,  (g) except as
may be provided in the Real Property  Leases,  made or obligated  itself to make
(in  one  transaction  or in a  series  of  related  transactions)  any  capital
expenditures,  capital  additions or betterments in excess of $5 million outside
the  ordinary  course of  business,  (h) except as may be  provided  in the Real
Property  Leases,  entered  into any contract or other  agreement  (or series of
related  contracts or agreements)  requiring the Company or a Subsidiary to make
payments in excess of $5 million other than in the ordinary  course of business,
(i) declared,  set a record date, set aside,  authorized the payment of, or paid
any dividends or other distribution, whether in cash or property, on account of,
or  repurchased  any of  the  outstanding  shares  of  capital  stock  or  other
securities  of, or other  ownership  interest in, the  Company,  (j) suffered or
experienced  any change in the  relationship  or course of dealings  between the
Company and any of its  suppliers  which supply goods or services to the Company
which has had a Material Adverse Effect on the Company, (k) paid to, or received
any payment  from,  or made or received any  investment  in, or entered into any
transaction  or  series  of  transactions  (including  without  limitation,  the
purchase, sale, exchange or lease of assets, property or services, or the making
of a loan or guarantee)  with any Affiliate in excess of $5 million  (other than
transactions involving Entertainment  Properties Trust, a real estate investment
trust),  or  (l)  entered  into  any  agreement  or  commitment  (contingent  or
otherwise) to do any of the foregoing.

          4.6  Assets and Property.
               -------------------

          (a)  Except as set forth on  Schedule  4.6(a),  the  Company  and each
                                       ----------------
Subsidiary has good, legal and marketable title to all of the personal  property
and  non-real  property  assets  owned by it, in each case free and clear of all
Encumbrances  except  Permitted  Encumbrances.  With  respect  to  the  personal
property  and  non-real  property  assets that the Company and its  Subsidiaries
leases,  the Company and its  Subsidiaries  are in compliance  with all material
provisions  of such  leases and the Company  and its  Subsidiaries  hold a valid
leasehold  interest  free and clear of any  Encumbrances  except  for  Permitted
Encumbrances. All material non-real property facilities,  machinery,  equipment,
fixtures, vehicles and other assets owned, leased or used by the Company and its
Subsidiaries are in good operating  condition and repair, are reasonably fit and
usable  for the  purposes  for  which  they are being  used,  are  adequate  and
sufficient  for the  Company's  business  and conform in all  respects  with all
applicable  laws except as would not  reasonably  be expected to have a Material
Adverse Effect.

                                       8
<PAGE>

          (b)  Except as set forth on Schedule  4.6(b),  neither the Company nor
any Subsidiary owns any real property.

          (c)  The Company has  delivered  or  otherwise  made  available to the
Purchasers  true,  correct and  complete  copies of all material  Real  Property
Leases (together with all amendments, modifications, supplements or side letters
affecting the obligations of any party  thereunder)  affecting all material real
property  and  interests  in  real  property  leased  by  the  Company  and  its
Subsidiaries (each a "Real Property Lease," and collectively, the "Real Property
Leases") as lessee or lessor.  Schedule 4.6(c) sets forth a complete list of all
                               ---------------
Real Property Leases. The information contained in the Real Property Lease Recap
Book  delivered  to the  Purchasers  by the  Company on April 13,  2001 is true,
correct and complete in all material  respects.  Except as set forth on Schedule
                                                                        --------
4.6(c),  the Company and its Subsidiaries  have good, legal and marketable title
------
to the leasehold estates in all Real Property Leases in each case free and clear
of all  Encumbrances  (except for  Permitted  Encumbrances).  The Company has no
reason to believe  that such title would not be  insurable  subject to customary
exceptions.

          (d)  To the knowledge of the Company, each of the Real Property Leases
is valid and  enforceable  in accordance  with its terms,  subject to applicable
bankruptcy,  insolvency,  reorganization,  receivership,  moratorium, fraudulent
transfer and other laws of general  application  relating to and  affecting  the
enforceability  of creditors' rights and remedies  generally and subject,  as to
enforceability,   to  general   principles  of  equity  (regardless  of  whether
enforcement is sought in a proceeding at law or in equity),  and,  except as set
forth on Schedule  4.6(d),  there is no material default under any Real Property
         ----------------
Lease by the Company and its  Subsidiaries  or, to the knowledge of the Company,
by any other party thereto,  and, to the knowledge of the Company,  no event has
occurred  that  with the lapse of time or the  giving  of  notice or both  would
constitute a material default by the Company or its Subsidiaries thereunder.

          (e)  To the Company's  knowledge,  no previous or current party to any
Real  Property  Lease has given  notice of or made a claim  with  respect to any
material breach or material default by the Company or any Subsidiary thereunder.
With respect to those Real  Property  Leases that were  assigned or subleased to
the Company or its Subsidiaries by a third party, all necessary consents to such
assignments  or subleases  have been obtained  except as would not reasonably be
expected to have a Material Adverse Effect.

          4.7  Company  SEC  Documents.  Since March 31,  1997,  the Company has
               -----------------------
timely filed all  reports,  schedules,  forms,  statements  and other  documents
required to be filed by it with the SEC pursuant to the  reporting  requirements
of the  Exchange  Act (all of the  foregoing  filed prior to the date hereof and
after March 31, 1997, and all exhibits included therein and financial statements
and schedules  thereto and documents  incorporated by reference  therein,  being
hereinafter  referred to herein as the  "Company  SEC  Documents").  As of their
respective dates or as heretofore amended, the Company SEC Documents complied in
all  material  respects  with  the  requirements  of  the  Exchange  Act  or the
Securities  Act,  as the case may be, and the rules and  regulations  of the SEC
promulgated thereunder applicable to the Company SEC Documents,  and none of the
Company SEC Documents,  at the time they were filed with the SEC,  contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated  therein or necessary in order to make the statements  therein,  in
light of the circumstances  under which they were made, not misleading.  None of

                                       9
<PAGE>

the written  information  supplied by the Company  specifically for inclusion or
incorporation  by reference in any  documents to be filed jointly by the Company
and the Purchasers  with the SEC or any  Governmental  Entity in connection with
the transactions contemplated hereby (including in connection with the Company's
solicitation   of  shareholder   approval  of  an  amendment  to  the  Company's
Certificate of Incorporation  increasing the number of authorized  shares of the
Common Stock) will, on the date of its filing and on the date any such materials
are mailed to  stockholders,  contain any untrue statement of a material fact or
omit to state any material  fact  required to be stated  therein or necessary in
order to make the statements  therein, in light of the circumstances under which
they are made, not misleading.

          4.8  Financial   Statements.   The  audited   consolidated   financial
               ----------------------
statements  and  unaudited  consolidated  interim  financial  statements  of the
Company included in the Company's Annual Report on Form 10-K for the fiscal year
ended March 30, 2000 (the "Company 10-K") and its Quarterly  Report on Form 10-Q
for the fiscal quarters ended June 29, 2000, September 28, 2000 and December 28,
2000 (the "Company  10-Q") have been  prepared in  accordance  with GAAP and the
published rules and regulations of the SEC applicable  thereto  (except,  in the
case of unaudited statements, as permitted by Form 10-Q of the SEC) applied on a
consistent  basis during the periods involved (except as may be indicated in the
notes thereto) and fairly  present the  consolidated  financial  position of the
Company  and its  consolidated  Subsidiaries  as of the dates  thereof and their
consolidated  results of  operations  and cash flows for the periods  then ended
(subject to normal  year-end  adjustments  in the case of the unaudited  interim
financial  statements).  For the purposes of this  Agreement,  "Company  Balance
Sheet" means the  consolidated  balance  sheet of the Company as of December 28,
2000 set forth in the  Company  10-Q and  "Company  Balance  Sheet  Date"  means
December 28, 2000.

          4.9  No  Undisclosed  Liabilities.  Neither the Company nor any of its
               ----------------------------
Subsidiaries  has any  liabilities  (whether  accrued,  absolute,  contingent or
otherwise,  and  whether due or to become due or  asserted  or  unasserted)  not
quantified  on the face of the  Company  Balance  Sheet  (other  than the  notes
thereto)  which are of the type  required to be  reflected as  liabilities  on a
balance sheet, except liabilities incurred since the date of the Company Balance
Sheet in the ordinary course of business consistent with past practice which are
not material and liabilities which individually,  or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect.

          4.10 Litigation.  Except as disclosed in the Company SEC  Documents or
               ----------
listed  on  Schedule  4.10,  there is no  claim,  action,  proceeding,  lawsuit,
            --------------
inquiry,  arbitration  or  investigation  before or by any  court,  governmental
agency, public board,  self-regulatory  organization or body, pending or, to the
knowledge of the Company or any Subsidiary,  threatened against or affecting (a)
the Company, any Subsidiary,  or their respective directors or officers in their
capacities as such, (b) the Company's or any  Subsidiary's  properties or assets
or (c) the validity of this Agreement or any of the other Transaction  Documents
or any  action  taken or to be taken by the  Company  in  connection  with  such
agreements  or the  consummation  of the  transactions  contemplated  hereby  or
thereby  which  if  decided  adversely  to the  Company  or  such  person  would
reasonably be expected to have a Material  Adverse  Effect.  Except as listed on
Schedule  4.10,  neither  the  Company  nor any  Subsidiary  is  subject  to any
--------------
outstanding order, ruling,  judgment or decree that would reasonably be expected
to have a Material Adverse Effect.

                                       10
<PAGE>

          4.11 Compliance  with Laws;  Permits.  Except as set forth on Schedule
               -------------------------------                          --------
4.11, the Company and each  Subsidiary has complied,  in all respects,  with all
----
laws,  rules,  regulations  and orders  applicable to its business,  operations,
properties,  assets,  products and  services,  except where the failure to do so
would not,  individually  or in the aggregate,  reasonably be expected to have a
Material  Adverse Effect.  Except as set forth in Schedule 4.11, the Company and
                                                  -------------
each  Subsidiary has all necessary  permits,  licenses and other  authorizations
required to conduct its  business as  conducted  and as proposed to be conducted
and the Company and each Subsidiary has been operating its business  pursuant to
and in  compliance  with the  terms  of all such  permits,  licenses  and  other
authorizations  except  where  the  failure  to do so would  not  reasonably  be
expected to have a Material  Adverse Effect.  Except as disclosed in the Company
SEC Documents or on Schedule  4.11,  neither the Company nor any  Subsidiary has
                    --------------
received  notification from any Governmental Entity (a) asserting a violation of
any law applicable to the conduct of its business, (b) threatening to revoke any
license, franchise, permit or government authorization, or (c) restricting or in
any way  limiting  its  operations  as  currently  conducted  or  proposed to be
conducted,  in each case which has not  heretofore  been remedied or resolved or
which would not reasonably be expected to have a Material Adverse Effect.

          4.12 Taxes. Except as set forth on Schedule 4.12, the Company and each
               -----                         -------------
Subsidiary has filed, or caused to be filed, all federal and all material state,
local and foreign  income Tax Returns  required to be filed with  respect to the
Company  and each  Subsidiary  in a  timely  manner  (taking  into  account  all
extensions  of due dates) and all such  material Tax Returns were true,  correct
and complete in all material respects.  The Company and each Subsidiary has paid
all material  Taxes and other  governmental  assessments  and charges,  shown or
determined  to be due on such Tax Returns,  except those not yet due and payable
or those being contested in good faith and for which adequate reserves have been
made,  and has set aside on its books  provisions  reasonably  adequate  for the
payment of all Taxes for  periods  subsequent  to the  periods to which such Tax
Returns  apply.  Except as set forth on Schedule  4.5(d),  there are no material
                                        ----------------
unpaid Taxes claimed to be due by the taxing authority of any jurisdiction,  and
the  officers  of the  Company  know of no basis for any such claim  which could
reasonably be expected to have a Material Adverse Effect. Neither the Company or
any  Subsidiary has executed a waiver with respect to any statute of limitations
relating to the assessment or collection of any material federal, state or local
Tax. Except as set forth on Schedule 4.12, none of the Company or any Subsidiary
                            -------------
(a) has been a member  of an  Affiliated  Group  filing a  consolidated  federal
income Tax Return (other than a group the common parent of which is the Company)
or (b) has any liability for the Taxes of any Person (other than the Company and
each  Subsidiary)  under Treasury  Regulation  Section  1.1502-6 (or any similar
provision of state,  local or foreign  law),  as  transferee  or  successor,  by
contract or otherwise.  Except as provided on Schedule 4.12, none of the Company
                                              -------------
or any Subsidiary is a party to any Tax allocation or sharing agreement. The net
operating losses and built-in losses of the Company and each Subsidiary are not,
prior  to the  sale  and  purchase  of the  Preferred  Stock  pursuant  to  this
Agreement,  subject to  limitation  pursuant  to Section 382 of the Code (or any
similar provision of federal, state, local or foreign law).

          4.13 Consents.  Except  as set forth on  Schedule  4.13,  neither  the
               --------                            --------------
execution,  delivery  or  performance  of  this  Agreement  or any of the  other
Transaction  Documents  by  the  Company,  nor  the  consummation  by it of  the
obligations and transactions contemplated hereby or thereby (including,  without
limitation,  the issuance,  the reservation for issuance and the delivery of the
shares of Preferred Stock) requires any consent of,  authorization by, exemption
from,  filing  with or notice to any  Governmental  Entity or any other  Person,
other than (i) the approvals or filings required under the Exchange Act or under
relevant  state blue sky laws,  (ii) approval for listing on the American  Stock
Exchange of the shares of Common Stock issuable upon conversion of the Preferred
Stock and (iii) Shareholder Approval.

                                       11
<PAGE>

          4.14 No Conflicts.  The  execution,  delivery and  performance of this
               ------------
Agreement and each of the other Transaction Documents,  the execution and filing
of the Certificate of  Designations  and the  consummation  of the  transactions
contemplated hereby and thereby (including, without limitation, the issuance and
reservation  for  issuance,  as  applicable,  of the  Preferred  Stock  and  the
Conversion  Shares)  will not (a) except  for the  requirement  for  Shareholder
Approval, result in a violation of the Certificate of Incorporation or Bylaws of
the Company or any Subsidiary,  (b) conflict with or result in the breach of the
terms,  conditions  or  provisions of or constitute a default (or an event which
with notice or lapse of time or both would become a default) under, or give rise
to any right of termination,  acceleration or cancellation  under,  any material
agreement, lease, mortgage, license, indenture,  instrument or other contract to
which  the  Company  or any  Subsidiary  is a party (or any  series  of  related
agreements,  leases,  mortgages,  licenses,  indentures,  instruments  or  other
contracts  that are, in the aggregate,  material),  (c) result in a violation of
any law,  rule,  regulation,  order,  judgment  or  decree  (including,  without
limitation,  U.S. federal and state securities laws and regulations)  applicable
to the  Company  or any  Subsidiary  or by which  any  property  or asset of the
Company or any Subsidiary is bound or affected, or (d) result in the creation of
any Encumbrance upon any of their assets except for such conflicts or violations
referred  to in clause (c) or such  Encumbrances  that would not  reasonably  be
expected  to  have a  Material  Adverse  Effect.  Neither  the  Company  nor any
Subsidiary  is in  violation of its  respective  Certificate  of  Incorporation,
Bylaws or other  organizational  documents,  and  neither  the  Company  nor any
Subsidiary is in default (and no event has occurred which,  with notice or lapse
of time or both,  would  cause the Company or any  Subsidiary  to be in default)
under,  nor has there  occurred any event giving others (with notice or lapse of
time or both) any rights of termination, amendment, acceleration or cancellation
of, any material agreement,  indenture or instrument to which the Company or any
Subsidiary  is a party  except  for  such  violations,  defaults,  terminations,
accelerations  or  cancellations  as would not  reasonably be expected to have a
Material Adverse Effect.

          4.15 Intellectual  Property.  The Company and each of its Subsidiaries
               ----------------------
owns or possesses rights to use all franchises,  licenses, copyrights, copyright
applications,   patents,   patent  rights  or  licenses,   patent  applications,
trademarks,  trademark rights,  trade names,  trade name rights,  copyrights and
rights with respect to the foregoing  which are required to conduct its business
as currently  conducted.  To the knowledge of the Company, no event has occurred
which  permits,  or after  notice  or lapse of time or both  would  permit,  the
revocation or  termination  of any such rights,  and neither the Company nor any
Subsidiary thereof is liable to any Person for infringement under applicable law
with respect to any such rights as a result of its business  operations,  except
for such  infringements  as would not  reasonably be expected to have a Material
Adverse Effect.

          4.16 Foreign  Corrupt   Practices  Act.   Neither  the  Company,   any
               ---------------------------------
Subsidiary, nor any director, officer, Agent, employee or other Person acting on
behalf of the Company or any  Subsidiary  has, in the course of his,  her or its
actions  for,  or on behalf  of,  the  Company or any  Subsidiary  violated  any
provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended,  or the
regulations thereunder.

                                       12
<PAGE>

          4.17 Material  Contracts.  Except as set forth in Schedule 4.17,  each
               -------------------                          -------------
Material Contract of the Company is the legal,  valid and binding  obligation of
the  Company  or  its  Subsidiary,  enforceable  against  the  Company  or  such
Subsidiary   in   accordance   with  its  terms,   except  to  the  extent  that
enforceability may be limited by bankruptcy,  insolvency,  fraudulent conveyance
or other  similar  laws  affecting  creditors'  rights  generally  or by general
equitable  principles,   regardless  of  whether  enforcement  is  sought  in  a
proceeding at law or in equity.  Except as set forth on Schedule 4.17, there has
                                                        -------------
not occurred any breach,  violation or default or any event that, with the lapse
of time, the giving of notice or the election of any Person,  or any combination
thereof,  would  constitute  a breach,  violation or default by the Company or a
Subsidiary under any such Material Contract or, to the knowledge of the Company,
by any other Person to any such contract,  in any such case as would  reasonably
be  expected  to have a Material  Adverse  Effect.  Neither  the Company nor any
Subsidiary has been notified that any party to any Material  Contract intends to
cancel,  terminate, not renew or exercise an option under any Material Contract,
whether in connection with the transactions contemplated hereby or otherwise.

          4.18 Right of  First  Refusal;  Stockholders'  Agreement;  Voting  and
               -----------------------------------------------------------------
Registration Rights.  Except as set forth on Schedule 4.18, the Company is not a
-------------------                          -------------
party to any agreement  containing  any right of first  refusal,  right of first
offer,  right of co-sale,  preemptive right or other similar right regarding the
Company's   securities.   There  are  no  provisions  of  the   Certificate   of
Incorporation  or the  Bylaws,  and,  except  for this  Agreement  and the other
Transaction  Documents,  there are no agreements to which the Company is a party
by which the Company or any Subsidiary is bound which (a) may affect or restrict
the voting  rights of any Purchaser  with respect to the Preferred  Stock in its
capacity  as a  stockholder  of the  Company,  (b)  restrict  the ability of any
Purchaser,  or any  successor  thereto or assignee  or  transferee  thereof,  to
transfer the Preferred  Stock, and (c) would adversely affect the Company's or a
Purchaser's  right or ability to consummate this Agreement and the  transactions
contemplated  hereby  or  thereby.  Except as set  forth in the  Certificate  of
Incorporation  as it exists as of the date hereof and except as  contemplated by
the  Transaction  Documents,  the Company is not a party to any agreement  which
would (i) require the vote of more than a majority of the  Company's  issued and
outstanding Common Stock,  voting together as a single class, to take or prevent
any  corporate  action,  other than those  matters  requiring a class vote under
Delaware  law or (ii) entitle any party to nominate or elect any director of the
Company  or  require  any of the  Company's  stockholders  to vote  for any such
nominee or other Person as a director of the Company.

          4.19 Insurance.  (a) Each insurance policy,  including  directors' and
               ---------
officers' liability insurance,  maintained by the Company is valid, enforceable,
in full  force and  effect,  and is of such type and amount of  insurance,  with
respect to the Company's  business and properties,  on both a per occurrence and
an aggregate  basis,  as customarily  carried by Persons  engaged in the same or
similar business as the Company and its Subsidiaries.

          (b)  There is no pending  material  claim  under any of the  Company's
policies  and, to the knowledge of the Company,  no event has  occurred,  and no
condition or circumstance exists, that might (with or without notice or lapse of
time) directly or indirectly give rise to or serve as a basis for any such claim
which would reasonably be expected to have a Material Adverse Effect.

                                       13
<PAGE>

          (c)  Except as set forth on  Schedule  4.19(c),  the  Company  has not
                                       -----------------
received:  (i) any  written  notice or  communication  regarding  the  actual or
possible  cancellation  or invalidation of any of such policies or regarding any
actual or possible  adjustment in the amount of premiums payable with respect to
any of said  policies;  (ii) any written notice or  communication  regarding any
actual or  possible  refusal  of  coverage  under,  or any  actual  or  possible
rejection  of any  claim  under,  any of such  policies;  or (iii)  any  written
indication  that the issuer of any such  policies  may be unwilling or unable to
perform any of its obligations  thereunder,  except in each case which would not
reasonably be expected to have a Material Adverse Effect.

          4.20 Environmental Matters. Except as would not reasonably be expected
               ---------------------
to have a Material Adverse Effect, there is no environmental litigation or other
environmental proceeding pending or, to the knowledge of the Company, threatened
by any governmental  regulatory  authority or others with respect to the current
or any former business of the Company or any Subsidiary or of any partnership or
joint  venture  currently  or at any time  affiliated  with the  Company  or any
Subsidiary.  To the  knowledge  of the  Company,  no state of facts exists as to
environmental  matters or Hazardous  Substances  that  involves  the  reasonable
likelihood of a material capital expenditure by the Company or any Subsidiary or
that may otherwise  reasonably be expected to have a Material Adverse Effect. To
the knowledge of the Company, no Hazardous Substances have been treated,  stored
or disposed of, or otherwise deposited,  in or on the properties owned or leased
by the  Company  or  any  Subsidiary  or by any  partnership  or  joint  venture
currently  or at any time  affiliated  with the  Company  or any  Subsidiary  in
violation of any applicable Environmental Laws.

          4.21 Employee  Relations.  (a) The Company and its  Subsidiaries  have
               -------------------
entered into  individualized  written  employment  agreements with the executive
officers  (as such term is defined for  purposes of Item 401 of  Regulation  S-K
under the Securities Act) of the Company and its Subsidiaries listed on Schedule
                                                                        --------
4.21(a) (the "Executive Officers"),  true and complete copies of which have been
-------
delivered  to the  Apollo  Purchasers.  To the  knowledge  of  the  Company,  no
Executive  Officer  of the  Company or any  Subsidiary  is in  violation  of any
material  term of any  employment  contract or any other  contract or  agreement
relating to the  relationship of any such Executive  Officer with the Company or
any Subsidiary.  The Company and each  Subsidiary has operated and  administered
all plans,  programs and  arrangements  providing  compensation  and benefits to
employees in accordance  with their terms and with all applicable laws except as
would not  reasonably  be expected  to have a Material  Adverse  Effect.  To the
Company's knowledge,  no Executive Officer has any plans to terminate his or her
employment  with the  Company  or any  Subsidiary,  nor does the  Company or any
Subsidiary  have any  present  intention  to  terminate  the  employment  of any
Executive Officer.

          (b)  The Company and its  Subsidiaries  are not delinquent in payments
to any of their  employees,  for any wages,  salaries,  commissions,  bonuses or
other direct  compensation for any services performed through the date hereof or
amounts required to be reimbursed to them to the date hereof except as would not
reasonably  be expected to have a Material  Adverse  Effect.  The Company and it
Subsidiaries  are in compliance  with all  applicable  federal,  state and local
laws, rules and regulations respecting employment,  employment practices, labor,
terms and  conditions  of  employment  and wages and hours,  except as would not
reasonably be expected to have a Material Adverse Effect.  Except as provided on
Schedule 4.21(b),  neither the Company nor any Subsidiary is bound by or subject
----------------
to (and none of its assets or  properties is bound by or subject to) any written
or oral commitment or arrangement with any labor union, and, to the knowledge of
the Company,  no labor union has requested or has sought to represent any of the
employees,  representatives or Agents of the Company or any Subsidiary. There is
no labor  strike,  dispute,  slowdown  or stoppage  actually  pending or, to the
knowledge of the Company,  threatened  against or involving the employees of the
Company or of any Subsidiary.

                                       14
<PAGE>

          (c)  All  material  (which  shall  include  all  "Material  Contracts"
involving  the  types of plans,  contracts  and  arrangements  set forth in this
Section   4.21(c))   bonus,   deferred   compensation,    pension,   retirement,
profit-sharing,  thrift, savings,  employee stock ownership,  stock bonus, stock
purchase,  restricted  stock and stock  option  plans,  employment  or severance
contracts,  health and medical  insurance  plans,  life insurance and disability
insurance  plans,   other  material   employee   benefit  plans,   contracts  or
arrangements  which cover  employees  or former  employees of the Company or the
Subsidiaries including,  but not limited to, "employee benefit plans" within the
meaning of Section 3(3) of ERISA (the "Employee  Benefit Plans"),  are listed on
Schedule 4.21(c).  Except as set forth on Schedule 4.21(c),  no Employee Benefit
----------------                          ----------------
Plan is or was collectively  bargained for or has terms requiring  assumption or
any guarantee by the Purchaser.

          (d)  There have been no  violations  of ERISA or the Code  relating to
any Employee  Benefit Plan that could  reasonably be expected to have a Material
Adverse Effect.  All Employee Benefit Plans, to the extent subject to ERISA, are
in substantial  compliance  with their terms and ERISA,  the Code, and all other
applicable law except where the failure to be in compliance would not reasonably
be expected to have a Material Adverse Effect.  The Company has timely filed all
required  documents,  notes and reports  (including IRS Form 5500) for each such
Employee  Benefit  Plan with all  applicable  Governmental  Authorities  and has
timely furnished all required  documents to the participants or beneficiaries of
each such Employee Benefit Plan except where the failure to file or furnish such
reports or documents would not reasonably be expected to have a Material Adverse
Effect.  The Company and the subsidiaries have not incurred and do not expect to
incur any  withdrawal  liability  with  respect  to a  multiemployer  plan under
Subtitle E of Title IV of ERISA in an amount which could  reasonably be expected
to have a Material  Adverse  Effect.  Neither any Employee  Benefit Plan nor any
single-employer  plan of any entity which is  considered  one employer  with the
Company  under  Section  4001 of ERISA  or  Section  414 of the Code (an  "ERISA
Affiliate")  has an  "accumulated  funding  deficiency"  (whether or not waived)
within the  meaning of  Section  412 of the Code or Section  302 of ERISA and no
ERISA Affiliate has an outstanding  funding waiver.  Neither the Company nor any
of its  subsidiaries  has  provided,  or, to the  knowledge of the  Company,  is
required  to  provide,   security  to  any  Employee  Benefit  Plan  or  to  any
single-employer plan of an ERISA Affiliate pursuant to Section 401(a)(29) of the
Code.  All  contributions  required  to be made under the terms of any  Employee
Benefit  Plan  have  been  timely  made or have been  reflected  on the  audited
financial  statements  of the  Company,  except  where the  failure to make such
contributions  would not  reasonably  be  expected  to have a  Material  Adverse
Effect.

                                       15
<PAGE>


          4.22 Related Party Transactions.  Except as set forth in Schedule 4.22
               --------------------------                          -------------
or in the Company's  proxy  statement  relating to its 2000 Annual  Meeting,  no
director,  officer  or  Affiliate  of the  Company  or  any of the  Subsidiaries
(including,  without limitation,  spouses,  children and relatives of any of the
foregoing) is a party to any material transaction, arrangement or agreement with
the  Company  or  any  Subsidiary  (other  than  transactions,  arrangements  or
agreements  between or among the Company and any of its Subsidiaries)  providing
for the  furnishing  of  services by or to or sale or rental of real or personal
property from or to, or otherwise requiring payments to or by any such Person.

          4.23 Investment  Company  Act.  Neither  the  Company  nor  any of its
               ------------------------
Subsidiaries is an "investment company" or is directly or indirectly  controlled
by or acting on behalf of, any Person that is an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.

          4.24 Books and Records.  The books of account,  ledgers,  order books,
               -----------------
records  and  documents  of the  Company  and  each  Subsidiary  accurately  and
completely  reflect all  material  information  relating to the  business of the
Company and each Subsidiary,  the location and collection of its assets, and the
nature of all transactions giving rise to the obligations or accounts receivable
of the Company and each Subsidiary.

          4.25 Disclosure.  No event or circumstance has occurred or exists with
               ----------
respect  to the  Company  or any  Subsidiary  or  their  respective  businesses,
properties,  operations  or financial  conditions,  which has not been  publicly
disclosed or which has not been disclosed to the Purchaser but, under applicable
law, rule or  regulation,  would be required to be disclosed by the Company in a
registration  statement  filed on the  date  hereof  by the  Company  under  the
Securities Act with respect to an issuance of the Company's securities.

          4.26 Change of Control.  Without  giving  effect to (x) any  dividends
               -----------------
that may be paid or become  payable on the Preferred  Stock  pursuant to Section
2(b)(5) of the  Certificate of  Designations,  (y) any sale,  transfer,  pledge,
conveyance  or  conversion  of the Class B Shares by the record  holder  thereof
after the date of this Agreement or (z) any acquisition by the Apollo Purchasers
of any shares of Common Stock or Class B Stock after the date hereof (other than
those shares of Common Stock received upon  conversion of the Preferred  Stock),
no Change of Control (as such term is defined in the  indentures  governing  the
Company's  Existing  High Yield  Indebtedness  or as  defined in any  employment
agreements  between the Company and any  Executive  Officer) will occur upon the
following:  (i) the  purchase  of the  Preferred  Stock at  Closing  or (ii) the
payment of  Additional  Series A Securities  or  Additional  Series B Securities
(other  than  shares  paid as  dividends  as set forth in clause  (x)  above) in
accordance with the terms set forth in the  Certificate of Designations  (giving
effect to Section 2(a)(4) thereof).
                                       16

<PAGE>

          5.   Conditions of Parties' Obligations.
               -----------------------------------

          5.1  Conditions of the  Purchaser's  Obligations.  The  obligations of
               -------------------------------------------
each Purchaser under Section 1 hereof are subject to the fulfillment prior to or
on the  Closing  Date of all of the  following  conditions,  any of which may be
waived in whole or in part by the Purchasers.

          (a)  Representations and Warranties  Correct.  The representations and
               ----------------------------------------
warranties  of the Company  under this  Agreement  shall be true,  complete  and
correct  in all  material  respects  (except  with  respect  to  any  provisions
including the word "material" or words of similar import and the  representation
and warranty set forth in Section 4.8 with respect to which such representations
and warranties must be true,  complete and correct) on and as of the date hereof
and on the Closing  Date with the same force and effect as if they had been made
on the Closing Date.

          (b)  Compliance with  Agreement.  The Company shall have performed and
               ---------------------------
complied with all  agreements  and  conditions  required by this Agreement to be
performed or complied with by it on or before the Closing Date.

          (c)  No Material  Adverse  Effect.  No  condition  or event shall have
               ----------------------------
occurred  that has had, or could  reasonably  be  expected  to have,  a Material
Adverse Effect.

          (d)  Supporting  Documents and  Certificate  of Officers.  The Company
               ----------------------------------------------------
shall have delivered to the Purchaser the supporting  documents and certificates
set forth on Annex 5.1(d) hereto. ------------

          (e)  Opinion of the Company's  Counsel.  The Apollo  Purchasers  shall
               ---------------------------------
have received from Skadden,  Arps, Slate,  Meagher & Flom LLP and Lathrop & Gage
L.C.,  counsel  for the  Company,  favorable  opinions  dated the  Closing  Date
substantially in the form of Annex 5.1(e) hereto.

          (f)  Certificate of  Designations.  The  Certificate  of  Designations
               ----------------------------
substantially  in  the  form  of  Annex  5.1(f)  hereto  (the   "Certificate  of
                                  -------------
Designations")  shall have been duly  adopted  and  executed  and filed with the
Secretary of State of the State of Delaware,  the Company shall not have adopted
or filed any other document designating terms, relative rights or preferences of
the Preferred Stock, the Certificate of Designations  shall be in full force and
effect  as of the  Closing  under the laws of  Delaware  and shall not have been
amended or modified,  and a copy of the Certificate of Designations certified by
the  Secretary  of State of the State of Delaware  shall have been  delivered to
counsel for the Purchasers.

          (g)  Composition  of Board of  Directors.  On the  Closing  Date,  the
               -----------------------------------
Company's Board of Directors shall be expanded to eight persons comprising those
five  persons  elected to the Board of Directors  at the  Company's  2000 Annual
Meeting and the three designees of the Apollo Purchasers.  Specifically,  AIF IV
shall have the right to elect one member to Board of Directors, AIF V shall have
the  right  to  elect  one  member  to the  Board of  Directors  and the  Apollo
Purchasers,  collectively, shall have the right to elect the third member to the
Board of Directors.  If for any reason, any director appointed by any of AIF IV,
AIF V or the Apollo  Purchasers ceases to be a director before the expiration of
his or her term, and the Apollo  Purchasers have Preferred Stock Approval Rights
at such time,  the Apollo  Purchaser  who elected such  director  shall have the
right to appoint a director to fill such vacancy. In addition, to the extent AIF
IV or AIF V, as the  case  may be,  is no  longer  a  holder  of any  shares  of
Preferred  Stock and the Apollo  Purchasers have Preferred Stock Approval Rights
at such  time,  the  right of AIF IV or AIF V, as the  case  may be,  to elect a
member to the Board of Directors shall be deemed transferred to AIF V or AIF IV,
as the case may be. To the  extent  neither  AIF IV nor AIF V is a holder of any
shares of  Preferred  Stock  and the  Apollo  Purchasers  have  Preferred  Stock
Approval Rights at such time, the Apollo  Purchasers,  collectively,  shall have
the right to elect the two members of the Board of Directors  previously elected
by AIF IV and AIF V.

                                       17
<PAGE>
          (h)  Transaction  Documents.  The  Company  shall  have  executed  and
               ----------------------
               delivered each of the Transaction  Documents,  each substantially
               in the form of Annex 5.1(h) hereto.

          (i)  Board  Resolution  and Bylaw  Amendment.  The Board of  Directors
               ---------------------------------------
shall have adopted (i) resolutions of the Board of Directors,  substantially  in
the form attached hereto as Annex 5.1(i)(1),  which  resolutions  shall include,
among other  items,  the  establishment  of a Nominating  Committee  and matters
relating to Capital Expenditures,  amendments to the Senior Facility and certain
employment  arrangements for Executive  Officers (the "Board  Resolutions")  and
(ii) the Bylaw Amendments in the form attached hereto as Annex 5.1(i)(2).

          5.2  Conditions of Company's  Obligations.  The Company's  obligations
               ------------------------------------
under Section 1 hereof are subject to the fulfillment prior to or on the Closing
Date of the following conditions, any of which may be waived in whole or in part
by the Company.

          (a)  Representations and Warranties  Correct.  The representations and
               ---------------------------------------
warranties of the Purchaser under this Agreement shall in all material  respects
be true,  correct and complete (except with respect to any provisions  including
the word "material" or words of similar import,  which such representations must
be true,  complete  and correct) on and as of the date hereof and on the Closing
Date  with the same  force and  effect  as if they had been made on the  Closing
Date.

          (b)  Compliance with Agreement. The Purchaser shall have performed and
               --------------------------
complied with all  agreements  and  conditions  required by this Agreement to be
performed or complied with by it on or before the Closing Date.

          (c)  Payment of Purchase  Price.  The Company shall have received from
               ---------------------------
the Purchasers the Purchase Price as set forth on Schedule 1 hereto.

          (d)  Standstill  Agreement.  The Apollo Purchasers shall have executed
               ---------------------
and  delivered  the  Standstill  Agreement,  substantially  in the form of Annex
5.1(h) hereto.

          5.3  Conditions   of  Each   Party's   Obligations.   The   respective
               ---------------------------------------------
obligations of each party to consummate the transactions  contemplated hereunder
are subject to the fulfillment  prior to or on the Closing Date of the following
conditions:

          (a)  No Injunction.  No Governmental  Entity or any other Person shall
               --------------
have issued an order which shall then be in effect  restraining  or  prohibiting
the  completion  of  the  transactions  contemplated  hereby  or  by  the  other
Transaction Documents, nor shall any such order be threatened or pending.

                                       18
<PAGE>

          (b)  Absence of  Litigation.  The  Purchasers and the Company shall be
               ----------------------
satisfied  as to the absence of  litigation  which could  result in the award of
significant  damages or which seeks to enjoin or void any material aspect of the
transactions contemplated by this Agreement or by the Transaction Documents.

          (c)  Approvals.  The Company shall have obtained any and all consents,
               ---------
waivers, approvals or authorizations, with or by any Governmental Entity and all
material  consents,  waivers,  approvals or  authorizations  of any other Person
required  for  the  valid  execution  of  the  Transaction   Documents  and  the
consummation of the transactions  contemplated hereby,  including the consent of
the Company's  Senior Lenders,  except for such consents,  waivers  approvals or
authorizations  the failure of which to obtain would not  reasonably be expected
to have a Material Adverse Effect.

          6.   Covenants.  The Company  agrees that until the earlier of (x) the
               ---------
Closing Date or (y) the  termination of this Agreement  pursuant to Section 12.3
(provided,  however,  that  the  obligations  of  the  Company  pursuant  to the
provisions  of Sections 6.3 and 6.5 shall survive the Closing for so long as the
Apollo Purchasers possess Preferred Stock Approval Rights and the obligations of
the Company  pursuant to the  provisions  of Sections  6.6,  6.8,  and 6.9 shall
survive the Closing  until the  redemption of all of the  outstanding  shares of
Preferred  Stock or  conversion  of all of the  outstanding  shares of Preferred
Stock  ultimately into Common Stock),  the Company (and each of its Subsidiaries
unless the context otherwise requires) will do the following:

          6.1  Maintain  Corporate Rights and Facilities.  Maintain and preserve
               -----------------------------------------
its  corporate  existence  and all  rights,  franchises,  licenses,  trademarks,
service marks, trade names,  copyrights and other authority, in each case to the
extent  reasonably  deemed  adequate  by the  Company  for  the  conduct  of its
business.  Maintain its  properties,  equipment and facilities in good order and
repair;  and  conduct  its  business  in an  orderly  manner  without  voluntary
interruption  except where failure to do so would not  reasonably be expected to
have a Material Adverse Effect.

          6.2  Maintain Insurance. Maintain in full force and effect a policy or
               ------------------
policies of insurance issued by insurers of recognized responsibility,  insuring
it and its  properties and business  against such losses and risks,  and in such
types and amounts of  insurance,  with  respect to the  Company's  business  and
properties,  on both a per occurrence and an aggregate basis, as are customarily
carried by Persons  engaged in the same or similar  business  as the Company and
its Subsidiaries.

                                       19
<PAGE>

          6.3  Information Rights.
               ------------------

          (a)  Access to Records.
               -----------------

          The Company shall,  and shall cause each  Subsidiary to, afford to the
Apollo  Purchasers  and  their  respective  Affiliates,   officers,   employees,
advisors,  counsel and other authorized  representatives  (collectively with the
Affiliates  of the Apollo  Purchasers,  the  "Representatives"),  during  normal
business hours, reasonable access, upon reasonable advance notice, to all of the
books,  records  and  properties  of the  Company  and such  Subsidiary  and all
officers and employees of the Company and such Subsidiary. Subject to compliance
with customary confidentiality obligations,  each Apollo Purchaser shall also be
entitled to receive copies of all confidential financial information and reports
prepared for the Company's  lenders promptly upon furnishing such information to
such lenders. The Apollo Purchasers and their Representatives shall maintain the
confidentiality  of any confidential and proprietary  information  regarding the
Company and its Subsidiaries;  provided, however, that the foregoing shall in no
                               --------  -------
way limit or otherwise  restrict the ability of the Apollo  Purchasers or any of
their  Representatives  to disclose any such information  concerning the Company
and each Subsidiary  which it may be required to disclose (i) to its partners or
limited partners to the extent required to satisfy its fiduciary  obligations to
such Persons,  provided that the recipients of such information are informed of,
               --------
and  agree  to be bound  by,  the  confidentiality  provisions  hereof,  or (ii)
otherwise pursuant to or as required by law.

          (b)  Financial Reports.
               -----------------

          The Company  shall  furnish each  Purchaser,  promptly  upon  becoming
available, copies of all financial statements, reports, press releases, notices,
proxy  statements and other documents sent by the Company or its Subsidiaries to
its  stockholders  generally or released to the public and copies of all regular
and periodic reports,  if any, filed by the Company or its Subsidiaries with the
SEC,  any  securities  exchange or the NASD to the extent  such  reports are not
publicly available via EDGAR.

          6.4  Conduct of Business.  Conduct its business in accordance with all
               -------------------
applicable  provisions  of federal,  state,  local and foreign  law,  except for
either (i) instances of noncompliance  which would not reasonably be expected to
have a Material Adverse Effect or (ii) instances of  noncompliance  which are or
may be reasonably  cured without the incurrence by the Company or any Subsidiary
of any material cost or liability.

          6.5  Indemnification  of the Board of  Directors.  The  Company  shall
               -------------------------------------------
reimburse  all  directors  of the  Company  for their  reasonable  out-of-pocket
expenses  in  connection  with  attending  meetings  of the  Company's  Board of
Directors and all committees thereof and all reasonable  out-of-pocket  expenses
otherwise incurred in fulfilling their duties as directors. The Company's Bylaws
or  charter  shall  at  all  times  require  the  indemnification  of all of the
Company's  directors against liability for actions and omissions to act in their
capacity as directors of the Company to the maximum extent that such individuals
may  lawfully be so  indemnified  by the  Company.  The Company  shall  maintain
directors'  and  officers'  liability  insurance  in an amount equal to at least
$25,000,000.00.

                                       20
<PAGE>

          6.6  Reservation  of Common Stock.  The Company shall reserve and keep
               ----------------------------
available out of its authorized but unissued  Common Stock (that is not reserved
for issuance under any stock or option plan or upon conversion of Class B Stock)
the number of shares  required for issuance upon the conversion of the Preferred
Stock  and  otherwise  complying  with  the  terms of this  Agreement,  it being
understood that the Company will require Shareholder  Approval before it is able
to reserve any shares of Common Stock  issuable upon  conversion of the Series A
Preferred Stock that, in turn,  would have been issued upon conversion of Series
B Preferred  Stock.  If at any time the number of authorized but unissued shares
of  Common  Stock  shall  not be  sufficient  to effect  the  conversion  of the
Preferred  Stock or  otherwise to comply with the terms of this  Agreement,  the
Company will use its reasonable best efforts to obtain  Shareholder  Approval in
accordance with Section 6.9 and shall take such other corporate action as may be
necessary to increase its authorized but unissued shares of Common Stock to such
number of shares as shall be sufficient for such purposes.  The Company will use
its best reasonable  efforts to obtain any authorization,  consent,  approval or
other action by, and shall make any filing with any court or administrative body
that may be required under  applicable  state securities laws in connection with
the issuance of shares of Common Stock upon conversion of the Preferred Stock.

          6.7  Advice of Changes;  Filings.  The Company  shall  confer with the
               ---------------------------
Purchasers  on a regular  and  frequent  basis as  reasonably  requested  by the
Purchasers,  orally and, if requested by Purchaser,  in writing,  with regard to
any change that has had a Material  Adverse  Effect.  The Company shall promptly
provide to the Purchasers  (or their counsel)  copies of all filings made by the
Company or any Affiliate with any  Governmental  Entity in connection  with this
Agreement and the transactions contemplated hereby.

          6.8  Tax Treatment of the Preferred Stock. The Company agrees to treat
               ------------------------------------
the  Series A  Preferred  Stock and the Series B  Preferred  Stock as stock that
participates  in the  corporate  growth of the Company to a  significant  extent
within the  meaning of  Treasury  Regulation  ss.1.305-5(a),  and hence will not
treat the Preferred  Stock as  "preferred  stock" for purposes of Section 305 of
the Code and the Treasury Regulations promulgated thereunder, unless required to
treat it otherwise  pursuant to a "determination"  within the meaning of Section
1313(a) of the Code. The Apollo  Purchasers  shall be entitled to receive prompt
notice of any Tax assessment,  deficiency, audit or judicial proceeding received
by the Company or of which the Company is aware that  relates to the taxation of
the Preferred Stock. The Apollo  Purchasers shall indemnify,  and hold harmless,
the Company  for any Taxes  imposed on or incurred by the Company as a result of
any  "determination"  that the Preferred Stock is "preferred stock" for purposes
of Section  305 of the Code and  Treasury  Regulations  promulgated  thereunder;
provided that the Apollo  Purchasers  (i) have  received  prompt notice from the
Company of any tax assessment, deficiency, audit or judicial proceeding received
by the Company or of which the Company is aware that  relates to the taxation of
the Preferred  Stock,  (ii) are given the  opportunity to  participate,  whether
directly or  indirectly,  through the Company or counsel to the Company,  in all
proceedings  that  affect  the  taxation  of  Preferred  Stock,  and (iii)  have
consented to any closing or other agreement with the IRS or final disposition of
a claim for refund by the IRS that affects the taxation of the Preferred  Stock.
In  the  event  the   Preferred   Stock  is   outstanding   at  the  time  of  a
"determination," the Company will use its reasonable best efforts to restructure
such Preferred  Stock,  with the advice and subject to the consent of the Apollo
Purchasers, so that the Preferred Stock will not be treated as "preferred stock"
for purposes of Section 305 of the Code and the Treasury Regulations promulgated
thereunder.

                                       21
<PAGE>

          6.9  Solicitation of Shareholder  Approval.  The Company shall solicit
               -------------------------------------
Shareholder  Approval at its next regularly  scheduled annual meeting  following
the Closing Date (the  "Initial  Solicitation")  which shall take place no later
than 270 days after the Closing Date. In addition, until Shareholder Approval is
obtained,  the Company  shall  solicit  such  Shareholder  Approval  whenever it
solicits  proxies  subject  to  Section  14(a)  of the  Exchange  Act and  until
Shareholder Approval is obtained, any shares of Common Stock that are authorized
after the date hereof shall be reserved for issuance (i) subject to Section 8 of
this  Agreement,  upon the  exercise of options  pursuant to any option plan and
(ii) upon  conversion  of Series A Preferred  Stock to allow for exchange of the
Series B Preferred Stock into the Series A Preferred Stock (including the Series
A Preferred Stock that would be received upon a conversion of Series B Preferred
Stock).

          6.10 Board  Resolution  and Bylaw  Amendment.  The Board of  Directors
               ---------------------------------------
shall have adopted (a) resolutions of the Board of Directors,  substantially  in
the form attached hereto as Annex 5.1(i)(1),  which  resolutions  shall include,
                            ---------------
among other  items,  the  establishment  of a Nominating  Committee  and matters
relating to capital  expenditures,  amendments to the Company's  Senior Facility
and  certain   employment   arrangements  for  Executive  Officers  (the  "Board
Resolutions")  and (b) the Bylaw Amendments in the form attached hereto as Annex
                                                                           -----
5.1(i)(2).
---------

          6.11 Listing  Obligation.  The Company will take all reasonable  steps
               -------------------
necessary,  and pay all reasonable  fees required,  to list all of the shares of
Common Stock issuable upon any conversion of shares of Series A Preferred  Stock
(including such additional shares as may be issuable after Shareholder  Approval
or as dividends) on the American Stock Exchange or such other stock exchanges or
systems of automated  dissemination  of quotations  of securities  prices in the
United  States on which the Common Stock is then listed.  Following  the initial
listing of such shares,  the Company  shall use its  reasonable  best efforts to
maintain  the listing of such shares for so long as the  Company's  Common Stock
continues to be listed on any such exchange where the Common Stock is listed.

          7.   Negative Covenants.
               ------------------

          7.1  No Solicitation.  On the date hereof, the Company shall and shall
               ---------------
cause each Subsidiary and its Subsidiaries'  officers and directors to, and each
of the foregoing shall cause their respective Agents, representatives,  advisors
or  subsidiaries,  to cease any  discussions  or  negotiations  with any parties
(other  than  the  Purchaser)  that  may be  ongoing  with  respect  to (A)  any
acquisition  or purchase  of a material  amount of assets of the Company and its
Subsidiaries  (other than properties  disclosed in writing to Apollo as possible
candidates for  disposition),  (B) the purchase of any equity  securities of the
Company or any Subsidiary (including a self tender offer) or any securities that
are convertible,  exchangeable or exercisable for any equity securities, (C) any
merger,  consolidation,  business combination, sale of substantially all assets,
recapitalization,  liquidation, dissolution or similar transaction involving the
Company or any Subsidiary (other than a Permitted Acquisition), or (D) any other

                                       22
<PAGE>

transaction the consummation of which would, or could reasonably be expected to,
impede,   interfere  with,   prevent  or  materially   delay  the   transactions
contemplated by this Agreement or which would,  or could  reasonably be expected
to,  materially  dilute  the  benefits  to the  Purchaser  of  the  transactions
contemplated  hereby (each of the foregoing  items set forth in (A) through (D),
an  "Alternative  Transaction").  From the date hereof through the Closing Date,
the Company shall not, shall cause each Affiliate not to and shall not authorize
or permit any of its or any such  Person's  officers,  directors or employees or
any  investment  banker,  financial  advisor,  attorney,   accountant  or  other
representative  representing  any such Person to,  directly or  indirectly,  (i)
solicit, initiate or encourage (including by way of furnishing information),  or
take any other action to facilitate, any inquiries or the making of any proposal
that may lead to an Alternative  Transaction  (it being  understood  that public
announcement  of the execution of this  Agreement,  and  disclosure of the terms
thereof,  shall not in any way be deemed to be a  solicitation  in  violation of
this clause (i)) or (ii) participate in any discussions or negotiations with any
third party regarding any proposed Alternative  Transaction unless the Company's
Board of  Directors  determines  in good faith that  failure to take such action
would  be  a  violation  of  its   fiduciary   duties  under   applicable   law.
Notwithstanding  anything  else  in  this  Agreement  to  the  contrary,  if the
Company's  Board  of  Directors  determines  in  good  faith  the  terms  of any
Alternative  Transaction are more favorable to the Company and its  shareholders
than the transactions  contemplated by this Agreement, the Company may terminate
this  Agreement.  In the  event  the  Company  or any  of  its  Subsidiaries  or
Affiliates  receives an indication of interest or engages in any  discussions or
negotiations  with any parties (other than the  Purchasers)  with respect to any
Alternative Transaction, the Company shall promptly notify the Apollo Purchasers
of such occurrence within two business days.

          8.   Protective Provisions.
               ---------------------

          8.1  Preferred Stock Approval Rights.  In addition to any other rights
               -------------------------------
provided  by  applicable  law,  as long as the  Apollo  Purchasers  continue  to
beneficially  own shares of Preferred  Stock  representing  more than 50% of the
Preferred Stock issued  pursuant to this  Agreement,  the Company shall not, and
shall not permit any Subsidiary to, without the prior written consent of Apollo,
acting at the direction of the Apollo Purchasers:

          (a)  amend,  alter  or  repeal,  whether  by  merger,   consolidation,
combination,  reclassification or otherwise, the Certificate of Incorporation or
the Bylaws of the Company, or any provision thereof (including the adoption of a
new provision thereof);

          (b)  create,  authorize  or issue  any  class,  series  or  shares  of
preferred stock (other than Additional  Securities  issued pursuant to section 2
of the  Certificate  of  Designations)  or any other class,  series or shares of
capital stock (other than capital stock intended to be used in the redemption of
the Preferred  Stock or to be authorized and issued  pursuant to the Shareholder
Approval);  or amend or alter the rights provided in any class, series or shares
of preferred stock or any other class of capital stock;

          (c)  purchase,  redeem,  repurchase or otherwise acquire for value (or
pay into or set aside a sinking fund for such  purpose)  shares of the Company's
capital   stock  or  of  any   Affiliate   thereof   (other  than   Wholly-Owned
Subsidiaries)(except for redemptions or repurchases of Preferred Stock or Common
Stock  issued upon  conversion  of the  Preferred  Stock) or any other  options,
warrants or other rights to acquire such capital stock;

                                       23
<PAGE>

          (d)  pay any  dividend  or declare any  distribution  on any shares of
stock  (subject to Section  8.1(b) above,  excluding  (i) dividends  paid to the
Company  by  any  of  its  Wholly-Owned   Subsidiaries  and  (ii)  dividends  or
distributions payable in shares of its capital stock or in options, warrants, or
other  rights  to  purchase  such  capital  stock  but  including  dividends  or
distributions payable in shares of Redeemable Capital Stock or options, warrants
or other rights to purchase  Redeemable  Capital Stock (other than  dividends on
Redeemable  Capital Stock payable in such Redeemable  Capital Stock) held by any
person other than the Company or any of its Wholly-Owned Subsidiaries);

          (e)  redeem,  prepay,  defease or repurchase any  indebtedness  of the
Company (other than Permitted Debt Repayments);

          (f)  merge,  consolidate or consummate a similar transaction involving
the Company (other than a merger,  consolidation or similar  transaction between
the  Company  and a direct or indirect  Wholly-Owned  Subsidiary  of the Company
which transaction would not adversely impact the rights of the Preferred Stock);

          (g)  incur any indebtedness  (excluding any borrowings in the ordinary
course of business under the Company's Senior Facility), other than debt that is
used to redeem the Preferred Stock and other Permitted Indebtedness, or amend or
alter the material terms of any existing or future material senior  indebtedness
(including  term loans,  revolvers and other  similar bank loans,  but excluding
indebtedness  incurred  under the  Company's  Senior  Facility);  provided,  the
Company may amend or renew the Senior Facility;

          (h)  voluntarily  initiate any liquidation,  dissolution or winding up
of the  Company or permit  the  commencement  of a  proceeding  for  bankruptcy,
insolvency, receivership or similar action;

          (i)  enter into any Affiliate Transactions;

          (j)  increase or decrease  the size of the Board of  Directors  of the
Company; or

          (k)  acquire or dispose  (for either  cash or non-cash  consideration)
of, in a single transaction or a series of related transactions, any business or
assets (including  investments in third parties) with an aggregate value in such
transaction  or  series  of  related   transactions  in  excess  of  $25,000,000
(including all assumed debt, all cash payments, and the fair market value of all
securities or other property issued as consideration).

Collectively, the consents of the Apollo Purchasers required by this Section 8.1
shall be hereinafter referred to as the "Preferred Stock Approval Rights."
                                         -------------------------------

          8.2  Committees  of the  Board  of  Directors.  So long as the  Apollo
               ----------------------------------------
Purchasers  continue to possess  Preferred  Stock Approval Rights and subject to
the provisions of applicable law and the fiduciary  duties of the members of the
Board of Directors,  a member of the Board of Directors designated by the Apollo
Purchasers pursuant to Section 5.1(g) shall be nominated to serve on each of the
committees of the Board of Directors, including the Nominating Committee.

                                       24
<PAGE>

          9.   Transfer Restrictions.
               ---------------------

          9.1  Private Placement. Each Purchaser understands and agrees that the
               -----------------
shares of Preferred  Stock to be purchased  hereunder  have not been  registered
under the  Securities  Act by reason of their  issuance in a transaction  exempt
from the  registration  requirements of the Securities Act, and that accordingly
they will not be fully transferable except as permitted under various exemptions
contained in the Securities Act or upon  satisfaction  of the  registration  and
prospectus   delivery   requirements  of  the  Securities  Act.  Each  Purchaser
acknowledges  that it must bear the  economic  risk of the  shares of  Preferred
Stock to be  purchased  hereunder  for an  indefinite  period of time  (subject,
however, to the Company's obligation to redeem the Preferred Stock in accordance
with  the  terms  thereof,  and  to  the  Company's  obligation  to  effect  the
registration  of  the  registrable   securities  under  the  Securities  Act  in
accordance  with the  Registration  Rights  Agreement)  since they have not been
registered under the Securities Act and therefore cannot be sold unless they are
subsequently  registered or an exemption from  registration  is available.  Each
Purchaser  understands that the exemption from registration afforded by Rule 144
promulgated  under the Securities Act depends upon the  satisfaction  of various
conditions and that, if applicable, Rule 144 affords the basis for sales only in
limited amounts.  Furthermore,  except as set forth in the  Registration  Rights
Agreement,  the Company has not agreed to make Rule 144 available for any resale
of the  Preferred  Stock or the shares of Common Stock into which the  Preferred
Stock is convertible.

          9.2  Legend.   Each  Purchaser   agrees  with  the  Company  that  the
               ------
certificates  evidencing the shares of Preferred Stock to be purchased hereunder
will bear the following legend:

     THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE  SECURITIES  ACT OF 1933,  AS  AMENDED,  AND MAY NOT BE SOLD OR  TRANSFERRED
UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH
SECURITIES OR THE SECURITIES ARE SOLD AND  TRANSFERRED IN A TRANSACTION  THAT IS
EXEMPT FROM THE REGISTRATION AND PROSPECTUS  DELIVERY  REQUIREMENTS OF SUCH ACT.
THE  SECURITIES   REPRESENTED  BY  THIS   CERTIFICATE  ARE  SUBJECT  TO  CERTAIN
LIMITATIONS  ON TRANSFER SET FORTH IN A STANDSTILL  AGREEMENT  DATED AS OF APRIL
19, 2001  BETWEEN AMC  ENTERTAINMENT  INC.  AND CERTAIN  OTHER  INVESTORS  NAMED
THEREIN,  COPIES OF WHICH ARE ON FILE WITH THE  SECRETARY  OF AMC  ENTERTAINMENT
INC.

          9.3  Removal of Legend.  The  Securities  Act legend  endorsed  on the
               -----------------
certificates  pursuant  to Section  9.2 hereof  shall be removed and the Company
shall issue a certificate without such legend to the holder thereof at such time
as the securities  evidenced thereby cease to be restricted  securities upon the
earliest to occur of (i) a  registration  statement  with respect to the sale of
such  securities  shall have become  effective under the Securities Act and such
securities  shall have been  disposed of in  accordance  with such  registration
statement,  (ii) the securities  shall have been sold to the public  pursuant to
Rule 144 (or any successor  provision)  under the Securities  Act, or (iii) such
securities may be sold by the holder without  restriction or registration  under
Rule 144(k) under the Securities Act (or any successor provision).

                                       25
<PAGE>

          9.4  Standstill  Agreement.  Subject  to the  terms of the  Standstill
               ---------------------
Agreement and Section 9.5, the Preferred  Stock shall be freely  transferable by
the holders  thereof;  provided that the Purchasers shall provide written notice
to the Company within three days of any transfer of Preferred Stock.

          9.5  Restrictions on Conversion of Series A Preferred.
               ------------------------------------------------

          (a)  During the period commencing on the date hereof and ending on the
fifth  anniversary  of the date  hereof,  the  Purchasers  shall not convert any
shares of Series A Preferred Stock into Common Stock,  except in connection with
a Disposition effected pursuant to paragraph (b) below.

          (b)  If, at any time during the period  commencing  on the date hereof
and ending on the fifth  anniversary  of the date hereof,  any Apollo  Purchaser
desires to effect a Disposition of any shares of Series A Preferred Stock to any
person  other than members of the Apollo  Group and Other  Investor  Affiliates,
such Apollo  Purchaser may, as part of such  Disposition,  elect to convert such
shares of Series A Preferred Stock into Common Stock,  prior to transfer to such
purchasing  Person.  In order to convert shares of Preferred Stock to effect any
such Disposition,  the selling Apollo Purchaser shall deliver to the Company, on
or before the proposed  settlement date of such  Disposition,  written notice of
its intention to convert  Series A Preferred  Stock as part of a Disposition  (a
"Disposition  Notice").  The  Disposition  Notice  shall set forth the number of
shares of Series A Preferred  Stock that shall be converted  into Common  Stock,
the sale  price for such  shares  and the  purchasing  Person in whose  name the
Common Stock shall be registered. Upon surrender by the selling Apollo Purchaser
of  certificates  representing  the shares of Series A Preferred  Stock that are
being  converted  as part of such  Disposition,  the Company  shall issue to the
purchasing Person certificates  representing the appropriate number of shares of
Common Stock. Any Disposition  pursuant to a third party made under this Section
9.5 or  Section  5.2(b)  of the  Standstill  Agreement  shall  comply  with  the
provisions of Section 5.1 of the Standstill Agreement.

          9.6  Series B Preferred  Stock.  The Purchasers  shall not transfer to
               --------------------------
any Person  (other  than  their  respective  Affiliates)  any shares of Series B
Preferred  Stock  until a date that is eighteen  (18)  months  after the Closing
Date.

          9.7  Preferred  Stock Approval  Rights.  The Preferred  Stock Approval
               ----------------------------------
Rights  granted  to the Apollo  Purchasers  are not  transferable  by the Apollo
Purchasers and shall be exercised solely by Apollo.  The Apollo  Purchasers will
not  enter  into any  agreements  with  any  person  or  entity  limiting  their
discretion  with  respect to the  exercise  of their  Preferred  Stock  Approval
Rights.  In the event (i) the Apollo Purchasers or their Affiliates cease to own
at least 50% of the  Preferred  Stock  issued,  (ii) Apollo is terminated as the
investment  manager,  or (iii) an Affiliate is removed as the general partner of
the Apollo  Purchasers (and, in either case, such terminated or removed party is
not replaced by an Affiliate of Apollo),  Apollo and the Apollo Purchasers shall
promptly  notify the Company and the Preferred  Stock Approval Rights granted to
the Apollo Purchasers shall terminate.

                                       26
<PAGE>


          10.  Definitions.  Unless the context  otherwise  requires,  the terms
               -----------
defined in this Section 10 shall have the meanings specified for all purposes of
this Agreement.

          Except as otherwise expressly  provided,  all accounting terms used in
this Agreement, whether or not defined in this Section 10, shall be construed in
accordance  with United  States  GAAP.  If and so long as the Company has one or
more  Subsidiaries,  such accounting terms shall be determined on a consolidated
basis for the Company and each of its Subsidiaries, and the financial statements
and other financial  information to be furnished by the Company pursuant to this
Agreement  shall be  consolidated  and presented  with  consolidating  financial
statements  of the Company and each of its  Subsidiaries  prepared in accordance
with GAAP.

          "Additional  Securities" shall mean the shares of Preferred Stock that
are issued to the holders of  Preferred  Stock as payment of  dividends  thereon
pursuant to the Certificate of Designations.

          "Additional Series A Securities" shall have the meaning assigned it in
the Certificate of Designations.

          "Additional Series B Securities" shall have the meaning assigned it in
the Certificate of Designations.

          "Affiliate"  means,  with respect to any Person,  (i) any other Person
directly or indirectly controlling or controlled by, or under direct or indirect
common  control with,  such specified  Person;  (ii) any other Person that owns,
directly or  indirectly,  ten percent or more of such Person's  capital stock or
other  equity  interests  or any officer or director of any such Person or other
Person;  or (iii)  with  respect to any  natural  Person,  any  person  having a
relationship  with such Person by blood,  marriage  or adoption  not more remote
than first cousin; provided,  however, that with respect to Apollo or the Apollo
                   --------   -------
Purchasers,  the term  "Affiliate"  shall not include any limited partner of the
Apollo Purchasers or their Affiliates nor any portfolio or investee companies of
the Apollo Purchasers or their Affiliates so long as, in either case, (x) Apollo
does not  control or have  investment  authority  over such  limited  partner or
portfolio or investee company; (y) such limited partner or portfolio or investee
company  does not  operate in the  domestic  theatrical  exhibition  industry or
otherwise  compete  with the Company  and (z) Apollo  does not own,  directly or
indirectly, 33% or more of such portfolio or investee company's capital stock or
other equity  interests.  For purposes of this  definition,  "control" when used
with respect to any  specified  Person means the power to direct the  management
and  policies  of such  Person,  directly  or  indirectly,  whether  through the
ownership  of  voting  securities,  by  contract  or  otherwise;  and the  terms
"controlling" and "controlled" shall have correlative meanings.

          "Affiliate  Transaction"  shall  mean any  transaction  or  series  of
related  transactions  (including,   without  limitation,  the  sale,  purchase,
exchange or lease of assets,  property or  services)  with any  Affiliate of the
Company (other than a direct or indirect Wholly-Owned Subsidiary of the Company)
involving  aggregate  consideration  in excess  of $5  million  unless  (A) such
transaction or series of  transactions is on terms that are no less favorable to
the Company or such  Subsidiary,  as the case may be, than would be available at
the  time  of  such  transaction  or  series  of  transactions  in a  comparable
transaction in an arms-length dealing with an unaffiliated third party, (B) such

                                       27
<PAGE>

transaction  or series of  transactions  is in the best interests of the Company
and (C) with  respect  to a  transaction  or  series of  transactions  involving
aggregate  payments  equal  to or  greater  than  $50  million,  a  majority  of
disinterested members of the Board of Directors determines that such transaction
or series of transactions  complies with clauses (A) and (B) above, as evidenced
by a Board Resolution; provided, however, that notwithstanding the foregoing the
                       --------  -------
following  transactions  shall not be  deemed  Affiliate  Transactions:  (i) any
transaction  pursuant to any contract in existence on the Initial Issuance Date;
(ii)  any  "Restricted  Payment"  (as such  term is  defined  in the  indentures
governing the Company's Existing High Yield  Indebtedness)  permitted to be made
pursuant to the provisions of such Existing High Yield  Indebtedness;  (iii) any
transaction or series of transactions between the Company and one or more of its
Subsidiaries or between two or more of its  Subsidiaries  (provided that no more
than 5% of the equity  interest  in any such  Subsidiary  is owned,  directly or
indirectly (other than by direct or indirect  ownership of an equity interest in
the Company),  by any Affiliate of the Company other than a Subsidiary) and (iv)
the payment of compensation (including amounts paid pursuant to employee benefit
plans) for the personal  services of officers,  directors  and  employees of the
Company or any of its Subsidiaries.

          "Affiliated  Group" shall mean any affiliated group within the meaning
of Section  1504(a) of the Code (or any similar  group  defined  under a similar
provision of state, local or foreign law).

          "Agent" of a Person shall mean any officer, director, employee, agent,
partner stockholder or Affiliate of such Person.

          "Agreement" shall mean this Investment Agreement.

          "AIF  IV"  shall  have the  meaning  assigned  it in the  introductory
paragraph.

          "AIF  V"  shall  have  the  meaning  assigned  it in the  introductory
paragraph.

          "Apollo"  shall  have  the  meaning  assigned  it in the  introductory
paragraph.

          "Apollo Group" shall have the meaning  assigned it in Section 1.1.4 of
the Standstill Agreement.

          "Apollo  Management  IV" shall  have the  meaning  assigned  it in the
introductory paragraph.

          "Apollo  Management  V" shall  have  the  meaning  assigned  it in the
introductory paragraph.

          "Apollo IV  Purchasers"  shall  have the  meaning  assigned  it in the
introductory paragraph.

                                       28
<PAGE>

          "Apollo  V  Purchasers"  shall  have the  meaning  assigned  it in the
introductory paragraph.

          "Apollo  Purchasers"  shall  have  the  meaning  assigned  it  in  the
introductory paragraph of this Agreement.

          "Alternative  Transaction"  shall  have  the  meaning  assigned  it in
Section 7.1 hereof.

          "AOP  IV"  shall  have the  meaning  assigned  it in the  introductory
paragraph.

          "AOP  V"  shall  have  the  meaning  assigned  it in the  introductory
paragraph.

          "B Trustees"  shall mean  Raymond F. Beagle,  Jr. and Charles J. Egan,
Jr., as (1)  successor  trustees of the 1992  Durwood,  Inc.  Voting Trust dated
December 12, 1992,  as amended and  restated on August 12, 1997,  (2)  successor
trustees of the trust created under the revocable  Trust  Agreement dated August
14, 1989 of Stanley H. Durwood, as amended and restated on May 12, 1999, and (3)
surviving  trustees of the Foundation,  or any successor  trustees of any of the
trusts referred to in clauses (1), (2) or (3) above.

          "Board of Directors" shall mean the Board of Directors of the Company.

          "Board  Resolutions"  shall have the meaning assigned to it in Section
5.1(i) hereof.

          "Bylaw  Amendments"  shall  mean the  amendments  to the  Bylaws to be
adopted by the Board of  Directors  at  Closing,  substantially  in the form set
forth in Annex 5.1(i)(2) hereto,  which amendment shall provide that the maximum
number of directors on the Board of Directors be increased by three and that the
three  additional  directors  shall be elected by holders of the Preferred Stock
pursuant to the  Certificate  of  Designations  (and in accordance  with Section
5.1(g) hereof).

          "Bylaws" shall have the meaning assigned it in Section 4.1(c) hereof.

          "Capital   Expenditures"  shall  mean,  for  any  fiscal  period,  all
expenditures  (including  outlays of cash and incurrence of  obligations) of the
Company and its  Subsidiaries in any such fiscal period which are required to be
included in property, plant and equipment or a similar fixed or long-lived asset
account on a  consolidated  balance sheet of the Company  prepared in accordance
with  GAAP  which  shall  include,   for  these  purposes,   Capitalized   Lease
Obligations.

          "Capitalized  Lease  Obligations"  means any obligation to pay rent or
other  amounts under a lease (or other  agreement  conveying a right to use) any
property (whether real, personal or mixed) that is required to be classified and
accounted for as a  capitalized  lease  obligation  (including  financing  lease
obligations) under generally accepted accounting principals.

                                       29
<PAGE>


          "Certificate   of   Designations"   shall  mean  the   certificate  of
designations described in Section 5.1(f) hereof.

          "Certificate of  Incorporation"  shall have the meaning assigned it in
Section 4.1(c) hereof.

          "Change of Control" shall have the meaning assigned it in Section 4.26
hereof.

          "Class B Stock"  shall have the  meaning  assigned  it in Section  4.1
hereof.

          "Closing" shall have the meaning assigned it in Section 2 hereof.

          "Closing Date" shall have the meaning assigned it in Section 2 hereof.

          "Code"  shall mean the  Internal  Revenue  Code of 1986,  as  amended.
References to "Code" made herein shall include, where applicable,  references to
the Treasury Regulations promulgated thereunder.

          "Common  Stock" shall have the meaning  assigned it in Section  4.1(a)
hereof.

          "Company"  shall  have the  meaning  assigned  it in the  introductory
paragraph.

          "Company  10-K"  shall have the  meaning  assigned  it in Section  4.8
hereof.

          "Company  10-Q"  shall have the  meaning  assigned  it in Section  4.8
hereof.

          "Company  Balance Sheet" shall have the meaning assigned it in Section
4.8 hereof.

          "Company  Balance  Sheet Date"  shall have the meaning  assigned it in
Section 4.8 hereof.

          "Company SEC Documents" shall have the meaning assigned in Section 4.7
hereof.

          "Conversion  Shares" shall mean the shares of Common Stock issued upon
conversion of any shares of Series A Preferred Stock (including shares of Series
A Preferred  Stock  issued upon  conversion  of any shares of Series B Preferred
Stock).

          "Disposition"  shall  mean  a  sale,  assignment,   transfer,  pledge,
hypothecation,  grant of any option with respect to or otherwise  dispose of any
interest in (or enter into an  agreement  or  understanding  with respect to the
foregoing) of any shares of Series A Preferred Stock.

          "Disposition  Notice"  shall have the  meaning  assigned it in Section
9.5(b) hereof.

                                       30
<PAGE>

          "Employee Benefit Plans" shall have the meaning assigned it in Section
4.21(c) hereof.

          "Encumbrances" shall have the meaning assigned it in Section 4.2(a).

          "Environmental  Laws"  shall  mean  any  and all  applicable  foreign,
federal, state, local or municipal laws, rules, orders,  regulations,  statutes,
ordinances,  codes,  decrees,  requirements of any Governmental  Entity or other
Requirement of Law (including  common law)  regulating,  relating to or imposing
liability or standards of conduct  concerning  protection of human health or the
environment,  as are now or may at any time be in effect during the term of this
Agreement.

          "ERISA"  shall mean the  Employee  Retirement  Income  Security Act of
          1974, as amended.  "Exchange Act" shall mean the  Securities  Exchange
          Act of 1934, as amended.  "Executive  Officer"  shall have the meaning
          assigned it in Section 4.21(a).

          "Existing  High  Yield  Indebtedness"  means  the  currently  existing
indebtedness  of the Company  pursuant to (i) the Indenture dated March 19, 1997
by and between the Company and Bank of New York,  as Trustee,  in respect of AMC
Entertainment   Inc.'s  9  1/2%  Senior  Subordinated  Notes  due  2009  and  as
supplemented by the First Supplemental Indenture dated June 9, 1997 and (ii) the
Indenture  dated  January  27,  1999 by and  between the Company and Bank of New
York,  as  Trustee,  in  respect  of AMC  Entertainment  Inc.'s  9  1/2%  Senior
Subordinated Notes due 2011.

          "Foundation" shall mean The Stanley H. Durwood Foundation.

          "GAAP" shall mean generally accepted  accounting  principles in effect
in the United States of America applied on a consistent basis.

          "Governmental  Entity"  shall  mean  any  national,   federal,  state,
municipal,  local,  territorial,  foreign or other government or any department,
commission,  board,  bureau,  agency,  regulatory  authority or  instrumentality
thereof;  or any court,  judicial,  administrative or arbitral body or public or
private tribunal  exercising  executive,  legislative,  judicial,  regulatory or
administrative functions pertaining to government.

          "Hazardous Substances" shall mean any waste or other substance that is
listed,  defined,  designated,  or classified as, or otherwise determined to be,
hazardous,  toxic,  or a  pollutant  or a  contaminant  under or pursuant to any
Environmental Law.

          "HSR Act" shall mean the Hart-Scott-Rodino  Antitrust Improvements Act
of 1976, as amended.

          "HSR  Conversion"  shall have the meaning  assigned thereto in Section
12.13.

                                       31
<PAGE>

          "Independent  Director"  shall mean a member of the Board of Directors
(i) who is not and has never been an officer or employee of the Company,  Apollo
or the Apollo Purchasers or any of their respective Affiliates,  or of an entity
that derived more than 5% of its revenues or earnings in its most recent  fiscal
year from transactions involving the Company, Apollo or any of Apollo Purchasers
or  any of  their  respective  Affiliates,  (ii)  who  has  no  relationship  or
affiliation  or  compensation,  consulting or contracting  arrangement  with the
Company, the B Trustees, the Foundation,  Apollo or the Apollo Purchasers or any
other entity such that a reasonable  person could regard such director as likely
to be unduly influenced by the Company, the B Trustees,  the Foundation,  Apollo
or any of  Apollo  Purchasers  and  (iii)  who is  nominated  by the  Nominating
Committee  in  accordance  with  the  procedures  set  forth  thereby,  it being
understood  that  the  Company's   existing  directors  elected  by  the  common
stockholders  will be deemed  independent for purposes of this provision through
at least the remainder of their current terms.

          "Initial  Issuance  Date" shall mean the first date of issuance of the
Preferred Stock pursuant to the closing of this Agreement.

          "Initial  Solicitation"  shall have the meaning assigned it in Section
6.9 hereof.

          "Material  Adverse  Effect" shall mean a material  adverse  change (or
effect)  in  the  condition  (financial  or  otherwise),   assets,   properties,
operations, business or results of operations (but not prospects) of the Company
and its  Subsidiaries,  taken as a whole  (excluding  the  effect of any  events
affecting the domestic theatrical exhibition industry as a whole); provided that
a decline in the  Company's  stock price in and of itself shall not be deemed to
be a Material Adverse Effect.

          "Material Contract" shall mean any contract,  commitment,  undertaking
or agreement to which the Company or any  Subsidiary  is a party or by which any
of them  are  bound  as of the  date  of this  Agreement  (i)  involving  annual
expenditures  or liabilities in excess of $10.0 million in any fiscal year; (ii)
providing for the lending of money (whether as borrower, lender or guarantor) in
excess  of $10.0  million;  (iii)  creating  or  governing  a joint  venture  or
partnership material to the Company and its Subsidiaries,  taken as a whole; and
(iv) that would otherwise constitute a "material contract" within the meaning of
Item 601(b)(10) of Regulation S-K promulgated by the SEC.

          "Nominating  Committee"  shall mean the committee  established  by the
Board of  Directors  pursuant to the  Company's  Bylaws as of the Closing  Date,
which committee shall be charged with the task of nominating for election by the
holders of the Common Stock  qualified  candidates  to serve as directors on the
Board of Directors.

          "Other  Investor  Affiliates"  shall have the  meaning  assigned it in
Section 4.1 of the Standstill Agreement.

          "Permitted  Acquisition"  shall mean any acquisition by the Company or
any  Subsidiary  of (i)  any  business  or  assets  with  a  purchase  price  of
$25,000,000 or less (including all assumed debt, all cash payments, and the fair
market value of all securities or other  property  issued as  consideration)  or
(ii) any  business or assets for which the consent or approval of the  Purchaser
has been given.

                                       32
<PAGE>

          "Permitted  Debt  Repayments"  shall mean scheduled or ordinary course
repayments of indebtedness of the Company or any Subsidiary,  including  without
limitation   ordinary  course   payments  with  respect  to  Capitalized   Lease
Obligations.

          "Permitted Encumbrances" shall mean (i) Encumbrances upon any property
presently  owned or hereafter  acquired,  created at the time of  acquisition to
secure a portion of the purchase price thereof,  or existing thereon at the date
of acquisition and assumed by the Company or one of its  Subsidiaries,  provided
that such  Encumbrance  shall apply only to the  property so acquired  and fixed
improvements  thereon;  (ii) any pledge of current assets in the ordinary course
of business made to secure current liabilities; (iii) Encumbrances for Taxes not
yet  delinquent;  (iv)  Encumbrances  on the  property  of the  Company  and its
Subsidiaries in the ordinary  course of business which do not materially  affect
the value of the property of the Company and do not  materially  interfere  with
the use made and proposed to be made of such property;  (v) landlords'  liens on
fixtures  and movable  property  located on premises  leased by the Company or a
Subsidiary  in the  ordinary  course  of  business;  (vi)  zoning  and  planning
restrictions, easements, permits and other restrictions or limitations of public
record  affecting the use of such properties;  provided that such  restrictions,
easements,  permits  or  other  restrictions  do not  impair  the  use  of  such
properties as exhibition  theaters or for such other purposes as such properties
are currently being used; (vii)  imperfections of title, if any, not material in
nature or amount and not materially  detracting  from the value or impairing the
use of the property  subject  thereto or impairing  the  operations  or proposed
operations of the Company and its Subsidiaries,  including,  without limitation,
the ability of the Company and its  Subsidiaries to secure  financing using such
properties and assets as collateral;  and (viii) other  Encumbrances  that would
not be reasonably expected to have a Material Adverse Effect.

          "Permitted Indebtedness" shall mean (i) indebtedness of the Company or
any of its Subsidiaries  owing one to the other; (ii) any indebtedness  incurred
to renew,  extend,  refinance or refund (each, a "refinancing") any indebtedness
outstanding  on the  Initial  Issuance  Date  (or  with  respect  to the  Senior
Facility,  an  aggregate  principal  amount at any one time  outstanding  not to
exceed  $425.0  million) in an  aggregate  principal  amount not  exceeding  the
principal  amount of the  indebtedness  so  refinanced  (plus the  amount of any
premium required to be paid in connection with such refinancing  pursuant to the
terms of the indebtedness so refinanced or the amount of any premium  reasonably
determined by the Company as necessary to accomplish such refinancing,  plus the
expenses of the Company  incurred in connection  with such  refinancing);  (iii)
indebtedness related to interest rate protection or currency hedging obligations
entered into solely to protect the Company or its Subsidiaries from fluctuations
in interest or currency exchange rates; (iv) Capitalized Lease Obligations;  (v)
indebtedness  of the  Company  or any of its  Subsidiaries  in  connection  with
standby letters of credit or performance  bonds issued in the ordinary course of
business;  (vi)  indebtedness of any Subsidiary  incurred in connection with the
guaranty of indebtedness of the Company or any other  Subsidiary of the Company;
(vii) indebtedness represented by property,  liability and workers' compensation
insurance; and (viii) other indebtedness in an aggregate principal amount at any
time outstanding not in excess of $30 million.

                                       33
<PAGE>

          "Person"  shall include all natural  persons,  corporations,  business
trusts, associations, companies, partnerships, joint ventures and other entities
and governments and agencies and political subdivisions.

          "Preferred  Stock"  shall  mean the Series A  Preferred  Stock and the
Series B Preferred Stock.

          "Preferred  Stock Approval  Rights" shall have the meaning assigned it
in Section 8.1 hereof.

          "Purchase  Price"  shall  have the  meaning  assigned  it in Section 1
hereof.

          "Purchaser"  shall have the meaning  assigned  it in the  introductory
paragraph of this Agreement.

          "Real  Property  Lease  Recap  Book"  shall  mean the  compilation  of
summaries and abstracts of the key terms of the Company's  Real Property  Leases
prepared by the Company.

          "Real Property  Leases" shall have the meaning  assigned it in Section
4.6(c) hereof.

          "Redeemable  Capital Stock" shall mean any capital stock that,  either
by its  terms,  by the terms of any  security  into which it is  convertible  or
exchangeable  or  otherwise,  is or upon the happening of an event or passage of
time would be required to be redeemed in cash prior to the tenth  anniversary of
the Initial  Issuance Date or is redeemable at the option of the holder  thereof
in cash at any time prior to such date, or is convertible  into or  exchangeable
for debt  securities  at any time prior to such date at the option of the holder
thereof (other than redemptions payable in the capital stock of the Company).

          "Registration  Rights  Agreement" shall mean the  registration  rights
agreement,  substantially  in the form attached  hereto as Annex  5.1(h),  to be
entered  into on or prior to the Closing Date by and between the Company and the
Purchasers.

          "Representatives" shall have the meaning assigned it in Section 6.3(a)
hereof.

          "Requirement of Law" shall mean, as to any Person,  the Certificate of
Incorporation and Bylaws or other  organizational or governing documents of such
Person,  and  each  law,  treaty,  rule or  regulation  or  determination  of an
arbitrator or a court or other  Governmental  Entity, in each case applicable to
or binding  upon such  Person or any of its  property or to which such Person or
any of its property is subject.

          "SEC" shall mean the Securities and Exchange Commission.

          "Securities  Act" shall mean the  Securities  Act of 1933, as amended.

          "Senior  Facility"  shall  mean The U.S.  $  425,000,000  Amended  and
Restated Credit  Agreement,  dated as of April 10, 1997, among AMC Entertainment
Inc, as the Borrower;  and The Bank of Nova Scotia, as Administrative Agent; and
Bank of America National Trust and Savings Association,  as Documentation Agent;
and  Various  Financial  Institutions  as  Lenders,  as  amended  by the  Second
Amendment,  dated as of  January  16,  1998,  as  further  amended  by the Third
Amendment,  dated as of March 15,  1999 and as  further  amended  by the  Fourth
Amendment, dated as of March 29, 2000.

                                       34
<PAGE>

          "Senior  Indebtedness"  shall  mean  the  Company's  current  existing
indebtedness pursuant to the Senior Facility.

          "Senior Lenders" shall mean the lenders of the Company pursuant to the
Company's Senior Facility.

          "Series  A  Preferred  Stock"  shall  mean the  Series  A  Convertible
Preferred Stock of the Company, par value $0.66 2/3 per share.

          "Series  B  Preferred  Stock"  shall  mean the  Series B  Exchangeable
Preferred Stock of the Company, par value $0.66 2/3 per share.

          "Shareholder  Approval"  shall mean  approval  by (i) the holders of a
majority of the Common Stock,  voting  separately as a class and (ii) a majority
of the votes cast by the  Company's  stockholders  voting  together  as a single
class, of an amendment to the Company's Certificate of Incorporation  increasing
the number of authorized shares of Common Stock (so as to permit the issuance of
additional  shares of Series A Preferred  Stock and the underlying  Common Stock
and until  there are  enough  shares  that  would  allow all  shares of Series A
Preferred  Stock to  convert  into  Common  Stock  and all  shares  of  Series B
Preferred  Stock to convert into Series A Preferred  Stock,  as  contemplated by
this Agreement and the Transaction Documents).

          "Standstill   Agreement"   shall   mean  the   standstill   agreement,
substantially in the form attached hereto as Annex 5.1(h), to be entered into on
or prior to the Closing Date by and between the Company and the Purchasers.

          "Subsidiary" shall mean any corporation, association or other business
entity (i) at least 50% of the outstanding voting securities of which are at the
time owned or controlled  directly or  indirectly  by the Company;  or (ii) with
respect to which the Company  possesses,  directly or  indirectly,  the power to
elect  more than 50% of the board of  directors  or  others  performing  similar
functions for such entity.

          "Taxes" shall mean any federal,  state, local or foreign income, gross
receipts,  license, payroll,  employment,  excise, severance, stamp, occupation,
premium,  windfall profits,  environmental (including taxes under Section 59A of
the Code),  customs  duties,  capital stock,  franchise,  profits,  withholding,
social security (or similar), unemployment,  disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not.

          "Tax  Return"  means all  returns and  reports  (including  elections,
claims,  declarations,   disclosures,  schedules,  estimates,  computations  and
information  returns)  required  to  be  supplied  to a  tax  authority  in  any
jurisdiction relating to Taxes.

                                       35
<PAGE>

          "Transaction Documents" shall mean this Agreement,  the Certificate of
Designations, the Registration Rights Agreement and the Standstill Agreement.

          "Treasury  Regulation" means a regulation  promulgated under the Code,
as amended from time to time.

          "Wholly-Owned  Subsidiary" shall mean a Subsidiary of the Company, all
of the  capital  stock  (other  than  directors'  qualifying  shares)  or  other
ownership  or  economic  interests  of  which  shall at the time be owned by the
Company or by one or more  Wholly-Owned  Subsidiaries  of the  Company or by the
Company and one or more Wholly-Owned Subsidiaries of the Company.

          11.  Remedies.
               --------

          11.1 Remedies at Law or in Equity.  If any  representation or warranty
               ----------------------------
made by or on behalf of the Company,  on the one hand, or the Purchaser,  on the
other hand, in this Agreement or in any certificate,  report or other instrument
delivered  under or  pursuant  to any term  hereof or in any of the  Transaction
Documents shall be untrue or misleading  (including by omission) in any material
respect as of the date of this Agreement (and not subsequently cured by Closing)
or as of the Closing Date or as of the date it was made, furnished or delivered,
or any  covenant  (whether  under  Section 6 or not) made by either party hereto
shall be breached by such party,  a Purchaser,  on the one hand, or the Company,
on the other  hand,  may  proceed to protect  and  enforce its rights by suit in
equity  or action  at law,  whether  for the  specific  performance  of any term
contained in this Agreement,  or in any certificate,  report or other instrument
delivered under or pursuant to any of the terms hereof or any of the Transaction
Documents or for an injunction  against the breach of any such term or in aid of
the  exercise of any power  granted in this  Agreement,  or in any  certificate,
report  or other  instrument  delivered  under or  pursuant  to any of the terms
hereof or any of the  Transaction  Documents,  or to enforce  any other legal or
equitable  right of a Purchaser,  on the one hand, or the Company,  on the other
hand, or to take any one or more of such actions.

          In the event a Purchaser  brings such an action against the Company or
the Company  brings  such an action  against the  Purchaser  arising  under this
Agreement, or under any certificate,  report or other instrument delivered under
or pursuant to any of the terms hereof or any of the Transaction Documents,  the
prevailing  party in such  dispute  shall be entitled to recover from the losing
party all fees,  costs and  expenses of enforcing  any right of such  prevailing
party  under  or  with  respect  to  this   Agreement  or  the   Certificate  of
Designations,  including,  without limitation, such reasonable fees and expenses
of attorneys and accountants.

          11.2 Cumulative  Remedies.  None of the  rights,  powers  or  remedies
               --------------------
conferred  upon a Purchaser  on the one hand,  or the Company on the other hand,
shall be  mutually  exclusive,  and each such  right,  power or remedy  shall be
cumulative  and in  addition  to every  other  right,  power or remedy,  whether
conferred  hereby or by the  Certificate  of  Designations  or now or  hereafter
available at law, in equity, by statute or otherwise.

          11.3 No  Implied  Waiver.   Except  as  expressly   provided  in  this
               -------------------
Agreement, no course of dealing between the Company and a Purchaser and no delay
in  exercising  any such  right,  power or  remedy  conferred  hereby  or by the
Certificate of Designations or now or hereafter existing at law or in equity, by
statute or otherwise,  shall operate as a waiver of, or otherwise prejudice, any
such right, power or remedy.

                                       36
<PAGE>

          12.  Miscellaneous.
               -------------

          12.1 Waivers and Amendments.  Upon the approval of the Company and the
               ----------------------
written consent of the Apollo  Purchasers (a) the obligations of the Company and
the rights of a Purchaser  under this Agreement may be waived (either  generally
or in a particular  instance,  either  retroactively or prospectively and either
for a specified period of time or  indefinitely),  and (b) the Company may enter
into a  supplementary  agreement for the purpose of adding any  provisions to or
changing in any manner or eliminating  any of the provisions of this  Agreement,
or of any  supplemental  agreement  or  modifying  in any  manner the rights and
obligations hereunder or thereunder of a Purchaser and the Company.

          The  foregoing   notwithstanding,   no  such  waiver  or  supplemental
agreement shall affect any of the rights of any holder of a Security  created by
the  Certificate of  Designations  or by the Delaware  General  Corporation  Law
without  compliance  with  all  applicable  provisions  of  the  Certificate  of
Designations and the Delaware General Corporation Law.

          Upon the  effectuation of each such waiver or supplemental  agreement,
the Company shall  promptly give written  notice  thereof to the  Purchasers who
have not previously consented thereto in writing.

          Neither  this  Agreement,  nor any  provision  hereof may be  changed,
waived,  discharged or terminated orally or by course of dealing,  but only by a
statement  in  writing  signed by the party  against  which  enforcement  of the
change,  waiver,  discharge  or  termination  is  sought,  except to the  extent
provided in this Section 12.1.

          12.2 Notices. All notices, requests, consents and other communications
               -------
required or permitted  hereunder shall be in writing and shall be hand delivered
or mailed postage prepaid by registered or certified mail,

                           (a)     If to the Apollo Purchasers:

                                   c/o Apollo Management IV, L.P.
                                   and Apollo Management V, L.P.
                                   1301 Avenue of the Americas
                                    38th Floor
                                   New York, NY 10019
                                   Attention:   Marc Rowan
                                   Fax: (212) 515-3262

                                   with a copy to:

                                   Akin, Gump, Strauss, Hauer & Feld, L.L.P.
                                   1333 New Hampshire Ave., N.W.
                                   Washington, D.C.  20036
                                   Attention:   Bruce S. Mendelsohn
                                   Fax: (202) 887-4288

                                       37
<PAGE>

                       or (b) If to the Company:

                                   AMC Entertainment Inc.
                                   106 West 14th Street
                                   P.O. Box 419615
                                   Kansas City, MO
                                   Attention:   Peter Brown
                                    Fax: (816) 480-2517

                                    with a copy to:

                                    Lathrop & Gage L.C.
                                    2345 Grand Boulevard
                                    Suite 2800
                                    Kansas City, MO 64108
                                    Attention:  Raymond F. Beagle, Jr.
                                    Fax: (816) 292-2001

                                    and a copy to:

                    Skadden, Arps, Slate, Meagher & Flom LLP
                                    4 Times Square
                                    New York, NY 10036
                                    Attention: Eileen T. Nugent
                                    Fax: (212) 735-2000


or at such other address as the Company or the Purchaser each may specify by
written notice to the other, and each such notice, request, consent and other
communication shall for all purposes of the Agreement be treated as being
effective or having been given when delivered if delivered personally, or, if
sent by mail, at the earlier of its receipt or 72 hours after the same has been
deposited in a regularly maintained receptacle for the deposit of United States
mail, addressed and postage prepaid as aforesaid.

          12.3 Termination of Agreement.  This Agreement may be terminated prior
               ------------------------
to the Closing as follows:

               (a)  by mutual consent of the Purchaser and the Company;

               (b)  at the  election of the  Company,  if any one or more of the
conditions to its  obligations  has not been  fulfilled as of 120 days following
the date hereof;

               (c)  at the election of the Purchaser,  if any one or more of the
conditions to its  obligations  has not been  fulfilled as of 120 days following
the date hereof;

               (d)  at  the  election  of the  Company,  if  the  Purchaser  has
breached any material representation,  warranty, covenant or agreement contained
in this Agreement and such breach is incapable of cure or is not cured within 30
days of notice of such breach is received by the breaching party;

                                       38
<PAGE>

               (e)  at  the  election  of the  Purchaser,  if  the  Company  has
breached any material representation,  warranty, covenant or agreement contained
in this Agreement and such breach is incapable of cure or is not cured within 30
days of notice of such breach is received by the breaching party; or

               (f)  at the  election  of the  Company  pursuant  to the terms of
Section 7.1.

          If the Closing  shall  occur,  this  Agreement  shall remain in effect
until the date  upon  which no Series A  Preferred  Stock or Series B  Preferred
Stock shall remain outstanding.

          In the event that the  Company or the  Purchaser,  as the case may be,
elects to terminate this  Agreement,  it shall deliver an irrevocable  notice to
the other party to this  Agreement  declaring its election to so terminate  this
Agreement in accordance  with the  provisions of this Section 12.3,  and setting
forth therein the basis for such termination.

          12.4 Indemnification.  The  Company  shall  indemnify,  save  and hold
               ---------------
harmless  the  Purchaser,   its  directors,   officers,   employees,   partners,
representatives  and Agents from and against any and all liability,  loss, cost,
damage,  reasonable  attorneys' and accountants' fees and expenses,  court costs
and all other  out-of-pocket  expenses  incurred by the  Purchaser in connection
with or arising from the execution,  delivery and  performance by the Company of
this Agreement and each of the other Transaction  Documents and the transactions
contemplated  thereby,  except to the extent of any willful  misconduct or gross
negligence of Apollo or the indemnified  party. This  indemnification  provision
shall be in addition to the rights of the  Purchaser to bring an action  against
the  Company  for  breach  of any term of this  Agreement  and any of the  other
Transaction Documents.

          12.5 Survival   of    Representations    and   Warranties   etc.   All
               -----------------------------------------------------------
representations  and warranties  made in, pursuant to or in connection with this
Agreement  shall survive until sixty (60) days  following the delivery to Apollo
of the final audited  consolidated  financial  statements of the Company for the
year ended March 30, 2001  (provided,  however,  that the provisions of Sections
4.2,  4.18,  4.19,  and 4.26 shall survive until the conversion or redemption of
all  of  the  outstanding  shares  of  Preferred  Stock),   notwithstanding  any
investigation  at any time made by or on behalf of the  Purchaser,  and the sale
and  purchase of the shares of  Preferred  Stock and payment  therefor;  and all
statements  contained in any certificate,  instrument or other writing delivered
by or on behalf of the  Company  pursuant  hereto  or in  connection  with or in
contemplation  of  the  transactions   herein   contemplated   shall  constitute
representations and warranties by the Company hereunder.

          If this  Agreement is  terminated  and the  transactions  contemplated
hereby are not consummated as described above,  this Agreement shall become void
and of no further  force and effect.  None of the parties  hereto shall have any
liability in respect of a termination  of this  Agreement,  except to the extent
that failure to satisfy the  conditions  set forth in Sections  5.1, 5.2 and 5.3
results  from the  intentional  or  willful  violation  of the  representations,
warranties, covenants or agreements of such party under this Agreement.

                                       39
<PAGE>

          12.6 Severability.  Should any one or more of the  provisions  of this
               ------------
Agreement  or of any  agreement  entered  into  pursuant  to this  Agreement  be
determined  to be  illegal  or  unenforceable,  all  other  provisions  of  this
Agreement and of each other  agreement  entered into pursuant to this  Agreement
shall be given effect separately from the provision or provisions  determined to
be illegal or unenforceable and shall not be affected thereby.

          12.7 Parties  in  Interest.  All  the  terms  and  provisions  of this
               ---------------------
Agreement  shall be binding upon and inure to the benefit of and be  enforceable
by the respective  parties hereto,  the successors and assigns of the Purchasers
and the Company,  whether so expressed or not. This  Agreement  shall not run to
the benefit of or be enforceable by any other Person.

          12.8 Successors and Assigns.  Except as otherwise  expressly  provided
               ----------------------
herein,  the  provisions  hereof  shall  inure to the benefit of, and be binding
upon,  the  successors,  assigns,  heirs,  executors and  administrators  of the
parties  hereto and shall  inure to the  benefit of and be  enforceable  by each
person  who  shall be a holder  of  shares of the  Preferred  Stock  and/or  the
Conversion Shares.

          12.9 Assignment and  Transfers.  This Agreement can be assigned by the
               -------------------------
Apollo  Purchasers  to any  Affiliate  of Apollo  over  which  Apollo  exercises
investment  authority,  including with respect to voting and dispositive rights;
provided,  any such assignee  assumes the obligations of the assignor  hereunder
and agrees in writing to be bound by the terms of the  Transaction  Documents in
the same  manner  as the  assignor.  In  addition,  without  limiting  any other
provisions  of this  Agreement,  the shares of  Preferred  Stock or Common Stock
issued pursuant to this Agreement shall be freely  transferable to any Affiliate
of Apollo, subject to the terms of the Standstill Agreement.

          12.10Headings.  The headings of the Sections  and  paragraphs  of this
               --------
Agreement  have been  inserted  for  convenience  of  reference  only and do not
constitute a part of this Agreement.

          12.10Governing  Law;  Jurisdiction;  Venue;  Process.  THIS  AGREEMENT
               -----------------------------------------------
               SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
               THE  STATE OF NEW YORK  WITHOUT  REGARD  TO ANY  CHOICE OF LAW OR
               CONFLICT  OF  LAW   PROVISION   OR  RULE  THAT  WOULD  CAUSE  THE
               APPLICATION OF THE LAWS OF ANY JURISDICTION  OTHER THAN THE STATE
               OF NEW YORK. Any legal or equitable action or proceeding  arising
               out  of  or  in  connection   with  this   Agreement  or  in  any
               certificate,  report  or  other  instrument  delivered  under  or
               pursuant to any term hereof or any of the  Transaction  Documents
               shall be brought  in the courts of the State of New York,  in the
               county  and city of New  York or of the  United  States  District
               Court for the Southern District of New York, and by execution and
               delivery of this Agreement, the parties hereby irrevocably accept
               for  themselves and in respect of their  property,  generally and
               unconditionally,  the  exclusive  jurisdiction  of the  aforesaid
               courts.  The parties hereby irrevocably waive any objection which
               they may now or hereafter have to laying of jurisdiction or venue
               of any actions or  proceedings  arising  out of or in  connection
               with  this  Agreement  or in any  certificate,  report  or  other
               instrument  delivered under or pursuant to any term hereof or any

                                       40
<PAGE>

               of the  Transaction  Documents  brought in the courts referred to
               above and hereby  further  irrevocably  waive and  agree,  not to
               plead  or  claim  in any such  court  that  any  such  action  or
               proceeding has been brought in an inconvenient forum. The parties
               further agree that thc mailing by certified or  registered  mail,
               return  receipt  requested,  of any process  required by any such
               court  shall  constitute  valid and  lawful  service  of  process
               against  them,  without  necessity for service by any other means
               provided by statute or rule of court.

          12.12 Fees and Expenses.
                -----------------


          (a)  The  Company   agrees,   subject  to  the   consummation  of  the
transactions  contemplated  hereby to pay, and hold the Purchasers harmless from
liability  for  the  payment  of,  all   reasonable   expenses,   including  all
out-of-pocket  expenses,  incurred  by the  Purchasers  in  connection  with the
preparation  and  negotiation  of  this  Agreement,  and the  other  Transaction
Documents,  the other  supporting  documents  referred  to in  Section 5 of this
Agreement,  and the  consummation of the  transactions  contemplated  hereby and
thereby. Notwithstanding the foregoing or anything else in this Agreement to the
contrary, the Company shall not be required to reimburse the Purchasers for more
than  $125,000  in filing  fees (plus  reasonable  legal  expenses  incurred  in
connection  with the  preparation  of one filing) for all filings  under the HSR
Act.

          (b)  Upon Closing, the Company agrees to pay Apollo or their designees
a fee equal to three and one half percent (3.50%) of the Purchase Price.

          12.13HSR  Act.  The  Company  and  each  Purchaser  required  to  file
               --------
notification  under the HSR Act with  respect to the  acquisition  by holders of
Series B Preferred Stock of a present right to vote in the election of directors
of the Company, whether pursuant to the terms of Section 9(a) of the Certificate
of  Designations  or prior to exchange of Series B Preferred  Stock for Series A
Preferred  Stock pursuant to Section 7 of the  Certificate of  Designations  (an
"HSR  Conversion"),  shall  file  notification  under the HSR Act within 30 days
after the Initial  Issuance  and the waiting  period  shall have expired or been
terminated prior to any HSR Conversion being  consummated,  notwithstanding  any
provision of this Agreement or the Certificate of Designations to the contrary.

          12.14Counterparts.  This  Agreement  may be  executed in any number of
               ------------
counterparts and by different parties hereto in separate counterparts,  with the
same  effect  as  if  all  parties  had  signed  the  same  document.  All  such
counterparts shall be deemed an original,  shall be construed together and shall
constitute one and the same instrument.

          12.15Entire  Agreement.  This  Agreement  and  the  other  Transaction
               -----------------
Documents  contain the entire agreement among the parties hereto with respect to
the subject matter hereof and such  Agreement  supersedes and replaces all other
prior  agreements,  written or oral among the parties hereto with respect to the
subject matter hereof.

                                       41
<PAGE>


          IN WITNESS  WHEREOF,  the parties  hereto have caused this  Investment
Agreement to be duly executed as of the day and year first above written.

         AMC ENTERTAINMENT INC.


         By:      /S/ PETER C. BROWN
                  -----------------------------------------------------
                  Name:    Peter C. Brown
                  Title:   Chairman of the Board,  President  and Chief
                           Executive Officer


                                       42
<PAGE>


         APOLLO INVESTMENT FUND IV, L.P.

         By:      APOLLO ADVISORS IV, L.P.
                  its general partner

         By:      Apollo Capital Management IV, Inc.
                  its general partner

         By:      /S/ MARC ROWAN
                  -----------------------------------------------------
                  Name:    Marc Rowan
                  Title:   Vice President

         APOLLO OVERSEAS PARTNERS IV, L.P.

         By:      APOLLO ADVISORS IV, L.P.
                  its managing general partner

         By:      Apollo Capital Management IV, Inc.
                  its general partner

         By:      /S/ MARC ROWAN
                  -----------------------------------------------------
                  Name:    Marc Rowan
                  Title:   Vice President

         APOLLO MANAGEMENT IV, L.P.
         in its capacity as investment manager to
         Apollo Investment Fund IV, L.P.

         By:      AIF IV Management, Inc.

         By:      /S/ MARC ROWAN
                  -----------------------------------------------------
                  Name:    Marc Rowan
                  Title:   Vice President

                                       43
<PAGE>





         APOLLO INVESTMENT FUND V, L.P.

         By:      APOLLO ADVISORS V, L.P.
                  its general partner

         By:      Apollo Capital Management V, Inc.
                  its general partner

         By:      /S/ MARC ROWAN
                  -----------------------------------------------------
                  Name:    Marc Rowan
                  Title:   Vice President

         APOLLO OVERSEAS PARTNERS V, L.P.

         By:      APOLLO ADVISORS V, L.P.
                  its managing general partner

         By:      Apollo Capital Management V, Inc.
                  its general partner

         By:      /S/ MARC ROWAN
                  -----------------------------------------------------
                  Name:    Marc Rowan
                  Title:   Vice President

         APOLLO MANAGEMENT V, L.P.
         in its capacity as investment manager to
         Apollo Investment Fund V, L.P.

         By:      AIF V Management, Inc.

         By:      /S/ MARC ROWAN
                  -----------------------------------------------------
                  Name:    Marc Rowan
                  Title:   Vice President


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