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                                                                    Exhibit 10.4

                           NATIONAL AUTO CREDIT, INC.
                                   LETTERHEAD


April 5, 2000

James J. Cotter, Chairman
Reading Entertainment, Inc.
One Penn Square West
30 South Fifteenth Street, Suite 1300
Philadelphia, Pennsylvania 19103-4831

         Re:      Acquisition of Domestic Cinema Assets

Dear Mr. Cotter:

As we have discussed, National Auto Credit, Inc. ("National") is interested in
entering into the motion picture exhibition business in the United States
through its wholly-owned subsidiary National Cinemas, Inc. ("National Cinemas").
National and National Cinemas have entered into an agreement (the "Angelika
Agreement") with Reading Entertainment, Inc. ("RDG" and collectively with its
consolidated subsidiaries, "Reading") to acquire a 50% membership interest in
Angelika Film Centers, LLC ("AFC"). The purpose of this letter is to set out the
terms under which Reading has agreed to grant to National an option to acquire
the remainder of Reading's domestic cinema assets.

A. THE OPTION FEE: Promptly following the execution and delivery of this letter
agreement, National will transfer to Reading the sum of $500,000, in
consideration of the rights granted by Reading to National pursuant to this
letter agreement.

B. THE ASSETS COVERED: In consideration of the payment of this fee, National
will have the option, as described hereinbelow, to acquire the following assets:

         1.       THE CITY CINEMAS RIGHTS: These are the rights held by Reading
                  under that certain Agreement in Principle between RDG, James
                  J. Cotter and Michael Forman dated December 2, 1998, a copy of
                  which is appended as Appendix A to this letter (the "City
                  Cinemas Agreement"), other than the right to acquire the 1/6th
                  interest in AFC and the right to acquire by merger Off
                  Broadway, Inc. described in that Agreement in Principle. The
                  purchase price of this asset will be an amount equal to
                  Reading's transaction costs with respect to such transaction
                  (including reimbursement of the $1 million deposit previously
                  made by Reading and which counts as a credit against the
                  option fee specified in the City Cinemas Agreement).

         2.       THE DOMESTIC CINEMA ASSETS: These include the following cinema
                  assets:



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                  a)       The remaining interest held by Reading in AFC
                           (including the interest being acquired pursuant to
                           the City Cinemas Agreement);
                  b)       The Angelika Film Center Houston (Houston, Texas);
                  c)       The Reading Mansville 12 (Mansville, New Jersey);
                  d)       The St. Anthony Main (Minneapolis, Minnesota);
                  e)       The Tower Cinema (Sacramento, California);
                  f)       The Angelika Film Center Buffalo (Buffalo, New York);
                           and
                  g)       The Angelika Film Center Dallas (under development in
                           Dallas, Texas).

                  Provided, that Reading is currently in negotiations with
                  respect to the Angelika Film Center Buffalo, and may terminate
                  its rights and obligations with respect to such cinema complex
                  if it is not satisfied with the results of such negotiation.

                  The purchase price of the Domestic Cinema Assets will be as
                  follows:

                  a)       With respect to the remaining interest in AFC, the
                           amount of $13.5 million;
                  b)       With respect to the cinemas at Houston, Mansville,
                           Minneapolis, Sacramento and Buffalo, the lesser of
                           Reading's historic cost basis in such assets and the
                           fair market value of such cinemas (such fair market
                           value to be determined, in the event of dispute
                           between the parties, by binding arbitration under the
                           rules of the American Arbitration Association); and
                  c)       With respect to the cinema under development in
                           Dallas, Reading's cost basis in such asset.

C. EXERCISE OPTION: National will have a period of sixty (60) days, through and
including June 5, 2000 in which to determine whether or not it wishes to proceed
with the acquisition of the City Cinema Rights and the Domestic Cinema Assets.
National shall have the right to extend the sixty (60) day period provided in
the immediately preceding sentence for up to two (2) additional periods of
thirty (30) days, by written notice to Reading given on or before the expiration
of such sixty (60) day period (or extension thereof) accompanied by payment to
Reading of $100,000 in immediately available funds for each such thirty (30) day
extension. If National determines that it wishes to exercise the option, it will
give written notice of that election to Reading within this period. Thereafter,
National and Reading will cooperate and work in good faith to complete the
definitive documentation necessary to complete the transaction, with an
intention to close such transactions within sixty (60) days of the date of such
election. Closing shall be subject to compliance with the Hart-Scott-Rodino
Antitrust Improvements Act.

D. CITADEL OFFER: In the event that National elects to exercise the Option that
is the subject of this letter agreement, National will offer to Citadel Holding
Corporation ("Citadel") the right to form a joint venture with National or
National Cinemas (as the case may be) to acquire the City Cinemas Rights and the
Domestic Cinema Assets. The joint venture would be structured as a Delaware
limited liability company, and would be generally on the terms set out

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in Appendix B to this letter. Citadel will have until the later of (i) thirty
(30) days following the date on which National offers Citadel such right and
(ii) two (2) business days following the date on which National notifies Citadel
(by copy of its notice to Reading) whether it elects to exercise the option
granted to National by RDG and FA, Inc. by letter of even date herewith to
purchase the additional 1/3 Membership Interest in AFC held by FA, Inc., in
which to elect in writing to accept such offer. Thereafter, if Citadel elects to
accept such offer, National and Citadel will cooperate and work in good faith to
complete the definitive documentation necessary to complete the transaction
within the time periods specified above. If Citadel has elected to participate
in the joint venture and then fails for any reason, other than default by
National or National Cinemas, to close, National will be entitled, at its
option, within ten (10) business days of such default, to revoke through written
notice to Reading, its exercise of the option to acquire the city Cinema Rights
and the Domestic Cinema Assets.

E. EXCLUSIVITY: Reading agrees to deal exclusively with National during the term
of this option; provided, however, that Reading will be entitled to continue its
negotiations with Citadel and to enter into agreements with Citadel with respect
to the City Cinema Rights and the Domestic Cinema Assets, so long as any
agreements entered into with Citadel are entered into subject to the rights of
National under this letter agreement. National also acknowledges and agrees that
Reading may elect to dispose of its interest in the Angelika Film Center Buffalo
separate from this agreement.

F. RETURN OF OPTION FEE: In the event of failure to close the acquisition of the
City Cinemas Rights and the Domestic Cinema Assets due to default on the part of
Reading, National will be entitled to a refund of the option fee. In all other
cases, such fee will be deemed fully earned by Reading upon the execution and
delivery of this letter agreement by Reading.

G. FORM AND PAYMENT OF THE PURCHASE PRICE: The purchase price will be paid in
full at the Closing by wire transfer of currently available funds. In the event
of such a closing, the option fee will be credited to the purchase
price(including any fee paid for the extension thereof).



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Should you have any questions, please feel free to contact me at (440) 349-1000.

Sincerely,



David L. Huber
Chairman of the Board and
Chief Executive Officer

ACCEPTED AND AGREED
AS OF THIS _____ DAY
OF APRIL, 2000.

READING ENTERTAINMENT, INC.

By:
     --------------------------------

Its:
     --------------------------------


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