Document:

<PAGE>

                           PERSONAL AND CONFIDENTIAL
                                                                   EXHIBIT 10.37

October 28, 1999

Mr. James J. Cotter
Chairman & CEO
Craig Corporation

This memo will set out the details of the job offer discussed between us in our
meetings of October 21 and October 27, 1999.

Position Description:  CFO Craig Corporation
                       CFO Citadel Holding Corporation
                       CAO Reading Entertainment, Inc.

Reporting To:          James J. Cotter, Chairman & CEO

Main Responsibilities: All financial and administrative functions for the above
                       mentioned three (3) Companies with reporting lines from
                       all finance/accounting Managers in the various
                       subsidiaries.

Salary:                Base salary $180,000/annum

Bonus:                 Unconditional - 12,0000/annum

                       Conditional - 25% of base salary.
                       In the first year, conditional bonus will be conditioned
                       on the successful transfer of the finance group from
                       Philadelphia to California.

                       Signing Bonus - $40,0000 payable on starting date.

Interest Free Loan:    $33,000 payable on starting date.  This amount will be
                       repaid on the date of my leaving Craig Corporation
                       employment, at which time a $50,000 leaving bonus will be
                       paid to offset the loan.
<PAGE>

James J. Cotter
Craig Corporation
October 28, 1999
Page 2

Leaving Bonus:         In the event of termination of employment for other than
                       unlawful causes, a 6-month base salary will be paid.

Stock Options:         30,000 stock options from Craig Corporation.
                       30,000 stock options from Citadel Holding Corporation.

                       The above stock options will be deeded to me on the
                       starting date. These 60,000 stock options will vest in
                       the following manner:

                       -  30,000 shares at the end of 12 months from start of
                          employment.
                       -  10,000 shares at the end of 24 months from start of
                          employment.
                       -  10,000 shares at the end of 36 months from start of
                          employment.
                       -  10,000 shares at the end of 48 months from start of
                          employment.

Company Car:           A company car will be available for this position valued
                       at $1000/month for the total package.

401K Contribution:     The Company will contribute a matching amount of 3% of
                       total pay (salary & unconditional and conditional bonus)
                       into the 401K Plan.

Vacation:              Official vacation of 2 weeks/annum.
                       3 weeks after 5 years, however, flexibility will be
                       available at the discretion of the Chairman/CEO.

Medical:               Benefits to be the same as currently being enjoyed under
                       the Beckman Coulter, Inc. Plan for medical, dental and
                       vision and will be reimbursed by the Company.

Incidentals:           Parking fees will be paid by the Company.
                       Cellular phone and internet connection at home will be
                       paid by the Company.
                       Normal business expenses will be reimbursed.

Starting date:         ASAP
<PAGE>

James J. Cotter
Craig Corporation
October 28, 1999
Page 3

Based on the above, if this is acceptable to you, can you please sign and refax
back to me at (714) 508-5726.

ACCEPTED:                 ________________________________
                          James J. Cotter
                          Chairman and CEO

Best regards,

Andrzej Matyczynski<PAGE>

                                                                   Exhibit 10.38

                            1999 STOCK OPTION PLAN
                                      OF
                          CITADEL HOLDING CORPORATION

1.   PURPOSES OF THE PLAN
     --------------------

     The purposes of the 1999 Stock Option Plan ("Plan") of Citadel Holding
Corporation, a Delaware corporation (the "Company"), are to:

               (a)  Encourage selected employees, directors and consultants to
improve operations and increase profits of the Company;

               (b)  Encourage selected employees, directors and consultants to
accept or continue employment or association with the Company or its Affiliates;
and

               (c)  Increase the interest of selected employees, directors and
consultants in the Company's welfare through participation in the growth in
value of the common stock of the Company (the "Common Stock").

     Options granted under this Plan ("Options") may be "incentive stock
options" ("ISOs") intended to satisfy the requirements of Section 422 of the
Internal Revenue Code of 1986, as amended, and the regulations thereunder (the
"Code"), or "nonqualified options" ("NQOs").

2.   ELIGIBLE PERSONS
     ----------------

     Every person who at the date of grant of an Option is an employee of the
Company or of any Affiliate (as defined below) of the Company is eligible to
receive NQOs or ISOs under this Plan.  Every person who at the date of grant is
a consultant to, or non-employee director of, the Company or any Affiliate (as
defined below) of the Company is eligible to receive NQOs under this Plan.  The
term "Affiliate" as used in this Plan means a parent or subsidiary corporation
as defined in the applicable provisions (currently Sections 424(e) and (f),
respectively) of the Code.  The term "employee" includes an officer or director
who is an employee of the Company.  The term "consultant" includes persons
employed by, or otherwise affiliated with, a consultant.

                                 Page 1 of 10
<PAGE>

3.   STOCK SUBJECT TO THIS PLAN; MAXIMUM NUMBER OF GRANTS
     ----------------------------------------------------

     Subject to the provisions of Section 6.1.1 of this Plan, the total number
of shares of stock which may be issued under Options granted pursuant to this
Plan shall not exceed 666,000 shares of Common Stock.  The shares covered by the
portion of any grant under this Plan which expires, terminates or is cancelled
unexercised shall become available again for grants under this Plan.  Where the
exercise price of an Option is paid by means of the optionee's surrender of
previously owned shares of Common Stock or the Company's withholding of shares
otherwise issuable upon exercise of the Option as permitted herein, only the net
number of shares issued and which remain outstanding in connection with such
exercise shall be deemed "issued" and no longer available for issuance under
this Plan.  No eligible person shall be granted Options during any twelve-month
period covering more than 100,000 shares.

4.   ADMINISTRATION
     --------------

               (a)  This Plan shall be administered by the Board of Directors of
the Company (the "Board") or by a committee (the "Committee") to which
administration of this Plan, or of part of this Plan, is delegated by the Board
(in either case, the "Administrator"). The Board shall appoint and remove
members of the Committee in its discretion in accordance with applicable laws.
If necessary in order to comply with Rule 16b-3 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and Section 162(m) of the Code,
the Committee shall, in the Board's discretion, be comprised solely of "non-
employee directors" within the meaning of said Rule 16b-3 and "outside
directors" within the meaning of Section 162(m) of the Code. The foregoing
notwithstanding, the Administrator may delegate nondiscretionary administrative
duties to such employees of the Company as it deems proper and the Board, in its
absolute discretion, may at any time and from time to time exercise any and all
rights and duties of the Administrator under this Plan.

               (b)  Subject to the other provisions of this Plan, the
Administrator shall have the authority, in its discretion: (i) to grant Options;
(ii) to determine the fair market value of the Common Stock subject to Options;
(iii) to determine the exercise price of Options granted; (iv) to determine the
persons to whom, and the time or times at which, Options shall be granted, and
the number of shares subject to each Option; (v) to construe and interpret the
terms and provisions of this Plan and of any option agreement and all Options
granted under this Plan; (vi) to prescribe, amend, and rescind rules and
regulations relating to this Plan; (vii) to determine the terms and provisions
of each Option granted (which need not be identical), including but not limited
to, the time or times at which Options shall be exercisable; (viii) with the
consent of the optionee, to modify or amend any Option; (ix) to reduce the
exercise price of any Option; (x) to accelerate or defer (with the consent of
the optionee) the exercise date of any Option; (xi) to authorize any person to
execute on behalf of the Company any instrument evidencing the grant of an
Option; and (xii) to

                                 Page 2 of 10
<PAGE>

make all other determinations deemed necessary or advisable for the
administration of this Plan or any option agreement or Option. The Administrator
may delegate nondiscretionary administrative duties to such employees of the
Company as it deems proper.

               (c)  All questions of interpretation, implementation, and
application of this Plan or any option agreement or Option shall be determined
by the Administrator, which determination shall be final and binding on all
persons.

5.   GRANTING OF OPTIONS; OPTION AGREEMENT
     -------------------------------------

               (a)  No Options shall be granted under this Plan after 10 years
from the date of adoption of this Plan by the Board.

               (b)  Each Option shall be evidenced by a written stock option
agreement, in form satisfactory to the Administrator, executed by the Company
and the person to whom such Option is granted. In the event of a conflict
between the terms or conditions of an option agreement and the terms and
conditions of this Plan, the terms and conditions of this Plan shall govern.

               (c)  The stock option agreement shall specify whether each Option
it evidences is an NQO or an ISO, provided, however, all Options granted under
this Plan to non-employee directors and consultants of the Company are intended
to be NQOs.

               (d)  Subject to Section 6.3.3 with respect to ISOs, the
Administrator may approve the grant of Options under this Plan to persons who
are expected to become employees, directors or consultants of the Company, but
are not employees, directors or consultants at the date of approval, and the
date of approval shall be deemed to be the date of grant unless otherwise
specified by the Administrator.

                                 Page 3 of 10
<PAGE>

6.   TERMS AND CONDITIONS OF OPTIONS
     -------------------------------

     Each Option granted under this Plan shall be subject to the terms and
conditions set forth in Section 6.1.   NQOs shall be also subject to the terms
and conditions set forth in Section 6.2, but not those set forth in Section 6.3.
ISOs shall also be subject to the terms and conditions set forth in Section 6.3,
but not those set forth in Section 6.2.

     6.1  Terms and Conditions to Which All Options Are Subject.  All Options
          -----------------------------------------------------
granted under this Plan shall be subject to the following terms and conditions:

          6.1.1  Changes in Capital Structure.  Subject to Section 6.1.2, if
                 ----------------------------
the stock of the Company is changed by reason of a stock split, reverse stock
split, stock dividend, recapitalization, combination or reclassification, or if
the Company effects a spin-off of the Company's subsidiary, appropriate
adjustments shall be made by the Board, in its sole discretion, in (a) the
number and class of shares of stock subject to this Plan and each Option
outstanding under this Plan, and (b) the exercise price of each outstanding
Option; provided, however, that the Company shall not be required to issue
fractional shares as a result of any such adjustments.

          6.1.2  Corporate Transactions.  In the event of a Corporate
                 ----------------------
Transaction (as defined below), the Administrator shall notify each optionee at
least 30 days prior thereto or as soon as may be practicable. To the extent not
previously exercised, all Options shall terminate immediately prior to the
consummation of such Corporate Transaction unless the Administrator determines
otherwise in its sole discretion; provided, however, that the Administrator, in
its sole discretion, may permit exercise of any Options prior to their
termination, even if such Options would not otherwise have been exercisable. The
Administrator may, in its sole discretion, provide that all outstanding Options
shall be assumed or an equivalent option substituted by an applicable successor
corporation or any Affiliate of the successor corporation in the event of a
Corporate Transaction. A "Corporate Transaction" means a liquidation or
dissolution of the Company, a merger or consolidation of the Company with or
into another corporation or entity, a sale of all or substantially all of the
assets of the Company, or a purchase of more than 50 percent of the outstanding
capital stock of the Company in a single transaction or a series of related
transactions by one person or more than one person acting in concert.

6.1.3  Time of Option Exercise.  Subject to Section 5 and Section 6.3.4, an
       -----------------------
Option granted under this Plan shall be exercisable (a) immediately as of the
effective date of the stock option agreement granting the Option, or (b) in
accordance with a schedule or performance criteria as may be set by the
Administrator and specified in the written stock option agreement relating to
such Option.  In any case, no Option shall be exercisable until a written stock
option agreement in form satisfactory to the Company is executed by the Company
and the optionee.

                                 Page 4 of 10
<PAGE>

          6.1.4  Option Grant Date.  The date of grant of an Option under this
                 -----------------
Plan shall be the effective date of the stock option agreement granting the
Option.

          6.1.5  Nontransferability of Option Rights.  Except with the express
                 -----------------------------------
written approval of the Administrator which approval the Administrator is
authorized to give only with respect to NQOs, no Option granted under this Plan
shall be assignable or otherwise transferable by the optionee except by will or
by the laws of descent and distribution. During the life of the optionee, an
Option shall be exercisable only by the optionee.

          6.1.6  Payment.  Except as provided below, payment in full, in cash,
                 -------
shall be made for all stock purchased at the time written notice of exercise of
an Option is given to the Company, and proceeds of any payment shall constitute
general funds of the Company. The Administrator, in the exercise of its absolute
discretion after considering any tax, accounting and financial consequences, may
authorize any one or more of the following additional methods of payment:

                 (a)  Acceptance of the optionee's full recourse promissory note
for all or part of the Option price, payable on such terms and bearing such
interest rate as determined by the Administrator (but in no event less than the
minimum interest rate specified under the Code at which no additional interest
or original issue discount would be imputed), which promissory note may be
either secured or unsecured in such manner as the Administrator shall approve
(including, without limitation, by a security interest in the shares of the
Company);

                 (b)  Subject to the discretion of the Administrator and the
terms of the stock option agreement granting the Option, delivery by the
optionee of shares of Common Stock already owned by the optionee for all or part
of the Option price, provided the fair market value (determined as set forth in
Section 6.1.9) of such shares of Common Stock is equal on the date of exercise
to the Option price, or such portion thereof as the optionee is authorized to
pay by delivery of such stock;

                 (c)  Subject to the discretion of the Administrator, through
the surrender of shares of Common Stock then issuable upon exercise of the
Option, provided the fair market value (determined as set forth in Section
6.1.9) of such shares of Common Stock is equal on the date of exercise to the
Option price, or such portion thereof as the optionee is authorized to pay by
surrender of such stock; and

                 (d)  By means of so-called cashless exercises as permitted
under applicable rules and regulations of the Securities and Exchange Commission
and the Federal Reserve Board.

          6.1.7  Withholding and Employment Taxes.  In the case of an employee
                 --------------------------------
exercising an NQO, at the time of exercise and as a condition thereto, or at
such other time as the amount of such obligation becomes determinable, the
optionee

                                 Page 5 of 10
<PAGE>

shall remit to the Company in cash all applicable federal and state withholding
and employment taxes. Such obligation to remit may be satisfied, if authorized
by the Administrator in its sole discretion, after considering any tax,
accounting and financial consequences, by the optionee's (i) delivery of a
promissory note in the required amount on such terms as the Administrator deems
appropriate, (ii) tendering to the Company previously owned shares of Common
Stock or other securities of the Company with a fair market value equal to the
required amount, or (iii) agreeing to have shares of Common Stock (with a fair
market value equal to the required amount) which are acquired upon exercise of
the Option withheld by the Company.

          6.1.8  Other Provisions.  Each Option granted under this Plan may
                 ----------------
contain such other terms, provisions, and conditions not inconsistent with this
Plan as may be determined by the Administrator, and each ISO granted under this
Plan shall include such provisions and conditions as are necessary to qualify
the Option as an "incentive stock option" within the meaning of Section 422 of
the Code.

          6.1.9  Determination of Value.  For purposes of this Plan, the fair
                 ----------------------
market value of Common Stock or other securities of the Company shall be
determined as follows:

                 (a)  If the stock of the Company is listed on a securities
exchange or is regularly quoted by a recognized securities dealer, and selling
prices are reported, its fair market value shall be either, as determined by the
Administrator, (i) the closing price of such stock on the date the value is to
be determined, or (ii) the average closing price of such stock over such number
of trading days (not to exceed ten (10) trading days) immediately preceding the
date the value is to be determined, as determined by the Administrator, but if
selling prices are not reported, its fair market value shall be the mean between
the high bid and low asked prices for such stock on the date the value is to be
determined (or if there are no quoted prices for the date of grant, then for the
last preceding business day on which there were quoted prices).

                 (b)  In the absence of an established market for the stock, the
fair market value thereof shall be determined in good faith by the
Administrator, with reference to the Company's net worth, prospective earning
power, dividend-paying capacity, and other relevant factors, including the
goodwill of the Company, the economic outlook in the Company's industry, the
Company's position in the industry, the Company's management, and the values of
stock of other corporations in the same or a similar line of business.

          6.1.10    Option Term.  Subject to Section 6.3.4, no Option shall be
                    -----------
exercisable more than 10 years after the date of grant, or such lesser period of
time as is set forth in the stock option agreement (the end of the maximum
exercise period stated in the stock option agreement is referred to in this Plan
as the "Expiration Date").

                                 Page 6 of 10
<PAGE>

     6.2  Terms and Conditions to Which Only NQOs Are Subject.  Options granted
          ---------------------------------------------------
under this Plan which are designated as NQOs shall be subject to the following
terms and conditions:

          6.2.1  Exercise Price.  (a)  The exercise price of an NQO shall be
                 --------------
the amount determined by the Administrator as specified in the option agreement.

                 (a)  To the extent required by applicable laws, rules and
regulations, the exercise price of an NQO granted to any person who owns,
directly or by attribution under the Code (currently Section 424(d)), stock
possessing more than ten percent of the total combined voting power of all
classes of stock of the Company or of any Affiliate (a "Ten Percent
Stockholder") shall in no event be less than 110% of the fair market value
(determined in accordance with Section 6.1.9) of the stock covered by the Option
at the time the Option is granted.

          6.2.2  Termination of Employment.  Except as otherwise provided in
                 -------------------------
the stock option agreement, if for any reason an optionee ceases to be employed
by the Company or any of its Affiliates, Options that are NQOs held at the date
of termination (to the extent then exercisable) may be exercised in whole or in
part at any time within 90 days of the date of such termination or such longer
period as the Administrator may approve (but in no event after the Expiration
Date). For purposes of this Section 6.2.2, "employment" includes service as a
director or as a consultant. For purposes of this Section 6.2.2, an optionee's
employment shall not be deemed to terminate by reason of sick leave, military
leave or other leave of absence approved by the Administrator, if the period of
any such leave does not exceed 90 days or, if longer, if the optionee's right to
reemployment by the Company or any Affiliate is guaranteed either contractually
or by statute.

     6.3  Terms and Conditions to Which Only ISOs Are Subject. Options granted
          ---------------------------------------------------
under this Plan which are designated as ISOs shall be subject to the following
terms and conditions:

          6.3.1  Exercise Price.  (a)  The exercise price of an ISO shall be
                 --------------
not less than the fair market value (determined in accordance with Section
6.1.9) of the stock covered by the Option at the time the Option is granted.

                 (a)  The exercise price of an ISO granted to any Ten Percent
Stockholder shall in no event be less than 110% of the fair market value
(determined in accordance with Section 6.1.9) of the stock covered by the Option
at the time the Option is granted.

          6.3.2  Disqualifying Dispositions.  If stock acquired by exercise of
                 --------------------------
an ISO granted pursuant to this Plan is disposed of in a "disqualifying
disposition" within the meaning of Section 422 of the Code (a disposition within
two years from the date of grant of the Option or within one year after the
transfer of such stock on exercise of the

                                 Page 7 of 10
<PAGE>

Option), the holder of the stock immediately before the disposition shall
promptly notify the Company in writing of the date and terms of the disposition
and shall provide such other information regarding the Option as the Company may
reasonably require.

          6.3.3  Grant Date.  If an ISO is granted in anticipation of
                 ----------
employment as provided in Section 5(d), the Option shall be deemed granted,
without further approval, on the date the grantee assumes the employment
relationship forming the basis for such grant, and, in addition, satisfies all
requirements of this Plan for Options granted on that date.

          6.3.4  Term.  Notwithstanding Section 6.1.10, no ISO granted to any
                 ----
Ten Percent Stockholder shall be exercisable more than five years after the date
of grant.

          6.3.5  Termination of Employment.  Except as otherwise provided in
                 -------------------------
the stock option agreement, if for any reason an optionee ceases to be employed
by the Company or any of its Affiliates, Options that are ISOs held at the date
of termination (to the extent then exercisable) may be exercised in whole or in
part at any time within 90 days of the date of such termination or such longer
period as the Administrator may approve (but in no event after the Expiration
Date). For purposes of this Section 6.3.5, an optionee's employment shall not be
deemed to terminate by reason of sick leave, military leave or other leave of
absence approved by the Administrator, if the period of any such leave does not
exceed 90 days or, if longer, if the optionee's right to reemployment by the
Company or any Affiliate is guaranteed either contractually or by statute.

7.   MANNER OF EXERCISE
     ------------------

                 (a)  An optionee wishing to exercise an Option shall give
written notice to the Company at its principal executive office, to the
attention of the officer of the Company designated by the Administrator,
accompanied by payment of the exercise price and withholding taxes as provided
in Sections 6.1.6 and 6.1.7. The date the Company receives written notice of an
exercise hereunder accompanied by payment of the exercise price will be
considered as the date such Option was exercised.

                 (b)  Promptly after receipt of written notice of exercise of an
Option and the payments called for by Section 7(a), the Company shall, without
stock issue or transfer taxes to the optionee or other person entitled to
exercise the Option, deliver to the optionee or such other person a certificate
or certificates for the requisite number of shares of stock. An optionee or
permitted transferee of the Option shall not have any privileges as a
stockholder with respect to any shares of stock covered by the Option until the
date of issuance (as evidenced by the appropriate entry on the books of the
Company or a duly authorized transfer agent) of such shares.

8.   EMPLOYMENT OR CONSULTING RELATIONSHIP
     -------------------------------------

                                 Page 8 of 10
<PAGE>

     Nothing in this Plan or any Option granted hereunder shall interfere with
or limit in any way the right of the Company or of any of its Affiliates to
terminate any optionee's employment or consulting at any time, nor confer upon
any optionee any right to continue in the employ of, or consult with, the
Company or any of its Affiliates.

9.   CONDITIONS UPON ISSUANCE OF SHARES
     ----------------------------------

     Shares of Common Stock shall not be issued pursuant to the exercise of an
Option unless the exercise of such Option and the issuance and delivery of such
shares pursuant thereto shall comply with all relevant provisions of law,
including, without limitation, the Securities Act of 1933, as amended (the
"Securities Act").

10.  NONEXCLUSIVITY OF THIS PLAN
     ---------------------------

     The adoption of this Plan shall not be construed as creating any
limitations on the power of the Company to adopt such other incentive
arrangements as it may deem desirable, including, without limitation, the
granting of stock options other than under this Plan.

11.  MARKET STANDOFF
     ---------------

     Each optionee, if so requested by the Company or any representative of the
underwriters in connection with any registration of the offering of any
securities of the Company under the Securities Act, shall not sell or otherwise
transfer any shares of Common Stock acquired upon exercise of Options during the
180-day period following the effective date of a registration statement of the
Company filed under the Securities Act; provided, however, that such restriction
shall apply only to the first registration statement of the Company to become
effective under the Securities Act after the date of adoption of this Plan which
includes securities to be sold on behalf of the Company to the public in an
underwritten public offering under the Securities Act.  The Company may impose
stop-transfer instructions with respect to securities subject to the foregoing
restriction until the end of such 180-day period.

12.  AMENDMENTS TO PLAN
     ------------------

     The Board may at any time amend, alter, suspend or discontinue this Plan.
Without the consent of an optionee, no amendment, alteration, suspension or
discontinuance may adversely affect outstanding Options except to conform this
Plan and ISOs granted under this Plan to the requirements of federal or other
tax laws relating to incentive stock options.  No amendment, alteration,
suspension or discontinuance shall require stockholder approval unless (a)
stockholder approval is required to preserve incentive stock option treatment
for federal income tax purposes or (b) the Board otherwise concludes that
stockholder approval is advisable.

                                 Page 9 of 10
<PAGE>

13.  EFFECTIVE DATE OF PLAN; TERMINATION
     -----------------------------------

     This Plan shall become effective upon adoption by the Board provided,
however, that no Option shall be exercisable unless and until written consent of
the stockholders of the Company, or approval of stockholders of the Company
voting at a validly called stockholders' meeting, is obtained within twelve
months after adoption by the Board.  If any Options are so granted and
stockholder approval shall not have been obtained within twelve months of the
date of adoption of this Plan by the Board, such Options shall terminate
retroactively as of the date they were granted.  Options may be granted and
exercised under this Plan only after there has been compliance with all
applicable federal and state securities laws.  This Plan (but not Options
previously granted under this Plan) shall terminate within ten years from the
date of its adoption by the Board.

1999 StockOption Plan12-17-99

                                 Page 10 of 10

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00007-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00007-of-00352.parquet"}]]