Document:

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                                                                    EXHIBIT 10.9

                    GUARANTY OF CITADEL HOLDING CORPORATION

     GUARANTY AGREEMENT (this "Guaranty"), dated as of July 28, 2000, between
CITADEL HOLDING CORPORATION, a Nevada corporation (the "Guarantor"), and SUTTON
HILL CAPITAL, L.L.C., a New York limited liability company (together with its
successors, the "Beneficiary").

                                   RECITALS

     A.  The Guarantor is an affiliate of Citadel Realty, Inc., a Nevada
corporation (together with its permitted successors, the "Company").

     B.  The Beneficiary and the Company have entered into an agreement, dated
as of the date hereof (as the same may be amended, restated, modified or
supplemented from time to time, the "Fee Option Agreement"), pursuant to which
the Company has agreed to indemnify the Beneficiary pursuant to paragraph (c) of
Section 10 thereof.

     C.  The Beneficiary is unwilling to enter into the Fee Option Agreement
unless this Guaranty shall have been executed and delivered by the Guarantor and
shall be in full force and effect.

     NOW THEREFORE, in consideration of the foregoing premises and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Guarantor hereby agrees as follows:

     1.  Guaranty of Obligations.  Subject to the terms and conditions in this
         ------------------------
Guaranty, the Guarantor hereby unconditionally guarantees to the Beneficiary the
due and punctual payment when due of all amounts now due or hereafter becoming
due in respect of the Company's obligations arising under paragraph (c) of
Section 10 of the Fee Option Agreement (such obligations being herein called the
"Obligations"), and agrees to pay any and all reasonable expenses incurred by
the Beneficiary in successfully enforcing any rights under this Guaranty.  This
Guaranty is a primary and original obligation of the Guarantor and is an
absolute, unconditional, continuing and irrevocable guaranty of payment and not
of collectibility or performance and is in no way conditioned or contingent upon
any attempt to collect from the Company or to realize upon any property
constituting security for the Obligations, all to the same extent, except as
otherwise specifically provided herein, as if the Guarantor were the Company
under the Fee Option Agreement; provided, however, that the foregoing limitation
imposing on the Guarantor obligations hereunder as if it were the Company under
the Fee Option Agreement (except as set forth herein) shall not limit
obligations of the Guarantor hereunder to the extent the limitations (including
termination, disavowal, rejection or reduction) of any such obligation of the
Company results from (a) any insolvency or bankruptcy case or proceeding
(including any case under the U.S. Bankruptcy Code of 1978, as amended), or any
receivership, liquidation, reorganization or other similar case or proceeding
relative to the Company or all or substantially all of its assets, or (b) any
liquidation, dissolution, reorganization or winding up of the Company, whether
voluntary or involuntary and whether or not involving insolvency or bankruptcy,
or (c)
<PAGE>

any assignment of all or substantially all of the assets of the Company for the
benefit of creditors or any other marshalling of assets and liabilities of the
Company (the events in (a), (b) and (c) collectively referred to as an
"Insolvency or Liquidation Proceeding"), and in such event the Guarantor shall
be liable in respect of obligations of the Company pursuant to the Fee Option
Agreement as if no such Insolvency or Liquidation Proceeding had been initiated.
If the Company shall fail to pay any of the Obligations when and as the same
shall become due and payable, the Guarantor shall forthwith pay such
Obligations, in immediately available funds, directly to the Beneficiary at its
address specified herein or at such other place as the Beneficiary shall direct.
The Guarantor hereby waives diligence, presentment or protest. Each default in
payment of any of the Obligations shall give rise to a separate cause of action
hereunder and separate suits may be brought hereunder as each cause of action
arises.

          Character of Obligations Hereunder: Subrogation.  (a)  The right of
          ------------------------------------------------
the Beneficiary to enforce the obligations of the Guarantor hereunder by any
proceedings, whether by action at law, suit in equity or otherwise, shall not be
impaired by any right, claim or defense (against the Company or any other
person) of any character whatsoever, including without limitation any right,
claim or defense of rescission, recoupment, reduction, limitation, termination,
setoff, counterclaim, waiver, frustration, surrender, alteration or compromise
except, and then only to the extent, any such right, claim or defense would have
been available to the Company pursuant to the Fee Option Agreement.  Without
limiting the generality of the foregoing, such obligations of the Guarantor
shall not be discharged, released or impaired or otherwise affected by:  (i) any
renewal, extension, amendment or modification of or addition or supplement to or
deletion from this Guaranty or the Fee Option Agreement except to the extent of
the Company's rights, claims or defenses thereunder as aforesaid; (ii) any
inability or failure on the part of the Company to perform or comply with the
Fee Option Agreement; (iii) any waiver, consent, extension, indulgence or other
action or inaction (including, without limitation, any lack of diligence) under
or in respect of this Guaranty, the Fee Option Agreement, or any obligation or
liability of the Company, or any other person, or any exercise or nonexercise of
any right, power or remedy under or in respect of any such agreement or any such
obligation or liability; (iv) any Insolvency or Liquidation Proceeding; and (v)
any limitation or any party's obligation or liability under any such agreement
or any such obligation or liability or any termination, cancellation,
frustration, invalidity or enforceability, in whole or in part, of any such
agreement or any such obligation or liability or any term of any thereof except
to the extent of the Company's rights, claims or defenses thereunder as
aforesaid.

     (b)  This Guaranty shall continue to be effective or be reinstated, as the
case may be, if at any time any payment of any of the Obligations is rescinded
or must otherwise be returned by the Beneficiary upon the insolvency, bankruptcy
or reorganization of the Company or otherwise, all as though such payment had
not been made.

     (c)  The Guarantor will not exercise any rights which it may acquire by way
of subrogation under this Guaranty, by any payment made hereunder or otherwise,
until all of the Obligations shall have been paid in full.  If any amount shall
be paid to the Guarantor on account of such subrogation rights at any time when
all the Obligations then outstanding shall not have been indefeasibly paid in
full, such amount shall be held in trust for the benefit of the Beneficiary and
shall forthwith be paid to the Beneficiary and applied upon the Obligations,
whether matured
<PAGE>

or unmatured. If (i) the Guarantor shall make payment to the Beneficiary of all
or any part of the Obligations and (ii) all the Obligations shall be paid in
full and the period under the Fee Option Agreement for the Beneficiary to assert
claims against the Company shall have expired, the Beneficiary will, at the
Guarantor's request, execute and deliver to the Guarantor appropriate documents,
without recourse and without representation or warranty, necessary to evidence
the transfer by subrogation to the Guarantor of an interest in the Obligations
resulting from such payment by the Guarantor.

           Representations and Warranties of the Guarantor.  The Guarantor
           ------------------------------------------------
represents and warrants to the Beneficiary that:

     (i)   The Guarantor is a corporation duly organized and validly existing
under the laws of Delaware and has full power, authority and legal right to
carry on its business as currently conducted, to own its properties and to enter
into and perform its obligations under this Guaranty;

     (ii)  The execution, delivery and performance by the Guarantor of this
Guaranty have been duly authorized by all necessary corporate action and do not
and will not contravene any presently existing law or any governmental rule,
regulation or order applicable to the Guarantor or its properties;

     (iii) The execution, delivery and performance by the Guarantor of this
Guaranty do not require the consent or approval or authorization or order of,
the giving of notice to, or the registration with, or the taking of any other
action in respect of, any governmental authority or agency, foreign or domestic,
other than such as have been duly obtained, given or taken; and

     (iv)  This Guaranty has been duly executed and delivered by the Guarantor
and constitutes the legal, valid and binding obligation of the Guarantor,
enforceable against the Guarantor in accordance with its terms, except as the
enforceability of this Guaranty may be limited by the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally and by general principles of equity.

     2.    Miscellaneous.
           --------------

     (i)   No failure on the part of the Beneficiary to exercise, no delay in
exercising, and no course of dealing with respect to, any right or remedy
hereunder will operate as a waiver thereof; nor will any single or partial
exercise of any right or remedy hereunder preclude any exercise of any other
right or remedy.  This Guaranty may not be amended or modified except by written
agreement of the Guarantor and the Beneficiary.

     (ii)  All notices in connection with this Guaranty shall be in writing,
shall be deemed given and shall become effective when delivered by hand or
courier service or received by telex, telecopier, telegram, cable or registered
or certified first-class mail, postage prepaid, addressed as follows:  if to the
Guarantor, at 550 South Hope Street, Suite 1825, Los Angeles, CA 90071; if to
the Beneficiary, addressed to: 120 North Robertson Blvd., Los Angeles,
California 90048 or at such other addresses which either of the foregoing shall
from time to time designate in writing.
<PAGE>

     (iii) The terms of this Guaranty shall be binding upon the Guarantor and
its successors and assigns and shall inure to the benefit of, and be enforceable
by, the Beneficiary and its successors and assigns.

     (iv)  This Guaranty shall be construed in accordance with and governed by
the internal laws of the State of New York.

     (v)   If any term of this Guaranty and any other application thereof shall
be invalid or unenforceable, the remainder of this Guaranty and any other
application of such terms shall not be affected thereby.

     (vi)  Each of the parties hereto (i) hereby irrevocably submits to the
nonexclusive jurisdiction of the Supreme Court of the State of New York, New
York County (without prejudice to the right of any party to remove to the United
States District Court for the Southern District of New York) and to the
nonexclusive jurisdiction of the United States District Court for the Southern
District of New York, for the purposes of any suit, action or other proceeding
arising out of this Guaranty or the subject matter hereof or any of the
transactions contemplated hereby or thereby brought by either of the parties
hereto or their successors or assigns, (ii) hereby irrevocably agrees that all
claims in respect of such action or proceeding may be heard and determined in
such New York State court or, to the fullest extent permitted by applicable law,
in such Federal court, (iii) hereby waives any right it may have to trial by
jury in respect of any litigation based on, arising out of, under or in
connection with this Guaranty, and (iv) to the extent permitted by applicable
law, hereby irrevocably waives, and agrees not to assert, by way of motion, as a
defense or otherwise, in any such suit, action or proceeding any claim that it
is not subject to the jurisdiction of the above-named courts, that the suit,
action or proceeding is brought in an inconvenient forum, that the venue of the
suit, action or proceeding is improper or that this Guaranty or the subject
matter hereof may not be enforced in or by such court.  A final judgment
obtained in respect of any action, suit or proceeding referred to in this
Section 4 shall be conclusive and may be enforced in other jurisdictions by suit
or judgment or in any manner as provided by applicable law.  Each of the parties
hereto hereby consents to service of process by registered mail, Federal
Express, DHL or similar courier at the address to which notices to it are to be
given, it being agreed that service in such manner shall constitute valid
service upon such party or its respective successors or assigns in connection
with any such action or proceeding only; provided, however, that nothing in this
Section 4 shall affect the right of any of such parties or their respective
successors or assigns to serve legal process in any other manner permitted by
applicable law or affect the right of any of such parties or its respective
successors or assigns to bring any action or proceeding against any other one of
such parties or its respective property in the courts of other jurisdictions.

     IN WITNESS WHEREOF, the parties hereto have caused this Guaranty to be duly
executed as of the date first set forth herein.
<PAGE>

                                   GUARANTOR:

                                   CITADEL HOLDING CORPORATION

                                   By:   /s/ Andrzej Matyczynski
                                      --------------------------
                                      Name:  Andrzej Matyczynski
                                      Title: Chief Financial Officer

                                   BENEFICIARY:

                                   SUTTON HILL CAPITAL, LLC

                                   By:   /s/ James J. Cotter
                                      ----------------------
                                      Name:  James J. Cotter
                                      Title: Operating Manager<PAGE>

                                                                   Exhibit 10.10

                                   GUARANTY

     This Guaranty, made as of this 28th day of July, 2000, by Michael R. Forman
and James J. Cotter (collectively, the "Guarantors") in favor of Citadel
Cinemas, Inc. (including its successors and assigns, "Citadel Cinemas"), and
Citadel Realty, Inc. (including its successors and assigns, "FeeSub" and,
together with Citadel Cinemas, the "Beneficiaries").

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

     WHEREAS, Sutton Hill Capital, L.L.C. ("SHC") is acquiring certain interests
in various theatre properties in New York City, including the option (the
"Sutton/Murray Hill Fee Option") to acquire the fee interests in and to two of
such properties (the "Sutton & Murray Hill Fees");

     WHEREAS, Citadel Cinemas is subleasing from SHC certain of the theatre
properties, including the improvements and equipment located therein or thereon
(collectively, the "Leased Interests"), pursuant to the provisions of a certain
Lease Agreement, dated as of the date hereof (the "Lease Agreement"), between
SHC, as lessor, and Citadel Cinemas, as lessee;

     WHEREAS, included in the Lease Agreement is an option in favor of Citadel
Cinemas (the "Lease Option") to acquire from SHC the Leased Interests;

     WHEREAS, pursuant to an agreement, dated the date hereof (the "Fee Option
Agreement"), between FeeSub and SHC, SHC is granting to FeeSub the right (the
"Fee Option Right"), subject to the exercise by Citadel Cinemas of the Lease
Option and payment by Citadel Cinemas of the exercise price under the Lease
Option, to require SHC to exercise the Sutton/Murray Hill Fee Option and direct
the delivery of title to the Sutton & Murray Hill Fees to or as directed by
FeeSub, upon payment by FeeSub or its designee of the exercise price under the
Sutton/Murray Hill Fee Option;

     WHEREAS, the Guarantors are indirect owners of the membership interest in
SHC and will benefit by the execution and delivery by SHC of the Lease Agreement
and the Fee Option Agreement;

     WHEREAS, it is the intention of the Guarantors in executing and delivering
this Guaranty to (i) assure to Citadel Cinemas, if it exercises the Lease
Option, that it will acquire title to the Leased Interests subject only to the
Permitted Liens (as hereinafter defined) and (ii) assure to FeeSub, if it
exercises the Fee Option Right, that no Insolvency or Liquidation Proceeding (as
hereinafter defined) will cause to be stayed or otherwise impede such exercise
and that, when and if it acquires title to the Sutton & Murray Hill Fees, there
will be no Liens arising from any action of SHC or its Affiliates, except for
Liens existing on the date hereof listed on Exhibit A attached hereto or liens
resulting from a Tenant Event;
<PAGE>

     NOW, THEREFORE, the Guarantors hereby agree, for the benefit of the
Beneficiaries, as follows:

     1.   Unless otherwise defined herein, terms that are defined in the Lease
Agreement and used herein are so used as so defined. In addition, the following
terms shall have the following meanings:

     "Bad Faith Determination" with respect to a Beneficiary Proceeding means
the entry of one or more Final Orders (i) (a) dismissing such Beneficiary
Proceeding if (I) neither Nationwide nor SHC consented to such Beneficiary
Proceeding and at least one of Nationwide or SHC opposed such Beneficiary
Proceeding and (II) such Final Order is based on a finding by the court that (A)
in the case of a Beneficiary Proceeding under the Federal bankruptcy laws, the
criteria in 11 U.S.C. '303(b) are not satisfied or (B) in any other case, the
relevant statutory criteria for bringing such Beneficiary Proceeding are not
satisfied and (b) finding that the Beneficiary or Beneficiaries or Affiliate of
any Beneficiary which is a Petitioning Creditor in such Beneficiary Proceeding,
at the time such petition or other action was filed or taken, initiated such
Beneficiary Proceeding in "bad faith" (or words of similar import) or (ii)
granting judgment against a Petitioning Creditor therein which is a Beneficiary
under 11 U.S.C. '303(i)(2) (as any such statutory section referenced herein may
hereafter be modified, restated or amended).

     "Beneficiaries" has the meaning set forth in the recitals hereto.

     "Beneficiary Proceeding" means an Insolvency or Liquidation Proceeding in
which a Beneficiary or any Affiliate of a Beneficiary is a Petitioning Creditor.

     "Certificate of Title" means a title search or report provided by a title
insurance company or agency licensed to do business in the state where the
Leased Interests are located.

     "Citadel Cinemas" means Citadel Cinemas, Inc., a Nevada corporation, and
its successors and assigns.

     "Covered Asset" means any material component of real estate comprising the
Leased Interests and the Sutton & Murray Hill Fees, if to be transferred as
herein described.

     "Cure" (including grammatical alternatives thereof) means (i) the removal
of the Lien or Title Impairment in question, either of record or by arrangement
for the title company insuring the interest of the transferee to "omit" the Lien
or Title Impairment in question, or (ii) the causing of the title company
involved to insure against collection or to insure against loss or forfeiture of
title with respect to the Lien or Title Impairment in question, provided, that,
in the case of a Cure described in clause (ii) hereof, the title company must
agree to "omit" such Lien or Title Impairment in question in connection with any
mortgagee title insurance policy with respect to any third party financing.
<PAGE>

     "Designated Payments" means the amounts (if any) required to be paid to
satisfy the principal amount of the Nationwide Indebtedness.

     "Fee Option Agreement" has the meaning set forth in the recitals hereto.

     "Fee Option Right" has the meaning set forth in the recitals hereto.

     "FeeSub" means Citadel Realty, Inc., a Nevada corporation, and its
successors and assigns.

     "Final Order" means a judgment by a court of competent jurisdiction, not
subject to further appeal or with respect to which the time to appeal has
lapsed.

     "Insolvency or Liquidation Proceeding" means:

          (i)  the entry of a decree or order for relief in respect of SHC by a
     court having jurisdiction in the premises, or the appointment of a
     receiver, liquidator, assignee, custodian, trustee, sequestrator (or other
     similar official) of SHC or of any substantial part of its property, or
     ordering the winding up or liquidation of its affairs, in an involuntary
     case under the Federal bankruptcy laws, as now or hereafter constituted, or
     any other applicable Federal or state bankruptcy, insolvency or other
     similar law; or the commencement against SHC of an involuntary case under
     the Federal bankruptcy laws, as now or hereafter constituted, or any other
     applicable Federal or state bankruptcy, insolvency or other similar law; or

          (ii) the commencement by SHC of a voluntary case under the Federal
     bankruptcy laws, as now or hereafter constituted, or any other applicable
     Federal or state bankruptcy, insolvency or other similar law, or the
     consent by it to the entry of an order for relief in an involuntary case
     under any such law or the consent by it to the appointment of or taking
     possession by a receiver, liquidator, assignee, custodian, trustee,
     sequestrator (or other similar official) of SHC or of any substantial part
     of its property, or the making by it of a general assignment for the
     benefit of creditors, or the taking of any action in furtherance of any of
     the foregoing;

provided, however, that, if any of the events described in clauses (i) and (ii)
of this definition shall arise as a result of a Tenant Event, then such an event
shall not constitute an Insolvency or Liquidation Proceeding.

     "Lease Agreement" has the meaning set forth in the recitals hereto.

     "Leased Interests" has the meaning set forth in the recitals hereto.
<PAGE>

     "Lease Option" has the meaning set forth in the recitals hereto.

     "Nationwide Accrual" means interest on the principal of the Nationwide
Indebtedness (i) relating to any period in respect of which either (A) Citadel
Cinemas has failed to pay any amount of Basic Rent or Additional Rent (each as
defined in the Lease Agreement) or (B) as a result of the failure by Citadel
Cinemas to perform any of its obligations under the Lease Agreement or any of
the Other Lease Documents, SHC has applied Basic Rent received by it to perform
such obligations, in each case under clause (A) or (B) limited to the lesser of
(x) the amount which Citadel Cinemas has failed to so pay or the amount which
SHC has so applied, as the case may be, and (y) the amount of such interest, or
(ii) which remains unpaid and accruing on such principal (or, but for the filing
of a Beneficiary Proceeding, that would have accrued on such principal) during
the pendency of a Beneficiary Proceeding if there is a Bad Faith Determination
with respect to such Beneficiary Proceeding.

     "Permitted Liens" means the following Liens and other matters affecting the
title of any Leased Interest: (i) Liens securing the payment of taxes,
assessments and other governmental charges or levies which are not yet
delinquent to the extent not the obligations of the Tenant pursuant to the Lease
Agreement; (ii) Legal Requirements, zoning and planning restrictions,
subdivision and platting restrictions, easements, rights-of-way, licenses,
reservations, covenants, conditions, waivers, or restrictions on the use of any
Covered Asset which exist on the date hereof and either are set forth in the
title insurance policy delivered to Citadel Cinemas in connection with the Lease
Agreement or are not disclosed therein; (iii) encroachments or irregularities of
title none of which materially impairs the current use or value of the affected
Theatre Property; (iv) the Liens created pursuant to the Nationwide Agreement,
provided that the amount secured by such Liens shall not exceed the sum of (A)
$11,300,000 or the principal amount of the Nationwide Indebtedness, whichever is
less, and (B) the Nationwide Accrual, and provided, further, that the principal
amount of the Nationwide Indebtedness secured by such Liens is paid with the
applicable Designated Payment; (v) leases and licenses in effect with respect to
any Theatre Property which are permitted by the Lease Agreement; (vi) mechanics'
and materialmen's liens or Liens not disclosed in the title insurance policy and
existing on the date hereof; (vii) exceptions to the title of any such Covered
Asset as set forth in the title insurance policy delivered to Citadel Cinemas
hereunder or in connection with the Lease Agreement; (viii) existing Liens
listed on Exhibit A attached hereto; (ix) any Lien which is or results from a
Tenant Event or is approved by the Tenant for purposes of the Lease Agreement;
(x) Liens, including Legal Requirements, zoning and planning restrictions,
subdivision and platting restrictions and any of the matters affecting title,
which result from acts of Governmental Authority from and after the date hereof
not caused by or resulting from a Landlord Act; and (xi) such other or
additional matters as may be approved in writing by Citadel Cinemas in its sole
discretion.
<PAGE>

     "Petitioning Creditor" with respect to any Insolvency or Liquidation
Proceeding means the creditors that filed the petition to commence or otherwise
commenced such Insolvency or Liquidation Proceeding.

     "Prepared" means that the Person in question is ready, willing and able to
consummate the transaction in question, recognizing that such Person shall be
Prepared to close even if such Person must satisfy typical closing conditions
for a financing to provide a portion of the price so long as such Person can
show its ability to comply with such conditions in the ordinary course.

     "SHC" means Sutton Hill Capital, L.L.C., a New York limited liability
company and its successors and assigns, including without limitation any trustee
in bankruptcy, receiver, debtor-in-possession, or other person or entity
controlling any of the foregoing.

     "Sutton & Murray Hill Fees" has the meaning set forth in the recitals
hereto.

     "Sutton/Murray Hill Fee Option" has the meaning set forth in the recitals
hereto.

     "Title Impairment" means a claim, charge or other matter affecting title to
an Asset or interest therein, other than a Lien, which materially impairs the
intended use or value of the Asset (or interest therein) in question excluding,
however, the matters affecting title as of the date hereof, the Site Leases and
the terms and conditions thereof and matters which constitute Tenant Events.

     2.(a) (i)  If, at the time title to the Leased Interests is to be conveyed
by SHC to or as directed by Citadel Cinemas by reason of the timely and proper
exercise of the Lease Option (or if, at the time notice of such exercise would
be required to be given, such timely and proper exercise is stayed by an
Insolvency or Liquidation Proceeding), title to any Covered Asset shall be
subject to a Lien other than a Permitted Lien or to a Title Impairment and
provided the Beneficiaries are able to provide to the Guarantors evidence
reasonably satisfactory to the Guarantors that the respective Beneficiaries are
then Prepared to close, then the Guarantors shall be obligated to pay, bond, or
otherwise Cure such Lien and to Cure such Title Impairment.

           (ii) Not less than ten days prior to the date of the anticipated
transfer described in paragraph (i) of this Section 2, Citadel Cinemas shall
deliver to the Guarantors a Certificate of Title with respect to the asset or
assets to be transferred indicating whether or not any Liens encumbering such
title constitute Liens other than Permitted Liens and whether there exist any
Title Impairments, together with evidence that Citadel Cinemas is then Prepared
to close as aforesaid.  At the Closing (as such term is defined in the Lease
Agreement), the Guarantors shall have the right to instruct the transferee to
pay, to or as the Guarantors may direct, any excess of the cash amount paid by
Citadel Cinemas as part of the Acquisition Cost (such cash amount
<PAGE>

having given effect to any offsets to which Citadel Cinemas is entitled) over
that amount necessary to satisfy Designated Payments.

     (b)(i)  If, at the time title to the Sutton & Murray Hill Fees is to be
conveyed to or as directed by FeeSub by reason of the timely and proper exercise
of the Fee Option Right (or if, at the time notice of such exercise would be
required to be given, such timely and proper exercise is stayed by an Insolvency
or Liquidation Proceeding), title to any part of the Sutton & Murray Hill Fees
shall be subject to a Lien or to a Title Impairment, in either case arising
solely from or relating to any action or omission by SHC or an Affiliate which
is not a Tenant Event and provided the Beneficiaries are able to provide to the
Guarantors evidence reasonably satisfactory to the Guarantors that the
respective Beneficiaries are then Prepared to close, then the Guarantors shall
be obligated to pay, bond, or otherwise Cure such Lien and to Cure such Title
Impairment.

             (ii)   Not less than ten days prior to the date of the anticipated
transfer described in paragraph (b)(i) of this Section 2, FeeSub shall deliver
to the Guarantors a Certificate of Title with respect to the asset or assets to
be transferred indicating whether or not any Liens encumbering such title
constitute such Liens other than Permitted Liens and whether there exist any
such Title Impairments, each as described in paragraph (b)(i) of this Section 2,
together with evidence of FeeSub's ability to close as aforesaid.

     (c)     If by reason of the occurrence of an Insolvency or Liquidation
Proceeding, (i) SHC shall fail to convey or cause to be conveyed title to any of
the Leased Interests, at the time provided in the Lease Agreement, (ii) Citadel
Cinemas shall be stayed from exercising the Lease Option on a timely basis,
(iii) SHC shall fail to cause the Sutton/Murray Hill Fee Option to be exercised
on a timely basis or to cause the Sutton & Murray Hill Fees to be delivered to
or as directed by FeeSub at the time provided in the Sutton/Murray Hill Fee
Option and the Fee Option Agreement, or (iv) FeeSub shall be stayed from
exercising the Fee Option Right on a timely basis, then, provided all conditions
to such transfer or exercise, as the case may be, which then should have been
satisfied by Citadel Cinemas or FeeSub, as the case may be, have been satisfied
(excluding, however, those conditions which could not have been satisfied by
reason of such Insolvency or Liquidation Proceeding), the Guarantors shall cause
such Insolvency or Liquidation Proceeding to be terminated or otherwise to be
resolved as promptly as practicable and in a manner such that, or take such
other actions as may be necessary so that, the applicable transaction can be
consummated in accordance with its terms.  Any such action may include causing
SHC to apply to any liability or claim, or distribute to its member for
application to any liability or claim of, funds available or to be available to
SHC in connection with consummation of the applicable transactions or otherwise,
after payment of any obligations owing by it to either Beneficiary or any
Affiliates of either Beneficiary.  All times referred to in this Section 2(c)
shall be determined without regard to any additional time that may be permitted
or authorized under any statute or order entered in or applicable to such
Insolvency or Liquidation Proceeding.
<PAGE>

     (d)  Any provisions of subsection 2(c) or Section 3 hereof to the contrary
notwithstanding, if an Insolvency or Liquidation Proceeding is a Beneficiary
Proceeding, then (i) each of the Beneficiaries shall defer claims or actions
hereunder against either of the Guarantors and the exercise of its rights
pursuant to said Section 3 until the earliest of (A) the issuance of a Final
Order in connection with such Insolvency or Liquidation Proceeding precluding,
or with the result of precluding, the consummation of the Closing with respect
to the transfer of the Leased Interest or the Sutton & Murray Hill Fees, as the
case may be, or otherwise declaring as null and void or otherwise unenforceable
the Lease Option or the Fee Option Agreement (assuming in any such instance that
the applicable Beneficiary had properly exercised its rights pursuant to the
Lease Option or the Fee Option Agreement, as applicable, or had been stayed from
so doing by reason of the filing of the Insolvency or Liquidation Proceeding),
(B) the rejection of the Lease Option or the Fee Option Agreement as an
executory obligation of SHC, (C) the issuance of a Final Order inconsistent with
a Bad Faith Determination, (D) 30 days after such Insolvency or Liquidation
Proceeding is dismissed, (E) such Insolvency or Liquidation Proceeding is
converted, (F) a plan is confirmed in any such Insolvency or Liquidation
Proceeding (unless such plan provides for the consummation of the Closing of the
transfer of the Leased Interest or the Sutton & Murray Hill Fees, or both, as
the case may be), and (G) the termination of the term of the Lease Agreement
(after giving effect to any extension of the Lease Term, so long as the periods
to exercise and consummate the transactions contemplated by the Lease Option and
Fee Option Agreement have also been extended for the same period) and (ii) any
statute of limitations or similar defense applicable to such deferred claims or
actions against the Guarantors hereunder is deemed tolled during such Insolvency
or Liquidation Proceeding; provided, however, that, if a Bad Faith Determination
is issued with respect to such Beneficiary Proceeding, then the statute of
limitations and similar defenses will not be deemed tolled.

     3.   In the event the Guarantors do not timely perform any of the above
obligations, any Beneficiary may, after written demand to perform has been
served upon the Guarantors and the Guarantors have been given 15 days to
perform, perform said obligations at the Guarantors' sole cost and expense;
provided, however, that no Beneficiary shall exercise its option to perform said
obligations for up to 90 days if within said 15-day period the Guarantors have
commenced to perform the obligation or obligations in question and thereafter to
the reasonable satisfaction of such Beneficiary continue to perform such
obligation or obligations with reasonable diligence; and provided, further, that
such 15-day period, and the preceding proviso, shall not apply if such
Beneficiary reasonably concludes that delay in exercising its right hereunder
would materially and adversely affect the ability of the parties to consummate
the closing on a timely basis in accordance with the Lease Agreement or the
closing of the transfer of the Sutton & Murray Hill Fees in accordance with the
Fee Option Agreement or the Sutton/Murray Hill Fee Option. The Beneficiaries'
exercise of or failure to exercise their rights under this Section 3 shall not
relieve the Guarantors of their obligations under this Agreement. The Guarantors
shall, upon written demand from a Beneficiary, reimburse such Beneficiary for
all costs, including reasonable attorney's fees and out-of-pocket expenses, and
all liabilities incurred by such Beneficiary by reason of the foregoing, with
interest thereon at the Reimbursement Rate.
<PAGE>

     4.   The obligations, covenants, agreements and duties of the Guarantors
under this Agreement shall in no way be affected or impaired by reason of the
occurrence from time to time of any of the following with respect to the Lease
Agreement, the Fee Option Agreement or this Agreement, even though notice may
not have been given to, or received from, the Guarantors or the further consent
of either Guarantor thereto may not have been obtained: (a) any amendment,
modification, waiver or termination of or supplement to the Lease Agreement, or
the Fee Option Agreement or any agreement, instrument or document executed or
delivered pursuant thereto or in connection therewith (collectively the
"Documents"); (b) the validity or enforceability of any of the Documents; or (c)
any exercise or non-exercise of any right, power or remedy under or in respect
of any of the Documents or arising at law.

     5.   Except as expressly set forth herein, the agreements of each of the
Guarantors set forth in this Agreement constitute the absolute, present,
primary, continuing, irrevocable, unlimited and unconditional obligations of the
Guarantors in accordance with the terms hereof, without limitation, and are not
conditioned or contingent upon any effort to attempt to seek payment or
performance from the other Guarantor or any other person or entity (whether or
not pursuant to this Agreement) or upon any other condition or contingency;
provided, however, that nothing herein shall obligate the Guarantors hereunder
if Citadel Cinemas or FeeSub, as applicable, shall fail to satisfy the
conditions for proper and timely exercise of the Lease Option or the Fee Option
Right, as applicable (excepting only those conditions which cannot reasonably be
satisfied by reason of an Insolvency or Liquidation Proceeding). The obligations
of the Guarantors set forth herein constitute full recourse obligations of each
Guarantor enforceable against him to the full extent of all his assets and
properties, notwithstanding any provision in the Lease Agreement or Fee Option
Agreement limiting the liability of any Person. Without limiting the foregoing,
it is agreed and understood that repeated and successive demands for performance
hereunder may be made and this Agreement shall remain in full force and effect
and shall apply to each and every subsequent event to which it applies by its
terms. The Guarantors assume full responsibility for being and staying informed
as to all facts and circumstances bearing upon the risk of nonperformance of the
obligations guaranteed hereunder, and the Guarantors agree that the
Beneficiaries shall have no obligation to advise the Guarantors or any of them
of information known to the Beneficiaries regarding such condition or any other
circumstance.

     6.   The Guarantors irrevocably waive (i) any and every right they may have
to injunctive relief, (ii) any and every right they may have to have any suit,
action or proceeding brought by the Beneficiaries on this Agreement consolidated
with any other or separate suit, action or proceeding, and (iii) the right, in
such suit, action, proceeding or counterclaim, to interpose any counterclaims
(except to the extent that such counterclaims are compulsory and may not be
brought in a separate action) or setoffs of any kind or description.

     7    Except as to applicable statutes of limitation, no delay on the part
of any Beneficiary in exercising any power or right hereunder shall operate as a
waiver thereof; nor
<PAGE>

shall any single or partial exercise of any power or right hereunder or the
failure to exercise same in any instance preclude other or further exercise
thereof or the exercise of any other power or right; nor shall any Beneficiary
be liable for exercising or failing to exercise any such power or right. The
rights and remedies hereunder expressly specified are cumulative and not
exclusive of any rights or remedies which any Beneficiary may or will otherwise
have.

     8    The obligations of the Guarantors hereunder shall be joint and several
obligations.

     9    In case any Document or obligation thereunder shall be terminated or
rejected by any trustee, receiver or liquidating agent of SHC or any of its
properties in any Insolvency or Liquidation Proceeding, the Guarantors'
obligations hereunder shall continue to the same extent as if such Document had
not been so rejected or terminated. The Guarantors agree that this Agreement
shall continue to be effective or be reinstated, as the case may be, if at any
time any payment or performance by SHC is rescinded or must otherwise be
returned as a result of any Insolvency or Liquidation Proceeding.

     10   The obligations of the Guarantors hereunder shall not be subject to
any counterclaim, setoff, deduction or defense (other than payment, performance
or affirmative discharge, release or termination of this Agreement by the
Beneficiaries in writing) based upon any claim the Guarantors or SHC may have
against any Beneficiary (except for claims that may not be asserted in a
separate action or proceeding) or the Guarantors may have against SHC or any
other Person and shall remain in full force and effect without regard to, and
shall not be released, discharged, reduced or in any way affected by, any
circumstance or condition (whether or not the Guarantors shall have any
knowledge or notice thereof) whatsoever which might constitute a legal or
equitable discharge or defense; provided, however, that the Guarantors shall not
be precluded from asserting, whether by way of defense or otherwise, the failure
by Citadel Cinemas or FeeSub, as applicable, to satisfy the conditions to the
proper and timely exercise of the Lease Option or the Fee Option Right, as the
case may be (excepting those conditions which could not be so satisfied by
reason of an Insolvency or Liquidation Proceeding).

     11   Except as specifically provided herein, the Guarantors unconditionally
waive: (a) notice of any of the matters referred to in Section 4 or 10 hereof;
(b) all notices which may be required by statute, rule of law or otherwise to
preserve any rights against the Guarantors hereunder, including notice of the
acceptance of this Agreement; (c) except as otherwise specifically set forth
herein, any requirement for the enforcement, assertion or exercise of any right,
remedy, power or privilege under or in respect of any Document, including
diligence in collection or protection of or realization upon any obligations or
any part thereof or any collateral therefor; (d) any requirement of diligence;
(e) any requirement to mitigate the damages resulting from a default under any
Document, except that this shall not relieve the Beneficiaries of any such
obligation; or (f) the occurrence of every other condition precedent to which
the Guarantors or SHC may otherwise be entitled, except as provided in any
Document.
<PAGE>

     12   Any Beneficiary may, at its election, exercise any right or remedy it
might have against SHC or any security held by such Beneficiary, including the
right to foreclose upon any such security by judicial or nonjudicial sale,
without affecting or impairing in any way the liability of the Guarantors
hereunder, and the Guarantors waive any defense arising out of the absence,
impairment or loss of any right of reimbursement, contribution or subrogation or
any other right or remedy of the Guarantors against SHC or any such security,
whether resulting from such election by a Beneficiary or otherwise. The
Guarantors waive any defense arising by reason of any disability or other
defense of SHC (which may nevertheless be asserted in a separate action or
proceeding against the Beneficiaries or any other party), or by reason of the
cessation from any cause whatsoever of the liability, either in whole or in
part, of SHC to a Beneficiary (other than as a result of payment, performance or
affirmative discharge, release or termination of this Agreement by the
Beneficiaries).

     13   The Guarantor understands that the Beneficiaries' exercise of certain
rights and remedies contained in the Documents may affect or eliminate the
Guarantors' rights of subrogation against SHC and that the Guarantors may
therefore incur partially or totally nonreimbursable liability hereunder;
nevertheless, the Guarantors hereby authorize and empower the Beneficiaries to
exercise, in its or their sole discretion, any rights and remedies, or any
combination thereof, which may then be available, it being the purpose and
intent of each Guarantor that its obligations hereunder shall be absolute,
independent and unconditional under any and all circumstances.

     14   Each Guarantor represents and warrants to the Beneficiaries that, as
to himself, the following statements are true and correct in all material
respects as of the date hereof:

          (a)  Guarantor has full power and authority to execute, deliver and
     perform its obligations under this Agreement. No consent of any other
     person, and no authorization of, notice to, or other act by or in respect
     of the Guarantor by or with any Governmental Authority, is required in
     connection with the execution, delivery, performance, validity or
     enforceability of this Agreement. This Agreement has been duly executed and
     delivered by the Guarantor and constitutes a legal, valid and binding
     obligation of the Guarantor, enforceable against the Guarantor in
     accordance with its terms, except as the enforceability of this Agreement
     may be limited by the effect of any applicable bankruptcy, insolvency,
     reorganization, moratorium, or similar laws affecting creditors' rights
     generally and by general principles of equity.

          (b)  Neither the execution, delivery or performance by the Guarantor
     of this Agreement will violate any provision or any existing Law applicable
     to the Guarantor or any order or decree applicable to the Guarantor of any
     court, arbitrator or governmental authority, or of any mortgage, indenture,
     lease, contract or other agreement or undertaking to which the Guarantor is
     a party or by which the Guarantor or any of his properties or assets is
     bound, or will result in the creation or imposition of any lien,
<PAGE>

     charge, encumbrance or security interest on any of the properties or assets
     of the Guarantor pursuant to the provisions of any of the foregoing.

          (c)  There is no action, suit, proceeding or investigation at law or
     in equity by or before any court, governmental body, agency, commission or
     other tribunal now pending or threatened in writing against or affecting
     the Guarantor or any property or rights of the Guarantor or questioning the
     enforceability of this Agreement which, if adversely determined, could
     reasonably be expected to have a material adverse effect on (a) the
     business, assets, properties, revenues, financial condition, operations or
     prospects of the Guarantor or (b) the ability of the Guarantor to perform
     its obligations under this Agreement in a timely manner.

     15   In no event shall the Guarantors have any liability to any Beneficiary
hereunder for any lost or prospective profits or any other special, punitive,
exemplary, consequential, incidental or indirect losses or damages (in tort,
contract or otherwise). The parties further agree that no claim for direct
damages by a party hereunder shall include any amounts for which such party has
been reimbursed or is entitled to be reimbursed under any insurance required to
be obtained under the Lease Agreement or acquired in connection therewith.

     16   Except as provided in the last sentence of Section 9 hereof, this
Agreement, and the obligations of the Guarantors hereunder, shall expire,
terminate and be of no further force and effect on and after the earlier of the
end of the Initial Term or the date of the Closing provided SHC complies with
its obligations in respect thereof.

     17   The Guarantor will not exercise any rights which it may acquire by way
of subrogation hereunder, by any payment made hereunder or otherwise, until all
of the obligations of SHC to the Beneficiaries under the Documents have been
indefeasibly paid in full in cash and performed in full. If any amount shall be
paid to the Guarantor on account of such subrogation rights at any time when all
of such obligations shall not have been paid in full in cash, such amount shall
be held in trust for the benefit of the Beneficiaries and shall forthwith be
paid as provided herein to be credited and applied upon such obligations, in
accordance with the terms of the Documents.

     18   All covenants and agreements made herein and in statements or
certificates delivered pursuant hereto shall survive any investigation or
inspection made by or on behalf of the Beneficiaries and shall continue in full
force and effect until all of the obligations of the Guarantors under this
Agreement shall be fully performed in accordance with the terms hereof.

     19   THIS AGREEMENT HAS BEEN EXECUTED AND DELIVERED IN THE STATE OF NEW
YORK. THE GUARANTORS AGREE THAT, TO THE MAXIMUM EXTENT PERMITTED BY THE LAWS OF
THE STATE OF NEW YORK, THIS AGREEMENT, AND THE RIGHTS AND DUTIES OF THE
GUARANTORS
<PAGE>

HEREUNDER, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK (INCLUDING, WITHOUT LIMITATION, SECTIONS 5-1401 AND 5-1402
OF THE NEW YORK GENERAL OBLIGATIONS LAW) IN ALL RESPECTS, IN RESPECT OF ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.

     20   EACH GUARANTOR HEREBY IRREVOCABLY SUBMITS, FOR HIMSELF AND HIS
PROPERTIES, TO THE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK AND THE SUPREME COURT OF THE STATE OF NEW YORK IN
THE COUNTY OF NEW YORK IN ANY ACTION, SUIT OR PROCEEDING BROUGHT AGAINST IT AND
RELATED TO OR IN CONNECTION WITH THIS AGREEMENT, AND TO THE EXTENT PERMITTED BY
APPLICABLE LAW, EACH GUARANTOR HEREBY WAIVES AND AGREES NOT TO ASSERT BY WAY OF
MOTION, AS A DEFENSE OR OTHERWISE IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY
CLAIM THAT HE IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURT, THAT
THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE
VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER, OR THAT THIS AGREEMENT OR
THE SUBJECT MATTER HEREOF MAY NOT BE LITIGATED IN OR BY SUCH COURT. THIS
SUBMISSION TO JURISDICTION IS NONEXCLUSIVE AND DOES NOT PRECLUDE ANY BENEFICIARY
FROM OBTAINING JURISDICTION OVER THE GUARANTORS IN ANY COURT OTHERWISE HAVING
JURISDICTION.

     21   TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH GUARANTOR AGREES NOT
TO SEEK AND HEREBY WAIVES THE RIGHT TO ANY REVIEW OF THE JUDGMENT OF ANY SUCH
COURT BY ANY COURT OF ANY OTHER NATION OR JURISDICTION WHICH MAY BE CALLED UPON
TO GRANT AN ENFORCEMENT OF SUCH JUDGMENT. EACH GUARANTOR AGREES THAT SERVICE OF
PROCESS MAY BE MADE UPON IT BY CERTIFIED OR REGISTERED MAIL TO THE ADDRESS FOR
NOTICES SET FORTH IN THIS AGREEMENT OR ANY METHOD AUTHORIZED BY THE LAWS OF NEW
YORK.

     EACH GUARANTOR AND EACH BENEFICIARY EXPRESSLY WAIVES ALL RIGHT TO TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM RELATED TO THIS AGREEMENT. THE
GUARANTORS AND BENEFICIARIES ACKNOWLEDGE THAT THE PROVISIONS OF SECTIONS 19, 20
AND 21 HAVE BEEN BARGAINED FOR AND THAT THEY HAVE BEEN REPRESENTED BY COUNSEL IN
CONNECTION THEREWITH.
<PAGE>

     22   All notices or other communications required or permitted to be given
hereunder shall be deemed to have been satisfactorily given or served for all
purposes when sent by United States registered mail, return receipt requested,
postage prepaid as follows:

               If to the Guarantors:

               Michael R. Forman
               120 North Robertson Boulevard
               Los Angeles, California 90048

               James J. Cotter
               120 North Robertson Boulevard
               Los Angeles, California 90048

     With a copy of all notices under this Section 22 to a Guarantor to be
simultaneously sent to the following addresses:

               Howard Peskoe, Esq.
               Whitman Breed Abbott & Morgan LLP
               200 Park Avenue
               New York, New York 10166

If to Citadel Cinemas:

               Citadel Cinemas, Inc.
               550 South Hope Street
               Suite 1825
               Los Angeles, CA 90071
               Facsimile: (213) 239-0548
               Attention: President

If to FeeSub:

               Citadel Realty, Inc.
               550 South Hope Street
               Suite 1825
               Los Angeles, CA 90071
               Facsimile: (213) 239-0548
               Attention: President
<PAGE>

With a copy of all notices under this Section 22 to a Guarantor to be
simultaneously sent to the following addresses:

               Michael Margulis, Esq.
               Duane, Morris & Heckscher LLP
               380 Lexington Avenue
               New York, New York 10168

or to such other address with respect to any party as such party or holder shall
notify the other in writing. All such notices shall be deemed given three (3)
Business Days after delivery to the United States Post Office registry clerk.

     23   This Agreement shall bind the Guarantors and their respective
successors and assigns and shall inure to the benefit of the Beneficiaries and
their respective successors and assigns (including, without limitation, (a) any
successor to Citadel Cinemas as tenant under the Lease Agreement, and (b) any
person to whom FeeSub shall assign the Fee Option Right).

     24   This instrument represents the entire agreement between the parties
with respect to the subject matter hereof and may not be modified or amended
except by a writing duly executed by the party sought to be charged.

     25   Neither this Agreement nor any uncertainty or ambiguity herein shall
be construed against any particular party, whether under any rule of
construction or otherwise. On the contrary, this Agreement has been reviewed by
each of the parties and their counsel and shall be construed and interpreted
according to the ordinary meaning of the words so used as to fairly accomplish
the purposes and intentions of all parties hereto.

     26   In the event that a Beneficiary for any reason whatsoever shall deem
it necessary to refer this Agreement to an attorney for the enforcement thereof
or of any rights hereunder, by suit or otherwise and prevails therein, there
shall be immediately due from the Guarantors to such Beneficiary, in addition to
the sums due and payable hereunder, reasonable attorneys' fees and
disbursements, together with all costs and expenses of such action, which costs,
expenses, fees and disbursement shall be deemed part of the obligation
hereunder. If such Beneficiary initiates such legal action and does not prevail
in such action, the Guarantors shall be entitled to recover from such
Beneficiary all of such costs incurred by Guarantors in connection therewith.

     27   In the event that any provision of this Agreement or the application
thereof to a Guarantor or any circumstance in any jurisdiction governing this
Agreement shall, to any extent, be invalid or unenforceable under any applicable
statute, regulation, or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform to such statute, regulation or rule of law, and the
remainder of this Agreement and the application of any such invalid or
unenforceable provision to parties,
<PAGE>

jurisdictions or circumstances other than to whom or to which it is held invalid
or unenforceable, shall not be affected thereby nor shall same affect the
validity or enforceability of any other provision of this Agreement.

     28   This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original and it shall not be necessary in making proof
of this Agreement to produce or account for more than one such counterpart.
<PAGE>

     IN WITNESS WHEREOF, this Agreement was duly executed and delivered by the
undersigned as of the 28/th/ day of July, 2000.

                                    CITADEL CINEMAS, INC.

                                    By: /s/ Andrzej Matyczynski
                                        -----------------------------------
                                        Name: Andrzej Matyczynski
                                        Title: Chief Financial Officer

                                    CITADEL REALTY, INC.

                                    By: /s/ Andrzej Matyczynski
                                        -----------------------------------
                                        Name: Andrzej Matyczynski
                                        Title: Chief Financial Officer

                                    GUARANTORS:

                                        /s/ James J. Cotter
                                    ---------------------------------------
                                        James J. Cotter

                                        /s/ Michael R. Forman
                                    ---------------------------------------
                                    Michael R. Forman

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