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                                                                  Exhibit 10.39

                            [CINEMASTAR LETTERHEAD]


May 2, 1995

Robert A. Bailey, #117
P.O. Box 5005
Rancho Santa Fe, CA 92067


Dear Robert:

        We would like you to assist us in establishing one or more corporate
"Lines of Credit", or establishing Loans to support our company expansion. In
addition, we would like you to assist us in locating and establishing leases
for existing or "build to suit" theater sites. This letter agreement will serve
to establish the terms of your compensation for obtaining for us, one or more
"Lines of Credit" and/or for obtaining one or more Loans and/or for
establishing leases for existing or "build to suit" theater sites. We reserve
the right to accept or decline the terms of a proposed "Line of Credit" or a
proposed Loan, or proposed theater lease that you bring to us. Of course, if we
decline any of these transactions, no fee is payable on that transaction.

        1.      Term.  This Agreement will become effective upon execution by
the parties and will extend until November 2, 1995. It is understood and
agreed however, that for a period of two years after the expiration of the
Term, if a commitment for a "Line of Credit" is accepted, and/or any funds are
borrowed and funded from a source of yours, or a lease is entered into from one
of your sources, a fee will nevertheless be paid as if this Agreement were
still in full force and effect.

        2.      Line of Credit.  In recognition of the fact that most of your
effort will be spent in obtaining a commitment for a "Line of Credit", we agree
to pay you a cash fee of three percent (3%) upon our receipt of a written
commitment for a "Line of Credit" from one of your lending sources. We agree to
draw sufficient funds from this "Line of Credit" at the time of the written
commitment in order to make this payment to you, or to instruct the Lender to
make payment directly to you from the "Line" as soon as it is issued. In
addition, we agree to pay you a cash fee of two percent (2% ) on amounts that
are funded against the "Line of Credit". This fee will be payable from proceeds
funded against the "Line". It is understood that if a commitment is made to
increase an already established "Line of Credit", the above referenced 3%
commitment fee will be payable upon such commitment increase, and the 2% fee
will be paid on amounts funded as the increased credit line is accessed.



        
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Mr. Robert A. Bailey                                                   Page 2
May 2, 1995

        3.      ADDITIONAL LINES.  If more than one lender commits to our
receiving a "Line of Credit", it is understood that the terms of payment
specified in paragraph 1., above will apply to any additional "Lines of
Credit" as well as the initial "Line".

        4.      LOANS.  If you obtain a loan for the corporation, the terms of
which are acceptable to us, a fee of five percent (5%) of the amount loaned
will be paid at the time of funding such loan.

        5.      LEASES.  In the event that you are able to obtain a Lease for
either an existing theater or a "build to suit" theater, on terms that are
acceptable to us, we will pay you a fee of $3.00 per square foot upon our
opening that theater for business. You will attempt to have this fee paid by
the Landlord, but if you are unsuccessful, then we shall be obligated to pay
the fee.

        6.      ASSUMPTION OF OBLIGATION.  It is our understanding that you
will assume the fee obligation that would be owed under any of these
transactions by CinemaStar Luxury Theaters, (formerly Nickelodeon Theater Co.,
Inc.), to Chris Nicholas and to Jon Meloan pursuant to their respective "Fee
Agreements" dated 9/3/93.

        7.      AGREEMENT TO COOPERATE.  We understand that in order to develop
a substantial "Line of Credit", lenders will require cash-flow projections,
company statements, background data, company growth plans, a review of the
facilities and interviews with operating management. We fully expect that this
will take executive and staff time. We also know that to effectively establish
such a banking relationship, several months may be required, along with
compensating balances, incremental borrowings and some negotiations with the
Lender. We agree to support such an effort.

        8.      CONFIDENTIALITY.  We understand that the Lending Sources and
Contacts you bring to us are to be treated as private and confidential and
are not to be disclosed to outside parties for a period of one year after the
expiration of the term of this Agreement.

        9.      ENTIRE AGREEMENT.  This letter constitutes the entire agreement
between the parties regarding lines of credit and loans. Any modification
hereto must be made by a written amendment that is signed by both parties.

Very Truly Yours,                       Acknowledged and Agreed:


/s/ John Ellison, Jr.,                  /s/ Robert A. Bailey
_____________________________           ______________________________
John Ellison, Jr.,                      Robert A. Bailey
President       5/2/95