<PAGE>
 
                                                                   EXHIBIT 10.30

================================================================================


                   NATIONAL GOLF OPERATING PARTNERSHIP, L.P.


                           _________________________

                            RESTATED NOTE AGREEMENT

                           DATED AS OF JULY 1, 1996
                           _________________________



                                  SERIES A-1:
                                  $14,758,700
           7.9% GUARANTIED SENIOR PROMISSORY NOTES DUE JUNE 15, 2006

                                  SERIES A-2:
                                  $13,794,200
           7.9% GUARANTIED SENIOR PROMISSORY NOTES DUE JUNE 15, 2006

                                  SERIES A-3:
                                  $11,447,100
           7.9% GUARANTIED SENIOR PROMISSORY NOTES DUE JUNE 15, 2006

                                   SERIES B:
                                  $35,000,000
 8% GUARANTIED SENIOR PROMISSORY NOTES DUE 10 YEARS FROM THE DATE OF ISSUANCE

================================================================================
<PAGE>
 
                               TABLE OF CONTENTS
                            (NOT PART OF AGREEMENT)

<TABLE> 
<S>                                                                       <C>  
1.  THE NOTES............................................................. 2

      1.1 Authorization................................................... 2

      1.2 Purchase and Sale of the Notes.................................. 3

      1.3 Closings........................................................ 3

      1.4 Use of Proceeds................................................. 4

      1.5 Purchase for Instrument......................................... 4

      1.6 Accredited Investor............................................. 4

      1.7 Source of Funds................................................. 4

      1.8 Legal Investment................................................ 5

      1.9 Restrictions on Transfer or Sale................................ 5

2.  CONDITIONS OF CLOSING................................................. 5

      2.1 Satisfactory Proceedings........................................ 6

      2.2 Opinions of Counsel; REIT Letters............................... 6

      2.3 Representations and Warranties.................................. 6

      2.4 Performance: No Default......................................... 6

      2.5 Compliance Certificates......................................... 6

      2.6 Legality........................................................ 7

      2.7 Absence of Certain Events....................................... 7

      2.8 Private Placement Number........................................ 7

      2.9 Book Value of Subsidiaries...................................... 7

      2.10 Repayment of Debt, Etc......................................... 7

      2.11 Payment of Fees................................................ 7

      2.12 The Guaranty................................................... 7

      2.13 Sale of Other Notes............................................ 8
</TABLE> 

                                       i
<PAGE>
 
<TABLE>
<S>                                                                       <C>
3.  PAYMENT, PREPAYMENT AND PURCHASE OF THE NOTES......................... 8

      3.1 Required Annual Prepayments of the Notes........................ 8

      3.2 Optional Prepayments............................................10

      3.3 Notice of Prepayment............................................10

      3.4 Allocation of Partial Prepayments...............................10

      3.5 Maturity, etc...................................................10

      3.6 Right to Put....................................................11

      3.7 Purchase of Notes...............................................12

4.  FINANCIAL STATEMENTS; INFORMATION.....................................13

5.  INSPECTION AND CONFIDENTIALITY........................................15

      5.1 Inspection......................................................15

      5.2 Confidential Information........................................16

6.  COVENANTS.............................................................17

      6.1 Limitations on Liens............................................17

      6.2 Maintenance of Certain Financial Conditions.....................17

      6.3 Limitations on Debt.............................................17

      6.4 Limitations on Short-Term Debt..................................18

      6.5 Consolidation, Merger, Sales of Assets, etc.....................18

      6.6 Sales of Assets.................................................19

      6.7 Limitation on Sale and Leaseback Transactions...................19

      6.8 Nature of Business..............................................19

      6.9 Maintenance of Leases...........................................19

      6.10 Restricted Payments............................................20

      6.11 Transactions with Affiliates...................................20

      6.12 Ownership of Golf Courses......................................20

      6.13 Payment of Notes; Maintenance of Books and Office..............21
</TABLE>
 
                                      ii
<PAGE>
 
<TABLE>
<S>                                                                        <C>
      6.14 Partnership Existence and Tax Status; Payment of Taxes;
            Maintenance of Properties; Insurance; Compliance with Laws;
            Maintenance of Patents.........................................21

      6.15  Compliance with ERISA..........................................23

7.  REPRESENTATIONS AND WARRANTIES OF THE ISSUER...........................23

      7.1 Organization, Authority and Tax Status of the Issuer.............23

      7.2 Authorization....................................................23

      7.3 Capitalization...................................................23

      7.4 Organization and Ownership of Subsidiaries; Affiliates...........24

      7.5 Disclosure.......................................................24

      7.6 Financial Statements.............................................24

      7.7 Changes, etc.....................................................25

      7.8 Compliance with Other Instruments, etc...........................25

      7.9 Governmental Authorizations, etc.................................25

      7.10 Litigation......................................................25

      7.11 Taxes...........................................................26

      7.12 Title to Properties and Leases..................................26

      7.13 Patents, Trademarks, Authorizations, etc........................26

      7.14 Compliance with ERISA...........................................27

      7.15 Private Offering................................................27

      7.16 Use of Proceeds; Margin Regulations.............................28

      7.17 Existing Debt and Long Term Leases..............................28

      7.18 Status Under Certain Statutes...................................28

      7.19 Environmental Matters...........................................28

      7.20 Foreign Assets Control Regulations, etc.........................29

      7.21 Internal Accounting Controls....................................29

      7.22 Solvency........................................................29
</TABLE>

                                      iii
 
<PAGE>
 
<TABLE>
<S>                                                                          <C>
      7.23 Assumption of Original Issuer Notes For Equivalent Value...........30

8.  EVENTS OF DEFAULT; REMEDIES...............................................30

      8.1 Events of Default Defined; Acceleration of Maturity; Recission and
            Annulment.........................................................30

      8.2 Suits for Enforcement...............................................33

      8.3 Remedies Cumulative.................................................33

      8.4 Remedies Not Waived.................................................33

9.  DEFINITIONS AND ACCOUNTING TERMS..........................................34

      9.1 Definitions.........................................................34

      9.2 Accounting Terms....................................................49

10. REGISTRATION, TRANSFER AND EXCHANGE OF NOTES..............................49

11. LOST NOTES, ETC...........................................................49

12. AMENDMENT AND WAIVER......................................................50

13. PAYMENTS ON NOTES.........................................................51

      13.1 Place Of Payment...................................................51

      13.2 Home Office Payment................................................51

14. LIABILITIES OF PURCHASER..................................................51

15. MISCELLANEOUS.............................................................52

      15.1 Expenses...........................................................52

      15.2 Reliance on and Survival of Representations........................52

      15.3 Successors and Assigns.............................................52

      15.4 Notices............................................................53

      15.5 Law Governing......................................................53

      15.6 Forum..............................................................53

      15.7 Waiver of Jury Trial...............................................53

      15.8 Headings, etc......................................................54

      15.9 Entire Agreement...................................................54
</TABLE>

                                      iv
<PAGE>
 
<TABLE>
<S>                                                                         <C>
      15.10 Substitution of Purchaser........................................54

      15.11 Counterparts.....................................................54

      15.12 Payments Due on Non-Business Days................................54

      15.13 Payments Due on Non-Business Days................................54

      15.14 Severability.....................................................55

      15.15 Construction.....................................................55
</TABLE>

Annex 1     - Information Relating to Purchasers
Exhibit A   - [Intentionally Omitted]
Exhibit B   - Form of Series B Note
Exhibit C-1 - Form of Opinion of Latham & Watkins
Exhibit C-2 - Form of Opinion of Scott S. Thompson
Exhibit C-3 - Form of Letter from Edward R. Sause
Exhibit C-4 - Form of Letter from Coopers & Lybrand L.L.P.
Exhibit D   - Form of Officer's Certificate delivered pursuant to Section 2.5(a)
Exhibit E   - Form of Secretary's Certificate delivered pursuant to Section 
              2.5(b)
Exhibit F   - Form of Guaranty
Exhibit G   - Form of Assumption Agreements
Exhibit H   - Form of Contribution Agreements
Exhibit I   - Form of Notice of CC Purchase Waiver
Exhibit J   - Form of Officer's Certificate delivered pursuant to Section 4(c)

                                       v
<PAGE>
 
           TO EACH OF THE PURCHASERS LISTED IN THE ATTACHED ANNEX 1:




                   NATIONAL GOLF OPERATING PARTNERSHIP, L.P.
                          1448 15th Street, Suite 200
                        Santa Monica, California 90404

                                  Series A-1:
                                  $14,758,700
           7.9% Guarantied Senior Promissory Notes due June 15, 2006


                                  Series A-2:
                                  $13,794,200
           7.9% Guarantied Senior Promissory Notes due June 15, 2006


                                  Series A-3
                                  $11,447,100
           7.9% Guarantied Senior Promissory Notes due June 15, 2006


                                   Series B:
                                  $35,000,000
 8% Guarantied Senior Promissory Notes due 10 Years from the Date of Insurance


                                                              as of July 1, 1996

                                R E C I T A L S
                                - - - - - - - -

          WHEREAS, pursuant to several Note Purchase Agreements dated as of June
28, 1996 (the "Issuer Note Purchase Agreements") by and between the Issuer and 
each of the Purchasers listed on Annex 1 thereto, you and each of the Other 
Purchasers have purchased the Issure's 7.9% guarantied senior promissory notes 
due June 15, 2006 in the aggregate principal amount of $14,758,700 (together 
with all notes issued in substitution or exchange therefor in accordance with 
the terms of this Agreement, the Series A-1 Notes"), and you and each of the 
Other Purchasers have severally agreed to purchase, in the aggregate amounts 
specified opposite your and their names on Annex 1 thereto, the Issuer's 8% 
guarantied senior promissory notes due ten years from the date of issuance 
thereof in the aggregate principal amount of $35,000,000 (together with all 
notes issued in substitution or exchange therefor in accordance with the terms 
of this Agreement, the "Series B Notes");

          WHEREAS, pursuant to several Note Purchase Agreements dated as of 
June 28, 1996 (the "Trust Note Purchase Agreements") by and between David G. 
Price, individually and as trustee of the Trust Revocable Trust Amendment in 
Entirety dated February 9, 1987 (the "Trust"), and each of the Purchasers listed
on Annex 1 thereto, you and each of the Other Purchasers have purchased the 
Trust's 7.9% senior promissory notes due June 15, 2006 in the aggregate 
principal amount of $13,794,200 (the "Trust Notes");

                                       1

<PAGE>
 
          WHEREAS, pursuant to several Note Purchase Agreements dated as of June
28, 1996 (the "Black Lake Note Purchase Agreements") by and between Black 
Lake/Penasquitos, a California general partnership ("Black Lake"), and each of 
the Purchasers listed on Annex 1 thereto, you and each of the Other Purchasers 
have purchased Black Lake's 7.9% senior promissory notes due June 15, 2006 in 
the aggregate principal amount of $11,447,100 (the Black Lake Notes");

          WHEREAS, pursuant to Assumption Agreements dated as of July 1, 1996 
(the "Assumption Agreements") by and between National Golf Operating 
Partnership, L.P., a Delaware limited partnership (the "Issuer"), and each of 
the Purchasers listed on Annex 1 hereto, the Issuer agreed to assume all of the 
liabilities, obligation, covenants, duties and indebtedness of the Trust and 
Black Lake to you and each of the Other Purchasers evidenced by the Trust Notes 
and Black Lake Notes, respectively, with the same effect as if such Notes had 
been executed and delivered by the Issuer to the respective Purchasers (the 
Trust Notes and the Black Lake Notes assumed by the Issuer being referred to 
herein as the Issuer's Series A-2 Notes and Series A-3 Notes, respectively, and,
together with all notes issued in substitution or exchange therefor in 
accordance with the terms of this Agreement and together with Series A-1 Notes, 
the "Series A-1 Notes, the "Series A Notes" and the Series A Notes together with
the Series B Notes being referred to as the "Notes");

          WHEREAS, the Guarantor has agreed to guarantee unconditionally any and
all obligations of the Issuer to you and the Other Purchasers under the 
Agreements and the Notes as provided therin:

          WHEREAS, this Agreement amends and restates the Issuer Note Purchase 
Agreement and shall govern the Issuer's rights and obligation with respect to 
all of the Notes, including without limitation, the Series A-2 and A-3 Notes;

          WHEREAS, the continuing obligations of the Trust and Black Lake under 
the Trust Note Purchase Agreements and the Black Lake Note Purchase Agreements, 
respectively, shall, upon execution and delivery hereof, be deemed fully 
performed and shall be no further force or effect with the exception that the 
covenant of each of the Trust and Black Lake to maintain its existence in 
Section 4.4(a), the covenant of each of the Trust and Black Lake to maintain an 
office in the last sentence of Section 4.3 and the covenants of each of the 
Trust and Black Lake in Section 8 thereof, as the case may be, shall survive and
continue in full force and effect, that all representation and warranties made 
by the Trust or Black Lake shall survive, and that all obligations of the Trust
and Black Lake under the Trust Notes and the Black Lake Notes shall continue in 
full force and effect;

          NOW, THEREFORE, the Issuer hereby agrees with you as follows:

     1.   THE NOTES.
          ---------

          1.1  AUTHORIZATION.  The Issuer has duly authorized and issued and 
               -------------
sold (or assumed) its (a) 7.9% guarantied senior promissory notes due June 15, 
2006 in the aggregate principal amount of $40,000,000, which shall be know as 
the Series A Notes and shall (i)bear interest from the date thereof on the 
unpaid principal amount thereof at the rate of 7.9% per annum (computed on the 
basis of a 360-day year of twelve 30-day months) payable semiannually on June 15
and December 15 of each year commencing on December 15, 1996, and with interest 
on any overdue principal (including any overdue prepayment of principal) and (to
the extent permitted by applicable law) on any overdue premium and any overdue 
interest, at the rate of 8.9% per annum until paid, such overdue interest (if 
any) to be payable semiannually as aforesaid or, at the option of the registered
holder of such Note, on demand and (ii) mature and be due and payable as to the 
entire remaining unpaid

                                       2
<PAGE>
 
principal amount thereof and unpaid interest thereon on June 15, 2006 and (b) 8%
guarantied senior promissory notes due on the date that is ten years from the 
date of issuance thereof in the aggregate principal amount of $35,00,000, which 
shall be known as the Series B Notes and shall (i) bear interest from the date 
thereof on the unpaid principal amount thereof at the rate of 8% per annum 
(computed on the basis of a 360-day year of twelve 30-day months) payable 
semiannually on the same dates each year commencing on the date that is six 
months from the date of issuance thereof, and with interest on any overdue 
principal (including any overdue prepayment of principal) and (to the extent 
permitted by applicable law) on any overdue premium and any overdue interest, at
the rate of 9% per annum until paid, such overdue interest (if any) to be 
payable semiannually as aforesaid or, at the option of the registered holder of 
such Note, on demand, (ii) mature and be due and payable as to the entire 
remaining unpaid principal amount thereof and unpaid interest thereon on the 
date that is ten years from the date of issuance thereof and (iii) be 
substantially in the form of Exhibit B hereto (with such changes therefrom as 
may be approved by you).

          Certain capitalized terms used and not otherwise defined herein shall 
have the respective meanings attributed thereto in Section 9 hereof.  Unless 
otherwise specified, any reference in this Agreement to a particular section or 
other subdivision, or to a particular schedule or exhibit, shall be considered a
reference to that section or other subdivision of, or to that schedule or 
exhibit to, this Agreement.

          1.2  PURCHASE AND SALE OF THE NOTES.  Subject to the terms and 
               ------------------------------
conditions hereof and in reliance on, with respect to the Issuer, your
representations and warranties contained in Sections 1.5 to 1.8 and your
agreements contained in Section 1.9 hereof and the representations and
warranties of the Other Purchasers contained in Sections 1.5 to 1.8 and the
agreements of the Other Purchasers contained in Section 1.9 of the Other 
Agreements and, with respect to you, the representations of the Issuer contained
in Sections 7.1 to 7.21 hereof and otherwise made in writing by or on behalf of
the Issuer in connection with the transactions contemplated hereby and thereby,
(a) the Issuer has issued and sold to you and you have purchased from the
Issuer, at the First Closing provided for in Section 1.3, Series A-1 Notes in
the aggregate principal amount specified opposite your name in Annex 1, at a
purchase price equal to 100% of such principal amount and payable as provided in
Section 1.3 and (b) the Issuer will issue and sell to you and you will purchase
from the Issuer, at the Second Closing provided for in Section 1.3, Series B
Notes in the aggregate principal amount specified opposite your name in Annex 1,
at a purchase price equal to 100% of such principal amount and payable as
provided in Section 1.3. Contemporaneously with entering into this Agreement,
the Issuer is entering into separate Restated Note Agreements (the "Other
Agreements") identical with this Agreement with each of the other purchasers
named in Annex 1 (the "Other Purchasers"), with respect to and providing for the
sale at the applicable Closing to each of the Other Purchasers of Notes in the
principal amount specified opposite its name in Annex 1. Your obligations
hereunder and the obligations of the Other Purchasers under the Other Agreements
are several and not joint obligations and you shall have no obligation under any
Other Agreement and no liability to any Person for the performance or
nonperformance by any Other Purchaser thereunder.

          1.3  CLOSINGS.  The closing of the purchase and sale of the Series A-1
               --------
Notes purchased by you (the "First Closing") occurred on July 1, 1996 (the 
"First Closing Date"), at the offices of Gibson, Dunn & Crutcher LLP, your 
special counsel in connection with the transactions contemplated by this 
Agreement, 200 Park Avenue, New York, New York. The closing of the purchase and 
sale of the Series B Notes to be purchased by you (the "Second Closing" and, 
together with the First Closing, the "Closings") shall occur on a Business Day
that is a date no more than eight months from the day of the First Closing, 
designated by the Issuer, upon 14 days' notice by the Issuer to

                                       3
<PAGE>
 
you and the Other Purchasers or such shorter notice as may be acceptable to you 
and the Other Purchasers (the "Second Closing Date" and, together with the First
Closing Date, the "Closing Dates") at the offices of Gibson, Dunn & Crutcher LLP
specified above or at such other location as you, the Other Purchasers and the 
Issuer shall agree. If the Second Closing shall not occur by the day that is 
eight months from the day of the First Closing, then unless you, the Other 
Purchasers and the Issuer shall otherwise agree, you and the Other Purchasers 
shall not have any obligation to purchase or to pay for, and the Issuer shall 
not have any obligation to sell or deliver, any Series B Notes. At each of the 
Closings, the Issuer shall have delivered or will deliver to you, as the case 
may be, the Notes to be purchased by you in the form of one or more Notes (as 
you may designate), each dated the applicable Closing Date and registered in 
your name (or the name of your nominee), against delivery by you to the Issuer 
or its order of immediately available funds in the amount of the purchase price 
therefor by wire transfer of immediately available funds for the account of the 
Issuer to account No. 14179-03625, maintained at Bank of America, 2049 Century 
Park East, Los Angeles, California 90067, ABA No. 121000358. If, at any of the 
Closings, the Issuer shall have failed or shall fail, as the case may be, to 
tender such Notes to you as provided in this Section 1.3, or if, at the Second 
Closing, any of the conditions specified in Section 2 shall not have been 
fulfilled to your satisfaction, you shall, at your election, be relieved of all 
further obligations under this Agreement in respect of such Notes, without 
thereby waiving any other rights you may have by reason of such failure or 
nonfulfillment.

          1.4  USE OF PROCEEDS.  The Issuer applied and will apply the proceeds 
               ---------------
from the sale of the Notes (subject in any event to Section 7.16) to repay 
existing bank debt, to finance future acquisitions of golf courses and related 
facilities and properties, to make participating mortgage loans for golf 
courses, secured by liens on such golf courses, and for general partnership 
purposes.

          1.5  PURCHASE FOR INVESTMENT.  You represent to the Issuer that on 
               -----------------------
each of the Closing Dates you have acquired or will acquire, as the case may be,
the Notes being purchased by you for your own account for investment and not 
with a view to or for sale in connection with any distribution thereof, provided
that, the disposition of your property shall at all times be and remain within 
your control.

          1.6  ACCREDITED INVESTOR.  You represent to the Issuer that you are 
               -------------------
knowledgeable, sophisticated and experienced in business and financial matters;
you have previously invested in securities similar to the Notes and you
acknowledge that the Notes have not been registered under the Securities Act and
understand that the Notes must be held indefinitely unless they are subsequently
registered under the Securities Act or such sale is permitted pursuant to an
available exemption from such registration requirement; you are able to bear the
economic risk of your investment in the Notes and are presently able to afford
the complete loss of such investment; you are an "accredited investor" as
defined in Regulation D, Rule 501(a)(i)-(3), promulgated under the Securities
Act; and you have been afforded access to information about the Issuer and the
Guarantor, and the Issuer's and the Guarantor's financial condition, results of
operations, business, property, management and prospects sufficient to enable
you to evaluate your investment in the Notes. You acknowledge that you have
conducted your own analysis of the Issuer's and the Guarantor's financial
condition and other foregoing factors and that you have not relied upon the
analysis of any Other Purchaser in determining the make an investment in the
Notes.

          1.7  SOURCE OF FUNDS. You represent to the Issuer that the purchase of
               ---------------
the Notes either (a) is being funded solely out of an insurance company general 
investment account which either (i) would be exempt from the prohibited 
transactions rules of ERISA and the Code under Prohibited Transaction Class 
Exemption 95-60, published by the Department of Labor in the Federal Register on
July 12, 1995 (60 F.R. 35925, July 12, 

                                       4




          
<PAGE>
 
1995) or (ii) exclusively supports either contracts not issued to any "employee 
benefit plan" as defined in Section 3(3) of ERISA which is subject to Title I of
ERISA or any "plan" within the meaning of Section 4975 of the Code or policies 
which constitute "guaranteed benefit policies" under Section 401(b) of ERISA;
(b) is not being funded with the assets of any (i) "employee benefit plan"
within the meaning of Section 3(3) of ERISA which is subject to Title I of
ERISA, (ii) "plan" within the meaning of Section 4975 of the Code or (iii)
entity deemed to hold "plan assets" within the meaning of 29 C.F.R. (S) 2510.3-
101 of any such employee benefit plan or plans, with respect to which the Issuer
or any ERISA Affiliate is a party in interest (as defined in Section 3(14) of
ERISA) or a disqualified person (as defined in Section 4975 of the Code) or (c)
is not a prohibited transaction within the meaning of Section 406 of ERISA or
Section 4975 of the Code because you have a statutory, class or administrative
exemption from such prohibited transaction rules for the purchase and holding of
Notes.

          1.8  LEGAL INVESTMENT  You represent to the Issuer that, as of the 
               ----------------
date hereof, the Notes purchased or to be purchased by you, as the case may be, 
are a legal investment for you under the laws of each jurisdiction to which you 
may be subject, without resort to any basket provision of said laws such as New 
York Insurance Law (S) 1405(a)(8) and that, as of the date hereof, you are not 
aware of any fact or reason why the Notes purchased or to be purchased by you 
hereunder, as the case may be, would not be a legal investment for you under the
laws of each jurisdiction to which you may be subject, without resort to any 
basket provision of said laws such as New York Insurance Law (S) 1405(a)(8), on 
each of the Closing Dates.

          1.9  RESTRICTIONS ON TRANSFER OR SALE. No transfer or sale (including,
               --------------------------------
without limitation, by pledge or hypothecation) of the Notes by any holder shall
be effective unless (a) the Notes are registered under the Securities Act or 
such transfer is permitted pursuant to an available exemption from such 
registration requirement and (b) the proposed transferee represents to you that 
such transfer or sale of the Notes either (i) is being funded solely out of an 
insurance company general investment account which either (x) would be exempt 
from the prohibited transactions rules of ERISA and the Code under Prohibited 
Transaction Class Exemption 95-60, published by the Department of Labor in the 
Federal Register on July 12, 1995 (60 F.R. 35925, July 12, 1995) or (y) 
exclusively supports either contracts not issued to any "employee benefit plan" 
as defined in Section 3(3) of ERISA which is subject to Title I of ERISA or any
"plan" within the meaning of Section 4975 of the Code or policies which
constitute "guaranteed benefit policies" under Section 401(b) of ERISA; (ii) is
not being funded with the assets of any (x) "employee benefit plan" within the
meaning of Section 3(3) of ERISA which is subject to Title I of ERISA (y) "plan"
within the meaning of Section 4975 of the Code or (z) entity deemed to hold
"plan assets" within the meaning of 29 C.F.R. (S) 2510.3-101 of any such
employee benefit plan or plans, with respect to which the Issuer or any ERISA
Affiliate is a party in interest (as defined in Section 3(14) of ERISA) or a
disqualified person (as defined in Section 4975 of the Code) or (iii) is not a
prohibited transaction within the meaning of Section 406 of ERISA or Section
4975 of the Code because the proposed transferee has a statutory, class or
administrative exemption from such prohibited transaction rules for the purchase
and holding of Notes.

     2.   CONDITIONS OF CLOSING.  The Issuer's obligation to sell and deliver 
          ---------------------
each of the Series B Notes to be sold and delivered by it hereunder shall be 
subject to the fulfillment to its satisfaction, prior to or at the Second 
Closing, of the conditions set forth in Section 2.15 hereof and, your obligation
to purchase and to pay for the Series B Notes to be purchased by you hereunder 
shall be subject to the fulfillment to your satisfaction, prior to or at the 
Second Closing, of each of the conditions hereinafter set forth:

                                       5

<PAGE>
 
          2.1  SATISFACTORY PROCEEDINGS.  All partnership, corporate and other 
               ------------------------
proceedings taken in connection with the issuance of the Notes and the 
consummation of the transactions contemplated hereby and all documents and 
papers relating thereto, including the Guaranty, shall be reasonably 
satisfactory to you and your special counsel, and you and your special counsel 
shall have received counterpart originals or certified or other copies of such 
documents and papers, all in form and substance reasonably satisfactory to you 
and your special counsel, as you or they may reasonably request in connection 
therewith.

          2.2  OPINIONS OF COUNSEL; REIT LETTERS.  You shall have received 
               ---------------------------------
favorable opinions, each dated the Second Closing Date, addressed to you and 
satisfactory in form, scope and substance to you, from (a) Latham & Watkins, 
special counsel of the Issuer, substantially in the form of Exhibit C-1 and, in 
the event that there is a change in circumstances, covering such other matters 
incident to the transactions contemplated hereby as shall be attributable to 
such change or changes as you may reasonably request, (b) Scott S. Thompson, 
Esq., in-house counsel to the Issuer, substantially in the form of Exhibit C-2 
and (c) Gibson, Dunn & Crutcher LLP, your special counsel, in form and substance
satisfactory to you and covering such other matters incident to such 
transactions as you may reasonably request. You shall also have received a 
letter dated the Second Closing Date from each of Edward R. Sause, Chief 
Financial Officer of the Issuer, substantially in form of Exhibit C-3, and 
Cooper and Lybrand, auditors and tax consultants for the Guarantor, 
substantially in the form of Exhibit C-4, each with respect to certain real 
estate investment trust matters.

          2.3  REPRESENTATIONS AND WARRANTIES.  All representations and 
               ------------------------------
warranties of the Issuer contained in this Agreement and in the Assumption 
Agreements and all representations and warranties of each of the Trust and Black
Lake contained in each of the Trust Note Purchase Agreements and Black Lake Note
Purchase Agreements, respectively, or otherwise made in writing by or on behalf
of the Issuer, the Trust or Black Lake in connection with the transactions
contemplated hereby and thereby shall be true and correct when made and (except
as affected by the consummation of such transactions) as of the time of the
Second Closing with the same effect as though such representations and
warranties had been made on and as of the Second Closing Date.

          2.4  PERFORMANCE; NO DEFAULT.  The Issuer shall have performed all 
               -----------------------
agreements and complied with all conditions contained herein and in the 
Assumption Agreements required to be performed or complied with by it on or 
prior to the Second Closing Date. At the time of the Second Closing (and after 
giving effect to the sale of the Notes to you and the application of the 
proceeds of such sale and the assumption by the Issuer of the Trust Notes and 
the Black Lake Notes) no Default or Event of Default shall have occurred and be 
continuing. Neither the Issuer nor any Restricted Subsidiary shall have entered 
into any transaction since the date of the Memorandum that would have been 
prohibited by Sections 6.6 through 6.11, inclusive, had such Sections applied 
since such date.

          2.5  COMPLIANCE CERTIFICATES.
               -----------------------

               (A)  OFFICER'S CERTIFICATE.  The Issuer shall have delivered to 
                    ---------------------
     you an Officer's Certificate substantially in the form of Exhibit D, dated
     the Second Closing Date, certifying that the conditions specified in
     Sections 2.3, 2.4, and 2.7 have been fulfilled.

               (B)  SECRETARY'S CERTIFICATE.  The Issuer shall have delivered to
                    -----------------------
     you a Secretary's Certificate substantially in the form of Exhibit E,
     certifying as to the resolutions attached thereto and other proceedings
     relating to the authorization,

                                       6
<PAGE>
 
     execution and delivery of the Notes, this Agreement, the Other Agreements
     and the Assumption Agreements.

               2.6   LEGALITY. On the Second Closing Date, the Notes to be 
                     --------
purchased by you hereunder shall (i) be a legal investment for you under the
laws of each jurisdiction to which you may be subject, without resort to any
basket provision of said laws such as New York Insurance Law (S) 1405(a)(8) and
(ii) not subject you to any tax, penalty or liability under or pursuant to any
applicable law or regulation, which law or regulation was not in effect on the
date hereof. If requested by you, you shall have received an Officer's
Certificate certifying as to such matters of fact as you may reasonably specify
to enable you to determine whether such purchase is so permitted.

               2.7   ABSENCE OF CERTAIN EVENTS. There shall not have occurred
                     -------------------------
any Material Adverse Change since the date of the most recent audited financial
statements included in the Memorandum. Subsequent to the respective dates as of
which information is given in the Memorandum and prior to the First Closing,
neither the Issuer nor any Restricted Subsidiary shall have consolidated with,
merged into, or sold, leased or otherwise disposed of its assets and properties
as an entirety or substantially as an entirety to any Person or succeeded to all
or substantially all or any substantial part of the liabilities of any other
Person except with respect to the golf course acquisition transactions described
on Schedule 2.7.

               2.8   PRIVATE PLACEMENT NUMBER. The Issuer shall have obtained 
                     ------------------------
from the Standard & Poor's Cusip Service Bureau a Private Placement Number for 
each series of Notes and shall have delivered to you an Officer's Certificate, 
dated the Second Closing Date, specifying such Private Placement Numbers. Each 
of the Trust and Black Lake shall have obtained from the Standard and Poor's 
Cusip Service Bureau a Private Placement Number for the Trust Notes and Black 
Lake Notes, respectively, and shall have delivered to you a copy of the 
correspondence from the Cusip Service Bureau specifying such Private Placement 
Numbers.

               2.9   BOOK VALUE OF SUBSIDIARIES. Prior to the First Closing
                     --------------------------
Date, the Issuer shall have delivered to you a schedule presenting a complete
and correct list of the Issuer's Subsidiaries and showing, as to each
Subsidiary, the book value of its assets as determined in accordance with GAAP
and presented on a current balance sheet.

               2.10  REPAYMENT OF DEBT, ETC. On the Second Closing Date, the 
                     ---------------------- 
Issuer shall have delivered to you a schedule detailing the bank debt to be 
repaid, the future acquisitions of golf courses and related facilities and 
properties to be financed and the participating mortgage loans for golf courses 
to be made or general partnership purposes to be accomplished pursuant to 
Section 1.4.

               2.11  PAYMENT OF FEES. The Issuer shall have paid the reasonable 
                     ---------------
legal fees and expenses of Gibson, Dunn & Crutcher LLP and all other fees and 
expenses for which the Issuer is obligated pursuant to Section 15.1 and for 
which the Issuer shall have received invoices in proper form on or prior to the 
Business Day preceding the Second Closing Date. 

               2.12  THE GUARANTY. National Golf Properties, Inc., a Maryland 
                     ------------
corporation (the "Guarantor"), shall have executed and delivered to you an 
Amended and Restated General Continuing Guaranty dated the date of the First 
Closing, in the form attached hereto as Exhibit F (the "Guaranty"), and such 
Guaranty shall be in full force and effect.

                                       7

<PAGE>
 
          2.13   SALE AND ASSUMPTION OF TRUST NOTES AND BLACK LAKE NOTES. (i) 
                 -------------------------------------------------------
the Trust shall have sold to you and the Other Purchasers and you and the Other 
Purchasers shall have purchased from the Trust, the Trust Notes to be purchased 
by you and them as specified in Annex 1 to the Trust Note Purchase Agreements; 
(ii) Black Lake shall have sold to you and the Other Purchasers and you and the 
Other Purchasers shall have purchased from Black Lake, the Black Lake Notes to 
be purchased by you and them as specified in Annex 1 to the Black Lake Note 
Purchase Agreements; (iii) the Issuer shall have assumed all of the liabilities,
obligations, covenants, duties and indebtedness owing to you and the Other 
Purchasers under each of the Trust Note Purchase Agreements and Black Lake Note 
Purchase Agreements and the Trust Notes and Black Lake Notes issued thereunder, 
respectively, pursuant to the terms of Assumption Agreements dated the date of 
the First Closing, in the form attached hereto as Exhibit G (the "Assumption 
Agreements"), and such Assumption Agreements shall be in full force and effect.

          2.14   CONTRIBUTION AGREEMENTS. The Guarantor and the Issuer shall 
                 -----------------------
have entered into Trust Contribution Agreements with each of the Trust, Black 
Lake and Richard C. Price dated a date on or prior to the First Closing Date in 
the form attached hereto as Exhibit H (collectively, the "Contribution 
Agreements"), and such Contribution Agreements shall be in full force and 
effect.

          2.15   SALE OF OTHER NOTES. Contemporaneously with the Second Closing,
                 -------------------
the Issuer shall sell to the Other Purchasers and the Other Purchasers shall 
purchase from the Issuer, the Notes to be purchased by them as specified in 
Annex 1. Prior to the Second Closing, the First Closing shall have occurred, and
the Issuer shall have sold to you and the Other Purchasers and the Other 
Purchasers shall have purchased from the Issuer, the Series A-1 Notes to be 
purchased by you and them at the First Closing as specified in Annex 1.

     3.   PAYMENT, PREPAYMENT AND PURCHASE OF THE NOTES.
          ---------------------------------------------

          3.1    REQUIRED SEMI-ANNUAL PREPAYMENTS OF THE NOTES.
                 ---------------------------------------------
                 (A)  REQUIRED SEMI-ANNUAL PREPAYMENTS OF THE SERIES A NOTES.
                      ------------------------------------------------------

     On June 15, 1999 and on each June 15 and December 15 thereafter to and
     including December 15, 2005 (so long as any Series A Notes shall remain
     outstanding), the Issuer will prepay, and there shall become due and
     payable, an aggregate principal amount of the Series A Notes (or, in the
     case of the prepayment to be made on any such date pursuant to this Section
     3.1(a), such lesser principal amount as shall then be outstanding) as
     follows:

<TABLE> 
<CAPTION> 
                                                              REQUIRED       
                      DATE                                   PREPAYMENT      
                 -------------------------------------   --------------------
                 <S>                                     <C> 
                 June 15, 1999........................   $548,567.63
                 December 15, 1999....................   $570,236.05
                 June 15, 2000........................   $592,760.37
                 December 15, 2000....................   $616,174.41
                 June 15, 2001........................   $640,513.30
                 December 15, 2001....................   $665,813.57
                 June 15, 2002........................   $692,113.21
                 December 15, 2002....................   $719,451.68
                 June 15, 2003........................   $747,870.02
                 December 15, 2003....................   $777,410.89
                 June 15, 2004........................   $808,118.62
</TABLE> 

                                       8
<PAGE>
 
                 
<TABLE> 
                 <S>                                     <C> 
                 December 15, 2004.....................  $840,039.30
                 June 15, 2005.........................  $873,220.85
                 December 15, 2005.....................  $907,713.08
</TABLE> 

     The remaining $29,999,997.05 in principal amount of the Series A Notes,
     together with accrued interest thereon, shall become due and payable on the
     maturity date of the Series A Notes.

                 (B)     REQUIRED SEMI-ANNUAL PREPAYMENTS OF THE SERIES B NOTES.
                         ------------------------------------------------------
     On the day that is three years from the date of issuance of the Series B
     Notes and semiannually thereafter on the same dates each year to and
     including the day that is six months prior to the day on which the Series B
     Notes will mature and be due and payable as to the entire remaining unpaid
     principal amount thereof and unpaid interest thereon (so long as any Series
     B Notes shall remain outstanding), the Issuer will prepay, and there shall
     become due and payable, an aggregate principal amount of the Series B Notes
     (or, in the case of the prepayment to be made on any such date pursuant to
     this Section 3.1(b), such lesser principal amount as shall then be
     outstanding) as follows:

<TABLE> 
<CAPTION> 
                                                          REQUIRED
                            DATE                         PREPAYMENT
                 -------------------------------------   ------------
                 <S>                                     <C> 
                 First Payment........................   $475,206.28
                 Second Payment.......................   $494,214.53
                 Third Payment........................   $513,983.12
                 Fourth Payment.......................   $534,542.44
                 Fifth Payment........................   $555,924.14
                 Sixth Payment........................   $578,161.10
                 Seventh Payment......................   $601,287.55
                 Eighth Payment.......................   $625,339.05
                 Ninth Payment........................   $650,352.61
                 Tenth Payment........................   $676,366.72
                 Eleventh Payment.....................   $703,421.38
                 Twelfth Payment......................   $731,558.24
                 Thirteenth Payment...................   $760,820.57
                 Fourteenth Payment...................   $791,253.39
</TABLE> 

     The remaining $26,307,568.88 in principal amount of the Series B Notes,
     together with accrued interest thereon, shall become due and payable on the
     maturity date of the Series B Notes.

                 (C)     OBLIGATION TO PREPAY FULL AMOUNT. Each prepayment made 
                         --------------------------------
     pursuant to Section 3.1(a) or (b) shall be at 100% of the principal amount
     so to be prepaid, together with interest accrued thereon to the date of
     such prepayment, without premium. No prepayment of less than all of the
     Notes pursuant to Section 3.2(b) shall relieve the Issuer of its obligation
     to make (nor, except as provided in Section 3.4, shall it reduce the amount
     of) the prepayments of principal on the Notes required by Sections 3.1(a)
     and (b).

                                       9






<PAGE>
 
          3.2  OPTIONAL PREPAYMENTS.
               --------------------

               (A) LIMITATION ON OPTIONAL PREPAYMENTS. The Notes shall not be
                   ----------------------------------
     subject to prepayment by the Issuer at its option, except as provided in
     Section 3.2(b).

               (B) OPTIONAL PREPAYMENTS WITH MAKEWHOLE AMOUNT. The Issuer may,
                   ------------------------------------------
     at its option, at any time upon notice as provided in Section 3.3, on the
     date specified in such notice, prepay the Notes in whole or from time to
     time in part (in an aggregate principal amount of the Notes that is equal
     to or exceeds $2,000,000 in the case of a partial prepayment), each such
     prepayment to be made at the principal amount of the Notes so to be prepaid
     together with interest accrued on such principal amount to the date of
     prepayment, plus a premium equal to the Makewhole Amount determined in
     respect of such principal amount.

          3.3  NOTICE OF PREPAYMENT. The Issuer will give each holder of a Note
               --------------------
(a) written notice of any prepayment pursuant to Section 3.2(b) at least 30 days
(except as provided in Section 3.5) and not more than 60 days prior to the date
fixed for such prepayment in each case specifying (i) such date of prepayment,
(ii) the aggregate principal amount of the Notes to be prepaid on such date,
(iii) the principal amount of each Note held by such holder so to be prepaid
determined in accordance with Section 3.4, (iv) the Issuer's estimate as of the
date of such notice, calculated, with respect to the Makewhole Amount only, as
though payment were being made on the date of such notice, of the respective
amounts of (A) accrued interest payable to such holder in respect of each such
prepayment and (B) the Makewhole Amount, if any, applicable in respect of each
such prepayment, showing in each case in reasonable detail the calculation
thereof and, with respect to the Makewhole Amount, the Reference Rate used in
such calculation and (v) whether such prepayment is being made in connection
with an anticipated consolidation, merger or sale, lease, transfer or other
disposition of all or substantially all of its properties or assets and (b)
further written notice (a copy of which shall be telecopied by the Issuer to
each such holder concurrently with the sending thereof) at least two Business
Days prior to such date of prepayment, specifying the amount, determined as of
the date of such further notice, required to be specified pursuant to subclause
(iv)(B) of the notice required by the foregoing clause (a), showing in
reasonable detail the calculation thereof and the Reference Rate used in such
calculation.

          3.4  ALLOCATION OF PARTIAL PREPAYMENTS. In the event of any prepayment
               ---------------------------------
or purchase of less than all of the outstanding Notes, the principal amount of
the Notes to be prepaid or repurchased shall be allocated among all the Notes at
the time outstanding (and allocated among the required prepayments and maturity
date repayments required under Sections 3.1(a) and (b)) in proportion, as nearly
as practicable, to the respective principal amounts thereof not therefore
prepaid pursuant to Sections 3.1(a) and (b) or 3.2(b) or purchased pursuant to
Section 3.6. Promptly following any prepayment or purchase of less than all the
outstanding Notes pursuant to Sections 3.2(b) or 3.6 hereof, and in any event
within thirty Business Days thereafter, the Issuer shall deliver to each holder
of any Notes a schedule setting forth the revised amount of principal on the
Notes to be prepaid pursuant to Sections 3.1(a) and (b).

          3.5  MATURITY, ETC. In the case of each prepayment of Notes, whether
               -------------
required or optional, the principal amount of each Note to be prepaid shall
become due and payable on the date fixed for such prepayment, together with
interest accrued on such principal amount to such date and the applicable
Makewhole Amount (if any), except that in the case of any optional prepayment
made in connection with an anticipated consolidation, merger or sale, lease,
transfer or other disposition of all or substantially all of its properties

                                      10





<PAGE>
 
or assets for which notice has been given in accordance with clause (v) of 
Section 3.3, the Issuer may by written notice (a "Cancellation Notice") to each 
holder of a Note cancel its prior written notice of prepayment pursuant to 
Section 3.3 hereof and the principal amount of each Note to be prepaid pursuant 
to such prior written notice shall no longer be due and payable on such date: 
provided that (i) such Cancellation Notice shall be effective and the Notes to 
-------- ----
be prepaid shall no longer be due and payable on such date only in the event
that the anticipated consolidation, merger or sale, lease, transfer or other
disposition of all or substantially all of its properties or assets has not
occurred and (ii) such Cancellation Notice is given at least three Business Days
before the date fixed for optional prepayment. If the Issuer believes that the
anticipated consolidation, merger or sale, lease, transfer or other disposition
of all or substantially all of its properties or assets has been merely delayed
rather than abandoned, the Issuer may, together with the Cancellation Notice,
give a second notice of prepayment shall be at least 5 days and not more than 60
days prior to the second date fixed for such prepayment. From and after the date
fixed for required or optional prepayment, unless the Issuer shall fail to pay
to each holder of a Note such principal amount when so due, together with the
interest and the Makewhole Amount, if any, as aforesaid, interest on such
principal amount shall cease to accrue. Any Note paid or prepaid in full shall
promptly thereafter be surrendered to the Issuer and canceled and shall not be
reissued and no Note shall be issued in lieu of any paid or prepaid principal
amount of any Note.

          3.6  Change of Control Purchase.
               --------------------------    

                 (1) Change of Control Purchase Obligation.  In the event of a 
                     -------------------------------------
     DGP Change of Control, the Issuer shall be obligated to purchase (the
     "Change of Control Purchase Obligation") from each holder of Notes on the
     terms and conditions hereinafter set forth, for an amount equal to the
     Agreed Purchase Consideration, the Notes held by such holder, provided,
                                                                   --------   
     however, that upon the occurrence of a DGP Change of Control, any holder
     -------  ----
     may waive the Change of Control Purchase Obligation with respect to all or
     any portion of the Notes held by such holder, in which event the Issuer
     shall be obligated to purchase only that amount of Notes held by such
     holder with respect to which the Change of Control Purchase Obligation has
     not been waived.

               (ii)  Notice of Change of Control Purchase: Waiver.
                     --------------------------------------------

                     (A) Within five Business Days after the occurrence of a DGP
     Change of Control with respect to which the Issuer did not publicly
     disclose that such DGP Change of Control was about to occur, the Issuer
     shall give each holder of Notes written notice thereof describing the DGP
     Change of Control, and the facts and circumstances surrounding the
     occurrence thereof, in reasonable detail. At any time prior to forty-five
     days after any holder of Notes shall receive such notice, such holder may
     deliver to the Issuer a waiver (a "Notice of CC Purchase Waiver")
     substantially in the form of Exhibit I hereto. When a holder of Notes shall
     deliver a Notice of CC Purchase Waiver, the Issuer shall purchase that
     amount of Notes held by such holder with respect to which such holder has
     not in the Notice of CC Purchase Waiver specifically waived the Change of
     Control Purchase Obligation on the date specified in such notice (which
     shall not be less than ten days after delivery of such Notice of CC
     Purchase Waiver), and such holder shall sell such Notes to the Issuer
     without recourse, representation or warranty (other than as to such
     holder's full right, title and interest to such Notes free of any adverse
     claim therein) at a price, payable in immediately available funds by wire
     transfer to the account specified in Annex I hereto or to such other
     account as may be specified in such notice, equal to the Agreed Purchase
     Consideration. If a holder of Notes fails to deliver a Notice of

                                      11
<PAGE>
 
     CC Purchase Waiver, the Issuer shall purchase all Notes held by such holder
     on the date that is sixty days after the Issuer shall have given each
     holder the aforementioned notice of the DGP Change of Control, and such
     holder shall sell such Notes to the Issuer without recourse, representation
     or warranty (other than as to such holder's full right, title and interest
     to such Notes free of any adverse claim therein) at a price, payable in
     immediately available funds by wire transfer to the account specified in
     Annex 1 hereto, equal to the Agreed Purchase Consideration.

                     (B) With respect to any DGP Change of Control for which the
     Issuer did publicly disclose that such DGP Change of Control was about to
     occur, the Issuer shall give each holder of Notes written notice describing
     the DGP Change of Control, and the facts and circumstances surrounding the
     occurrence thereof, in reasonable detail, such notice to be given promptly
     after the Issuer makes such disclosure and in any event within two days of
     the Issuer making such disclosure. At any time prior to the occurrence of
     such DGP Change of Control, a holder may deliver to the Issuer a Notice of
     CC Purchase Waiver. When a holder of Notes shall deliver a Notice of CC
     Purchase Waiver, the Issuer shall purchase, prior to or upon the occurrence
     of the DGP Change of Control (but in any event on a date not less than ten
     days after receipt by Issuer of such Notice of CC Purchase Waiver), that
     amount of Notes held by such holder with respect to which such holder has
     not in the Notice of CC Purchase Waiver specifically waived the Change of
     Control Purchase Obligation, and such holder shall sell such Notes to the
     Issuer without recourse, representation or warranty (other than as to such
     holder's full right, title and interest to such Notes free of any adverse
     claim therein) at a price, payable in immediately available funds by wire
     transfer to the account specified in Annex 1 hereto or to such other
     account as may be specified in such notice, equal to the Agreed Purchase
     Consideration. If a holder of Notes fails to deliver a Notice of CC
     Purchase Waiver prior to the occurrence of the DGP Change of Control, the
     Issuer shall purchase all Notes held by such holder on a date not more than
     ten days after the occurrence of the DGP Change of Control, and such holder
     shall sell such Notes to the Issuer without recourse, representation or
     warranty (other than as to such holder's full right, title and interest to
     such Notes free of any adverse claim therein) at a price, payable in
     immediately available funds by wire transfer to the account specified in
     Annex 1 hereto, equal to the Agreed Purchase Consideration. If, at any time
     after the delivery by the Issuer of a notice of an impending DGP change of
     Control, the Issuer publicly discloses that such DGP Change of Control is
     no longer expected to occur (whether or not Issuer has received any Notice
     of CC Purchase Waivers), the Issuer shall promptly, and in any event within
     two days of making such disclosure, give notice thereof to each holder of
     Notes. After delivery of such notice, all obligations of the Issuer to
     repurchase Notes, and all Notice of CC Purchase Waivers, with respect to
     such previously announced DGP Change of Control, shall terminate; provided,
     that if such DGP Change of Control later becomes pending and publicly
     disclosed, or occurs, Section 3.6 (ii)(B) or 3.6 (ii)(A), as applicable,
     shall again apply.

          3.7  Purchase of Notes.  The Issuer will not and will not permit any 
               -----------------
Affiliate (other than a third party investor who is an Affiliate solely by 
virtue of clause (b) of the definition of "Affiliate") to purchase, redeem, 
prepay or otherwise acquire, directly or indirectly, any of the outstanding 
Notes except upon the payment or repayment of the Notes in accordance with the 
terms of this Agreement and the Notes.  The Issuer will promptly cancel all 
Notes acquired by it or any Affiliate pursuant to any payment, prepayment or 
purchase of Notes pursuant to any provision of this Agreement and no Notes may 
be issued in substitution or exchange for any such Notes.

                                      12

<PAGE>
 
     4.   FINANCIAL STATEMENTS; INFORMATION. The Issuer will furnish (in 
          ---------------------------------
duplicate) to you, so long as you or your nominee shall be obligated to purchase
or shall hold any of the Notes, and to each other institutional holder of 
outstanding Notes:

          (a)  as soon as practicable and in any event within 50 days after the 
     end of each of the first three quarterly fiscal periods in each fiscal year
     of the Issuer, the unaudited consolidated balance sheet of the Issuer and
     any Restricted Subsidiaries, and the unaudited consolidating balance sheet
     of the Issuer and any Restricted Subsidiaries, as of the end of such
     quarterly period and the related unaudited consolidated statements of
     income, retained earnings and cash flows of the Issuer and any Restricted
     Subsidiaries, and the related unaudited consolidating statement of income
     of the Issuer and any Restricted Subsidiaries for such quarterly period and
     (in the case of the second and third such quarterly periods) for the
     portion of the fiscal year ended with the last day of such quarterly
     period, setting forth in each case in comparative form the respective
     figures for the corresponding periods of the previous fiscal year, all in
     reasonable detail and certified as complete and correct in all material
     respects in conformity with GAAP (except in respect of consolidating
     statements and footnotes), subject to changes resulting from year-end audit
     adjustments, by the principal financial officer of the General Partner of
     the Issuer;

          (b)  as soon as practicable and in any event within 95 days after the 
     end of each fiscal year of the Issuer, the unaudited consolidated balance
     sheet of the Issuer and any Restricted Subsidiaries, and the unaudited
     consolidating balance sheet of the Issuer and any Restricted Subsidiaries,
     as of the end of such fiscal year and the related unaudited consolidated
     statements of income, retained earnings and cash flows of the Issuer and
     any Restricted Subsidiaries, and the related unaudited consolidating
     statement of income of the Issuer and any Restricted Subsidiaries, for such
     fiscal year, setting forth in each case in comparative form the respective
     figures for the previous fiscal year, all in reasonable detail and
     certified as complete and correct in all material respects in conformity
     with GAAP (except in respect of consolidating statements and footnotes) by
     the principal financial officer of the General Partner of the Issuer,
     provided, however, that should the Notes receive a rating of lower than 2
     --------  -------  ----       
     from the NAIC, the Issuer agrees to furnish to you, as soon as practicable
     and in any event within 95 days after the end of each fiscal year of the
     Issuer, the consolidated balance sheet of the Issuer and any Restricted
     Subsidiaries, and the unaudited consolidating balance sheet of the Issuer
     and any Restricted Subsidiaries, as of the end of such fiscal year and the
     related consolidated statements of income, retained earnings and cash flows
     of the Issuer and any Restricted Subsidiaries, and the related unaudited
     consolidating statement of income of the Issuer and any Restricted
     Subsidiaries, for such fiscal year, setting forth in each case in
     comparative form the respective figures for the previous fiscal year, all
     in reasonable detail and (i) in the case of such consolidated statements,
     accompanied by a report thereon of Coopers & Lybrand L.L.P. or other
     independent certified public accountants of recognized national standing
     selected by the Issuer which report shall, unless a waiver of the
     provisions of this Section 4(b) has been obtained pursuant to Section 12,
     be made without qualification as to or by reason of (x) changes in
     accounting principles and methods (other than changes therein which such
     accountants express their concurrence), (y) the unavailability of
     sufficient competent evidential matter on which to base an audit or the
     inadequacy of accounting records or (z) restrictions on the scope of the
     audit conducted and shall comply with generally accepted auditing standards
     at the time in effect and shall state that such financial statements
     present fairly the financial position of the companies being reported upon
     as at the dates indicated and the results of their operations and cash
     flows for the periods indicated and have been prepared in accordance with
     GAAP consistently applied (except for

                                      13
<PAGE>
 
     changes in application in which such accountants concur) on a basis
     consistent with prior years, and that the examination of such accountants
     has been made in accordance with generally accepted auditing standards, and
     accordingly included such tests of pertinent accounting records and such
     other auditing procedures as were considered necessary in the
     circumstances, and (ii) in the case of such consolidating balance sheets
     and statements of income of the Issuer and any Restricted Subsidiaries,
     certified as complete and correct in all material respects in conformity
     with GAAP by the principal financial officer of the General Partner of the
     Guarantor;

          (c)  concurrently with each delivery of financial statements pursuant
     to clause (a) or (b) of this Section 4, an Officer's Certificate
     substantially in the form of Exhibit J (i) stating that such officer has
     reviewed the terms of this Agreement and of the Notes and has made, or
     caused to be made under such officer's supervision, a review in reasonable
     detail of the transactions and conditions of the Issuer and any Restricted
     Subsidiaries during the accounting period covered by such financial
     statements, and that such review has not disclosed the existence during, or
     at the end of such accounting period, and that such officer does not have
     knowledge of the existence as at the date of such Officer's Certificate, of
     any condition or event which constitutes a Default or an Event of Default,
     or, if any such condition or event existed or exists, specifying the nature
     and period of existence thereof and what action the Issuer has taken or is
     taking or proposes to take with respect thereto, (ii) setting forth, and
     showing in reasonable detail the computation of, (A) as of the last day of
     such quarterly or annual accounting period, as the case may be, the
     respective amounts of Consolidated Tangible Net Worth, Consolidated Funded
     Debt, Short-Term Debt, Attributable Debt, Secured Debt and Consolidated Net
     Tangible Assets, and (B) for the period of four consecutive fiscal quarters
     of the Issuer which shall have ended on the last day of such quarterly or
     annual accounting period, as the case may be, the respective amounts of
     Consolidated Net Income, Consolidated Net Operating Income and Consolidated
     Debt Service, (iii) setting forth computations in reasonable detail and
     dates, where applicable, demonstrating compliance with the restrictions
     contained in Sections 6.1(d), 6.2, 6.3, 6.6, 6.7, and 6.12 and (iv) if the
     Issuer Incurred any Short-Term Debt during such quarterly or annual period,
     as the case may be, setting forth, with respect to each such Incurrence,
     (A) the 45-day period during the prior 12-month period during which Short-
     Term Debt of the Issuer and any Restricted Subsidiaries was zero or (B) the
     45-day period during the prior twelve-month period during which Designated
     Short-Term Debt was calculated and the computation in reasonable detail of
     such Designated Short-Term Debt;

          (d)  promptly upon their becoming available (and in any event within
     ten Business Days thereafter), copies of (i) all financial statements,
     reports, notices, proxy statements and other information sent or made
     available generally by the Issuer to any class of its security holders
     other than the Guarantor or by any Subsidiary to any class of its security
     holders other than the Guarantor, the Issuer or any Wholly-Owned
     Subsidiary, (ii) all regular and periodic reports (including reports on
     Form 8-K) and any registration statements (other than on Form S-8 or a
     similar form) and prospectuses filed by the Issuer or any Subsidiaries with
     any securities exchange or with the Commission and (iii) all press releases
     and other statements made available generally by the Issuer or any
     Subsidiary to the public concerning material developments in the business
     of the Issuer or any Subsidiary;

          (e)  promptly upon receipt thereof (and in any event within five
     Business Days thereafter), copies of all reports submitted to the Issuer or
     any Subsidiary by independent public accountants in connection with any
     annual, interim or special audit of the books of the Issuer or any
     Subsidiary made by such accountants;

     
                                      14
<PAGE>
 
          (f)  immediately upon any officer of the Issuer obtaining knowledge of
     any condition or event which constitutes a Default or an Event of Default
     or becoming aware that the holder of any Note has given any notice or taken
     any other action with respect to a claimed Default or Event of Default an
     Officer's Certificate specifying the nature and period of existence thereof
     and what action the Issuer has taken or is taking or proposes to take with
     respect thereto;

          (g)  promptly, and in any event within 30 days of receipt thereof,
     copies of any notice to the Issuer or any Subsidiary from any federal or
     state Governmental Body relating to any Order, ruling, statute or other law
     or regulation that could reasonably be expected to have a Material Adverse
     Effect;

          (h)  promptly upon receipt thereof (and in any event within 20
     Business Days thereafter), such quarterly and annual financial statements
     or other financial information, whether audited or unaudited, of any lessee
     of real property (whether now owned or hereafter acquired) of the Issuer or
     any Subsidiary, delivered to the Issuer or any Wholly-Owned Subsidiary,
     provided that, the Issuer shall not be required to disclose any
     -------- ----
     confidential information received from any such lessee (other than AGC
     unless such lessee has expressly consented to the release thereof and if
     such lessee has not so expressly consented, the Issuer shall have, in any
     event, made reasonable efforts to obtain such consent of any such lessee,
     and provided further, that, in lieu of furnishing such other financial
         -------- -------  ----
     information received by it or its Subsidiaries, the Issuer may furnish to
     you an index (promptly if the information reflected thereby involves any
     material changes and in any event no less often than quarterly) of all such
     other financial information from which you may request (and the Issuer
     shall deliver) specific items at your discretion;

          (i)  promptly upon any officer of the Issuer obtaining knowledge of
     the occurrence of any ERISA Event of the Issuer or any ERISA Affiliate (and
     in any case within ten Business Days of the occurrence of such event), a
     written notification specifying the nature of such ERISA Event and the
     action, if any, that Issuer has taken, is taking or proposes to take with
     respect thereto; and

          (j)  promptly upon request therefor (and in any event within five
     Business Days thereafter), if no Default or Event of Default then exists,
     such other information then within the possession of the Issuer, or, if a
     Default or Event of Default then exists, such other information (whether
     within or not within the possession of the Issuer), in each case as to the
     business, operations, properties, financial condition or prospects of the
     Issuer or any Subsidiary as may from time to time be reasonably requested.

     5.   INSPECTION AND CONFIDENTIALITY.
          -------------------------------
     
          5.1  INSPECTION. Subject to the provisions of Section 5.2 hereof, the 
               ----------
     Issuer shall permit the representatives of each holder of Notes that is an 
     institutional investor:

               (A)  NO DEFAULT -- if no Default or Event of Default then exists,
                    ----------
     at the expense of such holder and upon reasonable prior notice to the
     Issuer, to visit the principal executive office of the Issuer, to discuss
     the affairs, finances and accounts of the Issuer and any Subsidiaries with
     the Issuer's officers, and (with the consent of the Issuer, which consent
     will not be unreasonably withheld) its independent public accountants, and
     (with the consent of the Issuer, which consent will not be unreasonably
     withheld) to visit the other offices and properties of the Issuer and each

                                      15
<PAGE>
 
     Subsidiary, all at such reasonable times and as often as may be reasonably
     requested in writing; and

               (B)  DEFAULT -- if a Default or Event of Default then exists, at
                    -------
     the expense of the Issuer to visit and inspect any of the offices or
     properties of the Issuer or any Subsidiary, to examine all their respective
     books of account, records, reports and other papers, to make copies and
     extracts therefrom, and to discuss their respective affairs, finances and
     accounts with their respective officers and independent public accountants
     (and by this provision the Issuer authorizes said accountants to discuss
     the affairs, finances and accounts of the Issuer and its Subsidiaries), all
     at such times and as often as may be requested.

          5.2  CONFIDENTIAL INFORMATION. For the purposes of this Section 5.2, 
               ------------------------
     "Confidential Information" means information delivered to you by or on
     behalf of the Issuer or any Subsidiary in connection with the transactions
     contemplated by or otherwise pursuant to this Agreement that is proprietary
     in nature and that is clearly marked or labeled or otherwise adequately
     identified when received by you as being confidential information of the
     Issuer or such Subsidiary, provided that such term does not include
                                --------
     information that (a) was publicly known prior to the time of such
     disclosure, (b) subsequently becomes publicly known through no act or
     omission by you or any person acting on your behalf, (c) otherwise becomes
     known to you other than through disclosure by the Issuer or any Subsidiary
     or (d) constitutes financial statements delivered to you under Section 4
     that are otherwise publicly available. You will maintain the
     confidentiality of such Confidential Information in accordance with
     procedures adopted by you in good faith to protect confidential information
     of third parties delivered to you, provided that you may deliver or
                                        --------
     disclose Confidential Information to (i) your directors, officers and
     employees (to the extent such disclosure reasonably relates to the
     administration of the investment represented by your Notes), (ii) your
     financial advisors and other professional advisors, agents, attorneys and
     affiliates who agree to hold confidential the Confidential Information
     substantially in accordance with the terms of this Section 5.2, (iii) any
     other holder of any Note, (iv) any Person to which you sell or offer to
     sell such Note or any part thereof or any participation therein who agrees
     to hold confidential the Confidential Information substantially in
     accordance with the terms of this Section 5.2, (v) any Person from which
     you offer to purchase any security of the Issuer who agrees to hold
     confidential the Confidential Information substantially in accordance with
     the terms of this Section 5.2, (vi) any federal or state regulatory
     authority having jurisdiction over you, (vii) the National Association of
     Insurance Commissioners or any similar organization, or any nationally
     recognized rating agency that requires access to information about your
     investment portfolio or (viii) any other Person to which such delivery or
     disclosure may be necessary or appropriate (w) to effect compliance with
     any law, rule, regulation or order applicable to you, to the extent you may
     reasonably determine such delivery or disclosure to be required thereby,
     (x) in response to any subpoena or other legal process, to the extent you
     may reasonably determine such delivery or disclosure to be required
     thereby, (y) in connection with any litigation to which you are a party, to
     the extent you may reasonably determine such delivery or disclosure to be
     required thereby, (y) in connection with any litigation to which you are a
     party, to the extent you may reasonably determine such delivery or
     disclosure to be necessary therein or (z) if an Event of Default has
     occurred and is continuing, to the extent you may reasonably determine such
     delivery and disclosure to be necessary or appropriate in the enforcement
     or for the protection of the rights and remedies under your Notes and this
     Agreement, provided that, in connection with this clause (viii) of Section
                --------
     5.2, you agree to make commercially reasonable efforts to provide notice of
     your intention to make disclosure pursuant to clause (w), (x) or (y) in
     order to provide the Issuer the opportunity to take such actions as the
     Issuer may determine are appropriate under the

                                      16




<PAGE>
 
     circumstances. Each holder of a Note, by its acceptance of a Note, will be
     deemed to have agreed to be bound by and to be entitled to the benefits of
     this Section 5.2 as though it were a party to this Agreement.

     6.   COVENANTS. The Issuer covenants and agrees that from the date of this 
          ---------
Agreement to the First Closing Date and thereafter so long as any Note of either
series shall be outstanding:

          6.1  LIMITATIONS ON LIENS. The Issuer will not, and will not permit 
               --------------------
any Restricted Subsidiary to, Incur any Debt secured by any Lien upon any of 
the property of the Issuer or any Restricted Subsidiary, whether now owned or 
hereafter acquired, except:

               (a)  Debt secured by only Permitted Liens;

               (b)  Existing Secured Debt; and

               (c)  Debt not otherwise permitted under this Section provided
     that after giving effect thereto the sum (without duplication) of (i) the
     aggregate amount of Attributable Debt of the Issuer or any Restricted
     Subsidiary then outstanding, (ii) the aggregate amount of Secured Debt of
     the Issuer or any Restricted Subsidiary then outstanding (not including
     Secured Debt permitted under other clauses of this Section) and (iii) the
     aggregate amount of Funded Debt and Short-Term Debt of any Restricted
     Subsidiary then outstanding (not including Secured Debt permitted under
     other clauses of this Section other than Existing Secured Debt described in
     Part II(a) of Schedule 7.17) does not exceed twenty percent (20%) of
     Consolidated Net Tangible Assets at the time of Incurrence.

          6.2  MAINTENANCE OF CERTAIN FINANCIAL CONDITIONS. The Issuer will 
               -------------------------------------------
cause the following financial conditions to exist at all times:

               (a)  Consolidated Tangible Net Worth to equal or exceed 
     $145,000,000;

               (b)  the ratio of (i) Consolidated Net Operating Income
     determined for each period of four consecutive fiscal quarters of the
     Issuer to (ii) Consolidated Debt Service determined for such period to be
     at least 1.75 to 1.00.

          6.3  LIMITATIONS ON DEBT.
               -------------------

               (a)  The Issuer will not at any time permit the ratio of (i) the
     sum of Consolidated Funded Debt outstanding at such time plus any
     Designated Short-Term Debt with respect to such time to (ii) Consolidated
     Net Operating Income for the four fiscal quarters most recently ended at or
     before such time to be greater than 5.75 to 1.00;

               (b)  The Issuer will not, and will not permit any Restricted
     Subsidiary to, Incur any Debt owed to any Subsidiary that is not a Wholly-
     Owned Subsidiary if after giving effect thereto the aggregate amount of
     Debt owed by the Issuer and any Restricted Subsidiaries to any Subsidiaries
     that are not a Wholly-Owned Subsidiaries exceeds $500,000; and

               (c)  The Issuer will not permit any Restricted Subsidiary to
     Incur any Funded Debt or Short-Term Debt unless after giving effect thereto
     the sum (without duplication) of (i) the aggregate amount of Attributable
     Debt of the Issuer or any

                                      17
<PAGE>
 
     Restricted Subsidiary then outstanding, (ii) the aggregate amount of
     Secured Debt of the Issuer or any Restricted Subsidiary then outstanding
     (other than Secured Debt permitted under clause (a) or (b) of Section 6.1)
     and (iii) the aggregate amount of Funded Debt and Short-Term Debt of any
     Restricted Subsidiary then outstanding (not including Secured Debt
     permitted under clause (a) or (b) of Section 6.1 other than Existing
     Secured Debt described in Part II(a) of Schedule 7.17) does not exceed
     twenty percent (20%) of Consolidated Net Tangible Assets at such time.

          6.4  LIMITATIONS ON SHORT-TERM DEBT. The Issuer will not, and will not
               ------------------------------
permit any Restricted Subsidiary to, Incur any Short-Term Debt (other than 
Intercompany Debt) unless, after the Incurrence thereof and immediately after 
giving effect thereto, no Default or Event of Default shall have occurred and be
continuing and either (a) the Short-Term Debt of the Issuer and its Restricted 
Subsidiaries shall have been zero for at least 45 consecutive days during the 
12-month period ending on the date of such Incurrence or (b) the ratio of (i) 
the sum of Consolidated Funded Debt then outstanding and Designated Short-Term 
Debt with respect to such Incurrence to (ii) Consolidated Net Operating Income 
for the four fiscal quarters most recently ended at or before the date of such 
Incurrence is less than 5.75 to 1.00.

          6.5  CONSOLIDATION, MERGER, SALE OF ASSETS, ETC. The Issuer will not 
               -------------------------------------------
voluntarily liquidate or dissolve, or (whether in a single transaction or a 
series of transactions) consolidate or merge with any other Person, or permit 
any other Person to consolidate or merge with it, or sell, lease, transfer or 
otherwise dispose of all or substantially all of its properties or assets 
(whether now owned or hereafter acquired) to any other Person, except that (as 
long as the successor formed by such consolidation or the survivor of such 
merger or the Person that acquires such assets in an entity treated as a 
partnership or a real estate investment trust for purposes of United States 
federal income taxation and, to the extent material, the tax laws of any state 
or locality in which such entity is subject to taxation based on its income) the
Issuer may consolidate with or merge into, or sell its assets as an entirety or 
substantially as an entirety to, any other Person if the successor formed by 
such consolidation or the survivor of such merger or the Person that acquires 
such assets is a solvent corporation, partnership or limited liability company
which shall be organized under the laws of any state of the United States of 
America and, if the Issuer is not such corporation, partnership or limited 
liability company, such corporation, partnership or limited liability company
(i) shall have executed and delivered to each holder of any Notes its assumption
of the due and punctual payment of the principal of, and premium (if any) and
interest on the Notes according to their tenor, and the due and punctual
performance and observance of the obligations of the Issuer under this
Agreement, the Other Agreements and under the Notes, (ii) shall have caused to
be delivered to each holder of any such Notes a favorable opinion of Latham &
Watkins or other counsel, such opinion and counsel to be reasonably satisfactory
to the holders of at least 66-2/3% in unpaid principal amount of the Notes then
outstanding, to the effect that all agreements and instruments effecting such
assumption are enforceable in accordance with their terms (subject to customary
exceptions) and comply with the terms hereof and (iii) shall have caused to be
delivered to each Gain Holder a favorable opinion of Latham & Watkins or other
counsel, such opinion and counsel to be reasonably satisfactory to the Gain
Holders which hold at least 66-2/3% in unpaid principal amount of the Notes then
outstanding and held by Gain Holders, that such consolidation, merger or sale of
assets will not result in an actual or deemed sale or exchange of the Notes for
federal income tax purposes; provided, however, that at the time of and
                             --------  -------
immediately after giving effect to any such merger, consolidation, sale, lease
or other disposition. (x) no Event of Default or Default shall have occurred and
be continuing and (y) the Issuer shall be entitled to increase Consolidated
Funded Debt by $1.00 pursuant to Section 6.3. No sale or other disposition
permitted by this Section 6.5 shall in any event release the Issuer or any
successor corporation, partnership or limited

                                      18
<PAGE>
 
liability company that shall theretofore have become such in the manner
prescribed in this Section 6.5 from any of its obligations and liabilities under
this Agreement, the Other Agreements and the Notes, except that a sale of all
assets shall release the Issuer or any successor corporation, partnership or
limited liability company that shall theretofore have become such in the manner
prescribed in this Section 6.5 from all of its obligations under this Agreement,
the Other Agreements and the Notes.

          6.6  SALES OF ASSETS.  The Issuer will not, and will not permit any 
               ---------------
Restricted Subsidiary to, at any time, make any Asset Disposition unless all of
the following conditions are met: (a) the net book value of all property then
being sold, leased, transferred or otherwise disposed of in such Asset
Disposition, together with the net book value of all other property sold,
leased, transferred or otherwise disposed of by the Issuer and its Restricted
Subsidiaries in other Asset Dispositions since the First Closing Date shall not,
in the aggregate, exceed thirty percent (30%) of Consolidated Net Tangible
Assets, determined as of the end of the then most recently ended fiscal quarter
of the Issuer preceding such sale, lease, transfer or other disposition and (b)
at the time of or immediately after the consummation of such sale, lease,
transfer or other disposition, and after giving effect thereto, no Default or
Event of Default would exist. Sales of all or any portion of the capital stock
or similar equity interest of a Restricted Subsidiary shall, for purposes of
determining the book value thereof in clause (a) above, be deemed to be the sale
of all or such portion of the book value of the assets of the Restricted
Subsidiary which shall have issued such capital stock or similar equity
interest.

          6.7  LIMITATION ON SALE AND LEASEBACK TRANSACTIONS.  The Issuer will 
               ---------------------------------------------
not, and will not permit any Restricted Subsidiary to, enter into any Sale and
Leaseback Transaction unless (a) the Sale and Leaseback Transaction is accounted
for as a capital lease on the financial statements of the Issuer or Restricted
Subsidiary engaging in the Sale and Leaseback Transaction and the Attributable
Debt in respect of such transaction plus the sum (without duplication) of (i)
the aggregate amount of Attributable Debt of the Issuer or any Restricted
Subsidiary then outstanding in respect of other Sale and Leaseback Transactions,
(ii) the aggregate amount of Secured Debt of the Issuer or any Restricted
Subsidiary then outstanding (other than Secured Debt permitted under clause (a)
or (b) of Section 6.1) and (iii) the aggregate amount of Funded Debt and Short-
Term Debt of any Restricted Subsidiary then outstanding (not including Secured
Debt permitted under clause (a) or (b) of Section 6.1 other than Existing
Secured Debt described on Part II(a) of Schedule 7.17) does not exceed twenty
percent (20%) of Consolidated Net Tangible Assets at such time or (b) if the
Sale and Leaseback Transaction is not accounted for as a capital lease on the
financial statements of the Issuer or Restricted Subsidiary engaging in the Sale
and Leaseback Transaction, then (i) the Asset Disposition included in such Sale
and Leaseback Transaction is permitted under Section 6.6, (ii) the proceeds
received by the Issuer or Restricted Subsidiary in connection with the Asset
Disposition included in such Sale and Leaseback Transaction are at least equal
to the fair market value of such property, and (iii) at the time of or
immediately after the consummation of such Asset Disposition, and after giving
effect thereto, no Default or Event of Default would exist.

          6.8  NATURE OF BUSINESS.  The Issuer will not, and will not permit any
               ------------------
Subsidiary to, engage in any line of business in which it is not currently 
engaged or otherwise alter its manner of conducting business if as a result 
thereof the business of the Issuer and its Subsidiaries taken as a whole would 
be substantially changed from the general nature of the business of the Issuer 
and its Subsidiaries as of the date of the Memorandum, as described therein.

          6.9  MAINTENANCE OF LEASES.  The Issuer will not, and will not permit 
               ---------------------
any Restricted Subsidiary to, change, waive, discharge or terminate any Existing
Lease or any

                                      19
<PAGE>
 
provision thereof, except that the Issuer or any Restricted Subsidiary may
change or waive any provision of, and may discharge and terminate, an Existing
Lease if in the good faith judgment of the Independent Directors of the General
Partner such change or waiver, discharge or termination, is in the best interest
of the Issuer or such Restricted Subsidiary or is required to maintain the
Guarantor's status as a real estate investment trust under the Code and the
consequences of such change or waiver, discharge or termination, would not, in
the aggregate as to any one or more Existing Leases, be materially
disadvantageous to the holders of the Notes; provided, however, that in no event
                                             --------  -------
may the Issuer or any Subsidiary change or waive any provision of any Existing
Lease relating to Assignment, Subletting or Change of Control (as each is
defined in the Existing Leases), expect for changes or waivers the consequences
of which would, in the aggregate as to any one or more Existing Leases, be more
favorable to the Issuer or such Restricted Subsidiary than would arise in the
absence of such changes or waivers and, provided further, that, any Existing
                                        ----------------------
Lease or any provision thereof may be changed, waived, discharged or terminated
in connection with the sale, transfer or other disposition of the related
property which is permitted under the terms hereof. The Issuer will not change
the designation of any Subsidiary in existence on the date hereof from an
Unrestricted Subsidiary to a Restricted Subsidiary unless any change to or
waiver of the provisions of, or discharge or termination of, any Existing Leases
of such Subsidiary would have been in compliance with the terms of this Section
6.9 had such Subsidiary been a Restricted Subsidiary on the date of such change,
waiver, discharge or termination.

          6.10 RESTRICTED PAYMENTS. The Issuer will not, directly or indirectly,
               -------------------
and will not permit any Restricted Subsidiary (other than a Wholly-Owned
Subsidiary) to, declare or make any Distribution unless, at the time of and
immediately after effect has been given to such declaration and the making of
such Distribution, no condition or event shall exist which constitutes a Default
or an Event of Default.

          6.11 TRANSACTIONS WITH AFFILIATES.  The Issuer will not, and will not 
               ----------------------------
permit any Restricted Subsidiary to, directly or indirectly, engage in any 
material transaction or material group of related transactions with any 
Affiliate of the Issuer or any Affiliate of its Restricted Subsidiaries, other 
than (i) transactions entered into in the ordinary course of business pursuant 
to the reasonable requirements of the Issuer's or such Restricted Subsidiary's
business and upon fair and reasonable terms that are no less favorable to the 
Issuer or such Restricted Subsidiary, as the case may be, than would be 
obtainable at the time on an arms-length basis from Persons that are not 
Affiliates, (ii) transactions solely between or among any of the Issuer or any 
Restricted Subsidiary or Restricted Subsidiaries, (iii) Distributions otherwise 
permitted hereunder, (iv) transactions effected pursuant to, and in accordance 
with, any agreement or arrangement existing as of the date hereof, all of which 
are described on Schedule 6.11 and (v) payments of reasonable compensation to 
employees or directors of the Guarantor.


          6.12 OWNERSHIP OF GOLF COURSES.  The Issuer will cause (i) all
               -------------------------       
Existing Golf Courses to be owned by the Issuer or Restricted Subsidiaries of
which at least ninety percent of the Voting Stock (in the case of corporations
or limited liability companies) or other equity interests (in the case of other
Subsidiaries) is controlled, directly or indirectly, by the Issuer, except for
Existing Golf Courses (x) sold or otherwise disposed of in an Asset Disposition
or Sale and Leaseback Transaction subject to Section 6.6 or Section 6.7, (y)
owned by the Guarantor, the Guarantor Subsidiaries or Unrestricted Subsidiaries
as permitted under clause (iii) of this Section 6.12 or (z) owned by Royal Golf,
L.P. II, so long as the Issuer owns at least eighty-nine percent of its
outstanding equity interests; (ii) all Golf Courses other than Existing Golf
Courses, acquired or owned by the Issuer or any corporation or other business
entity of which the Issuer owns or controls, directly or indirectly, any Voting
Stock or other equity interests, to be owned by the Issuer or its

                                      20
<PAGE>
 
Restricted Subsidiaries, except for Golf Courses sold or disposed of in an Asset
Disposition of Sale and Leaseback Transaction subject to Section 6.6 or Section 
6.7 and except for Golf Courses owned by the Guarantor, the Guarantor 
Subsidiaries or any Subsidiary that is an Unrestricted Subsidiary as permitted 
under clause (iii) of this Section 6.12; and (iii) at least ninety percent of 
all Golf Courses owned, in whole or in part, by the Guarantor, the Guarantor 
Subsidiaries, the Issuer and the Subsidiaries at any time to be owned by the 
Issuer and its Restricted Subsidiaries. For the purposes of this clause (iii) of
Section 6.12, the percentage of Golf Courses owned by the Issuer and its
Restricted Subsidiaries shall be calculated by dividing the total number of golf
course holes owned, in whole or in part, by the Issuer and its Restricted
Subsidiaries by the total number of golf course holes owned, in whole or in
part, by the Guarantor, the Guarantor Subsidiaries, the Issuer and the
Subsidiaries and then multiplying the quotient by 100. Notwithstanding the
foregoing, this Section 6.12 shall not be construed to prevent the Issuer or any
Subsidiary from obtaining a minor interest in a corporation or other business
entity for the sole purpose of obtaining water rights ancillary to the operation
of any Golf Course.

          6.13 PAYMENT OF NOTES; MAINTENANCE OF BOOKS AND OFFICE.  The Issuer 
               -------------------------------------------------
will duly and punctually pay the principal of, premium (if any) and interest on 
the Notes in accordance with the terms of the Notes, this Agreement and the 
Other Agreements.  The Issuer will, and will cause each of its Subsidiaries to, 
maintain a system of accounting established and administered in accordance with 
GAAP, keep proper books of record and account in which full, true and correct 
entries are made of its business transactions, and set aside appropriate 
reserves, all in accordance with GAAP.  The Issuer will maintain its principal 
office at a location in the United States of America where notices, 
presentations and demands in respect of this Agreement and the Notes may be made
upon it and will notify, in writing, each holder of a Note of any change of 
location of such office; and such office shall be maintained at 1448 15th 
Street, Suite 200, Santa Monica, California 90404, until such time as the Issuer
shall so notify the holders of the Notes of any such change.

          6.14 PARTNERSHIP EXISTENCE AND TAX STATUS;  PAYMENT OF TAXES; 
               --------------------------------------------------------
MAINTENANCE OF PROPERTIES; INSURANCE; COMPLIANCE WITH LAWS; MAINTENANCE OF 
--------------------------------------------------------------------------
PATENTS.
-------
The Issuer will and will cause each Subsidiary to:

               (a)       do or cause to be done all things necessary to preserve
     and keep in full force and effect its partnership or corporate existence,
     as the case may be (except as otherwise permitted by Section 6.5), and its
     licenses, permits, rights (charter and statutory) and franchises, except
     that, subject to compliance with Sections 6.6 and 6.7, the licenses,
     permits, rights and franchises of the Issuer or any Subsidiary may be
     abandoned, modified or terminated if in the good faith judgment of the
     General Partner such abandonment, modification or termination is in the
     best interest of the Issuer or the Subsidiary and would not, individually
     or in the aggregate, be disadvantageous to the holders of the Notes;

               (b)       do or cause to be done all things necessary to cause 
     the Issuer and any Subsidiary organized as a partnership to be treated as
     partnerships for purposes of United States federal income taxation and,
     with respect to any such partnership, the tax laws of any state or locality
     in which such partnership is subject to taxation based on its income
     except, with respect to such state or local tax laws, where the failure to
     be so treated would not, individually or in the aggregate, reasonably be
     expected to have a Material Adverse Effect;

               (c)       file all tax returns required to be filed in any 
     jurisdiction;

                                      21


<PAGE>
 
               (d)  pay and discharge or cause to be paid and discharge (i) all
taxes, assessments and governmental charges or levies imposed upon it or upon
its income or profits or upon any of its property (real, personal or mixed), or
upon any part thereof, or upon any of its assets or franchises when due and (ii)
all lawful claims of landlords, carriers, warehousemen, mechanics, materialmen
and other similar Persons for labor, materials, supplies and rentals which, if
unpaid, might by law become a lien upon any of its property; provided, however,
that the failure of the Issuer or any Subsidiary to pay any such tax,
assessment, charge, levy or claim shall not constitute a default hereunder if
and for so long as the amount, applicability or validity thereof shall
concurrently be contested in good faith by appropriate and timely proceedings
diligently conducted and if such reserve or other appropriate provision, if any,
as shall be required by GAAP shall have been made therefor;

               (e)  implement and enforce reasonable requirements for lessees of
all properties used or useful in the business of the Issuer and its Subsidiaries
to maintain and keep, or cause to be maintained and kept, in good repair,
working order, appearance and condition all such properties and, from time to
time, with reasonable promptness, make or cause to be made all necessary or
appropriate repairs, renewals, replacements and improvements thereof,

               (f)  implement and enforce reasonable requirements for lessees of
all properties used or useful in the business of the Issuer and its Subsidiaries
to maintain or cause to be maintained with financially sound and reputable
insurers, authorized to do insurance business in the State in which the property
or business is located, insurance (including deductibles) in respect of such
properties and businesses against loss or damage of the kind customarily insured
against and of such type and in such amounts as are customarily maintained under
similar circumstances by prudent business entities of established reputation
engaged in the same or similar business, including, but not limited to (i)
physical damage insurance on all real and personal property on an all risks
basis, covering the repair and replacement cost of all such property, and
consequential loss coverage for business interruption and extra expense, (ii)
personal injury or property damage insurance under a policy of comprehensive
general liability insurance, (iii) flood (when the property is located in whole
or in material part in a designated flood plain area) and such other hazards as
may be customary for comparable properties in the area and (iv) adequate
workers' compensation insurance coverage for all Persons employed on any of the
properties in accordance with the requirements of applicable federal, state and
local laws;

               (g)  comply in all material respects with all applicable lawful 
statutes, regulations and Orders of, and all applicable lawful restrictions 
imposed by, any Governmental Body, or by any trade or professional organization 
or other industry regulatory body in respect of the conduct of its business and 
the ownership of its properties (including, without limitation, applicable 
statutes, regulations and orders relating to equal employment opportunities),  
except where the failure to so comply, individually or in the aggregate, would 
not have a Material Adverse Effect; 

               (h)  implement and enforce reasonable requirements to cause each 
of the real properties and other assets of the Issuer or any Subsidiary, whether
now or hereafter owned, leased or operated, to be operated in compliance in all 
material respects with all Environmental Laws; and 

               (i)  maintain the validity of all patents, trademarks, service
marks, trade names, copyrights and the like necessary, individually or in the
aggregate, in

                                      22


 




<PAGE>
 
     any material respect for the conduct of its business as now conducted and 
     as proposed to be conducted.

               6.15  COMPLIANCE WITH ERISA. The Issuer shall, and shall cause 
                     ---------------------
its ERISA Affiliates to comply with the provisions of ERISA and the Code with 
respect to any Plan sponsored by or contributed to by it or any ERISA Affiliate.
The Issuer shall not (i) terminate or permit any ERISA Affiliate to terminate 
any Plan in a manner that results in any material liability of the Issuer or any
ERISA Affiliate to the PBGC or any other person or (ii) permit the occurrence of
any Reportable Event or any other event or condition that presents a material 
risk of a termination by the PBGC of any Plan pursuant to Section 4042 of ERISA.
The Issuer shall, and shall cause its ERISA Affiliates to make full and timely 
payment of all amounts required to be contributed under the terms of each Plan 
and each Multiemployer Plan and the laws applicable thereto.

     7.        REPRESENTATIONS AND WARRANTIES OF THE ISSUER. The Issuer 
represents and warrants to you that:
 
               7.1  ORGANIZATION, AUTHORITY AND TAX STATUS OF THE ISSUER. THE 
                    ----------------------------------------------------
Issuer has been duly formed, is validly existing as a limited partnership in 
good standing under the laws of the state of Delaware, and is duly qualified to 
transact business and is in good standing in each jurisdiction in which the 
conduct of its business or its ownership or leasing of property requires such 
qualification, other than those jurisdictions as to which the failure to be so 
qualified or in good standing would not, individually or in the aggregate, 
reasonably be expected to have a Material Adverse Effect. The Issuer has all 
requisite power and authority to own or hold under lease the property it 
purports to own or hold under lease, to carry on its business as now conducted 
and as proposed to be conducted, to execute and deliver this Agreement, the 
Other Agreements and the Notes and to perform its obligations hereunder and 
thereunder. The Issuer is a partnership for purposes of United States federal 
income taxation and for purposes of the tax laws of any state or locality in 
which the Issuer is subject to taxation based on its income except, with respect
to such state or local tax laws, where the failure to be so treated would not,  
individually or in the aggregate, reasonably be expected to have a Material 
Adverse Effect.

               7.2  AUTHORIZATION. The Issuer has by all necessary action duly 
                    -------------
authorized (i) the execution and delivery of this Agreement, the Other 
Agreements and the Notes and (ii) the performance of its obligations under this 
Agreement, the Other Agreements and the Notes. This Agreement and each of the 
Other Agreements constitutes, and upon execution and delivery thereof each Note 
will constitute, a legal, valid and binding obligation of the Issuer enforceable
against the Issuer in accordance with its terms, except as such enforceability 
may be limited by (i) applicable bankruptcy, insolvency, reorganization, 
moratorium or other similar laws affecting the enforcement of creditors rights 
generally and (ii) general principles of equity (regardless of whether such 
enforceability is considered in a proceeding in equity or at law).

               7.3  CAPITALIZATION. All of the Partnership Units are validly 
                    --------------
issued and owned of record in the percentage amounts and by the entities or
persons described in Schedule 7.3. and, to the best of the Issuer's knowledge,
free and clear of any Lien. There are 19,285,460 partnership Units issued and
outstanding and such Partnership Units have been offered and sold in compliance
with all applicable laws (including, without limitation, federal and state
securities laws and rollup legislation). The Guarantor is the sole general
partner of the Issuer.

                                      23


<PAGE>
 
          7.4  ORGANIZATION AND OWNERSHIP OF SUBSIDIARIES; AFFILIATES.
               ------------------------------------------------------

               (a)  Schedule 7.4 contains (except as noted therein) complete and
correct lists of (i) the Issuer's Subsidiaries, showing, as to each Subsidiary, 
the correct name thereof, the jurisdiction of its organization, and the 
percentage of shares of each class of its capital stock or similar equity 
interests outstanding owned by the Issuer and each other Subsidiary, (ii) the 
Issuer's Affiliates, other than Subsidiaries and (iii) the directors and  
executive officers of the General Partner of the Issuer.

               (b)  All of the outstanding shares of capital stock or similar 
equity interests of each Subsidiary shown in Schedule 7.4 as being owned by the 
Issuer and its Subsidiaries have been validly issued and are owned by the Issuer
or another Subsidiary free and clear of any Lien (except as otherwise disclosed 
in Schedule 7.4).

               (c)  Each Subsidiary identified in Schedule 7.4 is a corporation 
or other legal entity duly organized, validly existing and in good standing 
under the laws of its jurisdiction of organization, and is duly qualified as a 
foreign corporation or other legal entity and is in good standing in each 
jurisdiction in which such qualification is required by law, other than those 
jurisdictions as to which the failure to be so qualified or in good standing 
could not, individually or in the aggregate, reasonably be expected to have a 
Material Adverse Effect. Each such Subsidiary has the corporate or other power 
and authority to own or hold under lease the properties it purports to own or 
hold under lease and to transact the business it transacts and proposes to 
transact. Each Subsidiary organized as a partnership is a partnership for 
purposes of United States federal income taxation and for purposes of the tax 
laws of any state or locality in which the Subsidiary is subject to taxation 
based on its income except, with respect to such state or local tax laws, where 
the failure to be so treated would not, individually or in the aggregate, 
reasonably be expected to have a Material Adverse Effect.

          7.5  DISCLOSURE.  The Issuer, through its agent, Morgan Stanley & Co.
               ----------
Incorporated, has delivered to you and each other Purchaser the Disclosure
Documents relating to the transactions contemplated hereby: The Disclosure
Documents fairly describe, in all material respects, the general nature of the
business and principal properties of the Issuer and its Subsidiaries. Except as
disclosed in Schedule 7.5, this Agreement, the Disclosure Documents and the
documents, certificates or other writings delivered to you by or on behalf of
the Issuer in connection with the transactions contemplated hereby, taken as a
whole, do not contain any untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein not misleading in
light of the circumstances under which they were made. There is no fact known to
the Issuer that could reasonably be expected to have a Material Adverse Effect
that has not been set forth herein or in the Disclosure Documents or in the
other documents, certificates and other writings delivered to you by or on
behalf of the Issuer specifically for use in connection with the transactions
contemplated hereby. Any projections contained in the Disclosure Documents were
based on assumptions the Issuer believes to be reasonable and were calculated or
arrived at, as the case may be, in a manner the Issuer believes to be
reasonable.

          7.6  FINANCIAL STATEMENTS. The financial statements of the Issuer and 
               --------------------
any Subsidiaries included in the Memorandum present fairly the financial 
position of the Issuer and any Subsidiaries as at the dates indicated and the 
results of their operations and cash flows for the periods specified; except as 
otherwise stated in the Memorandum, said financial statements have been prepared
in conformity with GAAP applied on a consistent basis; and the pro forma 
financial statements included in the Memorandum comply in all material respects 
with the applicable requirements of Rule 11-02 of Regulation S-X promulgated by 

                                      24
<PAGE>
 
the Commission and the pro forma adjustments have been properly applied to the 
historical amounts in the compilation of such statements.

          7.7  CHANGES, ETC. Except as disclosed in the Disclosure Documents or 
               ------------
as expressly described in Schedule 7.5, or in one of the documents, certificates
or other writings identified therein, or in the financial statements referenced 
in Section 7.6, since December 31, 1995, there has been on Material Adverse 
Change. Subsequent to the respective dates as of which information is given in 
the Memorandum and prior to the First Closing (i) neither the Issuer nor any 
Subsidiary has incurred any material transaction not in the ordinary course of 
business, except as disclosed in the quarterly report on Form 10-Q of the 
Guarantor for the quarter ended March 31, 1996; (ii) neither the Issuer nor any 
Subsidiary has purchased any of the Issuer's Partnership Units, nor declared, 
paid or otherwise made a dividend or distribution of any kind on the Issuer's 
Partnership Units except as required by Section 5.1 of the Partnership 
Agreement; and (iii) there has not been any material change in the capital stock
or similar equity interests, short-term debt or long-term debt of the Issuer or 
any Subsidiary except in each case as described in or contemplated by the 
Memorandum.

          7.8  COMPLIANCE WITH OTHER INSTRUMENTS, ETC. Neither the Issuer nor 
               --------------------------------------
any Subsidiary is in violation of any term or provision of its corporate charter
or by-laws or certificate of partnership or partnership agreement, as the case 
may be. Neither the Issuer nor any Subsidiary is in violation of any term or 
provision of any agreement, indenture, mortgage or other instrument or agreement
to which it is a party or by which it or any of its properties may be bound or 
affected, or in violation of any existing law, governmental rule or regulation 
or any Order of any court, arbitrator or other Governmental Body applicable to 
it, the consequences of which violation, either in any one case or in the 
aggregate, would reasonably be expected to have a Material Adverse Effect. 
Neither the execution and delivery of this Agreement, the Other Agreements and 
the Notes nor the consummation of the transactions contemplated hereby and 
thereby nor the performance of the terms and provisions hereof and thereof will 
result in any breach of, or constitute a default under, or result in (or 
require) the creation of any Lien in respect of any property of the Issuer or 
any Subsidiary under any indenture, mortgage, bank loan, credit agreement, other
agreement or instrument, or partnership agreement, partnership certificate, 
corporate charter or by-law to which the Issuer or any Subsidiary is a party or 
by which the Issuer or any Subsidiaries or any of their respective properties 
may be bound or affected, or violate any existing law, governmental rule or 
regulation or any Order of any court, arbitrator or Governmental Body applicable
to the Issuer or any Subsidiaries.

          7.9  GOVERNMENTAL AUTHORIZATIONS, ETC. Subject to the accuracy of your
               --------------------------------
representations and warranties contained in Sections 1.5 to 1.8 and the 
performance of your agreements contained in Section 1.9 hereof and the accuracy 
of the representations and warranties of the Other Purchasers contained in 
Sections 1.5 to 1.8 and the performance of the agreements of the Other Purchaser
contained in Section 1.9 of the Other Agreements, no consent, approval or 
authorization of, or registration, filing or declaration with, any Governmental 
Body is required for or in connection with the valid execution and delivery of 
this Agreement, the Other Agreements or the Notes, or the consummation of the 
transactions contemplated hereby and thereby, including the offer, issuance, 
sale and delivery by the Issuer of the Notes to you, or the fulfillment of, or 
compliance by the Issuer with, the terms and provisions hereof and thereof.

          7.10 LITIGATION. Except as disclosed in Schedule 7.10, there are no 
               ----------
actions, suits or proceedings pending or, to the knowledge of the Issuer, 
threatened against or affecting the Issuer, any Subsidiary or any of their 
respective properties before or by any Governmental Body (a) in which there is a
reasonable possibility of an adverse determination 

                                      25
<PAGE>
 
that could have a Material Adverse Effect or (b) that in any manner draws into 
question the legality, validity or enforceability of this Agreement or the Other
Agreements.

          7.11 TAXES. The Issuer and its Subsidiaries have properly prepared and
               -----
timely filed all tax returns that are required by law to have been filed and 
have paid all taxes, assessments, fees and charges of each Governmental Body 
shown to be due and payable on such returns and all other taxes and assessments 
levied upon them or their properties, assets, income or franchises, to the 
extent the same have become due and payable and before they have become 
delinquent other than those presently payable without penalty or interest and 
those being contested in good faith by appropriate proceedings as to which 
adequate reserves have been established in accordance with GAAP with respect 
thereto. The Issuer knows of no basis for any other tax or assessment that could
reasonably be expected to have a Material Adverse Effect. In the opinion of the 
Issuer, all tax liabilities are adequately provided for on the books of the 
Issuer and its Subsidiaries in accordance with GAAP.

          7.12 TITLE TO PROPERTIES AND LEASES. Except as set forth on Schedule 
               ------------------------------
7.12, the Issuer and its Subsidiaries have good and marketable title to their
respective real properties and good title to their other properties reflected in
the most recent audited balance sheet contained in the Memorandum or purported
to have been acquired by the Issuer or any of its Subsidiaries after the date
thereof (except as sold or otherwise disposed of in the ordinary course of
business) in each case free and clear of Liens prohibited by this Agreement. The
Existing Leases and any Subsequent Leases are valid and subsisting and in full
force and effect, binding upon and enforceable against the lessees thereunder
and neither the Issuer nor any Subsidiary is aware of any Default or Event of
Default pursuant to the terms of any Existing or Subsequent Lease (as those
terms are defined therein). The Issuer and each of its Subsidiaries enjoys
peaceful and undisturbed possession under all leases of personal and real
property under which it operates, and all such leases are valid and subsisting
and in full force and effect and neither the Issuer nor any of its Subsidiaries
is in default in any material respect in the performance and observance of their
respective obligations under any thereof. The Issuer has obtained title
insurance for all of its real properties in the amounts shown on Schedule 7.12,
with only customary exceptions, and such title insurance is in full force and
effect.

          7.13 PATENTS, TRADEMARKS, AUTHORIZATIONS, ETC. The Issuer and its 
               ----------------------------------------
Subsidiaries own, possess or have the right to use (without any known conflict
with the rights of others) all franchises, patents, trademarks, service
marks, trade names, copyrights, inventions, Know-how (including trade secrets
and other unpatented and/or unpatentable proprietary or confidential
information, systems and procedures), licenses and authorizations (collectively,
"Proprietary Rights") which are necessary to the conduct of their respective
business as conducted on the date hereof and as proposed to be conducted, except
where the failure to so own, possess or have the right to use such Proprietary
Rights would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. Each such Proprietary Right is in full force and
effect, and, in the case of each such Proprietary Right, the Issuer or its
Subsidiaries (whichever shall own, possess or have the right to use the same),
has fulfilled and performed all of its material obligations with respect
thereto, except where the failure to so be in force and effect or to so fulfill
and perform such obligations would not, individually in the aggregate,
reasonably be expected to have a Material Adverse Effect. The Issuer has nor
received any notice and is otherwise unaware of any infringement of or conflict
with asserted rights of others with respect to any Proprietary Right, or of any
facts which would render any Proprietary Right invalid or inadequate to protect
the interest of the Issuer or any of its Subsidiaries therein, and which
infringement or conflict (if the subject of any unfavorable decision, ruling or
finding) or invalidity or inadequacy, in the aggregate, would result in a
Material Adverse Effect. To the best

                                      26
<PAGE>
 
knowledge of the Issuer, there is no material violation by any person of any 
right of the Issuer or any of its Subsidiaries with respect to any of their 
Proprietary Information.

          7.14 COMPLIANCE WITH ERISA. Except as set forth on Schedule 7.14, 
               ---------------------
neither the Issuer nor any ERISA Affiliate sponsors, maintains or contributes 
to, or has an obligation to contribute to, any Plan that is subject to Title IV 
of ERISA or to any Multiemployer Plan. With respect to any such Plan or any 
Multiemployer Plan that is or was previously sponsored, maintained or 
contributed to, or with respect to which the Issuer or any of its ERISA 
Affiliates has or had an obligation to contribute:

               (a)  No such Plan has been terminated so as to subject, directly
     or indirectly, any assets of Issuer or its ERISA Affiliates to any
     liability or the imposition of any liens under Title IV of ERISA;

               (b)  No proceeding has been initiated or threatened by any person
     including the PBGC, to terminate any such Plan;

               (c)  No condition or event exists or is expected to occur with
     respect to any such Plan that could subject, directly or indirectly, any
     assets of the Issuer or its ERISA Affiliates to any liability, contingent
     or otherwise, or the imposition of any lien under Title IV of ERISA,
     whether to the PBGC or to any other person;

               (d)  No Reportable Event has occurred and is continuing with 
     respect to any such Plan;

               (e)  No such Plan which is subject to Section 302 of ERISA or
     Section 412 of the Code has incurred an accumulated funding deficiency, as
     defined in Section 302 of ERISA and Section 412 of the Code, whether or not
     such deficiency has been waived;

               (f)  Neither the Issuer nor any ERISA Affiliate has incurred or 
     reasonably expects to incur any Withdrawal Liability; and

               (g)  Neither the Issuer nor any ERISA Affiliate has been notified
     by the sponsor of any Multiemployer Plan to which the Issuer or any ERISA
     Affiliate is or was required to make or accrue a contribution that such
     Multiemployer Plan is in reorganization or has been terminated within the
     meaning of Title IV of ERISA.

          Neither the Issuer nor any of its ERISA Affiliates has engaged in a 
transaction in connection with which the Issuer or such ERISA Affiliate would be
subject to liability either for a civil penalty assessed pursuant to Section 
502(i) of ERISA or tax imposed by Section 4975 of the Code. All Plans maintained
by the Issuer or any ERISA Affiliate have been administered in compliance with 
ERISA and the applicable provisions of the Code.

          7.15 PRIVATE OFFERING. Neither the Issuer nor any Person authorized or
               ----------------
employed by the Issuer to act on its behalf in connection with the offer and 
sale of the Notes or any similar security of the Issuer has offered the Notes or
any similar securities of the Issuer for sale to, or solicited any offer to buy 
any of the same from, or otherwise approached or negotiated in respect thereof 
with any Person other than you, the Other Purchasers and not more than 100 other
institutional investors, each of which has been offered the Notes at a private 
sale for investment. Neither the Issuer nor anyone acting on its behalf has 
taken, or will take, any action which would subject the offer, issuance or sale

                                      27
<PAGE>
 
of the Notes to Section 5 of the Securities Act or to be registration or 
qualification requirements of any securities or blue sky law of any applicable 
jurisdiction.

          7.16   USE OF PROCEEDS; MARGIN REGULATIONS.  The Issuer will apply the
                 -----------------------------------
proceeds of the sale of the Notes hereunder as provided in Section 1.4. No part
of the proceeds from the sale of the Notes hereunder will be used, directly or 
indirectly, for the purpose of buying or carrying any margin stock within the 
meaning of Regulation G of the Board of Governors of the Federal Reserve System 
(12 CFR 207, as amended), or for the purpose of purchasing or carrying or 
trading in any securities under such circumstances as to involve the Issuer in a
violation of Regulation X of said Board (12 CFR 224, as amended) or to involve 
any broker or dealer in a violation of Regulation T of said Board (12 CFR 220, 
as amended). None of the transactions contemplated by this Agreement (including,
without limitation, the direct or indirect use of the proceeds from the sale of
the Notes hereunder) will violate or result in a violation of Section 7 of the
Exchange Act or any regulations issued pursuant thereto, including, without
limitation, said Regulation G, Regulation T and Regulation X. As used in this
Section, the terms "margin stock" and "purpose of buying or carrying" shall have
the meanings assigned to them in said Regulation G.

          7.17   EXISTING DEBT AND LONG TERM LEASES.  Part One of Schedule 7.17
                 ----------------------------------
sets forth a complete and correct list of all outstanding Debt (not including
Secured Debt) of the Issuer and its Subsidiaries as of the date hereof, and
shows as to each item of Debt listed thereon the obligor, the aggregate
principal amount outstanding on the date hereof and the final maturity thereof,
since which date there has been no material change in the amounts, interest
rates, sinking funds, installment payments or maturities of any such Debt. Part
Two of Schedule 7.17 sets forth a complete and correct list of all outstanding
Secured Debt of the Issuer and its Subsidiaries as of the date hereof and shows
as to each item of Secured Debt listed thereon the obligor, the aggregate
principal amount outstanding on the date hereof, the final maturity thereof, and
a brief description of any security therefor, since which date there has been no
material change in the amounts, interest rates, sinking funds, installment
payments or maturities of any such Secured Debt. Neither the Issuer nor any
Subsidiary is in default and no waiver of default is currently in effect in the
payment of any principal or interest on any such Debt, including the Secured
Debt, and no event or condition exists with respect to any such Debt, including
the Secured Debt, that would permit (or that with notice or the lapse of time,
or both, would permit) one or more Persons to cause such Debt, including the
Secured Debt, to become due and payable before its stated maturity or before its
regularly scheduled dates of payment. The Issuer has delivered to you and the
Other Purchasers true and correct copies of all agreements or other documents
pursuant to which the Issuer or any Subsidiary has Debt, including the Secured
Debt, outstanding. Part Three of Schedule 7.17 includes a list of all Long Term
Leases under which the Issuer or any of its Subsidiaries is lessee and sets
forth, with respect to each such Long Term Lease, the name of the lessor, the
lessee, the property leased, the annual rentals payable thereunder, the
expiration date and any provisions for earlier cancellation and options for
extension thereof.

          7.18   STATUS UNDER CERTAIN STATUTES.  Neither the Issuer nor any
                 ----------------------------- 
Subsidiary is subject to regulation under the Investment Company Act of 1940, as
amended, the Public Utility Holding Company Act of 1935, as amended, the
Interstate Commerce Act, as amended, or the Federal Power Act, as amended.

          7.19   ENVIRONMENTAL MATTERS.
                 ---------------------

                 (a)  Except as has been disclosed in Schedule 7.19, to the best
     knowledge of the Issuer, the real properties now or formerly owned, leased
     or operated by the Issuer or any Subsidiary or any other assets
     (collectively, the

                                      28


<PAGE>
 
     "Properties") are presently operated in compliance in all material respects
     with all Environmental Laws.

               (b)  Except as has been disclosed in Schedule 7.19, to the best
     knowledge of the Issuer, there are no Environmental Laws requiring any
     material remediation, clean up, repairs, construction or capital
     expenditures (other than normal maintenance) with respect to the
     Properties.

               (c)  Except as has been disclosed in Schedule 7.19, (A) no
     notices of any violation or alleged violation of any Environmental Laws
     relating to the Properties or their uses have been received by the Issuer
     or any Subsidiary, or, to the best knowledge of the Issuer, by any prior
     owner, operator or occupant of the Properties and (B) there are no writs,
     injunctions, decrees, orders or judgments outstanding, or any actions,
     suits, claims, proceedings or investigations pending or threatened,
     relating to the ownership of the Properties or, to the best knowledge of
     the Issuer, relating to the use, maintenance or operation of the
     Properties.

               (d)  Except as has been disclosed in Schedule 7.19, to the best
     knowledge of the Issuer, all material permits and licenses required under
     any Environmental Laws in respect of the operations of the Properties have
     been obtained, and the Properties and the owners and operators thereof are
     in compliance, in all material respects, with the terms and conditions of
     such permits and licenses.

          7.20 FOREIGN ASSETS CONTROL REGULATIONS, ETC. Neither the sale of the 
               --------------------------------------- 
Notes by the Issuer hereunder nor its use of the proceeds thereof will violate 
the Trading with the Enemy Act, as amended, or any of the foreign assets control
regulations of the United States Treasury Department (31 CFR, Subtitle B, 
Chapter V, as amended) or any enabling legislation or executive order relating 
thereto.

          7.21 INTERNAL ACCOUNTING CONTROLS. The Issuer and the Subsidiaries 
               ---------------------------- 
maintain a system of internal accounting controls sufficient to provide 
reasonable assurance that (i) transactions are executed in accordance with 
management's general or specific authorizations; (ii) transactions are recorded 
as necessary to permit preparation of financial statements in conformity with 
GAAP and to maintain asset accountability and (iii) the recorded accountability 
for assets is compared with the existing assets at reasonable intervals and 
appropriate action is taken with respect to any differences.

          7.22 SOLVENCY. Neither the Issuer nor any of its Subsidiaries is 
               --------
insolvent. Neither the execution and delivery of this Agreement, the Other 
Agreements, the Notes and the Assumption Agreements nor the consummation of the 
transactions contemplated hereby and thereby, nor the performance of the terms 
and provisions hereof and thereof will result in the insolvency of the Issuer or
any of its Subsidiaries, nor will the consummation of the transactions 
contemplated by the Option Courses Agreement (including the repayment of amounts
owed pursuant to certain senior Participating Promissory Notes dated as of
August 18, 1993 and any other transactions related thereto), nor the performance
of the terms and provisions thereof result in the insolvency of the Issuer or
any of its Subsidiaries. For the purposes of this Section 7.22, the Issuer or
any of its Subsidiaries shall be deemed to be insolvent or an insolvency shall
be deemed to have resulted with respect to such Person if; (i) its liabilities
(including all claims against such Person, whether or not contingent,
unliquidated or disputed and regardless of whether such liabilities are required
to appear on a balance sheet prepared in accordance with GAAP) exceed the fair
market value of its assets; (ii) it retains unreasonably small capital for its
continuing business; or (iii) it intends to incur, or believes or reasonably
should believe it will incur, Debt beyond its ability to pay such Debt as it
becomes due.

                                      29
<PAGE>
 
          7.23 ASSUMPTION OF ORIGINAL ISSUER NOTES FOR EQUIVALENT VALUE. The 
               --------------------------------------------------------
transfer of the Option Courses pursuant to the terms of the Option Courses 
Agreement (including the repayment of amounts owed pursuant to certain Senior 
Participating Promissory Notes dated as of August 18, 1993 and any other 
transactions related thereto), on the one hand, and the assumption of the Trust 
Notes and Black Lake Notes by the Issuer pursuant to the terms of the Assumption
Agreements and the issuance of OP Units pursuant to the terms of the Option 
Courses Agreement, on the other hand, is an exchange for reasonably equivalent 
value as such term is used in (S) 548 of the United States Bankruptcy Code.

     8.   EVENTS OF DEFAULT; REMEDIES.
          ---------------------------

          8.1  EVENTS OF DEFAULT DEFINED; ACCELERATION OF MATURITY; RESCISSION 
               -------------------------------------------------------------- 
AND ANNULMENT. If any of the following conditions or events (herein called 
-------------
"Events of Default") shall occur and be continuing (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or come about 
or be effected by operation of law or judicial or governmental or administrative
order, action or otherwise):

               (a)  default shall be made in the due and punctual payment of all
     or any part of the principal of or Makewhole Amount (if any) on any Note
     when and as the same shall become due and payable, whether on a date fixed
     for required prepayment or purchase, at stated maturity, by acceleration or
     declaration, on a date fixed for an optional prepayment by notice thereof
     otherwise; or

               (b)  default shall be made in the due and punctual payment of any
     interest on any Note when and as such interest shall become due and payable
     or in the due and punctual payment of any other amounts due and payable
     hereunder (other than a default pursuant to Section 8.1(a) hereof) and such
     default shall have continued for a period of five days; or

               (c)  default shall be made in the performance or observance of
     any covenant, agreement or condition contained in Section 4(f) or in
     Sections 6.1, 6.5 or 6.6; or

               (d)  default shall be made in the performance or observance of
     any other covenant, agreement or condition contained in this Agreement and
     such default shall have continued for a period of 30 days after any Senior
     Officer of the General Partner of the Issuer shall have first obtained
     knowledge of such default (through notice or otherwise); or

               (e)  (i) default shall be made in the payment of any part of the
     principal of, the premium (if any) or the interest on, or any other payment
     of money due in respect of, Debt of the Issuer or any Restricted Subsidiary
     for money borrowed in an aggregate principal amount of at least $15,000,000
     (other than the Notes), beyond any period of grace provided with respect
     thereto, or (ii) default shall be made in the performance or observance of
     any other agreement, term or condition contained in any document or
     documents evidencing or securing Debt, or in any agreement or agreements
     under which Debt was issued or created, in each case, if the effect of any
     one or more such defaults is to cause the holders of Debt (or a trustee on
     behalf of such holders) to cause any payment or payments in respect of such
     Debt aggregating not less than $15,000,000 (other than the Notes) to become
     due prior to the Scheduled due date or dates thereof or (iii) as a
     consequence of the occurrence or continuation of any event or condition
     (other than the passage of time or the right of the holder or holders of
     any Debt to convert such Debt into equity interests), (x) the

                                      30
<PAGE>
 
     Issuer or any Restricted Subsidiary has become obligated obligation to
     purchase Debt (other than the Notes) before its regular maturity or before
     its regularly scheduled dates of payment in an aggregate outstanding
     principal amount of at least $15,000,000 or (y) one or more Persons
     required the Issuer or any Restricted Subsidiary so to purchase any such
     Debt in an aggregate principal amount of a least $15,000,000; or

               (f)  the Guarantor, the Issuer or any Restricted Subsidiary shall
     (i) apply for or consent to the appointment of, or the taking of possession
     by, a receiver, custodian, trustee or liquidator of itself or of all or a
     substantial part of its property, (ii) be generally unable or admit in
     writing its inability to pay its debts as such debts become due, (iii) make
     a general assignment for the benefit of its creditors, (iv) commence a
     voluntary case under the Federal Bankruptcy Code (as now or hereafter in
     effect), (v) file a petition seeking to take advantage of any bankruptcy,
     insolvency, moratorium, reorganization or other similar law of any
     jurisdiction, (vi) acquiesce in writing to, or fail to controvert in a
     timely or appropriate manner, any petition filed against it in an
     involuntary case under such Bankruptcy Code, (vii) take any action under
     the laws of any jurisdiction analogous to any of the foregoing, (vii) is
     adjudicated as insolvent or to be liquidated or (ix) take any corporate
     action in furtherance of any of the foregoing; or

               (g)  a proceeding or case shall be commenced, without the 
     application or consent of the Guarantor, the Issuer or any Restricted
     Subsidiary, in any court of competent jurisdiction, seeking (i) the
     liquidation, reorganization, moratorium, dissolution, winding up, or
     composition or readjustment of its debts, (ii) the appointment of a
     trustee, receiver, custodian, liquidation or the like of it or of all or 
     any substantial part of its assets, or (iii) similar relief in respect of
     it under any law providing for the relief of debtors, and such proceeding
     or case shall continue undismissed, or unstayed and in effect, for a period
     of 60 days; or

               (h)  final judgement for the payment of money shall be rendered 
     by a court of competent jurisdiction against the Guarantor, the Issuer or
     any Restricted Subsidiary and the Guarantor, the Issuer or such Restricted
     Subsidiary, as the case may be, shall not discharge the same or provide for
     its discharge in accordance with its terms, or procure a stay of execution
     thereof within 60 days from the date of entry thereof and within said
     period of 60 days, or such longer period during which execution of such
     judgment shall have been stayed, appeal therefrom and cause the execution
     thereof to be stayed during such appeal, and such judgment together with
     all other such judgments not then discharged or then subject to such a stay
     shall exceed in the aggregate U.S. $5,000,000 (or the equivalent amount of
     any other currency); or

               (i)  any representation or warranty made by or on behalf of the 
     Issuer or by an officer of the Issuer in this Agreement or in any
     certificate or other instrument delivered hereunder or pursuant hereto or
     in connection with any provision hereof shall prove to be false or
     incorrect or breached in any material respect on the date as of which made;
     or

               (j)  the Guaranty, or any material provision therein, shall
     cease to be in full force and effect for any reason other than a release or
     termination thereof pursuant to the terms of the Guaranty or the Guarantor
     shall contest or purport to repudiate or disavow any of its obligations
     thereunder or the validity or enforceability thereof; or

               (k)  there shall occur any Guaranty Event of Default; or

                                      31
<PAGE>
 
               (l)  there shall occur a Change of Control; or

               (m)  any ERISA Event shall have occurred with respect to any Plan
     or Multiemployer Plan and, thirty days thereafter (i) such ERISA Event
     shall still exist and (ii) the sum (determined as of the date of occurrence
     of such ERISA Event) of the aggregate liabilities of the Issuer or any
     ERISA Affiliate related to all such Plans and Multiemployer Plans with
     respect to which an ERISA Event has occurred exceeds $3,000,000; or

               (n)  the Guarantor, the Issuer or any Restricted Subsidiary
     organized as a partnership shall receive written notice from a Governmental
     Body that it intends to treat the Issuer, or any Restricted Subsidiary
     organized as a partnership, as an association taxable as a corporation
     unless (i) such treatment, if sustained, would not have a Material Adverse
     Effect or (ii) within 30 days following receipt of such notice, the Issuer
     provides an opinion of nationally recognized tax counsel addressed to you
     and the Other Purchasers, such opinion and counsel to be reasonably
     satisfactory to the holders of at least 66-2/3% in unpaid principal amount
     of the Notes then outstanding, to the effect that, notwithstanding such
     notice, the Issuer of such Restricted Subsidiary will be treated as a
     partnership for purposes of the tax to which such notice relates both as of
     the date of such opinion and during the period to which such notice
     relates;
     
then (i) upon the occurrence of any Event of Default described in clause (f) or
(g) as to the Issuer, the Guarantor or any Restricted Subsidiary having,
individually or in the aggregate, assets with a book value of at least
$5,000,000 or annual revenues of at least $2,500,000, the unpaid principal
amount of all Notes automatically become immediately due and payable together
with the interest accrued thereon (which interest shall be deemed matured), plus
(to the full extent permitted by applicable law) the Makewhole Amount determined
in respect of such principal amount of Notes, without presentment, demand,
protest, notice of intention to accelerate, notice of acceleration, or other
requirements of any kind, all of which are hereby expressly waived by the
Issuer, (ii) upon the occurrence and continuance of any Event of Default
described in clause (a) or (b), the holder or holders of at least 25% of the
unpaid principal amount of the Notes at the time outstanding may, by written
notice to the Issuer, declare the unpaid principal amount of all Notes to be, 
and the same shall forthwith become, due and payable, together with the interest
accrued thereon (which interest shall be deemed matured), plus (to the full
extent permitted by applicable law) the Makewhole Amount determined in respect
of such principal amount of the Notes, without presentment, demand, protest,
notice of intention to accelerate, notice of acceleration, or other requirements
of any kind, all of which are hereby expressly waived by the Issuer, and
furthermore, upon the occurrence and continuance of such an Event of Default,
any holder may declare the unpaid principal amount of its own Notes to be due
and payable, together with the interest accrued thereon (which interest shall be
deemed matured), plus (to the full extent permitted by applicable law) the
Makewhole Amount determined in respect of such principal amount of the Notes,
without presentment, demand, protest, or other notice or other requirements of
any kind, all of which are hereby expressly waived by the Issuer without regard
to the actions of any other holder or holders or (iii) during the occurrence and
continuance of any other Event of Default, the holder or holders of at least 50%
of the unpaid principal amount of the Notes at the time outstanding may, by
written notice to the Issuer, declare the unpaid principal amount of all Notes
to be, and same shall forthwith become, due and payable, together with the
interest accrued thereon (which interest shall be deemed matured), plus (to the
extent permitted by applicable law) the Makewhole Amount determined in respect
of such principal amount of Notes, without presentment, demand, protest, or
other notice or other requirements of any kind, all of which are hereby
expressly waived by the Issuer. The Issuer acknowledges, and the parties hereto
agree, that each

                                      32

 
    
<PAGE>
 
holder of a Note has the right to maintain its investment in the Notes free from
repayment by the Issuer (except as herein specifically provided for) and that 
the provision for payment of a Makewhole Amount by the Issuer in the event that 
the Notes are prepaid or are accelerated as a result of an Event of Default, is 
intended to provide compensation for the deprivation of such right under such 
circumstances.

          The provisions of this Section are subject, however, to the condition 
that if, at any time after any Note shall have so become due and payable and 
prior to the entry of any judgment for the payment of any monies due on the 
Notes or pursuant to this Agreement, the Issuer shall pay all arrears of 
interest on the Notes and all payments on account of the principal of and 
Makewhole Amount (if any) on the Notes which shall have become due otherwise 
than by acceleration (with interest on such principal, Makewhole Amount (if any)
and, to the extent permitted by law, overdue payments of interest, at the rate 
specified in the Notes) and all Events of Default (other than nonpayment of 
principal of and accrued interest on Notes due and payable solely by virtue of 
acceleration) shall be remedied or waived pursuant to Section 12, then, and in 
every such case, the holder or holders of at least 66-2/3% in unpaid principal 
amount of the Notes at the time outstanding, by written notice to the Issuer, 
may rescind and annul any such acceleration and its consequences, but no such 
action shall affect any subsequent Default or Event of Default or impair any 
right consequent thereon, and furthermore, no such action shall affect, rescind 
or annul the declaration by any holder, or the right of any holder or declare, 
upon the occurrence and continuance of any Event of Default declared in clause 
(a) or (b) of this Section 8.1, the unpaid principal amount of its own Notes to 
be due and payable, together with the interest accrued thereon, plus the 
Makewhole Amount, pursuant to clause (ii) of this Section 8.1.

          8.2  SUITS FOR ENFORCEMENT.  If any Event of Default shall have 
               ---------------------
occurred and be continuing and irrespective of whether any Notes have become or 
have been declared immediately due and payable under Section 8.1, the holder of
any Note may proceed to protect and enforce its rights, either by suit in equity
or by action at law, or both, whether for the specific performance of any
covenant or agreement contained in this Agreement or in any Note or in aid of 
the exercise of any power granted in this Agreement, or the holder of any Note
may proceed to enforce the payment of all sums due upon such Note or under this
Agreement or to enforce any other legal or equitable right of the holder of such
Note. The Issuer covenants that, if it shall default in the making of any
payment due under any Note or in the performance or observance of any agreement
contained in this Agreement, it will pay to the holder thereof such further
amounts, to the extent lawful, as shall be sufficient to pay the costs and
expenses of collection or of otherwise enforcing such holder's rights,
including, without limitation, reasonable fees and expenses of counsel.

          8.3  REMEDIES CUMULATIVE.  No right, power or remedy herein conferred 
               ------------------- 
upon you or the holder of any Note is intended to be exclusive of any other
remedy and each and every such remedy shall be cumulative and shall be in
addition to every other remedy given hereunder or under the Notes or now or
hereafter existing at law or in equity or by statute otherwise.


          8.4  REMEDIES NOT WAIVED. No course of dealing between the Issuer and
               -------------------
you or the holder of any Note and no delay or failure in exercising any right,
power or remedy hereunder or under any Note in respect thereof shall operate as
a waiver of or otherwise prejudice any of your rights, powers or remedies or the
rights, powers or remedies of any holder of any Note. 

                                      33

<PAGE>
 
     9.   DEFINITIONS AND ACCOUNTING TERMS.
          --------------------------------

          9.1    DEFINITIONS.  Except as otherwise specified or as the context
                 -----------
may otherwise require, the following terms shall have the respective meanings
set forth below (or in the Section of this Agreement referred to below) whenever
used in this Agreement:

          "AFFILIATE" of any specified Person shall mean any other Person (a)
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person, (b) which beneficially owns or holds,
directly or indirectly, 5% or more of any class of voting or equity interests of
such Person or (c) 5% or more of any class of voting or equity interests of
which are beneficially owned or held by such Person. For the purposes of this
definition, "control" when used with respect to any specified Person means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing, and, furthermore, for the purposes of this
definition, the Guarantor shall be deemed to be an Affiliate of the Issuer.

          "AGC" shall mean American Golf Corporation, a California corporation.

          "AGREED PURCHASE CONSIDERATION" shall mean, as of the date of purchase
by the Issuer in the event of a DGP Change of Control, the sum of:

          (i)    the principal amount of the Notes held by such holder subject
     to purchase on such date, plus

          (ii)   all accrued and unpaid interest to such date on such Notes,
     plus

          (iii)  the Makewhole Amount (if any) as of such date with respect to
     such Notes.

          "AGREEMENT" shall mean this Restated Note Agreement (together with the
Annex, Schedules and Exhibits hereto) as it may be from time to time amended,
modified or supplemented in accordance with its terms.

          "ASSET DISPOSITION" shall mean any sale, lease, transfer or other
disposition of any property by the Issuer or any Restricted Subsidiary
(including any such disposition effected by way of any issuance or sale of
capital stock or partnership interests (but not including the issuance or sale
of capital stock or partnership interests of an Unrestricted Subsidiary) or by
way of a Sale and Leaseback Transaction or by the designation of a formerly
Restricted Subsidiary as an Unrestricted Subsidiary), other than (i)
dispositions of obsolete or surplus property no longer used or useful in the
operations of the Issuer and its Subsidiaries, (ii) dispositions of Golf Course
properties by the Issuer or a Restricted Subsidiary to a Restricted Subsidiary
of which at least 90% of the equity interests is owned by the Issuer or a 
Wholly-Owned Subsidiary, (iii) leases of Golf Course properties to operators in
the ordinary course of business, (iv) transfers of property by a Subsidiary to
the Issuer or a Wholly-Owned Subsidiary, (v) Sale and Leaseback Transactions
permitted under clause (a) of Section 6.7, (vi) transfers of no more than three
Existing Golf Courses by the Issuer or a Restricted Subsidiary to an
Unrestricted Subsidiary, (vii) transfers of Golf Course properties acquired
after the date hereof from the Issuer or a Restricted Subsidiary to an
Unrestricted Subsidiary, provided that any such transfer occurs no more than
                         -------- ----  
thirty days after the closing date of the acquisition of such Golf Course
properties and (viii) transfers by the Issuer to an Unrestricted Subsidiary of
any of the four Existing Golf Courses owned on the date hereof by the Guarantor.

                                      34

<PAGE>
 
          "ASSUMPTION AGREEMENTS" shall have the meaning specified in the 
Recitals.

          "ATTRIBUTABLE DEBT" shall mean, with respect to any Sale and Leaseback
Transaction (other than a Sale and Leaseback Transaction permitted under 
clause(b) of Section 6.7), the lesser of (i) the fair market value of the 
property sold or transferred in such Sale and Leaseback Transaction and (ii) the
present value (discounted in accordance with GAAP at the debt rate implicit in
the lease or leases constituting part of such Sale and Leaseback Transaction) of
the obligations of the lessee to pay rent during the term of such lease or
leases.

          "BLACK LAKE" shall have the meaning specified in the Recitals.

          "BLACK LAKE NOTE PURCHASE AGREEMENTS" shall have the meaning specified
in the Recitals.

          "BLACK LAKE NOTES" shall have the meaning specified in the Recitals.

          "BUSINESS DAY" shall mean any day other than a Saturday, Sunday or any
other day on which commercial banks are authorized by law to be closed in New 
York, New York.

          "CANCELLATION NOTICE" shall have the meaning specified in Section 3.5.

          "CAPITAL LEASE" shall mean, as applied to any Person, any lease of any
property (whether real, personal or mixed) by such Person as lessee which would,
in accordance with GAAP, be required to be classified and accounted for as a
capital lease on the balance sheet of such Person or otherwise be disclosed as
such in a note to such balance sheet, other than, in the case of the Issuer or
any Subsidiary, any such lease under which the Issuer or a Wholly-Owned
Subsidiary is the lessor.


          "CAPITALIZED LEASE OBLIGATION" shall mean any rental obligation which,
under GAAP, would be required to be capitalized on the books of the Issuer or
any Restricted Subsidiary taken at the amount thereof accounted for as
indebtedness (net of interest expense) in accordance with such principles.
          
          "CHANGE OF CONTROL" shall mean the occurrence of the following event:
the Guarantor shall cease to be the sole General Partner of the Issuer.

          "CHANGE OF CONTROL PURCHASE OBLIGATION" shall have the meaning
specified in Section 3.6(a).

          "CLOSING" shall have the meaning specified in Section 1.3.

          "CLOSING DATES" shall have the meaning specified in Section 1.3.

          "CODE" shall mean the Internal Revenue Code of 1986, as amended from
time to time.

          "COMMISSION" shall mean the Securities and Exchange Commission and any
other similar or successor agency of the federal government administering the
Securities Act.

          "CONSOLIDATED DEBT SERVICE" shall mean, for any period, the total
amount payable by the Issuer and its Restricted Subsidiaries (either directly
or, without duplication, by reason of a Contingent Obligation) during such
period for or in respect of interest charges

                                      35

<PAGE>
 
on, required amortization of and payments on final maturity of Debt (other than 
Intercompany Debt) and any Distributions on preferred stock as described in 
clause (vii) of the definition of Debt hereunder. For the purposes of the 
foregoing definition, (i) any extension, renewal or refinancing of Debt on or in
anticipation of final maturity shall be excluded from the calculation of 
Consolidated Debt Service, except that an extension, renewal or refinancing of 
Debt shall be included to the extent that such extension, renewal or refinancing
would be an Incurrence of Debt not permitted hereunder, (ii) payments of 
principal of Debt required upon an Asset Disposition of property subject to a 
Lien securing such Debt shall be excluded from the calculation of Consolidated 
Debt Service, (iii) other optional prepayments of principal of Debt shall be 
excluded from the calculation of Consolidated Debt Service except to the extent 
such prepayments do not constitute an extension, renewal or refinancing of Debt 
in anticipation of final maturity subject to clause (i) above and such 
prepayments reduce the amount of amortizations or payments on final maturity of 
Debt otherwise required during such period and (iv) payments on or in 
anticipation of final maturity of Specified Debt shall in any event be excluded 
from the calculation of Consolidated Debt Service to the extent such payments 
are made with the proceeds of Asset Dispositions or equity contributions with 
respect to partnership interests of the Issuer.

          "CONSOLIDATED FUNDED DEBT" shall mean, as at any date of
determination, the aggregate principal amount of all Funded Debt of the Issuer
and its Restricted Subsidiaries outstanding on such date determined in
accordance with GAAP on a consolidated basis after eliminating all Intercompany
Debt.

          "CONSOLIDATED NET INCOME" shall mean, for any period, the net income
(or deficit) of the Issuer and its Restricted Subsidiaries for such period
(taken as a cumulative whole), which shall be calculated after giving effect to
deductions for, without duplication, all operating expenses, interest charges,
rentals, provisions for all taxes and reserves (including reserves for deferred
income taxes) and all other proper deductions, all determined in accordance with
GAAP on a consolidated basis, after eliminating all intercompany items and after
deducting portions of income properly attributable to outside minority
interests, if any, in Restricted Subsidiaries; provided, however, that there
                                               --------  -------
shall in any event be excluded from Consolidated Net Income:

               (a)  any income (or deficit) or any other Person accrued prior to
     the date it becomes a Restricted Subsidiary or merges into or consolidates
     with the Issuer or another Restricted Subsidiary,

               (b)  the income (or deficit) of any Person (other than a
     Subsidiary) in which the Issuer or any Restricted Subsidiary has any
     ownership interest, except to the extent that any such income has been
     actually received by the Issuer or such Restricted Subsidiary in the form
     of cash dividends or similar distributions,

               (c)  any deferred credit or amortization thereof arising from the
     acquisition of any properties or assets of any Person,

               (d)  (i) any gain (or loss) arising from the sale or other
     disposition during such period (other than in the ordinary course of
     business) of any capital assets (such term to include all fixed assets,
     whether tangible or intangible, all inventory sold in conjunction with a
     disposition of fixed assets, and all securities), to the extent the
     aggregate amount of such gain (or loss) exceeds the aggregate amount of
     losses (or gains) from the sale, abandonment or other disposition of
     capital assets and (ii) any gain arising form (A) any write up of assets
     during such period or (B) the
                                       
                                      36

<PAGE>
 
     acquisition by the Issuer or any Restricted Subsidiary during such period
     of any of their securities,

               (e)  proceeds of life insurance policies, and 

               (f)  any undistributed earnings of a Restricted Subsidiary to the
     extent that the distribution thereof to the Issuer by such Restricted
     Subsidiary (i) is not at the time permitted by the terms of its charter or
     any agreement, instrument, order, statute, rule or governmental regulation
     (including foreign exchange regulations) applicable to such Restricted
     Subsidiary, or (ii) would result in the imposition of tax liabilities on
     the Issuer or any Restricted Subsidiary which have not been provided for
     and deducted in determining Consolidated Net Income for such period.

          "CONSOLIDATED NET OPERATING INCOME" shall mean, for any period,
Consolidated Net Income for such period, plus the sum of the following amounts
to the extent deducted in determining Consolidated Net Income for such period:
(a) interest expense on Debt of the Issuer and its Restricted Subsidiaries, (b)
amortization of intangibles, (c) provision for depreciation, (d) provision for
income and franchise taxes, other than such taxes (either positive or negative)
attributable to extraordinary and non-recurring gains or losses or sales of
assets to the extent such gains or losses have been excluded from the
calculation of Consolidated Net Income pursuant to paragraph (d) of the
definition thereof and (e) non-cash restricted stock or other equity-based
compensation expense.

          "CONSOLIDATED NET TANGIBLE ASSETS" shall mean at any time the total
assets of the Issuer and any Restricted Subsidiaries at such time, determined on
a consolidated basis in accordance with GAAP, less the sum (without duplication
and in each case determined on a consolidated basis in accordance with GAAP) of:

          (i)    all Intangible Assets of the Issuer and any Restricted
Subsidiaries at such time:

          (ii)   any write-up of fixed assets occurring after the date of this
Agreement, except any write-up of newly-acquired assets in connection with the
purchase thereof as permitted or required by GAAP; and

          (iii)  the total liabilities of the Issuer and any Restricted
Subsidiaries (other than Consolidated Funded Debt) at such time.

          "CONSOLIDATED TANGIBLE NET WORTH" shall mean, as at any date,
Partnership Equity as of such date less all Intangible Assets of the Issuer and
its Restricted Subsidiaries recorded after the First Closing.

          "CONTINGENT OBLIGATIONS" shall mean any guaranty or other contingent
liability, direct or indirect, with respect to any Debt of another Person,
through an agreement or otherwise, including, without limitation, (a) any
endorsement (other than of notes, bills and checks presented to banks and other
financial institutions for collection or deposit in the ordinary course of
business) or discount with recourse or undertaking substantially equivalent to
or having similar economic effect of a guaranty with respect to any such Debt,
(b) any agreement (i) to purchase, or to advance or supply funds for the payment
or purchase of, any such Debt, (ii) to purchase, sell or lease property,
products, materials or supplies, or transportation or services, primarily for
the purpose of enabling such other Person to pay such Debt or to insure the
owner thereof against loss regardless of the delivery or non-delivery of the
property, products, materials or supplies, or
                         
                                      37

<PAGE>
 
transportation or services, or (iii) to make any loan, advance, capital 
contribution or other investment in such other Person to assure a minimum 
equity, working capital or other balance sheet condition as of any date, or to 
provide funds for the payment of any liability, dividend or stock liquidation 
payment, or otherwise to supply funds to or in any manner invest in such other 
Person, in each case, for the direct or indirect benefit of the holder or 
obligee of such Debt, (c) obligations for which such Person is obligated 
pursuant to or in respect of a letter of credit or similar instrument which is 
issued upon the application of such Person or upon which such Person is an 
account party or for which such Person is in any way liable, (d) repurchase 
obligations or liabilities of such Person with respect to accounts or notes 
receivable sold by such Person or (e) guaranties or obligations with respect to 
(i) maintaining the value of any asset of any Person or (ii) protecting the 
holder of such asset against loss in respect thereof. The amount of any 
Contingent Obligation shall (subject to any limitation contained therein) be 
equal to the outstanding principal amount of the Debt guarantied or subject 
thereto or, in the case of (e) above, the guarantied value of the subject asset.
For purposes of determining Consolidated Debt or Consolidated Funded Debt, Debt
of a Subsidiary that is guaranteed by the Issuer or another Subsidiary shall not
be double counted.

          "CONTRIBUTION AGREEMENTS" shall have the meaning specified in Section 
2.14.

          "DEBT" of a Person shall mean, without duplication, such Person's (i) 
indebtedness for borrowed money, (ii) obligations evidenced by bonds, 
debentures, notes or other similar instruments (as such term is defined in 
Article 9 of the Uniform Commercial Code as from time to time in effect in the 
State of New York), (iii) obligations, whether or not assumed, secured by any 
Lien or payable out of the proceeds or production from property now or hereafter
acquired by any such Person (other than any such obligation under the land lease
with respect to property in Harris County, Texas, set forth on part III of 
Schedule 7.17), (iv) obligations to pay the deferred purchase price of property 
or services (excluding trade accounts payable incurred in the ordinary course of
business and not overdue), (v) obligations as lessee under Capitalized Lease 
Obligations, (vi) Contingent Obligations and (vii) equity securities of 
Subsidiaries owned by Persons other than the Issuer and its Wholly-Owned 
Subsidiaries that have preferred rights to distributions.

          "DEFAULT" shall mean any default or other event which, with notice or 
the lapse of time or both, would constitute an Event of Default.

          "DESIGNATED SHORT-TERM DEBT" shall mean (i) with reference to any 
Incurrence of Debt under Section 6.4, the daily average outstanding amount of 
Short-Term Debt of the Issuer and its Restricted Subsidiaries during that 45-day
period during the 12-month period ending on the date of such Incurrence in 
which the least daily average amount of Short-Term Debt was outstanding if 
Short-Term Debt of the Issuer and its Restricted Subsidiaries has not been zero 
for at least 45 consecutive days during the 12-month period ending on the date 
of such Incurrence and (ii) with reference to Section 6.3, the daily average 
outstanding amount of Short-Term Debt of the Issuer and its Restricted 
Subsidiaries during that 45-day period in which the least daily average amount 
of Short-Term Debt was outstanding during the four fiscal quarters most recently
ended at or before the time of determination in Section 6.3.

          "DGP CHANGE OF CONTROL" shall mean the occurrence or continuation of 
any of the following events:

          (i)  DGP Persons shall cease to beneficially own in the aggregate that
     amount of REIT shares (as defined in the Partnership Agreement) and
     Partnership

                                      38
<PAGE>
 
     Units, in each case treating REIT Shares and Partnership Units
     (hereinafter, collectively, "Equity Interests") as identical for these
     purposes (subject to adjustment in the event the exchange ratio of
     Partnership Units for REIT Shares is no longer on a one-for-one basis), as
     shall equal or exceed the Requisite Percentage of the Equity Interests
     beneficially owned by DGP Persons on the date hereof except that, in the
     event of the divorce of David G. Price and his spouse, the amount of Equity
     Interests which DGP Persons shall thereafter be required to beneficially
     own shall equal or exceed the Requisite Percentage of (i) the amount of
     Equity Interests beneficially owned on the date hereof, multiplied by (ii)
     the ratio of the amount of Equity Interest beneficially owned by DGP
     Persons immediately after a transfer to such former spouse of David G.
     Price in connection with the divorce, over the amount of Equity Interests
     so owned by DGP Persons immediately before such transfer; or

          (ii)  any transaction or series of transactions (whether by purchase
     of existing shares of common stock, issuance of shares of common stock,
     merger, consolidation or otherwise) the result of which is that any Person
     or Group other than DGP Persons (or a former spouse of David G. Price or a
     Person acquiring shares from such former spouse and not owning any other
     shares of capital stock of the Guarantor) becomes the Beneficial Owner,
     directly or indirectly, of 15% or more of the total voting power in the
     aggregate of all classes of capital stock of the Guarantor then outstanding
     normally entitled to vote in the election of directors of the Guarantor (or
     any surviving entity); or

         (iii) any transaction or series of transactions (whether by purchase of
     existing shares of common stock or OP Units, issuance of shares of common
     stock or OP Units, merger, consolidation or otherwise) the result of which
     is that any Person or Group other than DGP Persons (or a former spouse of
     David G. Price or a Person acquiring shares from such former spouse and not
     owning any other shares of capital stock of the Guarantor or any OP Units)
     becomes the Beneficial Owner, directly or indirectly, of 30% or more of the
     total voting power in the aggregate of all classes of capital stock of the
     Guarantor then outstanding (including shares of common stock issuable upon
     exchange of OP Units, whether or not such OP Units are immediately
     exchangeable and without regard to the Ownership Limit) normally entitled
     to vote in the election of directors of the Guarantor (or any surviving
     entity).

          As used in the foregoing definition:

          "Beneficial Owner" shall have the same meaning as such term has for 
purposes of Rule 13d-3 promulgated under the Exchange Act, except that a Person 
shall be deemed to have beneficial ownership of all shares that a Person has the
right to acquire, whether or not such right is immediately exercisable, and that
notwithstanding such rule or the foregoing, except as expressly provided in
clause (iii), capital stock of the Guarantor shall not be deemed to be
beneficially owned by virtue of ownership of OP Units.

          "Group" shall have the same meaning as such term has for purposes of 
Sections 13(d) and 14(d) of the Exchange Act.

          "Ownership Limit" shall have the same meaning as such term has in the 
articles of incorporation of the Guarantor.

          "Person" shall have the same meaning as such term has for purposes of 
Sections 13(d) and 14(d) of the Exchange Act.

                                      39
<PAGE>
 
          "DGP PERSONS" shall mean David G. Price and his heirs, spouse, 
children, sons- and daughters-in-law and grandchildren and any trust or estate, 
all of the beneficiaries of which consist of David G. Price of David G. Price's 
heirs, spouse, children, sons- and daughter-in-law or grandchildren.

          "DISCLOSURE DOCUMENTS" shall mean the following documents delivered by
Morgan Stanley & Co. Incorporated to you and each Other Purchaser and relating 
to the transactions contemplated hereby:

          (i)  the Memorandum;

         (ii)  the Historical Financial Statements, Standard Acquisition and
     Lease Documents dated May 22 and 23, 1996 and Lender Due Diligence
     Conference Binder dated May 22 and 23, 1996; and

        (iii)  all exhibits, appendices, annexes, schedules or the like attached
     to each of the above.

          "DISTRIBUTION" shall mean (i) distributions or dividends on or in 
respect of the partnership interests or capital stock of the Issuer or any
Subsidiary (except distributions solely in such interests or stock and except to
the extent made to the Issuer or any Wholly-Owned Subsidiary) and (ii) the
repurchase, purchase, redemption or acquisition of partnership interests or
capital stock of the Issuer or any Subsidiary, or of warrants, rights or other
options to purchase such interests or stock (except when solely in exchange for
such interests or stock and except to the extent made from the Issuer or a
Wholly-Owned Subsidiary).

          "ENVIRONMENTAL LAW" shall mean all applicable statutes, regulations, 
rules, ordinances, codes, licenses, permits, Orders, approvals, authorizations 
and similar items of all Governmental Bodies relating to the protection of human
health or the environment as in effect as of the date hereof, including but not 
limited to those pertaining to reporting, licensing, permitting, investigation 
and remediation of emissions, discharges, releases or threatened releases of 
Hazardous Materials, substances, pollutants, contaminants or hazardous or toxic 
substances, materials or wasters whether solid, liquid or gaseous in nature, 
into the air, surface water, ground water or land, or relating to the 
manufacture, processing, distribution, use, treatment, storage, disposal, 
transport or handling of substances, pollutants, contaminants or hazardous or 
toxic substances, materials, or wastes, whether solid, liquid or gaseous in 
nature, including by way of illustration and not by way of limitation, (x) the 
Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. 
(S)(S) 9601 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. 
            ------
(S)(S) 6901 et seq.), the Clean Air Act (42 U.S.C. (S)(S) 7401 et seq.), the 
            ------                                             ------
Federal Water Pollution Control Act (33 U.S.C. (S)(S) 1251), the Safe Drinking 
Water Act (42 U.S.C. (S)(S) 300f et seq.), the Toxic Substances Control Act (15 
                                 ------
U.S.C. (S)(S) 2601 et seq.), the Endangered Species Act (16 U.S.C. (S)(S) 1531 
                   ------
et seq.), the Emergency Planning and Community Right-to-Know Act of 1986 (42 
-------
U.S.C. (S)(S) 11001 et seq.) and (y) analogous state and local provisions.
                    ------

          "ERISA" shall mean the Employee Retirement Income Security Act of 
1974, as amended.

          "ERISA AFFILIATE" of the Issuer shall mean any other person that, 
together with the Issuer as of the relevant measuring date under ERISA, was or 
is required to be treated as a single employer under Section 414 of the Code.

                                      40
<PAGE>
 
          "ERISA EVENT" shall mean (i) the occurrence of a Reportable Event; 
(ii) the provision by the administrator of any Plan of a notice of intent to 
terminate such Plan, pursuant to Section 4041(a)(2) of ERISA (including any such
notice with respect to a plan amendment referred to in Section 4041(e) of 
ERISA); (iii) the cessation of operations by the Issuer or an ERISA Affiliate at
a facility in the circumstances described in Section 4062(e) of ERISA; (iv) the 
withdrawal by the Issuer or an ERISA Affiliate from a Multiple Employer Plan 
during a plan year for which it was a substantial employer, as defined in 
Section 4001(a)(2) of ERISA; (v) the failure by the Issuer or any ERISA 
Affiliate to make a payment to a Plan required under Section 302(f)(l) of ERISA;
(vi) the adoption of an amendment to a Plan requiring the provision of security 
to such Plan, pursuant to Section 307 of ERISA; (vii) the institution by the 
PBGC of proceedings to terminate a Plan, pursuant to Section 4042 of ERISA, or 
the occurrence of any event or condition described in Section 4042 of ERISA that
constitutes grounds for the termination of, or the appointment of a trustee to 
administer, a Plan; (viii) the default, as defined in Section 4219(c)(5) of 
ERISA, of the Issuer or any ERISA Affiliate with respect to any payment of 
Withdrawal Liability thirty days after any dispute regarding such Withdrawal 
Liability has been finally resolved; or (ix) the notification by the sponsor of 
a Multiemployer Plan to which the Issuer or any ERISA Affiliate is or was 
obliged to contribute that such Multiemployer Plan is in reorganization or is 
being terminated, within the meaning of Title IV of ERISA.

          "EVENTS OF DEFAULT" shall have the meaning specified in Section 8.1.

          "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as 
amended, and any similar or successor federal statute, and the rules and 
regulations of the Commission thereunder, all as the same shall be in effect at 
the time.

          "EXISTING GOLF COURSES" shall mean those Golf Courses owned by the 
Guarantor, the Issuer or any Subsidiary on the date hereof, all of which are set
forth on Schedule 6.12.

          "EXISTING LEASES" shall mean all leases for golf courses and related 
facilities, pursuant to which the Issuer or any Subsidiary is the lessor, in 
effect on the date hereof, all of which are set forth on Schedule A hereto.

          "EXISTING SECURED DEBT" shall mean Debt secured by Liens described on 
Schedule 7.17 and any extension, renewal or refinancing thereof provided that 
the principal amount is not increased and such Liens shall not be extended to or
cover any property of the Issuer or any Subsidiary other than those properties 
subject thereto (including after-acquired property) on the date hereof.

          "FEDERAL BANKRUPTCY CODE" shall mean the United States Bankruptcy 
Code, Title 11, United States Code, as amended from time to time.

          "FIRST CLOSING" shall have the meaning specified in Section 1.3.

          "FIRST CLOSING DATE" shall have the meaning specified in Section 1.3.

          "FUNDED DEBT" of any Person shall mean and include, as of any date as 
of which the amount thereof is to be determined, all Debt of such Person which 
in accordance with GAAP would be classified on a balance sheet of such Person as
of such date as funded debt and shall also include (without duplication) all 
indebtedness outstanding at all times under the Revolving Facility and all other
Debt of such Person, whether secured or unsecured, having a final maturity (or 
which pursuant to its terms is renewable or extendible at the option of such 
Person for a period ending or which originally had a final maturity)

                                      41
<PAGE>
 
more than one year after the date of determination (but including, without 
limitation, any portion of such Debt maturing in less than one year).

          "GAAP" shall mean generally accepted accounting principles as in 
effect from time to time in the United States of America.

          "GAIN HOLDER" shall mean a holder of Notes that, based on a reasonable
good faith determination of such holder, would recognize income for federal 
income tax purposes in excess of 2% of the unpaid principal amount of the Notes 
then held by such holder if such Notes were sold or exchanged, or deemed sold or
exchanged, by such holder as a result of a proposed transaction described in 
Section 6.5. In the event of a proposed transaction described in Section 6.5, 
the Issuer shall notify all holders of Notes of its intention to engage in such
a transaction within 20 days prior to any such transaction. Each holder shall 
then have 15 days thereafter to notify the Issuer, based on a reasonable good 
faith determination of such holder, that it is a Gain Holder and to provide the 
Issuer with a description of how such determination was made. Any holder who 
does not provide timely notice that it is a Gain Holder along with such 
description shall be deemed not to be a Gain Holder.

          "GENERAL PARTNER" shall mean National Golf Properties, Inc., a 
Maryland corporation which is the general partner of the Issuer.

          "GOLF COURSE" shall mean a tract of land developed for the playing of 
the game of golf, together with all related recreational, operational or 
required ancillary facilities pertaining thereto.

          "GOVERNMENTAL BODY" shall mean any federal, state, municipal or other 
governmental department, commission, court, board, bureau, agency or 
instrumentality, domestic or foreign.

          "GUARANTOR" shall have the meaning specified in Section 2.12.
     
          "GUARANTOR SUBSIDIARY" shall mean any corporation or limited liability
company of which the Guarantor owns or controls, directly or indirectly, more 
than 50% of the Voting Stock or any partnership joint venture or other entity 
in which the Guarantor owns or controls, directly or indirectly, more than a 50%
equity interest and shall include, whether or not otherwise included in this 
definition, the Issuer and its Subsidiaries.

          "GUARANTY" shall have the meaning specified in Section 2.12.

          "GUARANTY EVENT OF DEFAULT" shall mean any Event of Default under and 
as defined in the Guaranty.

          "HAZARDOUS MATERIAL" shall mean any chemical substance:

          (i)  the presence of which requires investigation or remediation under
     any federal, state or local statute, regulation, ordinance, order, action
     or policy, administrative request or civil complaint under any of the
     foregoing or under common law; or

         (ii)  which is defined as a "hazardous waste" or "hazardous substance"
     under any federal, state or local statute, regulation or ordinance or
     amendments thereto as in effect as of the date hereof, or as hereafter
     amended, including, without limitation, the Comprehensive Environmental
     Response, Compensation and Liability

                                      42
<PAGE>
 
     Act (42 U.S.C. Section 9601 et seq.) and or the Resource Conservation and 
                                 ------
     Recovery Act (42 U.S.C. Section 6901 et seq.); or
                                          ------

        (iii)  which is toxic, explosive, corrosive, flammable, infectious,
     radioactive, carcinogenic, mutagenic or otherwise hazardous and is
     regulated by any Governmental Body having or asserting jurisdiction over
     any of the Properties; or

         (iv)  the presence of which on any of the Properties causes a nuisance
     upon such Properties or to adjacent properties or poses a hazard to the
     health or safety of persons on or about any of the Properties; or

          (v)  the presence of which on adjacent properties constitutes a 
     trespass by any owner or operator of the Properties; or

         (vi)  which contains gasoline, diesel fuel or other petroleum
     hydrocarbons, polychlorinated biphenyls (PCBs) or asbestos or asbestos-
     containing materials or urea formaldehyde foam insulation; or

        (vii)  radon gas.

        "HOLDER" shall mean, with respect to any Note, the Person in whose 
name such Note is registered in the register maintained by the Issuer pursuant 
to Section 10.

        "INCUR" when used with respect to any Debt shall mean to directly or 
indirectly create, incur, assume, agree to purchase or provide funds in respect 
of, or otherwise become directly or indirectly (by way of a Contingent 
Obligation or otherwise) liable in respect of such Debt, and the term 
"Incurrence" shall have a correlative meaning, provided that (i) in the event 
the Issuer or any Subsidiary shall extend, renew or refinance any Debt, the 
Issuer or such Subsidiary, as the case may be, shall be deemed to have Incurred 
such Debt at the time of such extension, renewal or refinancing, (ii) any Person
becoming a Subsidiary after the date of this Agreement shall be deemed to have 
Incurred all of its then outstanding Debt at the time it becomes a Subsidiary, 
(iii) in the event that the Issuer changes the designation of an Unrestricted 
Subsidiary to that of a Restricted Subsidiary, such Restricted Subsidiary shall 
be deemed to have Incurred all of the then outstanding Debt of the Unrestricted 
Subsidiary at the time of the redesignation, and (iv) any Debt Incurred by the  
Issuer or a Subsidiary to another Subsidiary shall be deemed Incurred anew by 
the Issuer or such Subsidiary, as the case may be, upon the transfer of such 
Debt by such other Subsidiary to a Person not a Subsidiary or upon such other 
Subsidiary ceasing to be a Subsidiary.

        "INDEPENDENT DIRECTORS" shall have the same meaning as such term has 
in the bylaws of the Guarantor, as in effect on the date hereof.

        "INTANGIBLE ASSETS" shall mean at any time all assets that would be 
classified as intangible assets under GAAP at such time, including, without 
limitation, goodwill (whether presenting the excess of cost over book value of 
assets acquired or otherwise), patents, trademarks, trade names, copyrights, 
franchises, unamortized debt discount and expense, organization costs, research 
and development costs and other deferred charges (other than prepaid insurance 
and taxes).

        "INTERCOMPANY DEBT" shall mean Debt owned by the Issuer or any 
Restricted Subsidiary to the Issuer or any Wholly-Owned Subsidiary.

        "ISSUER" shall have the meaning specified in the introductory 
paragraph.

                                      43
<PAGE>
 
          "ISSUER NOTE PURCHASE AGREEMENTS" shall have the meaning specified in
the Recitals.

          "LIEN" shall mean, as to any Person, any mortgage, lien, pledge,
adverse right, charge, security interest or other encumbrance in favor of any
vendor, lessor, lender or other secured party in or on, or any interest or title
of any such vendor, lessor, lender or other secured party under any conditional
sale or other title retention agreement or capital lease with respect to, any
property or asset of any nature whatsoever of Such Person, or the signing or
filing of a financing statement which names such Person as debtor, or the
signing of any security agreement authorizing any other party as the secured
party thereunder to file any such financing statement.

          "LONG TERM LEASE" shall mean a lease of real or personal property
having an unexpired term (including terms of renewal or extension at the option
of the lessee or lessor, whether or not such option has been exercised) of more
than one year, other than, in the case of the Issuer or any Subsidiary, a
Capital Lease.

          "MAKEWHOLE AMOUNT" applicable in respect of any prepayment of all or
any portion of the principal amount of any Note pursuant to Section 3.2(b) or
pursuant to Section 3.6 or any acceleration of the principal amount of any Note
pursuant to Section 8.1 (such prepaid, put or accelerated principal amount, as
the case may be, being hereinafter referred to as the "Prepaid Principal") shall
mean, as at any date of determination, the greater of (a) zero and (b) the
excess of:

          (i)  the sum of the respective present values as of the date such
     Makewhole Amount becomes due and payable of:

                    (A)  each prepayment of principal (if any) required to be
               made with respect to such Prepaid Principal pursuant to Section
               3.1 during the remaining term to maturity of the Notes,

                    (B)  the payment of principal balance required to be made
               at final maturity with respect to such Prepaid Principal,and

                    (C)  each payment of interest which would be required to be
               paid during the remaining term to maturity of the Notes with
               respect to such Prepaid Principal from time to time outstanding,

     determined, in the case of each such required prepayment, principal payment
     at final maturity and interest payment, by discounting the amount thereof
     (on a semiannual basis) from the date fixed therefor back to the date such
     Makewhole Amount becomes due and payable at the Reference Rate (assuming
     for such purpose that all such payments and prepayments of principal and
     payments of interest with respect to such Prepaid Principal were made
     when due pursuant to the terms thereof and hereof, and that no other
     payment or prepayment with respect to such Prepaid Principal was made).

0ver
----

          (ii) the amount of such Prepaid Principal.

          For purposes hereof, "Reference Rate" shall mean in connection with
any determination of the Makewhole Amount a per annum rate equal to 50 basis
points above the annual yield for United States Treasury securities having a
term to maturity equal to the

                                      44

<PAGE>
 
Weighted Average Life to Maturity of the Notes at the time such Makewhole Amount
becomes due and payable, as determined by reference to the display designated as
"Page 500" on the Telerate Access Service (or such other display as may replace 
Page 500 on the Telerate Access Service) at 11.00 a.m. New York City time on the
third Business Day preceding the date of such payment, or, if the Telerate 
Access Service is no longer available (or if such yield is not reported as of 
such time or the yield reported as of such time is not ascertainable), such 
annual yield for such United States Treasury securities as determined by 
reference to Federal Reserve Statistical Release H.15 (519) published most 
recently prior to such Business Day, or, if that is no longer published (or 
such yield is not reported or ascertainable) as determined, at the Issuer's 
expense, by an independent investment banking firm acceptable to the Issuer and 
the holder of such Note, provided that, if there shall be no actual United 
States Treasury security having a term to maturity equal to such remaining 
average life of the Notes, the annual yield for an actively-traded United States
Treasury securities as determined in accordance with accepted financial practice
by reference to Telerate Access Service, Federal Reserve Statistical Release
H.15 (519) or as determined by an independent investment banking firm, as the
case may be. For purposes hereof, "actively-traded" means an "on the run bond".

          "MATERIAL ADVERSE CHANGE (OR EFFECT)" shall mean a material adverse 
change (or effect) on (a) the business, operations, properties, financial 
condition or prospects of the Guarantor and the Guarantor Subsidiaries or the 
Issuer and its Restricted Subsidiaries taken as a whole, (b) the ability of the 
Issuer to perform its obligations under this Agreement or the Notes or the 
ability of the Guarantor to perform its obligations under the Guaranty or (c)
the validity or enforceability of this Agreement, the Notes or the Guaranty.

          "MEMORANDUM" shall mean the Private Placement Memorandum, dated April 
1996, delivered by Morgan Stanley & Co. Incorporated to you and each Other 
Purchaser and relating to the transactions contemplated hereby.

          "MULTIEMPLOYER PLAN" shall mean a "multiemployer plan," as defined in 
Section 4001(a)(3) of ERISA, to which the Issuer or any ERISA Affiliate is 
making or accruing, or has made or accrued, an obligation to make contributions.

          "MULTIPLE EMPLOYER PLAN" means a single employer plan, as defined in 
Section 4001(a)(15) of ERISA, which is or was maintained for employees of Issuer
or an ERISA Affiliate and at least one person other than the Issuer and any 
ERISA Affiliate and in respect the Issuer or any ERISA Affiliate could have 
liability under Section 4064 or 4069 of ERISA in the event such Plan has been 
or were to be terminated.

          "NOTES" shall have the meaning specified in the Recitals.

          "NOTICE OF CC PURCHASE WAIVER" shall have the meaning specified in 
Section 3.6.

          "OFFICER'S CERTIFICATE" shall mean a certificate signed in the 
Issuer's name by any one of the Senior Officers.

          "OP UNITS" shall mean units of limited partnership in the Issuer.

          "OPTION COURSES AGREEMENT" shall mean that certain Option Courses 
Agreement, as amended, dated as of August 18, 1993, among David G. Price, 
certain of his

                                      45
<PAGE>
 
affiliates, AGC and the Issuer pursuant to which the Issuer has the option to 
acquire four golf courses form David G. Price and his affiliates.

          "ORDER" shall mean any order, writ, injunction, decree, judgment,
award, determination, direction or demand.

          "OTHER AGREEMENTS" shall have the meaning specified in Section 1.2.

          "OTHER PURCHASERS" shall have the meaning specified in Section 1.2.

          "PARTNERSHIP AGREEMENT" shall mean the Agreement of Limited
Partnership of National Golf Operating Partnership, L.P. dated as of August 18,
1993, as it may be from time to time amended, modified or supplemented in
accordance with its terms.

          "PARTNERSHIP EQUITY" shall mean, as at any date, the aggregate of the
amounts which would, in accordance with GAAP, appear on a consolidated balance
sheet of the Issuer and its Restricted Subsidiaries as of such date (after
exclusion of outside minority interests in such Subsidiaries as (i) the
contributions with respect to partnership interests (net of distributions)
plus(ii) retained earnings.

          "PARTNERSHIP UNITS" shall have the meaning set forth in the
Partnership Agreement.

          "PBGC" shall mean the Pension Benefit Guaranty Corporation referred to
and defined in ERISA or any successor thereto.

          "PERMITTED LIENS" shall mean (i) Liens for taxes, assessments or
charges of and Governmental Body for claims not yet due or which are being
contested in good faith by appropriate proceedings and with respect to which
adequate reserves or other appropriate provisions are being maintained in
accordance with the provisions of GAAP; (ii) statutory Liens of landlords and
Liens of carriers, warehousemen, mechanics, materialmen and other Liens (other
than any Lien imposed under ERISA) imposed by law and created in the ordinary
course of business and Liens on deposits made to obtain the release of such
Liens if (x) the underlying obligations are not overdue for a period of more
than 60 days or (y) such Liens are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves or other appropriate
provisions are being maintained in accordance with the provisions of GAAP; (iii)
Liens (other than any Lien imposed under ERISA) incurred on deposits made in the
ordinary course of business (including, without limitation, surety bonds and
appeal bonds) in connection with workers' compensation, unemployment insurance
and other types of social security benefits or to secure the performance of
tenders, bids, leases, contracts (other than the repayment of Debt), statutory
obligations and other similar obligations or arising as a result of progress
payments under contracts; (iv) easements (including, without limitation,
reciprocal easement agreements and utility agreements), rights-of-way,
covenants, consents, reservations, encroachments, variations and other
restrictions, charges or encumbrances (whether or not recorded), which do not
interfere materially with the ordinary conduct of the business of the Issuer or
its Restricted Subsidiaries and which do not materially detract from the value
of the property to which they attach or materially impair the use thereof to the
Issuer or its Restricted Subsidiaries; (v) building restrictions, zoning laws
and other statutes, laws, rules, regulations, ordinances and restrictions, and
any amendments thereto, now or at any time hereafter adopted by any Governmental
Body having jurisdiction; (vi) any attachment or judgment Lien unless it
constitutes an Event of Default; and (vii) other Liens incidental to the conduct
of the business or the ownership of the property of the Issuer or a Restricted
Subsidiary which were not incurred in connection with borrowed money and which
do not in the aggregate

                                      46 

<PAGE>
 
materially detract the value of the property or materially impair the use 
thereof in the operation of the business and which, in any event, do not secure 
obligations aggregating in excess of $250.000.

          "PERSON" shall include an individual, a corporation, an association, a
partnership, a trust or estate, a government, foreign or domestic, and any
agency or political subdivision thereof, or any other entity.

          "PLAN" shall mean any employee benefit plan, as defined in Section
3(3) of ERISA, other than a Multiemployer plan.

          "PROPERTIES" shall have the meaning specified in Section 7.19.

          "PROPRIETARY RIGHTS" shall have the meaning specified in Section 7.13.

          "REPORTABLE EVENT" shall mean a reportable event, as defined in
Section 4043 of ERISA, to the extent that the reporting of such event to the
PBGC has not been waived.

          "REQUISITE PERCENTAGE" shall mean 60% during the period from the date
hereof through December 15, 1996, 40% during the period from December 16, 1996
through December 15, 1997, 20% from December 16, 1997 through December 15, 1998
and zero thereafter.

          "RESTRICTED SUBSIDIARIES" shall mean all Subsidiaries of the Issuer
except for those Subsidiaries designated by the Issuer as Unrestricted
Subsidiaries.

          "REVOLVING FACILITY" shall mean the $40 million credit facility
extended to the Issuer by Bank of America National Trust and Savings Association
under a Credit Agreement dated as of September 29, 1993, bearing interest at any
one of three interest rate bases as elected at the time the facility is drawn,
maturing (as of the date hereof) on September 1, 1996 and any other revolving
facility extended to the Issuer in addition thereto or in substitution therefor.

          "SALE AND LEASE BACK TRANSACTION" shall mean any arrangement with any
Person providing for the leasing by the Issuer or any Restricted Subsidiary of
any real or tangible personal property (or providing for the liability of the
Issuer or any Restricted Subsidiary as guarantor or surety with respect to the
lessee's obligations under any such lease), which property (or comparable
property) has been or is to be sold or transferred by the Issuer or such
Restricted Subsidiary in contemplation of such leasing.

          "SECOND CLOSING" shall have the meaning specified in Section 1.3.

          "SECOND CLOSING DATE" shall have the meaning specified in Section 1.3.

          "SECRETARY'S CERTIFICATE" shall mean a certificate signed by the
Secretary of the Issuer.

          "SECURED DEBT" shall mean any Debt of the Issuer or any Subsidiary of
the character described in clause (i), (iii) or (vi) of the definition of Debt
set forth in this Section secured by any Lien or payable out of the proceeds or
production from property now owned or hereafter acquired by the Issuer or any
Restricted Subsidiary.

                                      47

<PAGE>
 
          "SECURITIES ACT" shall mean the Securities Act of 1933, as amended,
and any similar or successor federal statute, and the rules and regulations of
the Commission thereunder, all as the same shall be in effect at the time.

          "SENIOR OFFICERS" shall mean the Chairman (if an officer),
President, Executive Vice President, Chief Financial Officer or Treasurer of the
General Partner of the Issuer or any Senior Officer as defined in the Guaranty.

          "SERIES A NOTES" shall have the meaning specified in the Recitals.

          "SERIES A-1 NOTES"  shall have the meaning specified in the Recitals.

          "SERIES A-2 NOTES"  shall have the meaning specified in the Recitals.

          "SERIES A-3 NOTES"  shall have the meaning specified in the Recitals.

          "SERIES B NOTES"  shall have the meaning specified in the Recitals.

          "SHORT-TERM DEBT" of any Person shall mean and include, as of any date
as of which the amount thereof is to be determined, all Debt of such Person,
whether secured or unsecured, which matures on demand or has a final maturity
less than one year after the date of determination unless such Debt constitutes
Funded Debt pursuant to the terms hereof.

          "SPECIFIED DEBT" shall mean the Notes, the Revolving Facility, the
Debt owned to NationsBank described in Part II(b) of Schedule 7.17 and the Debt
owed to HCI(America), Inc. described in Part II(a) of Schedule 7.17.

          "STATE" shall mean the State or Commonwealth in which the property is
located.

          "SUBSEQUENT LEASES" shall mean all leases for golf courses and related
facilities, pursuant to which the Issuer or any Subsidiary is the lessor, that
are not Existing Leases.

          "SUBSIDIARY" shall mean any corporation or limited liability company
of which the Issuer owns or controls, directly or indirectly, more than 50% of
the Voting Stock or any partnership, joint venture or other entity in which the
Issuer owns or controls, directly or indirectly, more than a 50% equity
interest.

          "TRUST"  shall have the meaning specified in the  Recitals.

          "TRUST NOTE PURCHASE AGREEMENTS" shall have the meaning specified in
the Recitals.

          "TRUST NOTES" shall have the meaning specified in the Recitals.

          "UNRESTRICTED SUBSIDIARIES" shall mean all Subsidiaries of the Issuer
designated as Unrestricted Subsidiaries  in a written notice to you
and the Other Purchasers.

          "VOTING STOCK" as applied to any corporation or limited liability
company shall mean all shares of any class or classes (however designated), or
other securities of such corporation or limited liability company, the holders
of which are ordinarily, in the absence of contingencies, entitled to elect a
majority of the corporate directors (or Persons performing similar functions).

                                      48

<PAGE>
 
          "WEIGHTED AVERAGE LIFE TO MATURITY." as applied to any Debt at any 
date, shall mean the number of years obtained by dividing (a) the then 
outstanding principal amount of such Debt into (b) the total of the products 
obtained by multiplying (i) the amount of each then remaining installment, 
sinking fund, serial maturity or other required payment, including payment at 
final maturity, in respect thereof, by (ii) the number of years (calculated to 
the nearest one twelfth) which will elapse between such date and the date on 
which such payment is to be made.

          "WHOLLY-OWNED SUBSIDIARY" shall mean any Restricted Subsidiary all of 
the equity interests of which are owned by the Issuer or another Wholly-Owned 
Subsidiary. 

          "WITHDRAWAL LIABILITY" shall have the meaning given such term under 
Part I of Subtitle E of Title IV of ERISA.

          9.2  ACCOUNTING TERMS.  All accounting terms herein which are not 
               ----------------
expressly defined in this Agreement have the meanings respectively given to them
in accordance with GAAP, all computations made pursuant to this Agreement shall 
be made in accordance with GAAP and all balance sheets and other financial 
statements shall be prepared in accordance with GAAP.

     10.  REGISTRATION, TRANSFER AND EXCHANGE OF NOTES.  The Issuer shall keep 
          --------------------------------------------
at its expense at its office maintained pursuant to Section 6.13 a register for 
the registration and registration of transfers of Notes.  The name and address 
of each holder of one or more Notes, each transfer thereof and the name and 
address of each transferee of one or more Notes shall be registered in such 
register.  Prior to due presentment for registration of transfer, the Person in 
whose name any Note shall be registered shall be deemed and treated as the owner
and holder thereof for all purposes hereof, and the Issuer shall give to any
holder of Notes that is an institutional investor promptly upon request
therefor, a complete and correct copy of the names and addresses of all
registered holders of Notes.

          Subject to Section 1.9 hereof, whenever any Note or Notes shall be 
surrendered at such office of the Issuer for transfer or exchange, accompanied 
(if so required by the Issuer) by an appropriate written instrument of transfer 
duly executed by the registered holder of such Note or its attorney duly 
authorized in writing, the Issuer will execute and deliver within five Business 
Days, at the Issuer's expense, in exchange therefor a new Note or Notes, in 
denominations of at least $500,000 (except one Note may be issued in a lesser 
principal amount if the unpaid principal amount of the surrendered Note is not
evenly divisible by, or is less than, $500,000), as may be requested by such
holder, in the same aggregate unpaid principal amount as the aggregate unpaid
principal amount of the Note or Notes so surrendered. Each such new Note shall
be payable to such Person as such issued in exchange for any other Note or upon
transfer thereof shall carry the rights to unpaid interest and interest to
accrue which were carried by the Note so exchanged or transferred, and neither
gain nor loss of interest shall result from any such transfer or exchange.

          The Issuer and any agent of the Issuer may treat the Person in whose 
name any Note is registered as the owner and holder of such Note for the purpose
of receiving payment of the principal of and premium (if any) and interest on 
such Note and for all other purposes whatsoever, whether or not such Note shall
be overdue.

     11.  LOST NOTES, ETC.  Upon receipt by the Issuer of evidence reasonably 
          ---------------
satisfactory to it of the ownership of and the loss, theft, destruction or 
mutilation of any

                                      49
<PAGE>
 
Note and (in case of loss, theft or destruction) of indemnity reasonably 
satisfactory to it, and upon surrender of such Note for cancellation, if 
mutilated, the Issuer will deliver within five Business Days in lieu of such 
Note a new Note in a like unpaid principal amount, dated so that there will be
no loss of interest on such lost, stolen, destroyed or mutilated Note.

          Notwithstanding the foregoing provisions of this Section, if any Note 
of which you or any other institutional holder is the owner is lost, stolen or 
destroyed, then your or such holder's written statement as to such ownership of 
and loss, theft or destruction shall be accepted as satisfactory evidence 
thereof, and no indemnity shall be required as a condition to the execution and 
delivery by the Issuer of a new Note in lieu of such Note (or as a condition to 
the payment thereof, if due and payable) other than your or such holder's 
unsecured written agreement to indemnify the Issuer.

     12.  AMENDMENT AND WAIVER.  (a) Any term, covenant, agreement or condition 
          --------------------
of this Agreement or of the Notes may, with the consent of the Issuer, be 
amended, or compliance therewith may be waived (either generally or in a 
particular instance and either retroactively or prospectively), by one or more 
substantially concurrent written instruments signed by the holder or holders of 
at least 66-2/3% in aggregate unpaid principal amount of all Notes at the time 
outstanding (exclusive of Notes held by the Issuer, its Subsidiaries or 
Affiliates), except as otherwise provided in clause (b) of this Section 12, 
provided, however, that:
--------  -------

                    (i)    no such amendment or waiver shall change the rate,
     extend the time of payment or change the method of computation of interest
     on any of the Notes, or change the time or amount of any prepayment or
     payment of principal or otherwise modify any of the provisions of this
     Agreement, the Other Agreements or of the Notes with respect to the payment
     or prepayment or purchase thereof, or release or terminate the Guaranty, or
     change the percentage of holders of Notes required to approve any such
     amendment or effectuate any such waiver, without the consent of the holders
     of all the Notes then outstanding;

                    (ii)   no amendment or waiver of any of the provisions of
     Section 1, 2, 3, 7, 12(a) 13 or 15.10 hereof, or any defined term (as it is
     used therein), will be effective as to you unless consented to by you in
     writing; and

                    (iii)  no such waiver shall extend to or affect any 
     obligation not expressly waived or impair any right consequent thereon.

          (b)  The holder or holders of at least 51% in aggregate unpaid
     principal amount of all Notes at the time outstanding (exclusive of Notes
     held by the Issuer, its Subsidiaries or Affiliates) may waive the
     provisions of Section 6.10 hereof to the extent necessary to permit (i) the
     payment of any dividend or distribution in such amount as may be necessary
     to maintain the Guarantor's status as a real estate investment trust as
     required by the Code or to avoid the imposition of federal or state income
     or excise tax on the Guarantor, or (ii) the redemption or repurchase of any
     partnership interest or shares of capital stock so as to preclude
     concentration of ownership potentially disqualifying the Guarantor as a
     real estate investment trust or potentially disqualifying income as rents
     from real property; provided, that, no such amendment or waiver shall be
                         --------  ---- 
     effective unless, at the time of and immediately after effect has been
     given to such declaration and the making of such Distribution as referred
     to in Section 6.10, no condition or event shall exist which constitutes a
     Default or Event of Default under the terms of Sections 8.1(a),(b),(f) or
     (g) hereof.
     
                                      50
<PAGE>
 
          (c)  Any amendment or waiver pursuant to clause (a) or (b) of this
     Section shall apply equally to all the holders of the Notes and shall be
     binding upon them, upon each future holder of any Note and upon the Issuer,
     in each case whether or not a notation thereof shall have been placed on
     any Note.

          (d)  The Issuer will not, directly or indirectly, pay or cause to be
     paid any remuneration, whether by way of supplemental or additional
     interest, fee or otherwise, to any holder of the Notes as consideration for
     or as an inducement to the entering into by any holder of the Notes of any
     waiver or amendment of any of the terms and provisions of this Agreement
     unless such remuneration is concurrently paid, on the same terms, ratably
     to the holders of all of the Notes then outstanding even if such holders
     did not consent to such waivers or amendments.

          (e)  The Issuer will provide each holder of the Notes (irrespective of
     the amount of Notes then owned by it) with sufficient information,
     sufficiently far in advance of the date a decision is required, to enable
     such holder to make an informed and considered decision with respect to any
     proposed amendment, waiver or consent in respect of any of the provisions
     hereof or of the Notes. The Issuer will deliver executed or true and
     correct copies of each amendment, waiver or consent effected pursuant to
     the provisions of this Section 12 to each holder of outstanding Notes
     promptly following the date on which it is executed and delivered by, or
     receives the consent or approval of, the requisite holders of Notes.

     13.  PAYMENTS ON NOTES.
          -----------------
 
          13.1  PLACE OF PAYMENT.  Subject to Section 13.2, payments of 
                ----------------
principal, Makewhole Amount, if any, and interest becoming due and payable on 
the Notes shall be made in New York City at the Citibank in such jurisdiction.  
The Issuer may at any time, by notice to each holder of a Note, change the place
of payment of the Notes so long as such place of payment shall be either the
principal office of the Issuer in such jurisdiction or the principal office of a
bank or trust company in such jurisdiction.

          13.2  HOME OFFICE PAYMENT.  Notwithstanding anything to the contrary 
                -------------------
in this Agreement or the Notes, so long as you or any nominee designated by you 
shall be the holder of any Note, the Issuer shall punctually pay all amounts 
which become due and payable on such Note to you at your address and in the 
manner set forth in Annex 1, or at such other place within the United States and
in such other manner as you may designate for the purpose by notice to the
Issuer, without presentation or surrender of such Note or the making of any
notation thereon, except that any Note paid or prepaid in full shall, following
such payment or prepayment, be surrendered to the Issuer for cancellation, upon
its request therefor, at the office maintained by the Issuer pursuant to Section
6.13 or at the place of payment specified in the Notes. You agree that prior to
the sale, transfer or other disposition of any such Note, you will make a
notation thereon of the portion of the principal amount paid or prepaid and the
date to which interest has been paid thereon, or surrender the same in exchange
for a Note or Notes aggregating the same principal amount as the unpaid
principal amount of the Note so surrendered. The Issuer shall enter into an
agreement similar to that contained in the first sentence of this Section with
any other institutional holder of outstanding Notes (or nominee thereof) who
shall make with the Issuer an agreement similar to that contained in the second
sentence of this Section.

     14.  LIABILITIES OF PURCHASER.  Neither this Agreement nor any disposition 
          ------------------------
of any of the Notes shall be deemed to create any liability or obligation on 
your part or that of any other holder of any Note to enforce any provision 
hereof or of any of the Notes for the benefit or on behalf of any other Person 
who may be the holder of any Note.

                                      51


<PAGE>
 
     15.  MISCELLANEOUS.
          -------------

          15.1 EXPENSES.  Whether or not the transactions contemplated hereby 
               --------
are consummated, the Issuer shall (a) pay the reasonable fees and disbursements 
of your special counsel and of any local counsel for any services rendered in 
connection with such transactions or in connection with any actual or proposed 
amendment, waiver or consent (whether or not the same becomes effective) with 
respect to this Agreement, the Other Agreements or the Notes, and all other 
reasonable expenses in connection therewith (including, without limitation, 
document production and reproduction expenses); (b) reimburse you for your 
reasonable out-of-pocket expenses in connection with such transactions and the 
exercise of your rights hereunder and thereunder, and each such actual or 
proposed amendment, waiver or consent (whether or not the same becomes 
effective), and any items of the character referred to in clause (a) which shall
have been paid by you and pay the cost of transmitting the Notes (insured to 
your satisfaction) to your principal office upon the issuance thereof; (c) pay, 
and save you and each subsequent holder of any Note harmless from and against, 
any and all liability and loss with respect to or resulting from the non-payment
or delayed payment of any and all placement fees and other liability to pay any 
agent or finder in connection with the sale of the Notes to you; (d) pay all 
taxes (including interest and penalties but exclusive of any and all franchise, 
income or gross receipt taxes imposed upon you or any other holder of any Notes)
which may be payable in respect of the execution and delivery (but not the 
transfer) of any of the Notes or of any amendment of, or waiver or consent under
or with respect to, this Agreement, the Other Agreements or of any of the Notes 
and save you and all subsequent holders of the Notes harmless against any loss 
or liability resulting from nonpayment or delay in payment of any such tax; (e) 
the costs and expenses incurred in enforcing or defending (or determining 
whether or how to enforce or defend) any rights under this Agreement, the Other 
Agreements or the Notes or in responding to any subpoena or other legal process 
or informal investigative demand issued in connection with this Agreement, the 
Other Agreements or the Notes, or by reason of being a holder of any Note; and 
(f) the costs and expenses, including financial advisors' fees, incurred in 
connection with the insolvency or bankruptcy of the Issuer or any Subsidiary or 
in connection with any work-out or restructuring of the transactions 
contemplated hereby and by the Notes. The obligations of the Issuer under this 
Section shall survive payment and transfer of any Notes.

          15.2 RELIANCE ON AND SURVIVAL OF REPRESENTATIONS.  All agreements, 
               -------------------------------------------
representations and warranties of the Issuer herein and in any certificates or 
other instruments delivered pursuant to this Agreement and all representations 
and warranties of the Issuer contained in the Assumption Agreements and in any 
certificate or other instruments delivered pursuant thereto shall (a) be deemed 
to be material and to have been relied upon by you, notwithstanding any 
investigation heretofore or hereafter made by you or on your behalf and (b) 
survive the execution and delivery of this Agreement and the delivery of the 
Notes to you. Your representations set forth in Sections 1.5 and 1.7 shall also
survive the execution and delivery of this Agreement and shall be deemed to have
been relied upon by the Issuer.

          15.3 SUCCESSORS AND ASSIGNS.  All covenants and agreements in this 
               ----------------------
Agreement by or on behalf of the respective parties hereto shall bind and inure 
to the benefit of their respective successors and assigns (including, without 
limitation, any subsequent holder of a Note), except that, in the case of a 
successor to the Issuer by consolidation or merger or a transfer of its assets, 
this Agreement shall inure to the benefit of such successor or transferee only 
if it becomes such in accordance with Section 6.5(c); provided, however, that 
                                                      --------  -------
you shall not be obligated to purchase any Notes on either of the Closing Dates 
from any Person other than the existing National Golf Operating Partnership, 
L.P., a Delaware limited partnership. The provisions of this Agreement are 
intended to be for the benefit of all 

                                      52
<PAGE>
 
holders from time to time of the Notes, and shall be enforceable by any such 
holder, whether or not an express assignment to such holder of rights under 
this Agreement has been made by you or your successor or assign.

          15.4 NOTICES.  All notices and communications provided for hereunder 
               -------
shall be in writing and sent by telecopy if the sender on the same day sends a 
confirming copy of such notice by a recognized overnight delivery service 
(charges prepaid), or by registered or certified mail with return receipt 
requested (postage prepaid), or by a recognized overnight delivery service (with
charges prepaid). Any such notice must be sent:.

                 (i) if to you or your nominee, to you or it at the address
          specified for such communications in Annex I, or at such other address
          as you or it shall have specified to the Issuer in writing,

                (ii) if to any other holder of any Note, to such holder at such
          address as such other holder shall have specified to the Issuer in
          writing, or

               (iii) if to the Issuer, to the Issuer at its address set forth at
          the beginning hereof to the attention of the President, or at such
          other address as the Issuer shall have specified to the holder of each
          Note in writing.

Notices under this Section 15.4 will be deemed given only when actually 
received.

          15.5 LAW GOVERNING.  This Agreement and the Notes shall be governed by
               -------------
and construed in accordance with the laws of the State of New York.

          15.6 FORUM.
               -----

               (a)  Pursuant to Section 5-1402 of the New York General 
Obligations Law, all actions or proceedings arising in connection with this 
Agreement shall be tried and litigated in state or federal courts located in the
Borough of Manhattan, New York City, State of New York, unless such actions or 
proceedings are required to be brought in another court to obtain subject matter
jurisdiction over the matter in controversy. THE ISSUER, YOU AND EACH OF THE 
OTHER PURCHASERS WAIVES ANY RIGHT IT MAY HAVE TO ASSERT THE DOCTRINE OF FORUM 
                                                                        -----
NON CONVENIENS, TO ASSERT THAT IT IS NOT SUBJECT TO THE JURISDICTION OF SUCH 
--------------
COURTS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN 
ACCORDANCE WITH THIS SECTION.

               (b)  Nothing contained in this Section shall preclude you or any 
of the Other Purchasers from bringing any action or proceeding arising out of or
relating to this Agreement in the courts of any place where the Issuer or any of
its assets may be found or located. TO THE EXTENT PERMITTED BY THE APPLICABLE 
LAWS OF ANY SUCH JURISDICTION, THE ISSUER HEREBY IRREVOCABLY SUBMITS TO THE 
JURISDICTION OF ANY SUCH COURT AND EXPRESSLY WAIVES, IN RESPECT OF ANY SUCH 
ACTION OR PROCEEDING, THE JURISDICTION OF ANY OTHER COURT OR COURTS THAT NOW OR 
HEREAFTER, BY REASON OF ITS PRESENT OR FUTURE DOMICILE, OR OTHERWISE, MAY BE 
AVAILABLE TO IT.

          15.7 WAIVER OF JURY TRIAL.  EACH OF THE ISSUER, YOU AND THE OTHER 
               --------------------
PURCHASERS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY 
LEGAL PROCEEDING ARISING OUT OF OR

                                      53
<PAGE>
 
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

          15.8  HEADINGS, ETC.  The headings in this Agreement are for 
                -------------
convenience of reference only and shall not limit or otherwise affect any of the
terms hereof.

          15.9  ENTIRE AGREEMENT.  This Agreement embodies the entire agreement 
                ----------------
and understanding between you and the Issuer regarding the Notes and supersedes 
all prior agreements and understandings relating to the subject matter hereof, 
including the Issuer Note Purchase Agreements, the Trust Note Purchase 
Agreements and Black Lake Note Purchase Agreements each of which shall be or 
deemed fully performed, with the exception that the covenant of each of the 
Trust and Black Lake to maintain its existence in Section 4.4(a), the covenant 
of each of the Trust and Black Lake to maintain an office in the last sentence 
of Section 4.3 and the covenants of each of the Trust and Black Lake in Section 
8 of each of the Trust Note Purchase Agreements and Black Lake Note Purchase 
Agreements, as the case may be, shall survive and continue in full force and 
effect, that all representations and warranties made by the Trust or Black Lake 
shall survive and that the obligations of the Trust and Black Lake under the 
Trust Notes and the Black Lake Notes shall continue in full force and effect.

          15.10 SUBSTITUTE OF PURCHASER.  You shall have the right to substitute
                -----------------------
a subsidiary wholly-owned by you as a purchaser of any or all of the Notes to be
purchased by you on any of the Closing Dates by written notice delivered to the 
Issuer, which notice shall be signed by both you and such subsidiary and shall 
contain such subsidiary's agreement to be bound by this Agreement and a 
confirmation by such subsidiary of the accuracy with respect to it of the 
representations set forth in Sections 1.5 to 1.8; provided, however, that such 
                                                  --------  -------
agreement may contain a statement to the effect that such subsidiary at all 
times has the right to sell the Notes being purchased by it to you. The Issuer 
agrees that, upon receipt of such notice and except to the extent otherwise 
specified therein, wherever the word "you" is used in this Agreement, such word 
shall be deemed to refer to such subsidiary in lieu of you. If any subsidiary 
has been substituted as a purchaser of any Notes and shall subsequently transfer
such Notes to you, then you will thereafter be liable for all obligations and 
entitled to all the rights and benefits of the purchaser of the Notes under this
Agreement.

          15.11 COUNTERPARTS.  This Agreement may be executed in any number of 
                ------------
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.

          15.12 PAYMENTS DUE ON NON-BUSINESS DAYS.  Anything in this Agreement, 
                ---------------------------------
the Other Agreements or the Notes to the contrary notwithstanding, any payment 
of principal of or Makewhole Amount or interest on any Note that is due on a 
date other than a Business Day shall be made on the next succeeding Business Day
without including the additional days elapsed in the computation of the 
interest payable on such next succeeding Business Day, unless such payment is 
the payment due on the maturity date of any Note, in which case the period of 
such extension shall be included in the computation of the interest payable on 
such Business Day.

          15.13 REPRODUCTION OF DOCUMENTS.  This Agreement and all documents 
                -------------------------
relating thereto, including, without limitation, (a) consents, waivers and 
modifications that may hereafter be executed, (b) documents received by you at 
the Closings (except the Notes themselves), and (c) financial statements, 
certificates and other information previously or hereafter furnished to you, may
be reproduced by you by any photographic, photostatic, microfilm, microcard, 
miniature photographic or other similar process and you may destroy any original
document so reproduced. The Issuer agrees and stipulates that, to the extent.

                                      54
<PAGE>
 
permitted by applicable law, any such reproduction shall be admissible in 
evidence as the original itself in any judicial or administrative proceeding 
(whether or not the original is in existence and whether or not such 
reproduction was made by you in the regular course of business) and any 
enlargement, facsimile or further reproduction of such reproduction shall 
likewise be admissible in evidence. This Section 15.13 shall not prohibit the 
Issuer or any other holder of Notes from contesting any such reproduction to the
same extent that it could contest the original, or from introducing evidence to 
demonstrate the inaccuracy of any such reproduction.

          15.14 SEVERABILITY.  Any provision of this Agreement that is 
                ------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, 
be ineffective to the extent of such prohibition or unenforceability without 
invalidating the remaining provisions hereof, and any such prohibition or 
unenforceability in any jurisdiction shall (to the full extent permitted by law)
not invalidate or render unenforceable such provision in any other jurisdiction.

          15.15 CONSTRUCTION.  Each covenant contained herein shall be construed
                ------------
(absent express provision to the contrary) as being independent of each other 
covenant contained herein, so that compliance with any one covenant shall not 
(absent such an express contrary provision) be deemed to excuse compliance with 
any other covenant. Where any provision herein refers to action to be taken by 
any Person, or which such Person is prohibited from taking, such provision shall
be applicable whether such action is taken directly or indirectly by such 
Person.

                                      55
<PAGE>
 
          If you are in agreement with the foregoing, please sign the form of 
acceptance in the space provided below on the accompanying counterparts of this 
Agreement and return one of the same to the Issuer, whereupon this instrument 
shall become a binding agreement between you and the Issuer.

                                        Very truly yours,

                                        NATIONAL GOLF OPERATING
                                        PARTNERSHIP, L.P.

                                             By: National Golf Properties Inc.,
                                                 as General Partner


                                             By:  /s/ Edward R. Sause
                                                --------------------------------
                                             Name:  Edward R. Sause
                                             Title: Executive Vice President and
                                                    Chief Financial Officer

The foregoing Agreement is hereby accepted as of
the date first above written:

AUSA LIFE INSURANCE COMPANY, INC.


By:    /s/ Gregory W. Theobald
   --------------------------------------
   Name:   Gregory W. Theobald
   Title:  VP & Asst. Secretary
<PAGE>
 
          If you are in agreement with the foregoing, please sign the form of 
acceptance in the space provided below on the accompanying counterparts of this 
Agreement and return one of the same to the Issuer, whereupon this instrument 
shall become a binding agreement between you and the Issuer.

                                        Very truly yours,

                                        NATIONAL GOLF OPERATING
                                        PARTNERSHIP, L.P.

                                             By: National Golf Properties Inc.,
                                                 as General Partner


                                             By:  /s/ Edward R. Sause
                                                --------------------------------
                                             Name:  Edward R. Sause
                                             Title: Executive Vice President and
                                                    Chief Financial Officer

The foregoing Agreement is hereby accepted as of
the date first above written:

PFL LIFE INSURANCE COMPANY


By:    /s/ Gregory W. Theobald
   --------------------------------------
   Name:   Gregory W. Theobald
   Title:  VP & Asst. Secretary

<PAGE>
 
     If you are in agreement with the foregoing, please sign the form of 
acceptance in the space the provided below on the accompanying counterparts of
this Agreement and return one of the same to the Issuer, whereupon this
instrument shall become a binding agreement between you and the Issuer.


                                   Very truly yours,                      
                                                                               
                                   NATIONAL GOLF OPERATING                     
                                   PARTNERSHIP, L.P.                           
                                                                               
                                        By: National Golf Properties, Inc.,     
                                            as General Partner                 
                                                                               
                                                                               
                                        By: /s/ Edward R. Sause                
                                            ------------------------------     
                                        Name:   Edward R. Sause                
                                        Title:  Executive Vice President and
                                                Chief Financial Officer  

The foregoing Agreement is hereby accepted as of 
the date first above written:

JEFFERSON-PILOT LIFE INSURANCE
COMPANY

By: /s/ Robert E. Whalen
    ------------------------------------
    Name:   Robert E. Whalen, II
    Title:  Second Vice President 
<PAGE>
 
          If you are in agreement with the foregoing, please sign the form of 
acceptance in the space provided below on the accompanying counterparts of this 
Agreement and return one of the same to the Issuer, whereupon this instrument 
shall become a binding agreement between you and the Issuer.

                                   Very truly yours,

                                   NATIONAL GOLF OPERATING
                                   PARTNERSHIP, L.P.
          
                                     By: National Golf Properties, Inc.,
                                         as General Partner



                                     By: /s/ Edward R.Sause
                                        ---------------------------------
                                     Name:   Edward R. Sause          
                                     Title:  Executive Vice President and
                                             Chief Financial Officer

The foregoing Agreement is hereby accepted as of 
the date first above written.

JOHN ALDEN LIFE INSURANCE
COMPANY

By: /s/ Michael E. Halligan
   --------------------------------------
   Name:  MICHAEL E. HALLIGAN
   Title: VICE PRESIDENT

<PAGE>
 
          If you are in agreement with the foregoing, please sign the form of 
acceptance in the space provided below on the accompanying counterparts of this 
Agreement and return one of the same to the Issuer, whereupon this instrument 
shall become a binding agreement between you and the Issuer.

                                        Very truly yours,

                                        NATIONAL GOLF OPERATING 
                                        PARTNERSHIP, L.P.

                                          By: National Golf Properties, Inc.,
                                              as General Partner


                                          By: /s/ Edward R. Sause 
                                             ---------------------------------
                                          Name:   Edward R. Sause
                                          Title:  Executive Vice President and  
                                                  Chief Financial Officer

The foregoing Agreement is hereby accepted as of 
the date first above written:
JOHN ALDEN ASSET MANAGEMENT COMPANY AS INVESTMENT ADVISOR FOR

OXFORD LIFE INSURANCE COMPANY

By: /s/ Michael E. Halligan
   -----------------------------------
   Name:  MICHAEL E. HALLIGAN  
   Title: VICE PRESIDENT
<PAGE>
 
          If you are in agreement with the foregoing, please sign the form of 
acceptance in the space provided below on the accompanying counterparts of this 
Agreement and return one of the same to the Issuer, whereupon this instrument 
shall become a binding agreement between you and the Issuer.

                                   Very truly yours,

                                   NATIONAL GOLF OPERATING
                                   PARTNERSHIP, L.P.

                                        By: National Golf Properties, Inc.,   
                                            as General Partner                
                                                                              
                                                                              
                                        By: /s/ Edward R. Sause               
                                            -------------------------------   
                                        Name:  Edward R. Sause                
                                        Title: Executive Vice President and   
                                               Chief Financial Officer         


The foregoing Agreement is hereby accepted 
as of the date first above written:

THE MINNESOTA MUTUAL LIFE
INSURANCE COMPANY

By: /s/ Guy M. de Lambert
    ------------------------------
    Name:  Guy M. de Lambert
    Title: Second Vice President

<PAGE>
 
          If you are in agreement with the foregoing, please sign the form of 
acceptance in the space provided below on the accompanying counterparts of this 
Agreement and return one of the same to the Issuer, whereupon this instrument 
shall become a binding agreement between you and the Issuer.

                                   Very truly yours,

                                   NATIONAL GOLF OPERATING
                                   PARTNERSHIP, L.P.

                                        By: National Golf Properties, Inc.,   
                                            as General Partner                
                                                                              
                                                                              
                                        By: /s/ Edward R. Sause               
                                            -------------------------------   
                                        Name:  Edward R. Sause                
                                        Title: Executive Vice President and   
                                               Chief Financial Officer         


The foregoing Agreement is hereby accepted 
as of the date first above written:

NATIONAL LIFE INSURANCE COMPANY

By:  /s/ Scott Higgins
     ------------------------------
     Name:  R. Scott Higgins
     Title: Vice President,
            National Life Investment Management
            Company, Inc.


<PAGE>
 
          If you are in agreement with the foregoing, please sign the form of 
acceptance in the space provided below on the accompanying counterparts of this 
Agreement and return one of the same to the Issuer, whereupon this instrument 
shall become a binding agreement between you and the Issuer.

                                   Very truly yours,

                                   NATIONAL GOLF OPERATING
                                   PARTNERSHIP, L.P.

                                        By: National Golf Properties, Inc.,   
                                            as General Partner                
                                                                              
                                                                              
                                        By: /s/ Edward R. Sause               
                                            -------------------------------   
                                        Name:  Edward R. Sause                
                                        Title: Executive Vice President and   
                                               Chief Financial Officer         


The foregoing Agreement is hereby accepted 
as of the date first above written:

LIFE INSURANCE COMPANY OF THE 
SOUTHWEST

By:  /s/ Scott Higgins
     ------------------------------
     Name:  R. Scott Higgins
     Title: Vice President
            Natioanl Life Investment 
            Management Company, Inc.


<PAGE>
 
          If you are in agreement with the foregoing, please sign the form of 
acceptance in the space provided below on the accompanying counterparts of this 
Agreement and return one of the same to the Issuer, whereupon this instrument 
shall become a binding agreement between you and the Issuer.

                                         Very truly yours,

                                         NATIONAL GOLF OPERATING 
                                         PARTNERSHIP, L.P.

                                           By: National Golf Properties, Inc.,
                                               as General Partner

                                           By: /s/ Edward R. Sause
                                              ----------------------------------
                                           Name:  Edward R. Sause
                                           Title: Executive Vice President and
                                                  Chief Financial Officer      


The foregoing Agreement is hereby accepted as of 
the date first above written:

TEACHERS INSURANCE AND ANNUITY
ASSOCIATION OF AMERICA


By: /s/ G. W. MacCORDY
   -----------------------------------
   Name:  GREGORY W. MacCORDY
   Title: DIRECTOR-PRIVATE PLACEMENT  
<PAGE>
 
 
          If you are in agreement with the foregoing, please sign the form of 
acceptance in the space provided below on the accompanying counterparts of this 
Agreement and return one of the same to the Issuer, whereupon this instrument 
shall become a binding agreement between you and the Issuer.

                                   Very truly yours,

                                   NATIONAL GOLF OPERATING
                                   PARTNERSHIP, L.P.

                                   By: National Golf Properties, Inc.,
                                       as General Partner


                                   By: /s/ Edward R. Sause
                                       ------------------------------- 
                                   Name:  Edward R. Sause                
                                   Title: Executive Vice President and  
                                          Chief Financial Officer        


The foregoing Agreement is hereby accepted 
as of the date first above written:

THE TRAVELLERS INSURANCE COMPANY

By: /s/ T.M. Torrey
    ------------------------------
Name:  TERESA M. TORREY
Title: SECOND VICE PRESIDENT