Document:

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                                                                    EXHIBIT 10.7

                            INDEMNIFICATION AGREEMENT
                            -------------------------

     THIS INDEMNIFICATION AGREEMENT is made and entered into this 14/th/ day of
December, 2001 (this "Agreement"), by and between National Golf Properties,
Inc., a Maryland corporation (the "Company"), and James M. Stanich
("Indemnitee").

     WHEREAS, at the request of the Company, Indemnitee currently serves as a
director of the Company and may, therefore, be subjected to claims, suits or
proceedings arising as a result of his service; and

     WHEREAS, as an inducement to Indemnitee to continue to serve as such
director, the Company has agreed to indemnify and to advance expenses and costs
incurred by Indemnitee in connection with any such claims, suits or proceedings,
to the fullest extent permitted by law; and

     WHEREAS, each of the directors of the Company, including the Indemnitee,
has one or more previous agreements entitled "Indemnification Agreement" with
the Company or its predecessor (the "Prior Agreements"); and

     WHEREAS, the Company desires to replace and supersede the Prior Agreements
with a new form of indemnification agreement for all of the directors of the
Company; and

     WHEREAS, Indemnitee is relying upon the rights afforded under this
Agreement in continuing as a director of the Company.

     NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, the Company and Indemnitee do hereby covenant and agree as
follows:

     Section 1.  Definitions. For purposes of this Agreement:
                 -----------

     (a) "Change in Control" means a change in control of the Company occurring
after the Effective Date of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A (or in response to any
similar item on any similar schedule or form) promulgated under the Securities
Exchange Act of 1934 (the "Act"), whether or not the Company is then subject to
such reporting requirement; provided, however, that, without limitation, such a
Change in Control shall be deemed to have occurred if after the Effective Date
(i) any "person" (as such term is used in Sections 13(d) and 14(d) of the Act)
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Act),
directly or indirectly, of securities of the Company representing 30% or more of
the combined voting power of the Company's then outstanding securities without
the prior approval of at least two-thirds of the members of the Board of
Directors in office immediately prior to such person attaining such percentage
interest; (ii) there occurs a proxy contest, or the Company is a party to a
merger, consolidation, sale of assets, plan of liquidation or other
reorganization not approved by at least two-thirds of the members of the Board
of Directors then in office, as a consequence of which members of the Board of
Directors in office immediately prior to such transaction or event constitute
less than a majority of the Board of Directors thereafter; or (iii) during any
period of two consecutive years, other than as a result of an event described in
clause (a)(ii) of this Section 1, individuals who at

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the beginning of such period constituted the Board of Directors (including for
this purpose any new director whose election or nomination for election by the
Company's stockholders was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning of such
period) cease for any reason to constitute at least a majority of the Board of
Directors.

     (b) "Corporate Status" means the status of a person who is or was a
director, trustee, officer, partner, member, employee or agent of the Company or
of any other corporation, partnership, joint venture, trust, limited liability
company, employee benefit plan or other enterprise which such person is or was
serving at the request of the Company.

     (c) "Disinterested Director" means a director of the Company who is not and
was not a party to the Proceeding in respect of which indemnification is sought
by Indemnitee.

     (d) "Effective Date" means the date set forth in the first paragraph of
this Agreement.

     (e) "Expenses" shall include all reasonable attorneys' fees, retainers,
court costs, transcript costs, fees of experts, witness fees, travel expenses,
duplicating costs, printing and binding costs, telephone charges, postage,
delivery service fees, and all other disbursements or expenses incurred in
connection with prosecuting, defending, preparing to prosecute or defend,
investigating, or being or preparing to be a witness in a Proceeding.

     (f) "Independent Counsel" means a law firm, or a member of a law firm,
selected by the board of directors as provided in Section 8(b), that is
experienced in matters of corporation law and neither presently is, nor in the
past five years has been, retained to represent: (i) the Company, any of its
direct or indirect subsidiaries or any of their respective tenants, or
Indemnitee in any matter material to any such party, or (ii) any other party to
the Proceeding giving rise to a claim for indemnification hereunder.
Notwithstanding the foregoing, the term "Independent Counsel" shall not include
any person who, under the applicable standards of professional conduct then
prevailing, would have a conflict of interest in representing either the Company
or Indemnitee in an action to determine Indemnitee's rights under this
Agreement.

     (g) "Proceeding" includes any action, suit, arbitration, alternate dispute
resolution mechanism, investigation, administrative hearing or any other
proceeding, whether civil, criminal, administrative or investigative (including
on appeal).

     Section 2. Services by Indemnitee. Indemnitee agrees to serve as a director
                ----------------------
of the Company and may at any time and for any reason resign from such position
(subject to any other contractual obligation or any obligation imposed by
operation of law), in which event the Company shall have no obligation under
this Agreement to continue Indemnitee in such position.

     Section 3. Indemnification - General. The Company shall indemnify, and
                -------------------------
advance Expenses to, Indemnitee (a) as provided in this Agreement and (b) to the
fullest extent permitted by Maryland law in effect on the date hereof and as
amended from time to time; provided, however, that no change in Maryland law
                           --------  -------
shall have the effect of reducing the benefits available to Indemnitee hereunder
based on Maryland law as in effect on the date hereof. The Company shall
indemnify Indemnitee's spouse (whether by statute or at common law and without
regard to

                                       2

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the location of the governing jurisdiction) and children to the same extent and
subject to the same limitations applicable to Indemnitee hereunder for claims
arising out of the status of such person as a spouse or child of Indemnitee,
including claims seeking damages from marital property (including community
property) or property held by such Indemnitee and such spouse or child or
property transferred to such spouse or child, but such indemnity shall not
otherwise extend to protect the spouse or child against liabilities caused by
the spouse's or child's own acts or inactions. The rights of Indemnitee provided
in this Section 3 shall include, but shall not be limited to, the rights set
forth in the other sections of this Agreement.

     Section 4. Proceedings Other Than Proceedings by or in the Right of the
                ------------------------------------------------------------
Company. Indemnitee shall be entitled to the rights of indemnification provided
-------
in this Section 4 if, by reason of his Corporate Status, he is, was or is
threatened to be made a party to any threatened, pending, or completed
Proceeding, other than a Proceeding by or in the right of the Company. Pursuant
to this Section 4, Indemnitee shall be indemnified against all Expenses,
judgments, awards, penalties, fines and amounts paid in settlement actually and
reasonably incurred by him or on his behalf in connection with a Proceeding by
reason of his Corporate Status unless it is established that (i) the act or
omission of the Indemnitee was material to the matter giving rise to the
Proceeding and (a) was committed in bad faith or (b) was the result of active
and deliberate dishonesty, (ii) the Indemnitee actually received an improper
personal benefit in money, property or services, or (iii) in the case of any
criminal Proceeding, the Indemnitee had reasonable cause to believe or should
have believed that his conduct was unlawful.

     Section 5. Proceedings by or in the Right of the Company. Indemnitee shall
                ---------------------------------------------
be entitled to the rights of indemnification provided in this Section 5 if, by
reason of his Corporate Status, he is, was or is threatened to be made a party
to any threatened, pending or completed Proceeding brought by or in the right of
the Company to procure a judgment in its favor. Pursuant to this Section 5,
Indemnitee shall be indemnified against all amounts paid in settlement and all
Expenses actually and reasonably incurred by him or on his behalf in connection
with such Proceeding unless it is established that (i) the act or omission of
the Indemnitee was material to the matter giving rise to such a Proceeding and
(a) was committed in bad faith or (b) was the result of active and deliberate
dishonesty or (ii) the Indemnitee actually received an improper personal benefit
in money, property or services.

     Section 6. Indemnification for Expenses of a Party Who is Wholly or Partly
                ---------------------------------------------------------------
Successful. Notwithstanding any other provision of this Agreement, to the extent
----------
that Indemnitee is, by reason of his Corporate Status, made a party to and is
successful, on the merits or otherwise, in the defense of any Proceeding, he
shall be indemnified against all Expenses actually and reasonably incurred by
him or on his behalf in connection therewith. If Indemnitee is not wholly
successful in such Proceeding but is successful, on the merits or otherwise, as
to one or more but less than all claims, issues or matters in such Proceeding,
the Company shall indemnify Indemnitee under this Section 6 against all Expenses
actually and reasonably incurred by him or on his behalf in connection with each
successfully resolved claim, issue or matter. For purposes of this Section and
without limitation, the termination of any claim, issue or matter in such a
Proceeding by dismissal, with or without prejudice, shall be deemed to be a
successful result as to such claim, issue or matter. Nothing in this Section 6
shall be construed to limit any indemnification or advancement of Expenses to
which Indemnitee is otherwise entitled pursuant to this Agreement or otherwise.

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     Section 7. Advancement of Expenses. The Company shall advance all
                -----------------------
reasonable Expenses incurred by or on behalf of Indemnitee in connection with
any Proceeding to which Indemnitee is, or is threatened to be, made a party,
within ten days after the receipt by the Company of a statement or statements
from Indemnitee requesting such advance or advances from time to time, whether
prior to or after final disposition of such Proceeding. Such statement or
statements shall reasonably evidence the Expenses incurred by Indemnitee and, to
the extent required by Maryland law, shall include or be preceded or accompanied
by a written affirmation by the Indemnitee of the Indemnitee's good faith belief
that the standard of conduct necessary for indemnification by the Company as
authorized by law and by this Agreement has been met and a written undertaking
by or on behalf of Indemnitee to repay any Expenses advanced if it shall
ultimately be determined that such standard of conduct has not been met. The
undertaking required by this Section 7 shall be an unlimited general obligation
of Indemnitee and shall be accepted without reference to the Indemnitee's
financial ability to repay such advanced Expenses.

     Section 8. Procedure for Determination of Entitlement to Indemnification.
                -------------------------------------------------------------

     (a) To obtain indemnification under this Agreement, Indemnitee shall submit
to the Company a written request, including therein or therewith such
documentation and information as is reasonably available to Indemnitee and is
reasonably necessary to determine whether and to what extent Indemnitee is
entitled to indemnification. The Secretary of the Company shall, promptly upon
receipt of such a request for indemnification, advise the Board of Directors in
writing that Indemnitee has requested indemnification.

     (b) Upon written request by Indemnitee for indemnification pursuant to the
first sentence of Section 8(a) hereof, a determination, if required by
applicable law, with respect to Indemnitee's entitlement thereto shall be made
promptly, in the specific case: (i) if a Change in Control shall have occurred,
by, at the option of Indemnitee, the Board of Directors by a majority vote of a
quorum of Disinterested Directors or by Independent Counsel in a written opinion
to the Board of Directors, a copy of which shall be delivered to Indemnitee; or
(ii) if a Change of Control shall not have occurred, (A) by the Board of
Directors by a majority vote of a quorum consisting of Disinterested Directors,
or (B) if a quorum of the Board of Directors consisting of Disinterested
Directors is not obtainable or, even if obtainable, such quorum of Disinterested
Directors so directs, by Independent Counsel in a written opinion to the Board
of Directors, a copy of which shall be delivered to Indemnitee, or (C) if so
directed by a majority of the members of the Board of Directors, by the
stockholders of the Company; and, if it is so determined that Indemnitee is
entitled to indemnification, payment to Indemnitee shall be made within ten days
after such determination. Indemnitee shall cooperate with the person, persons or
entity making such determination with respect to Indemnitee's entitlement to
indemnification, including providing to such person, persons or entity upon
reasonable advance request any documentation or information which is not
privileged or otherwise protected from disclosure and which is reasonably
available to Indemnitee and reasonably necessary to such determination. Any
costs or Expenses (including reasonable attorneys' fees and disbursements)
incurred by Indemnitee in so cooperating with the person, persons or entity
making such determination shall be borne by the Company (irrespective of the
determination as to Indemnitee's entitlement to indemnification) and the Company
hereby indemnifies and agrees to hold Indemnitee harmless therefrom.

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     Section 9.  Presumptions and Effect of Certain Proceedings.
                 ----------------------------------------------

     (a) In making a determination with respect to entitlement to
indemnification under this Agreement, the person or persons or entity making
such determination shall presume that Indemnitee is entitled to indemnification
under this Agreement if Indemnitee has submitted a request for indemnification
in accordance with Section 8(a) of this Agreement, and the Company shall have
the burden of proof to overcome that presumption in connection with the making
of any determination contrary to that presumption.

     (b) The termination of any Proceeding by judgment, order, settlement
(whether with or without court approval), conviction, a plea of nolo contendere
                                                                ---------------
or its equivalent, or an entry of an order of probation prior to judgment, does
not create a presumption that the Indemnitee did not meet the requisite standard
of conduct or have any particular belief or that a court has determined that
indemnification is not permitted by applicable law or this Agreement.

     Section 10. Remedies of Indemnitee.
                 ----------------------

     (a) If (i) a determination is made pursuant to Section 8 of this Agreement
that Indemnitee is not entitled to indemnification under this Agreement, (ii)
advancement of Expenses is not timely made pursuant to Section 7 of this
Agreement, (iii) no determination of entitlement to indemnification shall have
been made pursuant to Section 8(b) of this Agreement within thirty (30) days
(except that if such determination was to be made by the stockholders of the
Company, then within ninety (90) days) after receipt by the Company of the
request for indemnification, (iv) payment of indemnification is not made
pursuant to Section 6 of this Agreement within ten days after receipt by the
Company of a written request therefor, or (v) payment of indemnification is not
made within ten days after a determination has been made that Indemnitee is
entitled to indemnification, Indemnitee shall be entitled to an adjudication in
an appropriate court of the State of Maryland, or in any other court of
competent jurisdiction, of his entitlement to such indemnification or
advancement of Expenses. Alternatively, Indemnitee, at his option, may seek an
award in arbitration to be conducted by a single arbitrator pursuant to the
commercial Arbitration Rules of the American Arbitration Association. Indemnitee
shall commence such proceeding seeking an adjudication or an award in
arbitration within 180 days following the date on which Indemnitee first has the
right to commence such proceeding pursuant to this Section 10(a); provided,
                                                                  --------
however, that the foregoing clause shall not apply in respect of a proceeding
brought by Indemnitee to enforce his rights under Section 6 of this Agreement.

     (b) In any judicial proceeding or arbitration commenced pursuant to this
Section 10 the Company shall have the burden of proving that Indemnitee is not
entitled to indemnification or advancement of Expenses, as the case may be.

     (c) If a determination shall have been made pursuant to Section 8(b) of
this Agreement that Indemnitee is entitled to indemnification, the Company shall
be bound by such determination in any judicial proceeding or arbitration
commenced pursuant to this Section 10, absent a misstatement by Indemnitee of a
material fact, or an omission of a material fact necessary to make Indemnitee's
statement not materially misleading, in connection with the request for
indemnification.

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     (d) In the event that Indemnitee, pursuant to this Section 10, seeks a
judicial adjudication of or an award in arbitration to enforce his rights under,
or to recover damages for breach of, this Agreement, Indemnitee shall be
entitled to recover from the Company, and shall be indemnified by the Company
against, any and all Expenses actually and reasonably incurred by him in such
judicial adjudication or arbitration, regardless of whether Indemnitee is
successful in whole or in part therein.

     Section 11. Defense of the Underlying Proceeding.
                 ------------------------------------

     (a) Notice by Indemnitee. Indemnitee agrees to notify the Company promptly
         --------------------
upon being served with or receiving any summons, citation, subpoena, complaint,
indictment, information, notice, request or other document relating to any
Proceeding which may result in the right to indemnification or the advancement
of Expenses hereunder; provided, however, that the failure to give any such
                       --------  -------
notice shall not disqualify Indemnitee from the right, or otherwise affect in
any manner any right of Indemnitee, to indemnification or the advancements of
Expenses under this Agreement unless the Company's ability to defend in such
Proceeding or to obtain proceeds under any insurance policy is materially and
adversely prejudiced thereby, and then only to the extent the Company is thereby
actually prejudiced.

     (b) Defense by Company. Subject to the provisions of the last sentence of
         ------------------
this Section 11(b) and of Section 11(c) below, the Company shall have the right
to defend Indemnitee in any Proceeding which may give rise to indemnification
hereunder; provided, however, that the Company shall notify Indemnitee of any
           --------  -------
such decision to defend within fifteen (15) calendar days following receipt of
notice of any such Proceeding under Section 11(a) above. The Company shall not,
without the prior written consent of Indemnitee, which shall not be unreasonably
withheld or delayed, consent to the entry of any judgment against Indemnitee or
enter into any settlement or compromise which (i) includes an admission of fault
of Indemnitee or (ii) does not include, as an unconditional term thereof, the
full release of Indemnitee from all liability in respect of such Proceeding,
which release shall be in form and substance reasonably satisfactory to
Indemnitee. This Section 11(b) shall not apply to a Proceeding brought by
Indemnitee under Section 10 above or Section 15 below.

     (c) Indemnitee's Right to Counsel. Notwithstanding the provisions of
         -----------------------------
Section 11(b) above, if in a Proceeding to which Indemnitee is a party by reason
of Indemnitee's Corporate Status, (i) Indemnitee reasonably concludes, based
upon an opinion of counsel, that he may have separate defenses or counterclaims
to assert with respect to any issue which may not be consistent with other
defendants in such Proceeding, (ii) Indemnitee reasonably concludes, based upon
an opinion of counsel, that an actual or apparent conflict of interest or
potential conflict of interest exists between Indemnitee and the Company, or
(iii) if the Company fails to assume the defense of such Proceeding in a timely
manner, Indemnitee shall be entitled to be represented by separate legal counsel
of Indemnitee's choice at the expense of the Company. In addition, if the
Company fails to comply with any of its obligations under this Agreement or in
the event that the Company or any other person takes any action to declare this
Agreement void or unenforceable, or institutes any Proceeding to deny or to
recover from Indemnitee the benefits intended to be provided to Indemnitee
hereunder, Indemnitee shall have the right to retain counsel of Indemnitee's
choice, at the expense of the Company, to represent Indemnitee in connection
with any such matter.

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     Section 12. Non-Exclusivity; Survival of Rights; Insurance; Subrogation.
                 -----------------------------------------------------------

     (a) The rights of indemnification and advancement of Expenses as provided
by this Agreement shall be in addition to, and not deemed exclusive of, any
other rights to which Indemnitee may at any time be entitled under applicable
law, the charter or Bylaws of the Company, any agreement, a vote of stockholders
or a resolution of directors (or a committee of directors), or otherwise. No
amendment, alteration or repeal of this Agreement or of any provision hereof
shall limit or restrict any right of Indemnitee under this Agreement in respect
of any action taken or omitted by such Indemnitee in his Corporate Status prior
to such amendment, alteration or repeal.

     (b) To the extent that the Company maintains an insurance policy or
policies providing liability insurance for directors, officers, employees, or
agents of the Company or of any other corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise which such person serves at the
request of the Company, Indemnitee shall be covered by such policy or policies
in accordance with its or their terms to the maximum extent of the coverage
available for any such director, officer, employee or agent under such policy or
policies. The purchase and maintenance of such insurance shall not in any way
limit or affect the rights and obligations of the parties hereto, and the
execution and delivery of this Agreement shall not in any way be construed to
limit or affect the rights and obligations of the Company or the other parties
under any such insurance policy.

     (c) In the event of any payment under this Agreement, the Company shall be
subrogated to the extent of such payment to all of the rights of contribution or
recovery of Indemnitee, who shall take, at the request of the Company, all
reasonable actions necessary to secure such rights, including the execution of
such documents as are necessary to enable the Company to bring suit to enforce
such rights.

     (d) The Company shall not be liable under this Agreement to make any
payment of amounts otherwise indemnifiable hereunder if and to the extent that
Indemnitee has otherwise actually received such payment under any insurance
policy, contract, agreement or otherwise.

     Section 13. Successors. This Agreement shall be (a) binding upon all
                 ----------
successors and assigns of the Company (including any transferee of all or a
substantial portion of the business, stock and/or assets of the Company and any
direct or indirect successor by merger or consolidation or otherwise by
operation of law) and (b) binding on and shall inure to the benefit of the
heirs, personal representatives, executors and administrators of Indemnitee.
This Agreement shall continue for the benefit of Indemnitee and such heirs,
personal representatives, executors and administrators after Indemnitee has
ceased to have Corporate Status.

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     Section 14. Severability. If any provision or provisions of this Agreement
                 ------------
shall be held to be invalid, illegal or unenforceable for any reason whatsoever:
(a) the validity, legality and enforceability of the remaining provisions of
this Agreement (including, without limitation, each portion of any section of
this Agreement containing any such provision held to be invalid, illegal or
unenforceable that is not itself invalid, illegal or unenforceable) shall not in
any way be affected or impaired thereby; and (b) to the fullest extent possible,
the provisions of this Agreement (including, without limitation, each portion of
any section of this Agreement containing any such provision held to be invalid,
illegal or unenforceable, that is not itself invalid, illegal or unenforceable)
shall be construed so as to give effect to the intent manifested thereby.

     Section 15. Exception to Right of Indemnification or Advancement of
                 -------------------------------------------------------
Expenses. Notwithstanding any provision herein to the contrary:
--------

     (a) Except as provided in Section 10 of this Agreement, Indemnitee shall
not be entitled to indemnification or advancement of Expenses under this
Agreement with respect to any Proceeding brought by Indemnitee against the
Company, any entity controlled by the Company, any then current or former
director, officer or employee thereof, or any third party, unless the Board of
Directors has consented in writing to the initiation of such Proceeding.

     (b) Indemnitee shall not be entitled to indemnification or advancement of
Expenses under this Agreement if it has been finally adjudicated by a court of
competent jurisdiction that Indemnitee is liable to the Company for an
accounting of profits made from the purchase or sale by Indemnitee of securities
of the Company pursuant to the provisions of Section 16(b) of the Securities
Exchange Act of 1934, the rules and regulations promulgated thereunder and
amendments thereto or similar provisions of any federal, state or local
statutory law, or if Indemnitee agrees by way of settlement or otherwise to pay
any or all of such profits to the Company.

     Section 16. Identical Counterparts. This Agreement may be executed in one
                 ----------------------
or more counterparts, each of which shall for all purposes be deemed to be an
original but all of which together shall constitute one and the same Agreement.
Only one such counterpart signed by the party against whom enforceability is
sought needs to be produced to evidence the existence of this Agreement.

     Section 17. Headings. The headings of the paragraphs of this Agreement are
                 --------
inserted for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction thereof.

     Section 18. Modification and Waiver. No supplement, modification or
                 -----------------------
amendment of this Agreement shall be binding unless executed in writing by both
of the parties hereto. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provisions hereof
(whether or not similar) nor shall such waiver constitute a continuing waiver.

                                       8

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     Section 19. Notice by Indemnitee. Indemnitee agrees promptly to notify the
                 --------------------
Company in writing upon being served with any summons, citation, subpoena,
complaint, indictment, information or other document relating to any Proceeding
or matter which may be subject to indemnification or advancement of Expenses
covered hereunder.

     Section 20. Notices. All notices, requests, demands and other
                 -------
communications hereunder shall be in writing and shall be deemed to have been
duly given if (i) delivered by hand and receipted for by the party to whom said
notice or other communication shall have been directed, or (ii) mailed by
certified or registered mail with postage prepaid, on the third business day
after the date on which it is so mailed:

     (a) If to Indemnitee, to: The address set forth on the signature page
hereto.

     (b) If to the Company to:

           National Golf Properties, Inc.
           2951 28th Street, Suite 3001
           Santa Monica, California 90405
           Attention: President

or to such other address as may have been furnished to Indemnitee by the Company
or to the Company by Indemnitee, as the case may be.

     Section 21. Governing Law. The parties agree that this Agreement shall be
                 -------------
governed by, and construed and enforced in accordance with, the laws of the
State of Maryland, which laws are applicable to contracts made and to be
performed in such state without giving effect to the principles of conflicts of
laws.

     Section 22. Miscellaneous. Use of the masculine pronoun shall be deemed to
                 -------------
include usage of the feminine pronoun where appropriate.

     Section 23. Prior Agreements. This Agreement replaces and supersedes any
                 ----------------
Prior Agreements to which the Indemnitee is a party, and such Prior Agreements
are hereby void and of no further force or effect.

                                       9

<PAGE>

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.

ATTEST:                             NATIONAL GOLF PROPERTIES, INC.

/s/ Bonnie Matteren                 By:  /s/ David G. Price
-------------------------                -------------------------
Bonnie Matteren                          David G. Price
                                         Chairman

WITNESS:                            INDEMNITEE

/s/ Sylvia Adams                    /s/ James M. Stanich
-------------------------           ------------------------------------
Sylvia Adams                        JAMES M. STANICH

                                    Address:  2951 - 28th Street
                                              Santa Monica, California 90405

                                       10

<PAGE>

                            INDEMNIFICATION AGREEMENT
                            -------------------------

     THIS INDEMNIFICATION AGREEMENT is made and entered into this 14/th/ day of
December, 2001 (this "Agreement"), by and between National Golf Properties,
Inc., a Maryland corporation (the "Company"), and David G. Price ("Indemnitee").

     WHEREAS, at the request of the Company, Indemnitee currently serves as a
director of the Company and may, therefore, be subjected to claims, suits or
proceedings arising as a result of his service; and

     WHEREAS, as an inducement to Indemnitee to continue to serve as such
director, the Company has agreed to indemnify and to advance expenses and costs
incurred by Indemnitee in connection with any such claims, suits or proceedings,
to the fullest extent permitted by law; and

     WHEREAS, each of the directors of the Company, including the Indemnitee,
has one or more previous agreements entitled "Indemnification Agreement" with
the Company or its predecessor (the "Prior Agreements"); and

     WHEREAS, the Company desires to replace and supersede the Prior Agreements
with a new form of indemnification agreement for all of the directors of the
Company; and

     WHEREAS, Indemnitee is relying upon the rights afforded under this
Agreement in continuing as a director of the Company.

     NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, the Company and Indemnitee do hereby covenant and agree as
follows:

     Section 1. Definitions. For purposes of this Agreement:
                -----------

     a "Change in Control" means a change in control of the Company occurring
after the Effective Date of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A (or in response to any
similar item on any similar schedule or form) promulgated under the Securities
Exchange Act of 1934 (the "Act"), whether or not the Company is then subject to
such reporting requirement; provided, however, that, without limitation, such a
Change in Control shall be deemed to have occurred if after the Effective Date
(i) any "person" (as such term is used in Sections 13(d) and 14(d) of the Act)
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Act),
directly or indirectly, of securities of the Company representing 30% or more of
the combined voting power of the Company's then outstanding securities without
the prior approval of at least two-thirds of the members of the Board of
Directors in office immediately prior to such person attaining such percentage
interest; (ii) there occurs a proxy contest, or the Company is a party to a
merger, consolidation, sale of assets, plan of liquidation or other
reorganization not approved by at least two-thirds of the members of the Board
of Directors then in office, as a consequence of which members of the Board of
Directors in office immediately prior to such transaction or event constitute
less than a majority of the Board of Directors thereafter; or (iii) during any
period of two consecutive years, other than as a result of an event described in
clause (a)(ii) of this Section 1, individuals who at

<PAGE>

the beginning of such period constituted the Board of Directors (including for
this purpose any new director whose election or nomination for election by the
Company's stockholders was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning of such
period) cease for any reason to constitute at least a majority of the Board of
Directors.

     (b) "Corporate Status" means the status of a person who is or was a
director, trustee, officer, partner, member, employee or agent of the Company or
of any other corporation, partnership, joint venture, trust, limited liability
company, employee benefit plan or other enterprise which such person is or was
serving at the request of the Company.

     (c) "Disinterested Director" means a director of the Company who is not and
was not a party to the Proceeding in respect of which indemnification is sought
by Indemnitee.

     (d) "Effective Date" means the date set forth in the first paragraph of
this Agreement.

     (e) "Expenses" shall include all reasonable attorneys' fees, retainers,
court costs, transcript costs, fees of experts, witness fees, travel expenses,
duplicating costs, printing and binding costs, telephone charges, postage,
delivery service fees, and all other disbursements or expenses incurred in
connection with prosecuting, defending, preparing to prosecute or defend,
investigating, or being or preparing to be a witness in a Proceeding.

     (f) "Independent Counsel" means a law firm, or a member of a law firm,
selected by the board of directors as provided in Section 8(b), that is
experienced in matters of corporation law and neither presently is, nor in the
past five years has been, retained to represent: (i) the Company, any of its
direct or indirect subsidiaries or any of their respective tenants, or
Indemnitee in any matter material to any such party, or (ii) any other party to
the Proceeding giving rise to a claim for indemnification hereunder.
Notwithstanding the foregoing, the term "Independent Counsel" shall not include
any person who, under the applicable standards of professional conduct then
prevailing, would have a conflict of interest in representing either the Company
or Indemnitee in an action to determine Indemnitee's rights under this
Agreement.

     (g) "Proceeding" includes any action, suit, arbitration, alternate dispute
resolution mechanism, investigation, administrative hearing or any other
proceeding, whether civil, criminal, administrative or investigative (including
on appeal).

     Section 2. Services by Indemnitee. Indemnitee agrees to serve as a director
                ----------------------
of the Company and may at any time and for any reason resign from such position
(subject to any other contractual obligation or any obligation imposed by
operation of law), in which event the Company shall have no obligation under
this Agreement to continue Indemnitee in such position.

     Section 3. Indemnification - General. The Company shall indemnify, and
                -------------------------
advance Expenses to, Indemnitee (a) as provided in this Agreement and (b) to the
fullest extent permitted by Maryland law in effect on the date hereof and as
amended from time to time; provided, however, that no change in Maryland law
                           --------  -------
shall have the effect of reducing the benefits available to Indemnitee hereunder
based on Maryland law as in effect on the date hereof. The Company shall
indemnify Indemnitee's spouse (whether by statute or at common law and without
regard to

                                       2

<PAGE>

the location of the governing jurisdiction) and children to the same extent and
subject to the same limitations applicable to Indemnitee hereunder for claims
arising out of the status of such person as a spouse or child of Indemnitee,
including claims seeking damages from marital property (including community
property) or property held by such Indemnitee and such spouse or child or
property transferred to such spouse or child, but such indemnity shall not
otherwise extend to protect the spouse or child against liabilities caused by
the spouse's or child's own acts or inactions. The rights of Indemnitee provided
in this Section 3 shall include, but shall not be limited to, the rights set
forth in the other sections of this Agreement.

     Section 4. Proceedings Other Than Proceedings by or in the Right of the
                ------------------------------------------------------------
Company. Indemnitee shall be entitled to the rights of indemnification provided
-------
in this Section 4 if, by reason of his Corporate Status, he is, was or is
threatened to be made a party to any threatened, pending, or completed
Proceeding, other than a Proceeding by or in the right of the Company. Pursuant
to this Section 4, Indemnitee shall be indemnified against all Expenses,
judgments, awards, penalties, fines and amounts paid in settlement actually and
reasonably incurred by him or on his behalf in connection with a Proceeding by
reason of his Corporate Status unless it is established that (i) the act or
omission of the Indemnitee was material to the matter giving rise to the
Proceeding and (a) was committed in bad faith or (b) was the result of active
and deliberate dishonesty, (ii) the Indemnitee actually received an improper
personal benefit in money, property or services, or (iii) in the case of any
criminal Proceeding, the Indemnitee had reasonable cause to believe or should
have believed that his conduct was unlawful.

     Section 5. Proceedings by or in the Right of the Company. Indemnitee shall
                ---------------------------------------------
be entitled to the rights of indemnification provided in this Section 5 if, by
reason of his Corporate Status, he is, was or is threatened to be made a party
to any threatened, pending or completed Proceeding brought by or in the right of
the Company to procure a judgment in its favor. Pursuant to this Section 5,
Indemnitee shall be indemnified against all amounts paid in settlement and all
Expenses actually and reasonably incurred by him or on his behalf in connection
with such Proceeding unless it is established that (i) the act or omission of
the Indemnitee was material to the matter giving rise to such a Proceeding and
(a) was committed in bad faith or (b) was the result of active and deliberate
dishonesty or (ii) the Indemnitee actually received an improper personal benefit
in money, property or services.

     Section 6. Indemnification for Expenses of a Party Who is Wholly or Partly
                ---------------------------------------------------------------
Successful. Notwithstanding any other provision of this Agreement, to the extent
----------
that Indemnitee is, by reason of his Corporate Status, made a party to and is
successful, on the merits or otherwise, in the defense of any Proceeding, he
shall be indemnified against all Expenses actually and reasonably incurred by
him or on his behalf in connection therewith. If Indemnitee is not wholly
successful in such Proceeding but is successful, on the merits or otherwise, as
to one or more but less than all claims, issues or matters in such Proceeding,
the Company shall indemnify Indemnitee under this Section 6 against all Expenses
actually and reasonably incurred by him or on his behalf in connection with each
successfully resolved claim, issue or matter. For purposes of this Section and
without limitation, the termination of any claim, issue or matter in such a
Proceeding by dismissal, with or without prejudice, shall be deemed to be a
successful result as to such claim, issue or matter. Nothing in this Section 6
shall be construed to limit any indemnification or advancement of Expenses to
which Indemnitee is otherwise entitled pursuant to this Agreement or otherwise.

                                       3

<PAGE>

     Section 7. Advancement of Expenses. The Company shall advance all
                -----------------------
reasonable Expenses incurred by or on behalf of Indemnitee in connection with
any Proceeding to which Indemnitee is, or is threatened to be, made a party,
within ten days after the receipt by the Company of a statement or statements
from Indemnitee requesting such advance or advances from time to time, whether
prior to or after final disposition of such Proceeding. Such statement or
statements shall reasonably evidence the Expenses incurred by Indemnitee and, to
the extent required by Maryland law, shall include or be preceded or accompanied
by a written affirmation by the Indemnitee of the Indemnitee's good faith belief
that the standard of conduct necessary for indemnification by the Company as
authorized by law and by this Agreement has been met and a written undertaking
by or on behalf of Indemnitee to repay any Expenses advanced if it shall
ultimately be determined that such standard of conduct has not been met. The
undertaking required by this Section 7 shall be an unlimited general obligation
of Indemnitee and shall be accepted without reference to the Indemnitee's
financial ability to repay such advanced Expenses.

     Section 8. Procedure for Determination of Entitlement to Indemnification.
                -------------------------------------------------------------

     (a) To obtain indemnification under this Agreement, Indemnitee shall submit
to the Company a written request, including therein or therewith such
documentation and information as is reasonably available to Indemnitee and is
reasonably necessary to determine whether and to what extent Indemnitee is
entitled to indemnification. The Secretary of the Company shall, promptly upon
receipt of such a request for indemnification, advise the Board of Directors in
writing that Indemnitee has requested indemnification.

     (b) Upon written request by Indemnitee for indemnification pursuant to the
first sentence of Section 8(a) hereof, a determination, if required by
applicable law, with respect to Indemnitee's entitlement thereto shall be made
promptly, in the specific case: (i) if a Change in Control shall have occurred,
by, at the option of Indemnitee, the Board of Directors by a majority vote of a
quorum of Disinterested Directors or by Independent Counsel in a written opinion
to the Board of Directors, a copy of which shall be delivered to Indemnitee; or
(ii) if a Change of Control shall not have occurred, (A) by the Board of
Directors by a majority vote of a quorum consisting of Disinterested Directors,
or (B) if a quorum of the Board of Directors consisting of Disinterested
Directors is not obtainable or, even if obtainable, such quorum of Disinterested
Directors so directs, by Independent Counsel in a written opinion to the Board
of Directors, a copy of which shall be delivered to Indemnitee, or (C) if so
directed by a majority of the members of the Board of Directors, by the
stockholders of the Company; and, if it is so determined that Indemnitee is
entitled to indemnification, payment to Indemnitee shall be made within ten days
after such determination. Indemnitee shall cooperate with the person, persons or
entity making such determination with respect to Indemnitee's entitlement to
indemnification, including providing to such person, persons or entity upon
reasonable advance request any documentation or information which is not
privileged or otherwise protected from disclosure and which is reasonably
available to Indemnitee and reasonably necessary to such determination. Any
costs or Expenses (including reasonable attorneys' fees and disbursements)
incurred by Indemnitee in so cooperating with the person, persons or entity
making such determination shall be borne by the Company (irrespective of the
determination as to Indemnitee's entitlement to indemnification) and the Company
hereby indemnifies and agrees to hold Indemnitee harmless therefrom.

                                       4

<PAGE>

     Section 9.  Presumptions and Effect of Certain Proceedings.
                 ----------------------------------------------

     (a) In making a determination with respect to entitlement to
indemnification under this Agreement, the person or persons or entity making
such determination shall presume that Indemnitee is entitled to indemnification
under this Agreement if Indemnitee has submitted a request for indemnification
in accordance with Section 8(a) of this Agreement, and the Company shall have
the burden of proof to overcome that presumption in connection with the making
of any determination contrary to that presumption.

     (b) The termination of any Proceeding by judgment, order, settlement
(whether with or without court approval), conviction, a plea of nolo contendere
                                                                ---------------
or its equivalent, or an entry of an order of probation prior to judgment, does
not create a presumption that the Indemnitee did not meet the requisite standard
of conduct or have any particular belief or that a court has determined that
indemnification is not permitted by applicable law or this Agreement.

     Section 10. Remedies of Indemnitee.
                 ----------------------

     (a) If (i) a determination is made pursuant to Section 8 of this Agreement
that Indemnitee is not entitled to indemnification under this Agreement, (ii)
advancement of Expenses is not timely made pursuant to Section 7 of this
Agreement, (iii) no determination of entitlement to indemnification shall have
been made pursuant to Section 8(b) of this Agreement within thirty (30) days
(except that if such determination was to be made by the stockholders of the
Company, then within ninety (90) days) after receipt by the Company of the
request for indemnification, (iv) payment of indemnification is not made
pursuant to Section 6 of this Agreement within ten days after receipt by the
Company of a written request therefor, or (v) payment of indemnification is not
made within ten days after a determination has been made that Indemnitee is
entitled to indemnification, Indemnitee shall be entitled to an adjudication in
an appropriate court of the State of Maryland, or in any other court of
competent jurisdiction, of his entitlement to such indemnification or
advancement of Expenses. Alternatively, Indemnitee, at his option, may seek an
award in arbitration to be conducted by a single arbitrator pursuant to the
commercial Arbitration Rules of the American Arbitration Association. Indemnitee
shall commence such proceeding seeking an adjudication or an award in
arbitration within 180 days following the date on which Indemnitee first has the
right to commence such proceeding pursuant to this Section 10(a); provided,
                                                                  --------
however, that the foregoing clause shall not apply in respect of a proceeding
-------
brought by Indemnitee to enforce his rights under Section 6 of this Agreement.

     (b) In any judicial proceeding or arbitration commenced pursuant to this
Section 10 the Company shall have the burden of proving that Indemnitee is not
entitled to indemnification or advancement of Expenses, as the case may be.

     (c) If a determination shall have been made pursuant to Section 8(b) of
this Agreement that Indemnitee is entitled to indemnification, the Company shall
be bound by such determination in any judicial proceeding or arbitration
commenced pursuant to this Section 10, absent a misstatement by Indemnitee of a
material fact, or an omission of a material fact necessary to make Indemnitee's
statement not materially misleading, in connection with the request for
indemnification.

                                       5

<PAGE>

     (d) In the event that Indemnitee, pursuant to this Section 10, seeks a
judicial adjudication of or an award in arbitration to enforce his rights under,
or to recover damages for breach of, this Agreement, Indemnitee shall be
entitled to recover from the Company, and shall be indemnified by the Company
against, any and all Expenses actually and reasonably incurred by him in such
judicial adjudication or arbitration, regardless of whether Indemnitee is
successful in whole or in part therein.

     Section 11. Defense of the Underlying Proceeding.
                 ------------------------------------

     (a) Notice by Indemnitee. Indemnitee agrees to notify the Company promptly
         --------------------
upon being served with or receiving any summons, citation, subpoena, complaint,
indictment, information, notice, request or other document relating to any
Proceeding which may result in the right to indemnification or the advancement
of Expenses hereunder; provided, however, that the failure to give any such
                       --------  -------
notice shall not disqualify Indemnitee from the right, or otherwise affect in
any manner any right of Indemnitee, to indemnification or the advancements of
Expenses under this Agreement unless the Company's ability to defend in such
Proceeding or to obtain proceeds under any insurance policy is materially and
adversely prejudiced thereby, and then only to the extent the Company is thereby
actually prejudiced.

     (b) Defense by Company. Subject to the provisions of the last sentence of
         ------------------
this Section 11(b) and of Section 11(c) below, the Company shall have the right
to defend Indemnitee in any Proceeding which may give rise to indemnification
hereunder; provided, however, that the Company shall notify Indemnitee of any
           --------  -------
such decision to defend within fifteen (15) calendar days following receipt of
notice of any such Proceeding under Section 11(a) above. The Company shall not,
without the prior written consent of Indemnitee, which shall not be unreasonably
withheld or delayed, consent to the entry of any judgment against Indemnitee or
enter into any settlement or compromise which (i) includes an admission of fault
of Indemnitee or (ii) does not include, as an unconditional term thereof, the
full release of Indemnitee from all liability in respect of such Proceeding,
which release shall be in form and substance reasonably satisfactory to
Indemnitee. This Section 11(b) shall not apply to a Proceeding brought by
Indemnitee under Section 10 above or Section 15 below.

     (c) Indemnitee's Right to Counsel. Notwithstanding the provisions of
         -----------------------------
Section 11(b) above, if in a Proceeding to which Indemnitee is a party by reason
of Indemnitee's Corporate Status, (i) Indemnitee reasonably concludes, based
upon an opinion of counsel, that he may have separate defenses or counterclaims
to assert with respect to any issue which may not be consistent with other
defendants in such Proceeding, (ii) Indemnitee reasonably concludes, based upon
an opinion of counsel, that an actual or apparent conflict of interest or
potential conflict of interest exists between Indemnitee and the Company, or
(iii) if the Company fails to assume the defense of such Proceeding in a timely
manner, Indemnitee shall be entitled to be represented by separate legal counsel
of Indemnitee's choice at the expense of the Company. In addition, if the
Company fails to comply with any of its obligations under this Agreement or in
the event that the Company or any other person takes any action to declare this
Agreement void or unenforceable, or institutes any Proceeding to deny or to
recover from Indemnitee the benefits intended to be provided to Indemnitee
hereunder, Indemnitee shall have the right to retain counsel of Indemnitee's
choice, at the expense of the Company, to represent Indemnitee in connection
with any such matter.

                                        6

<PAGE>

     Section 12. Non-Exclusivity; Survival of Rights; Insurance; Subrogation.
                 -----------------------------------------------------------

     (a) The rights of indemnification and advancement of Expenses as provided
by this Agreement shall be in addition to, and not deemed exclusive of, any
other rights to which Indemnitee may at any time be entitled under applicable
law, the charter or Bylaws of the Company, any agreement, a vote of stockholders
or a resolution of directors (or a committee of directors), or otherwise. No
amendment, alteration or repeal of this Agreement or of any provision hereof
shall limit or restrict any right of Indemnitee under this Agreement in respect
of any action taken or omitted by such Indemnitee in his Corporate Status prior
to such amendment, alteration or repeal.

     (b) To the extent that the Company maintains an insurance policy or
policies providing liability insurance for directors, officers, employees, or
agents of the Company or of any other corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise which such person serves at the
request of the Company, Indemnitee shall be covered by such policy or policies
in accordance with its or their terms to the maximum extent of the coverage
available for any such director, officer, employee or agent under such policy or
policies. The purchase and maintenance of such insurance shall not in any way
limit or affect the rights and obligations of the parties hereto, and the
execution and delivery of this Agreement shall not in any way be construed to
limit or affect the rights and obligations of the Company or the other parties
under any such insurance policy.

     (c) In the event of any payment under this Agreement, the Company shall be
subrogated to the extent of such payment to all of the rights of contribution or
recovery of Indemnitee, who shall take, at the request of the Company, all
reasonable actions necessary to secure such rights, including the execution of
such documents as are necessary to enable the Company to bring suit to enforce
such rights.

     (d) The Company shall not be liable under this Agreement to make any
payment of amounts otherwise indemnifiable hereunder if and to the extent that
Indemnitee has otherwise actually received such payment under any insurance
policy, contract, agreement or otherwise.

     Section 13. Successors. This Agreement shall be (a) binding upon all
                 ----------
successors and assigns of the Company (including any transferee of all or a
substantial portion of the business, stock and/or assets of the Company and any
direct or indirect successor by merger or consolidation or otherwise by
operation of law) and (b) binding on and shall inure to the benefit of the
heirs, personal representatives, executors and administrators of Indemnitee.
This Agreement shall continue for the benefit of Indemnitee and such heirs,
personal representatives, executors and administrators after Indemnitee has
ceased to have Corporate Status.

                                       7

<PAGE>

     Section 14. Severability. If any provision or provisions of this Agreement
                 ------------
shall be held to be invalid, illegal or unenforceable for any reason whatsoever:
(a) the validity, legality and enforceability of the remaining provisions of
this Agreement (including, without limitation, each portion of any section of
this Agreement containing any such provision held to be invalid, illegal or
unenforceable that is not itself invalid, illegal or unenforceable) shall not in
any way be affected or impaired thereby; and (b) to the fullest extent possible,
the provisions of this Agreement (including, without limitation, each portion of
any section of this Agreement containing any such provision held to be invalid,
illegal or unenforceable, that is not itself invalid, illegal or unenforceable)
shall be construed so as to give effect to the intent manifested thereby.

     Section 15. Exception to Right of Indemnification or Advancement of
                 -------------------------------------------------------
Expenses. Notwithstanding any provision herein to the contrary:
--------

     (a) Except as provided in Section 10 of this Agreement, Indemnitee shall
not be entitled to indemnification or advancement of Expenses under this
Agreement with respect to any Proceeding brought by Indemnitee against the
Company, any entity controlled by the Company, any then current or former
director, officer or employee thereof, or any third party, unless the Board of
Directors has consented in writing to the initiation of such Proceeding.

     (b) Indemnitee shall not be entitled to indemnification or advancement of
Expenses under this Agreement if it has been finally adjudicated by a court of
competent jurisdiction that Indemnitee is liable to the Company for an
accounting of profits made from the purchase or sale by Indemnitee of securities
of the Company pursuant to the provisions of Section 16(b) of the Securities
Exchange Act of 1934, the rules and regulations promulgated thereunder and
amendments thereto or similar provisions of any federal, state or local
statutory law, or if Indemnitee agrees by way of settlement or otherwise to pay
any or all of such profits to the Company.

     Section 16. Identical Counterparts. This Agreement may be executed in one
                 ----------------------
or more counterparts, each of which shall for all purposes be deemed to be an
original but all of which together shall constitute one and the same Agreement.
Only one such counterpart signed by the party against whom enforceability is
sought needs to be produced to evidence the existence of this Agreement.

     Section 17. Headings. The headings of the paragraphs of this Agreement are
                 --------
inserted for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction thereof.

     Section 18. Modification and Waiver. No supplement, modification or
                 -----------------------
amendment of this Agreement shall be binding unless executed in writing by both
of the parties hereto. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provisions hereof
(whether or not similar) nor shall such waiver constitute a continuing waiver.

                                       8

<PAGE>

     Section 19. Notice by Indemnitee. Indemnitee agrees promptly to notify the
                 --------------------
Company in writing upon being served with any summons, citation, subpoena,
complaint, indictment, information or other document relating to any Proceeding
or matter which may be subject to indemnification or advancement of Expenses
covered hereunder.

     Section 20. Notices. All notices, requests, demands and other
                 -------
communications hereunder shall be in writing and shall be deemed to have been
duly given if (i) delivered by hand and receipted for by the party to whom said
notice or other communication shall have been directed, or (ii) mailed by
certified or registered mail with postage prepaid, on the third business day
after the date on which it is so mailed:

     (a) If to Indemnitee, to: The address set forth on the signature page
hereto.

     (b) If to the Company to:

            National Golf Properties, Inc.
            2951 28th Street, Suite 3001
            Santa Monica, California 90405
            Attention:  President

or to such other address as may have been furnished to Indemnitee by the Company
or to the Company by Indemnitee, as the case may be.

     Section 21. Governing Law. The parties agree that this Agreement shall be
                 -------------
governed by, and construed and enforced in accordance with, the laws of the
State of Maryland, which laws are applicable to contracts made and to be
performed in such state without giving effect to the principles of conflicts of
laws.

     Section 22. Miscellaneous. Use of the masculine pronoun shall be deemed to
                 -------------
include usage of the feminine pronoun where appropriate.

     Section 23. Prior Agreements. This Agreement replaces and supersedes any
                 ----------------
Prior Agreements to which the Indemnitee is a party, and such Prior Agreements
are hereby void and of no further force or effect.

                                       9

<PAGE>

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.

ATTEST:                             NATIONAL GOLF PROPERTIES, INC.

/s/ Sylvia Adams                    By:  /s/ James M. Stanich
----------------------------             ----------------------------------
Sylvia Adams                             James M. Stanich
                                         President

WITNESS:                            INDEMNITEE

/s/ Sylvia Adams                    /s/ David G. Price
----------------------------        ---------------------------------------
Sylvia Adams                        DAVID G. PRICE

                                    Address:  2951 - 28/th/ Street
                                              Santa Monica, California 90405

                                       10

<PAGE>

                            INDEMNIFICATION AGREEMENT
                            -------------------------

         THIS INDEMNIFICATION AGREEMENT is made and entered into this 14/th/ day
of December, 2001 (this "Agreement"), by and between National Golf Properties,
Inc., a Maryland corporation (the "Company"), and Charles S. Paul
("Indemnitee").

         WHEREAS, at the request of the Company, Indemnitee currently serves as
a director of the Company and may, therefore, be subjected to claims, suits or
proceedings arising as a result of his service; and

         WHEREAS, as an inducement to Indemnitee to continue to serve as such
director, the Company has agreed to indemnify and to advance expenses and costs
incurred by Indemnitee in connection with any such claims, suits or proceedings,
to the fullest extent permitted by law; and

         WHEREAS, each of the directors of the Company, including the
Indemnitee, has one or more previous agreements entitled "Indemnification
Agreement" with the Company or its predecessor (the "Prior Agreements"); and

         WHEREAS, the Company desires to replace and supersede the Prior
Agreements with a new form of indemnification agreement for all of the directors
of the Company; and

         WHEREAS, Indemnitee is relying upon the rights afforded under this
Agreement in continuing as a director of the Company.

         NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, the Company and Indemnitee do hereby covenant and agree as
follows:

         Section 1. Definitions.  For purposes of this Agreement:
                    -----------

         (a)        "Change in Control" means a change in control of the Company
occurring after the Effective Date of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or in
response to any similar item on any similar schedule or form) promulgated under
the Securities Exchange Act of 1934 (the "Act"), whether or not the Company is
then subject to such reporting requirement; provided, however, that, without
limitation, such a Change in Control shall be deemed to have occurred if after
the Effective Date (i) any "person" (as such term is used in Sections 13(d) and
14(d) of the Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Act), directly or indirectly, of securities of the Company
representing 30% or more of the combined voting power of the Company's then
outstanding securities without the prior approval of at least two-thirds of the
members of the Board of Directors in office immediately prior to such person
attaining such percentage interest; (ii) there occurs a proxy contest, or the
Company is a party to a merger, consolidation, sale of assets, plan of
liquidation or other reorganization not approved by at least two-thirds of the
members of the Board of Directors then in office, as a consequence of which
members of the Board of Directors in office immediately prior to such
transaction or event constitute less than a majority of the Board of Directors
thereafter; or (iii) during any period of two consecutive years, other than as a
result of an event described in clause (a)(ii) of this Section 1, individuals
who at

<PAGE>

the beginning of such period constituted the Board of Directors (including for
this purpose any new director whose election or nomination for election by the
Company's stockholders was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning of such
period) cease for any reason to constitute at least a majority of the Board of
Directors.

         (b)   "Corporate Status" means the status of a person who is or was a
director, trustee, officer, partner, member, employee or agent of the Company or
of any other corporation, partnership, joint venture, trust, limited liability
company, employee benefit plan or other enterprise which such person is or was
serving at the request of the Company.

         (c)   "Disinterested Director" means a director of the Company who is
not and was not a party to the Proceeding in respect of which indemnification is
sought by Indemnitee.

         (d)   "Effective Date" means the date set forth in the first paragraph
of this Agreement.

         (e)   "Expenses" shall include all reasonable attorneys' fees,
retainers, court costs, transcript costs, fees of experts, witness fees, travel
expenses, duplicating costs, printing and binding costs, telephone charges,
postage, delivery service fees, and all other disbursements or expenses incurred
in connection with prosecuting, defending, preparing to prosecute or defend,
investigating, or being or preparing to be a witness in a Proceeding.

         (f)   "Independent Counsel" means a law firm, or a member of a law
firm, selected by the board of directors as provided in Section 8(b), that is
experienced in matters of corporation law and neither presently is, nor in the
past five years has been, retained to represent: (i) the Company, any of its
direct or indirect subsidiaries or any of their respective tenants, or
Indemnitee in any matter material to any such party, or (ii) any other party to
the Proceeding giving rise to a claim for indemnification hereunder.
Notwithstanding the foregoing, the term "Independent Counsel" shall not include
any person who, under the applicable standards of professional conduct then
prevailing, would have a conflict of interest in representing either the Company
or Indemnitee in an action to determine Indemnitee's rights under this
Agreement.

         (g)   "Proceeding" includes any action, suit, arbitration, alternate
dispute resolution mechanism, investigation, administrative hearing or any other
proceeding, whether civil, criminal, administrative or investigative (including
on appeal).

         Section 2.  Services by Indemnitee. Indemnitee agrees to serve as a
                     ----------------------
director of the Company and may at any time and for any reason resign from such
position (subject to any other contractual obligation or any obligation imposed
by operation of law), in which event the Company shall have no obligation under
this Agreement to continue Indemnitee in such position.

         Section 3.  Indemnification - General. The Company shall indemnify, and
                     -------------------------
advance Expenses to, Indemnitee (a) as provided in this Agreement and (b) to the
fullest extent permitted by Maryland law in effect on the date hereof and as
amended from time to time; provided, however, that no change in Maryland law
                           --------  -------
shall have the effect of reducing the benefits available to Indemnitee hereunder
based on Maryland law as in effect on the date hereof. The Company shall
indemnify Indemnitee's spouse (whether by statute or at common law and without
regard to

                                       2

<PAGE>

the location of the governing jurisdiction) and children to the same extent and
subject to the same limitations applicable to Indemnitee hereunder for claims
arising out of the status of such person as a spouse or child of Indemnitee,
including claims seeking damages from marital property (including community
property) or property held by such Indemnitee and such spouse or child or
property transferred to such spouse or child, but such indemnity shall not
otherwise extend to protect the spouse or child against liabilities caused by
the spouse's or child's own acts or inactions. The rights of Indemnitee provided
in this Section 3 shall include, but shall not be limited to, the rights set
forth in the other sections of this Agreement.

         Section 4.  Proceedings Other Than Proceedings by or in the Right of
                     --------------------------------------------------------
the Company. Indemnitee shall be entitled to the rights of indemnification
-----------
provided in this Section 4 if, by reason of his Corporate Status, he is, was or
is threatened to be made a party to any threatened, pending, or completed
Proceeding, other than a Proceeding by or in the right of the Company. Pursuant
to this Section 4, Indemnitee shall be indemnified against all Expenses,
judgments, awards, penalties, fines and amounts paid in settlement actually and
reasonably incurred by him or on his behalf in connection with a Proceeding by
reason of his Corporate Status unless it is established that (i) the act or
omission of the Indemnitee was material to the matter giving rise to the
Proceeding and (a) was committed in bad faith or (b) was the result of active
and deliberate dishonesty, (ii) the Indemnitee actually received an improper
personal benefit in money, property or services, or (iii) in the case of any
criminal Proceeding, the Indemnitee had reasonable cause to believe or should
have believed that his conduct was unlawful.

         Section 5.  Proceedings by or in the Right of the Company. Indemnitee
                     ---------------------------------------------
shall be entitled to the rights of indemnification provided in this Section 5
if, by reason of his Corporate Status, he is, was or is threatened to be made a
party to any threatened, pending or completed Proceeding brought by or in the
right of the Company to procure a judgment in its favor. Pursuant to this
Section 5, Indemnitee shall be indemnified against all amounts paid in
settlement and all Expenses actually and reasonably incurred by him or on his
behalf in connection with such Proceeding unless it is established that (i) the
act or omission of the Indemnitee was material to the matter giving rise to such
a Proceeding and (a) was committed in bad faith or (b) was the result of active
and deliberate dishonesty or (ii) the Indemnitee actually received an improper
personal benefit in money, property or services.

         Section 6.  Indemnification for Expenses of a Party Who is Wholly or
                     --------------------------------------------------------
Partly Successful. Notwithstanding any other provision of this Agreement, to the
-----------------
extent that Indemnitee is, by reason of his Corporate Status, made a party to
and is successful, on the merits or otherwise, in the defense of any Proceeding,
he shall be indemnified against all Expenses actually and reasonably incurred by
him or on his behalf in connection therewith. If Indemnitee is not wholly
successful in such Proceeding but is successful, on the merits or otherwise, as
to one or more but less than all claims, issues or matters in such Proceeding,
the Company shall indemnify Indemnitee under this Section 6 against all Expenses
actually and reasonably incurred by him or on his behalf in connection with each
successfully resolved claim, issue or matter. For purposes of this Section and
without limitation, the termination of any claim, issue or matter in such a
Proceeding by dismissal, with or without prejudice, shall be deemed to be a
successful result as to such claim, issue or matter. Nothing in this Section 6
shall be construed to limit any indemnification or advancement of Expenses to
which Indemnitee is otherwise entitled pursuant to this Agreement or otherwise.

                                       3

<PAGE>

         Section 7.  Advancement of Expenses. The Company shall advance all
                     -----------------------
reasonable Expenses incurred by or on behalf of Indemnitee in connection with
any Proceeding to which Indemnitee is, or is threatened to be, made a party,
within ten days after the receipt by the Company of a statement or statements
from Indemnitee requesting such advance or advances from time to time, whether
prior to or after final disposition of such Proceeding. Such statement or
statements shall reasonably evidence the Expenses incurred by Indemnitee and, to
the extent required by Maryland law, shall include or be preceded or accompanied
by a written affirmation by the Indemnitee of the Indemnitee's good faith belief
that the standard of conduct necessary for indemnification by the Company as
authorized by law and by this Agreement has been met and a written undertaking
by or on behalf of Indemnitee to repay any Expenses advanced if it shall
ultimately be determined that such standard of conduct has not been met. The
undertaking required by this Section 7 shall be an unlimited general obligation
of Indemnitee and shall be accepted without reference to the Indemnitee's
financial ability to repay such advanced Expenses.

         Section 8.  Procedure for Determination of Entitlement to
                     ---------------------------------------------
Indemnification.
---------------

         (a)        To obtain indemnification under this Agreement, Indemnitee
shall submit to the Company a written request, including therein or therewith
such documentation and information as is reasonably available to Indemnitee and
is reasonably necessary to determine whether and to what extent Indemnitee is
entitled to indemnification. The Secretary of the Company shall, promptly upon
receipt of such a request for indemnification, advise the Board of Directors in
writing that Indemnitee has requested indemnification.

         (b)        Upon written request by Indemnitee for indemnification
pursuant to the first sentence of Section 8(a) hereof, a determination, if
required by applicable law, with respect to Indemnitee's entitlement thereto
shall be made promptly, in the specific case: (i) if a Change in Control shall
have occurred, by, at the option of Indemnitee, the Board of Directors by a
majority vote of a quorum of Disinterested Directors or by Independent Counsel
in a written opinion to the Board of Directors, a copy of which shall be
delivered to Indemnitee; or (ii) if a Change of Control shall not have occurred,
(A) by the Board of Directors by a majority vote of a quorum consisting of
Disinterested Directors, or (B) if a quorum of the Board of Directors consisting
of Disinterested Directors is not obtainable or, even if obtainable, such quorum
of Disinterested Directors so directs, by Independent Counsel in a written
opinion to the Board of Directors, a copy of which shall be delivered to
Indemnitee, or (C) if so directed by a majority of the members of the Board of
Directors, by the stockholders of the Company; and, if it is so determined that
Indemnitee is entitled to indemnification, payment to Indemnitee shall be made
within ten days after such determination. Indemnitee shall cooperate with the
person, persons or entity making such determination with respect to Indemnitee's
entitlement to indemnification, including providing to such person, persons or
entity upon reasonable advance request any documentation or information which is
not privileged or otherwise protected from disclosure and which is reasonably
available to Indemnitee and reasonably necessary to such determination. Any
costs or Expenses (including reasonable attorneys' fees and disbursements)
incurred by Indemnitee in so cooperating with the person, persons or entity
making such determination shall be borne by the Company (irrespective of the
determination as to Indemnitee's entitlement to indemnification) and the Company
hereby indemnifies and agrees to hold Indemnitee harmless therefrom.

                                       4

<PAGE>

         Section 9.  Presumptions and Effect of Certain Proceedings.
                     ----------------------------------------------

         (a)      In making a determination with respect to entitlement to
indemnification under this Agreement, the person or persons or entity making
such determination shall presume that Indemnitee is entitled to indemnification
under this Agreement if Indemnitee has submitted a request for indemnification
in accordance with Section 8(a) of this Agreement, and the Company shall have
the burden of proof to overcome that presumption in connection with the making
of any determination contrary to that presumption.

         (b)      The termination of any Proceeding by judgment, order,
settlement (whether with or without court approval), conviction, a plea of nolo
                                                                           ----
contendere or its equivalent, or an entry of an order of probation prior to
----------
judgment, does not create a presumption that the Indemnitee did not meet the
requisite standard of conduct or have any particular belief or that a court has
determined that indemnification is not permitted by applicable law or this
Agreement.

         Section 10. Remedies of Indemnitee.
                     ----------------------

         (a)      If (i) a determination is made pursuant to Section 8 of this
Agreement that Indemnitee is not entitled to indemnification under this
Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 7
of this Agreement, (iii) no determination of entitlement to indemnification
shall have been made pursuant to Section 8(b) of this Agreement within thirty
(30) days (except that if such determination was to be made by the stockholders
of the Company, then within ninety (90) days) after receipt by the Company of
the request for indemnification, (iv) payment of indemnification is not made
pursuant to Section 6 of this Agreement within ten days after receipt by the
Company of a written request therefor, or (v) payment of indemnification is not
made within ten days after a determination has been made that Indemnitee is
entitled to indemnification, Indemnitee shall be entitled to an adjudication in
an appropriate court of the State of Maryland, or in any other court of
competent jurisdiction, of his entitlement to such indemnification or
advancement of Expenses. Alternatively, Indemnitee, at his option, may seek an
award in arbitration to be conducted by a single arbitrator pursuant to the
commercial Arbitration Rules of the American Arbitration Association. Indemnitee
shall commence such proceeding seeking an adjudication or an award in
arbitration within 180 days following the date on which Indemnitee first has the
right to commence such proceeding pursuant to this Section 10(a); provided,
                                                                  --------
however, that the foregoing clause shall not apply in respect of a proceeding
-------
brought by Indemnitee to enforce his rights under Section 6 of this Agreement.

         (b)      In any judicial proceeding or arbitration commenced pursuant
to this Section 10 the Company shall have the burden of proving that Indemnitee
is not entitled to indemnification or advancement of Expenses, as the case may
be.

         (c)      If a determination shall have been made pursuant to Section
8(b) of this Agreement that Indemnitee is entitled to indemnification, the
Company shall be bound by such determination in any judicial proceeding or
arbitration commenced pursuant to this Section 10, absent a misstatement by
Indemnitee of a material fact, or an omission of a material fact necessary to
make Indemnitee's statement not materially misleading, in connection with the
request for indemnification.

                                       5

<PAGE>

         (d)      In the event that Indemnitee, pursuant to this Section 10,
seeks a judicial adjudication of or an award in arbitration to enforce his
rights under, or to recover damages for breach of, this Agreement, Indemnitee
shall be entitled to recover from the Company, and shall be indemnified by the
Company against, any and all Expenses actually and reasonably incurred by him in
such judicial adjudication or arbitration, regardless of whether Indemnitee is
successful in whole or in part therein.

         Section 11. Defense of the Underlying Proceeding.
                     ------------------------------------

         (a)      Notice by Indemnitee. Indemnitee agrees to notify the Company
                  --------------------
promptly upon being served with or receiving any summons, citation, subpoena,
complaint, indictment, information, notice, request or other document relating
to any Proceeding which may result in the right to indemnification or the
advancement of Expenses hereunder; provided, however, that the failure to give
                                   --------  -------
any such notice shall not disqualify Indemnitee from the right, or otherwise
affect in any manner any right of Indemnitee, to indemnification or the
advancements of Expenses under this Agreement unless the Company's ability to
defend in such Proceeding or to obtain proceeds under any insurance policy is
materially and adversely prejudiced thereby, and then only to the extent the
Company is thereby actually prejudiced.

         (b)      Defense by Company. Subject to the provisions of the last
                  ------------------
sentence of this Section 11(b) and of Section 11(c) below, the Company shall
have the right to defend Indemnitee in any Proceeding which may give rise to
indemnification hereunder; provided, however, that the Company shall notify
                           --------  -------
Indemnitee of any such decision to defend within fifteen (15) calendar days
following receipt of notice of any such Proceeding under Section 11(a) above.
The Company shall not, without the prior written consent of Indemnitee, which
shall not be unreasonably withheld or delayed, consent to the entry of any
judgment against Indemnitee or enter into any settlement or compromise which (i)
includes an admission of fault of Indemnitee or (ii) does not include, as an
unconditional term thereof, the full release of Indemnitee from all liability in
respect of such Proceeding, which release shall be in form and substance
reasonably satisfactory to Indemnitee. This Section 11(b) shall not apply to a
Proceeding brought by Indemnitee under Section 10 above or Section 15 below.

         (c)      Indemnitee's Right to Counsel. Notwithstanding the provisions
                  -----------------------------
of Section 11(b) above, if in a Proceeding to which Indemnitee is a party by
reason of Indemnitee's Corporate Status, (i) Indemnitee reasonably concludes,
based upon an opinion of counsel, that he may have separate defenses or
counterclaims to assert with respect to any issue which may not be consistent
with other defendants in such Proceeding, (ii) Indemnitee reasonably concludes,
based upon an opinion of counsel, that an actual or apparent conflict of
interest or potential conflict of interest exists between Indemnitee and the
Company, or (iii) if the Company fails to assume the defense of such Proceeding
in a timely manner, Indemnitee shall be entitled to be represented by separate
legal counsel of Indemnitee's choice at the expense of the Company. In addition,
if the Company fails to comply with any of its obligations under this Agreement
or in the event that the Company or any other person takes any action to declare
this Agreement void or unenforceable, or institutes any Proceeding to deny or to
recover from Indemnitee the benefits intended to be provided to Indemnitee
hereunder, Indemnitee shall have the right to retain counsel of Indemnitee's
choice, at the expense of the Company, to represent Indemnitee in connection
with any such matter.

                                       6

<PAGE>

         Section 12. Non-Exclusivity; Survival of Rights; Insurance;
                     -----------------------------------------------
Subrogation.
-----------

         (a)      The rights of indemnification and advancement of Expenses as
provided by this Agreement shall be in addition to, and not deemed exclusive of,
any other rights to which Indemnitee may at any time be entitled under
applicable law, the charter or Bylaws of the Company, any agreement, a vote of
stockholders or a resolution of directors (or a committee of directors), or
otherwise. No amendment, alteration or repeal of this Agreement or of any
provision hereof shall limit or restrict any right of Indemnitee under this
Agreement in respect of any action taken or omitted by such Indemnitee in his
Corporate Status prior to such amendment, alteration or repeal.

         (b)      To the extent that the Company maintains an insurance policy
or policies providing liability insurance for directors, officers, employees, or
agents of the Company or of any other corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise which such person serves at the
request of the Company, Indemnitee shall be covered by such policy or policies
in accordance with its or their terms to the maximum extent of the coverage
available for any such director, officer, employee or agent under such policy or
policies. The purchase and maintenance of such insurance shall not in any way
limit or affect the rights and obligations of the parties hereto, and the
execution and delivery of this Agreement shall not in any way be construed to
limit or affect the rights and obligations of the Company or the other parties
under any such insurance policy.

         (c)      In the event of any payment under this Agreement, the Company
shall be subrogated to the extent of such payment to all of the rights of
contribution or recovery of Indemnitee, who shall take, at the request of the
Company, all reasonable actions necessary to secure such rights, including the
execution of such documents as are necessary to enable the Company to bring suit
to enforce such rights.

         (d)      The Company shall not be liable under this Agreement to make
any payment of amounts otherwise indemnifiable hereunder if and to the extent
that Indemnitee has otherwise actually received such payment under any insurance
policy, contract, agreement or otherwise.

         Section 13. Successors. This Agreement shall be (a) binding upon all
                     ----------
successors and assigns of the Company (including any transferee of all or a
substantial portion of the business, stock and/or assets of the Company and any
direct or indirect successor by merger or consolidation or otherwise by
operation of law) and (b) binding on and shall inure to the benefit of the
heirs, personal representatives, executors and administrators of Indemnitee.
This Agreement shall continue for the benefit of Indemnitee and such heirs,
personal representatives, executors and administrators after Indemnitee has
ceased to have Corporate Status.

                                       7

<PAGE>

         Section 14.  Severability. If any provision or provisions of this
                      ------------
Agreement shall be held to be invalid, illegal or unenforceable for any reason
whatsoever: (a) the validity, legality and enforceability of the remaining
provisions of this Agreement (including, without limitation, each portion of any
section of this Agreement containing any such provision held to be invalid,
illegal or unenforceable that is not itself invalid, illegal or unenforceable)
shall not in any way be affected or impaired thereby; and (b) to the fullest
extent possible, the provisions of this Agreement (including, without
limitation, each portion of any section of this Agreement containing any such
provision held to be invalid, illegal or unenforceable, that is not itself
invalid, illegal or unenforceable) shall be construed so as to give effect to
the intent manifested thereby.

         Section 15.  Exception to Right of Indemnification or Advancement of
                      -------------------------------------------------------
Expenses.  Notwithstanding any provision herein to the contrary:
--------

         (a)        Except as provided in Section 10 of this Agreement,
Indemnitee shall not be entitled to indemnification or advancement of Expenses
under this Agreement with respect to any Proceeding brought by Indemnitee
against the Company, any entity controlled by the Company, any then current or
former director, officer or employee thereof, or any third party, unless the
Board of Directors has consented in writing to the initiation of such
Proceeding.

         (b)        Indemnitee shall not be entitled to indemnification or
advancement of Expenses under this Agreement if it has been finally adjudicated
by a court of competent jurisdiction that Indemnitee is liable to the Company
for an accounting of profits made from the purchase or sale by Indemnitee of
securities of the Company pursuant to the provisions of Section 16(b) of the
Securities Exchange Act of 1934, the rules and regulations promulgated
thereunder and amendments thereto or similar provisions of any federal, state or
local statutory law, or if Indemnitee agrees by way of settlement or otherwise
to pay any or all of such profits to the Company.

         Section 16.  Identical Counterparts. This Agreement may be executed in
                      ----------------------
one or more counterparts, each of which shall for all purposes be deemed to be
an original but all of which together shall constitute one and the same
Agreement. Only one such counterpart signed by the party against whom
enforceability is sought needs to be produced to evidence the existence of this
Agreement.

         Section 17.  Headings.  The headings of the paragraphs of this
                      --------
Agreement are inserted for convenience only and shall not be deemed to
constitute part of this Agreement or to affect the construction thereof.

         Section 18.  Modification and Waiver. No supplement, modification or
                      -----------------------
amendment of this Agreement shall be binding unless executed in writing by both
of the parties hereto. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provisions hereof
(whether or not similar) nor shall such waiver constitute a continuing waiver.

                                       8

<PAGE>

         Section 19.  Notice by Indemnitee. Indemnitee agrees promptly to notify
                      --------------------
the Company in writing upon being served with any summons, citation, subpoena,
complaint, indictment, information or other document relating to any Proceeding
or matter which may be subject to indemnification or advancement of Expenses
covered hereunder.

         Section 20.  Notices. All notices, requests, demands and other
                      -------
communications hereunder shall be in writing and shall be deemed to have been
duly given if (i) delivered by hand and receipted for by the party to whom said
notice or other communication shall have been directed, or (ii) mailed by
certified or registered mail with postage prepaid, on the third business day
after the date on which it is so mailed:

         (a)        If to Indemnitee, to: The address set forth on the signature
page hereto.

         (b)        If to the Company to:

                        National Golf Properties, Inc.
                        2951 28th Street, Suite 3001
                        Santa Monica, California 90405
                        Attention:  President

or to such other address as may have been furnished to Indemnitee by the Company
or to the Company by Indemnitee, as the case may be.

         Section 21.  Governing Law. The parties agree that this Agreement shall
                      -------------
be governed by, and construed and enforced in accordance with, the laws of the
State of Maryland, which laws are applicable to contracts made and to be
performed in such state without giving effect to the principles of conflicts of
laws.

         Section 22.  Miscellaneous. Use of the masculine pronoun shall be
                      -------------
deemed to include usage of the feminine pronoun where appropriate.

         Section 23.  Prior Agreements. This Agreement replaces and supersedes
                      ----------------
any Prior Agreements to which the Indemnitee is a party, and such Prior
Agreements are hereby void and of no further force or effect.

                                       9

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.

ATTEST:                             NATIONAL GOLF PROPERTIES, INC.

/s/ Sylvia Adams

Sylvia Adams                        By:/s/ James M. Stanich
-----------------                   ---------------------------
                                        James M. Stanich
                                        President

WITNESS:                            INDEMNITEE

                                    /s/ Charles S. Paul
_________________                   ---------------------------
                                    CHARLES S. PAUL

                                    Address: 1024 North Orange Drive
                                             Hollywood, California 90038

                                       10

<PAGE>

                           INDEMNIFICATION AGREEMENT
                           -------------------------

         THIS INDEMNIFICATION AGREEMENT is made and entered into this 14th day
of December, 2001 (this "Agreement"), by and between National Golf Properties,
Inc., a Maryland corporation (the "Company"), and Bruce Karatz ("Indemnitee").

         WHEREAS, at the request of the Company, Indemnitee currently serves as
a director of the Company and may, therefore, be subjected to claims, suits or
proceedings arising as a result of his service; and

         WHEREAS, as an inducement to Indemnitee to continue to serve as such
director, the Company has agreed to indemnify and to advance expenses and costs
incurred by Indemnitee in connection with any such claims, suits or proceedings,
to the fullest extent permitted by law; and

         WHEREAS, each of the directors of the Company, including the
Indemnitee, has one or more previous agreements entitled "Indemnification
Agreement" with the Company or its predecessor (the "Prior Agreements"); and

         WHEREAS, the Company desires to replace and supersede the Prior
Agreements with a new form of indemnification agreement for all of the directors
of the Company; and

         WHEREAS, Indemnitee is relying upon the rights afforded under this
Agreement in continuing as a director of the Company.

         NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, the Company and Indemnitee do hereby covenant and agree as
follows:

         Section 1. Definitions.  For purposes of this Agreement:
                    -----------

         (a)        "Change in Control" means a change in control of the Company
occurring after the Effective Date of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or in
response to any similar item on any similar schedule or form) promulgated under
the Securities Exchange Act of 1934 (the "Act"), whether or not the Company is
then subject to such reporting requirement; provided, however, that, without
limitation, such a Change in Control shall be deemed to have occurred if after
the Effective Date (i) any "person" (as such term is used in Sections 13(d) and
14(d) of the Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Act), directly or indirectly, of securities of the Company
representing 30% or more of the combined voting power of the Company's then
outstanding securities without the prior approval of at least two-thirds of the
members of the Board of Directors in office immediately prior to such person
attaining such percentage interest; (ii) there occurs a proxy contest, or the
Company is a party to a merger, consolidation, sale of assets, plan of
liquidation or other reorganization not approved by at least two-thirds of the
members of the Board of Directors then in office, as a consequence of which
members of the Board of Directors in office immediately prior to such
transaction or event constitute less than a majority of the Board of Directors
thereafter; or (iii) during any period of two consecutive years, other than as a
result of an event described in clause (a)(ii) of this Section 1, individuals
who at

<PAGE>

the beginning of such period constituted the Board of Directors (including
for this purpose any new director whose election or nomination for election by
the Company's stockholders was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning of such
period) cease for any reason to constitute at least a majority of the Board of
Directors.

         (b)        "Corporate Status" means the status of a person who is or
was a director, trustee, officer, partner, member, employee or agent of the
Company or of any other corporation, partnership, joint venture, trust, limited
liability company, employee benefit plan or other enterprise which such person
is or was serving at the request of the Company.

         (c)        "Disinterested Director" means a director of the Company who
is not and was not a party to the Proceeding in respect of which indemnification
is sought by Indemnitee.

         (d)        "Effective Date" means the date set forth in the first
paragraph of this Agreement.

         (e)        "Expenses" shall include all reasonable attorneys' fees,
retainers, court costs, transcript costs, fees of experts, witness fees, travel
expenses, duplicating costs, printing and binding costs, telephone charges,
postage, delivery service fees, and all other disbursements or expenses incurred
in connection with prosecuting, defending, preparing to prosecute or defend,
investigating, or being or preparing to be a witness in a Proceeding.

         (f)        "Independent Counsel" means a law firm, or a member of a law
firm, selected by the board of directors as provided in Section 8(b), that is
experienced in matters of corporation law and neither presently is, nor in the
past five years has been, retained to represent: (i) the Company, any of its
direct or indirect subsidiaries or any of their respective tenants, or
Indemnitee in any matter material to any such party, or (ii) any other party to
the Proceeding giving rise to a claim for indemnification hereunder.
Notwithstanding the foregoing, the term "Independent Counsel" shall not include
any person who, under the applicable standards of professional conduct then
prevailing, would have a conflict of interest in representing either the Company
or Indemnitee in an action to determine Indemnitee's rights under this
Agreement.

         (g)        "Proceeding" includes any action, suit, arbitration,
alternate dispute resolution mechanism, investigation, administrative hearing or
any other proceeding, whether civil, criminal, administrative or investigative
(including on appeal).

         Section 2. Services by Indemnitee. Indemnitee agrees to serve as a
                    ----------------------
director of the Company and may at any time and for any reason resign from such
position (subject to any other contractual obligation or any obligation imposed
by operation of law), in which event the Company shall have no obligation under
this Agreement to continue Indemnitee in such position.

         Section 3. Indemnification - General. The Company shall indemnify, and
                    -------------------------
advance Expenses to, Indemnitee (a) as provided in this Agreement and (b) to the
fullest extent permitted by Maryland law in effect on the date hereof and as
amended from time to time; provided, however, that no change in Maryland law
                           --------  -------
shall have the effect of reducing the benefits available to Indemnitee hereunder
based on Maryland law as in effect on the date hereof. The Company shall
indemnify Indemnitee's spouse (whether by statute or at common law and without
regard to

                                       2

<PAGE>

the location of the governing jurisdiction) and children to the same extent and
subject to the same limitations applicable to Indemnitee hereunder for claims
arising out of the status of such person as a spouse or child of Indemnitee,
including claims seeking damages from marital property (including community
property) or property held by such Indemnitee and such spouse or child or
property transferred to such spouse or child, but such indemnity shall not
otherwise extend to protect the spouse or child against liabilities caused by
the spouse's or child's own acts or inactions. The rights of Indemnitee provided
in this Section 3 shall include, but shall not be limited to, the rights set
forth in the other sections of this Agreement.

         Section 4. Proceedings Other Than Proceedings by or in the Right of the
                    ------------------------------------------------------------
Company. Indemnitee shall be entitled to the rights of indemnification provided
-------
in this Section 4 if, by reason of his Corporate Status, he is, was or is
threatened to be made a party to any threatened, pending, or completed
Proceeding, other than a Proceeding by or in the right of the Company. Pursuant
to this Section 4, Indemnitee shall be indemnified against all Expenses,
judgments, awards, penalties, fines and amounts paid in settlement actually and
reasonably incurred by him or on his behalf in connection with a Proceeding by
reason of his Corporate Status unless it is established that (i) the act or
omission of the Indemnitee was material to the matter giving rise to the
Proceeding and (a) was committed in bad faith or (b) was the result of active
and deliberate dishonesty, (ii) the Indemnitee actually received an improper
personal benefit in money, property or services, or (iii) in the case of any
criminal Proceeding, the Indemnitee had reasonable cause to believe or should
have believed that his conduct was unlawful.

         Section 5. Proceedings by or in the Right of the Company. Indemnitee
                    ---------------------------------------------
shall be entitled to the rights of indemnification provided in this Section 5
if, by reason of his Corporate Status, he is, was or is threatened to be made a
party to any threatened, pending or completed Proceeding brought by or in the
right of the Company to procure a judgment in its favor. Pursuant to this
Section 5, Indemnitee shall be indemnified against all amounts paid in
settlement and all Expenses actually and reasonably incurred by him or on his
behalf in connection with such Proceeding unless it is established that (i) the
act or omission of the Indemnitee was material to the matter giving rise to such
a Proceeding and (a) was committed in bad faith or (b) was the result of active
and deliberate dishonesty or (ii) the Indemnitee actually received an improper
personal benefit in money, property or services.

         Section 6. Indemnification for Expenses of a Party Who is Wholly or
                    --------------------------------------------------------
Partly Successful. Notwithstanding any other provision of this Agreement, to the
-----------------
extent that Indemnitee is, by reason of his Corporate Status, made a party to
and is successful, on the merits or otherwise, in the defense of any Proceeding,
he shall be indemnified against all Expenses actually and reasonably incurred by
him or on his behalf in connection therewith. If Indemnitee is not wholly
successful in such Proceeding but is successful, on the merits or otherwise, as
to one or more but less than all claims, issues or matters in such Proceeding,
the Company shall indemnify Indemnitee under this Section 6 against all Expenses
actually and reasonably incurred by him or on his behalf in connection with each
successfully resolved claim, issue or matter. For purposes of this Section and
without limitation, the termination of any claim, issue or matter in such a
Proceeding by dismissal, with or without prejudice, shall be deemed to be a
successful result as to such claim, issue or matter. Nothing in this Section 6
shall be construed to limit any indemnification or advancement of Expenses to
which Indemnitee is otherwise entitled pursuant to this Agreement or otherwise.

                                       3

<PAGE>

         Section 7.  Advancement of Expenses. The Company shall advance all
                     -----------------------
reasonable Expenses incurred by or on behalf of Indemnitee in connection with
any Proceeding to which Indemnitee is, or is threatened to be, made a party,
within ten days after the receipt by the Company of a statement or statements
from Indemnitee requesting such advance or advances from time to time, whether
prior to or after final disposition of such Proceeding. Such statement or
statements shall reasonably evidence the Expenses incurred by Indemnitee and, to
the extent required by Maryland law, shall include or be preceded or accompanied
by a written affirmation by the Indemnitee of the Indemnitee's good faith belief
that the standard of conduct necessary for indemnification by the Company as
authorized by law and by this Agreement has been met and a written undertaking
by or on behalf of Indemnitee to repay any Expenses advanced if it shall
ultimately be determined that such standard of conduct has not been met. The
undertaking required by this Section 7 shall be an unlimited general obligation
of Indemnitee and shall be accepted without reference to the Indemnitee's
financial ability to repay such advanced Expenses.

         Section 8.  Procedure for Determination of Entitlement to
                     ---------------------------------------------
Indemnification.
---------------

         (a)       To obtain indemnification under this Agreement, Indemnitee
shall submit to the Company a written request, including therein or therewith
such documentation and information as is reasonably available to Indemnitee and
is reasonably necessary to determine whether and to what extent Indemnitee is
entitled to indemnification. The Secretary of the Company shall, promptly upon
receipt of such a request for indemnification, advise the Board of Directors in
writing that Indemnitee has requested indemnification.

         (b)       Upon written request by Indemnitee for indemnification
pursuant to the first sentence of Section 8(a) hereof, a determination, if
required by applicable law, with respect to Indemnitee's entitlement thereto
shall be made promptly, in the specific case: (i) if a Change in Control shall
have occurred, by, at the option of Indemnitee, the Board of Directors by a
majority vote of a quorum of Disinterested Directors or by Independent Counsel
in a written opinion to the Board of Directors, a copy of which shall be
delivered to Indemnitee; or (ii) if a Change of Control shall not have occurred,
(A) by the Board of Directors by a majority vote of a quorum consisting of
Disinterested Directors, or (B) if a quorum of the Board of Directors consisting
of Disinterested Directors is not obtainable or, even if obtainable, such quorum
of Disinterested Directors so directs, by Independent Counsel in a written
opinion to the Board of Directors, a copy of which shall be delivered to
Indemnitee, or (C) if so directed by a majority of the members of the Board of
Directors, by the stockholders of the Company; and, if it is so determined that
Indemnitee is entitled to indemnification, payment to Indemnitee shall be made
within ten days after such determination. Indemnitee shall cooperate with the
person, persons or entity making such determination with respect to Indemnitee's
entitlement to indemnification, including providing to such person, persons or
entity upon reasonable advance request any documentation or information which is
not privileged or otherwise protected from disclosure and which is reasonably
available to Indemnitee and reasonably necessary to such determination. Any
costs or Expenses (including reasonable attorneys' fees and disbursements)
incurred by Indemnitee in so cooperating with the person, persons or entity
making such determination shall be borne by the Company (irrespective of the
determination as to Indemnitee's entitlement to indemnification) and the Company
hereby indemnifies and agrees to hold Indemnitee harmless therefrom.

                                       4

<PAGE>

         Section 9.  Presumptions and Effect of Certain Proceedings.
                     ----------------------------------------------

         (a)       In making a determination with respect to entitlement to
indemnification under this Agreement, the person or persons or entity making
such determination shall presume that Indemnitee is entitled to indemnification
under this Agreement if Indemnitee has submitted a request for indemnification
in accordance with Section 8(a) of this Agreement, and the Company shall have
the burden of proof to overcome that presumption in connection with the making
of any determination contrary to that presumption.

         (b)       The termination of any Proceeding by judgment, order,
settlement (whether with or without court approval), conviction, a plea of nolo
                                                                           ----
contendere or its equivalent, or an entry of an order of probation prior to
----------
judgment, does not create a presumption that the Indemnitee did not meet the
requisite standard of conduct or have any particular belief or that a court has
determined that indemnification is not permitted by applicable law or this
Agreement.

         Section 10. Remedies of Indemnitee.
                     ----------------------

         (a)       If (i) a determination is made pursuant to Section 8 of this
Agreement that Indemnitee is not entitled to indemnification under this
Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 7
of this Agreement, (iii) no determination of entitlement to indemnification
shall have been made pursuant to Section 8(b) of this Agreement within thirty
(30) days (except that if such determination was to be made by the stockholders
of the Company, then within ninety (90) days) after receipt by the Company of
the request for indemnification, (iv) payment of indemnification is not made
pursuant to Section 6 of this Agreement within ten days after receipt by the
Company of a written request therefor, or (v) payment of indemnification is not
made within ten days after a determination has been made that Indemnitee is
entitled to indemnification, Indemnitee shall be entitled to an adjudication in
an appropriate court of the State of Maryland, or in any other court of
competent jurisdiction, of his entitlement to such indemnification or
advancement of Expenses. Alternatively, Indemnitee, at his option, may seek an
award in arbitration to be conducted by a single arbitrator pursuant to the
commercial Arbitration Rules of the American Arbitration Association. Indemnitee
shall commence such proceeding seeking an adjudication or an award in
arbitration within 180 days following the date on which Indemnitee first has the
right to commence such proceeding pursuant to this Section 10(a); provided,
however, that the foregoing clause shall not apply in respect of a proceeding
brought by Indemnitee to enforce his rights under Section 6 of this Agreement.

         (b)       In any judicial proceeding or arbitration commenced pursuant
to this Section 10 the Company shall have the burden of proving that Indemnitee
is not entitled to indemnification or advancement of Expenses, as the case may
be.

         (c)       If a determination shall have been made pursuant to Section
8(b) of this Agreement that Indemnitee is entitled to indemnification, the
Company shall be bound by such determination in any judicial proceeding or
arbitration commenced pursuant to this Section 10, absent a misstatement by
Indemnitee of a material fact, or an omission of a material fact necessary to
make Indemnitee's statement not materially misleading, in connection with the
request for indemnification.

                                       5

<PAGE>

         (d)       In the event that Indemnitee, pursuant to this Section 10,
seeks a judicial adjudication of or an award in arbitration to enforce his
rights under, or to recover damages for breach of, this Agreement, Indemnitee
shall be entitled to recover from the Company, and shall be indemnified by the
Company against, any and all Expenses actually and reasonably incurred by him in
such judicial adjudication or arbitration, regardless of whether Indemnitee is
successful in whole or in part therein.

         Section 11. Defense of the Underlying Proceeding.
                     ------------------------------------

         (a)       Notice by Indemnitee. Indemnitee agrees to notify the Company
                   --------------------
promptly upon being served with or receiving any summons, citation, subpoena,
complaint, indictment, information, notice, request or other document relating
to any Proceeding which may result in the right to indemnification or the
advancement of Expenses hereunder; provided, however, that the failure to give
                                   --------  -------
any such notice shall not disqualify Indemnitee from the right, or otherwise
affect in any manner any right of Indemnitee, to indemnification or the
advancements of Expenses under this Agreement unless the Company's ability to
defend in such Proceeding or to obtain proceeds under any insurance policy is
materially and adversely prejudiced thereby, and then only to the extent the
Company is thereby actually prejudiced.

         (b)       Defense by Company. Subject to the provisions of the last
                   ------------------
sentence of this Section 11(b) and of Section 11(c) below, the Company shall
have the right to defend Indemnitee in any Proceeding which may give rise to
indemnification hereunder; provided, however, that the Company shall notify
                           --------  -------
Indemnitee of any such decision to defend within fifteen (15) calendar days
following receipt of notice of any such Proceeding under Section 11(a) above.
The Company shall not, without the prior written consent of Indemnitee, which
shall not be unreasonably withheld or delayed, consent to the entry of any
judgment against Indemnitee or enter into any settlement or compromise which (i)
includes an admission of fault of Indemnitee or (ii) does not include, as an
unconditional term thereof, the full release of Indemnitee from all liability in
respect of such Proceeding, which release shall be in form and substance
reasonably satisfactory to Indemnitee. This Section 11(b) shall not apply to a
Proceeding brought by Indemnitee under Section 10 above or Section 15 below.

         (c)       Indemnitee's Right to Counsel. Notwithstanding the provisions
                   -----------------------------
of Section 11(b) above, if in a Proceeding to which Indemnitee is a party by
reason of Indemnitee's Corporate Status, (i) Indemnitee reasonably concludes,
based upon an opinion of counsel, that he may have separate defenses or
counterclaims to assert with respect to any issue which may not be consistent
with other defendants in such Proceeding, (ii) Indemnitee reasonably concludes,
based upon an opinion of counsel, that an actual or apparent conflict of
interest or potential conflict of interest exists between Indemnitee and the
Company, or (iii) if the Company fails to assume the defense of such Proceeding
in a timely manner, Indemnitee shall be entitled to be represented by separate
legal counsel of Indemnitee's choice at the expense of the Company. In addition,
if the Company fails to comply with any of its obligations under this Agreement
or in the event that the Company or any other person takes any action to declare
this Agreement void or unenforceable, or institutes any Proceeding to deny or to
recover from Indemnitee the benefits intended to be provided to Indemnitee
hereunder, Indemnitee shall have the right to retain counsel of Indemnitee's
choice, at the expense of the Company, to represent Indemnitee in connection
with any such matter.

                                       6

<PAGE>

         Section 12. Non-Exclusivity; Survival of Rights; Insurance;
                     -----------------------------------------------
Subrogation.
-----------

         (a)       The rights of indemnification and advancement of Expenses as
provided by this Agreement shall be in addition to, and not deemed exclusive of,
any other rights to which Indemnitee may at any time be entitled under
applicable law, the charter or Bylaws of the Company, any agreement, a vote of
stockholders or a resolution of directors (or a committee of directors), or
otherwise. No amendment, alteration or repeal of this Agreement or of any
provision hereof shall limit or restrict any right of Indemnitee under this
Agreement in respect of any action taken or omitted by such Indemnitee in his
Corporate Status prior to such amendment, alteration or repeal.

         (b)       To the extent that the Company maintains an insurance policy
or policies providing liability insurance for directors, officers, employees, or
agents of the Company or of any other corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise which such person serves at the
request of the Company, Indemnitee shall be covered by such policy or policies
in accordance with its or their terms to the maximum extent of the coverage
available for any such director, officer, employee or agent under such policy or
policies. The purchase and maintenance of such insurance shall not in any way
limit or affect the rights and obligations of the parties hereto, and the
execution and delivery of this Agreement shall not in any way be construed to
limit or affect the rights and obligations of the Company or the other parties
under any such insurance policy.

         (c)       In the event of any payment under this Agreement, the Company
shall be subrogated to the extent of such payment to all of the rights of
contribution or recovery of Indemnitee, who shall take, at the request of the
Company, all reasonable actions necessary to secure such rights, including the
execution of such documents as are necessary to enable the Company to bring suit
to enforce such rights.

         (d)       The Company shall not be liable under this Agreement to make
any payment of amounts otherwise indemnifiable hereunder if and to the extent
that Indemnitee has otherwise actually received such payment under any insurance
policy, contract, agreement or otherwise.

         Section 13. Successors. This Agreement shall be (a) binding upon all
                     ----------
successors and assigns of the Company (including any transferee of all or a
substantial portion of the business, stock and/or assets of the Company and any
direct or indirect successor by merger or consolidation or otherwise by
operation of law) and (b) binding on and shall inure to the benefit of the
heirs, personal representatives, executors and administrators of Indemnitee.
This Agreement shall continue for the benefit of Indemnitee and such heirs,
personal representatives, executors and administrators after Indemnitee has
ceased to have Corporate Status.

                                       7

<PAGE>

      Section 14.   Severability. If any provision or provisions of this
                    ------------
Agreement shall be held to be invalid, illegal or unenforceable for any reason
whatsoever: (a) the validity, legality and enforceability of the remaining
provisions of this Agreement (including, without limitation, each portion of any
section of this Agreement containing any such provision held to be invalid,
illegal or unenforceable that is not itself invalid, illegal or unenforceable)
shall not in any way be affected or impaired thereby; and (b) to the fullest
extent possible, the provisions of this Agreement (including, without
limitation, each portion of any section of this Agreement containing any such
provision held to be invalid, illegal or unenforceable, that is not itself
invalid, illegal or unenforceable) shall be construed so as to give effect to
the intent manifested thereby.

      Section 15.   Exception to Right of Indemnification or Advancement of
                    --------------------------------------------------------
                    Expenses.
                    --------
 Notwithstanding any provision herein to the contrary:

      (a)           Except as provided in Section 10 of this Agreement,
Indemnitee shall not be entitled to indemnification or advancement of Expenses
under this Agreement with respect to any Proceeding brought by Indemnitee
against the Company, any entity controlled by the Company, any then current or
former director, officer or employee thereof, or any third party, unless the
Board of Directors has consented in writing to the initiation of such
Proceeding.

      (b)            Indemnitee shall not be entitled to indemnification or
advancement of Expenses under this Agreement if it has been finally adjudicated
by a court of competent jurisdiction that Indemnitee is liable to the Company
for an accounting of profits made from the purchase or sale by Indemnitee of
securities of the Company pursuant to the provisions of Section 16(b) of the
Securities Exchange Act of 1934, the rules and regulations promulgated
thereunder and amendments thereto or similar provisions of any federal, state or
local statutory law, or if Indemnitee agrees by way of settlement or otherwise
to pay any or all of such profits to the Company.

      Section 16.   Identical Counterparts. This Agreement may be executed in
                    ----------------------
one or more counterparts, each of which shall for all purposes be deemed to be
an original but all of which together shall constitute one and the same
Agreement. Only one such counterpart signed by the party against whom
enforceability is sought needs to be produced to evidence the existence of this
Agreement.

      Section 17.   Headings.  The headings of the paragraphs of this Agreement
                    --------
are inserted for convenience only and shall not be deemed to constitute part of
this Agreement or to affect the construction thereof.

      Section 18.   Modification and Waiver. No supplement, modification or
                    -----------------------
amendment of this Agreement shall be binding unless executed in writing by both
of the parties hereto. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provisions hereof
(whether or not similar) nor shall such waiver constitute a continuing waiver.

                                       8

<PAGE>

      Section 19.   Notice by Indemnitee. Indemnitee agrees promptly to notify
                    --------------------
the Company in writing upon being served with any summons, citation, subpoena,
complaint, indictment, information or other document relating to any Proceeding
or matter which may be subject to indemnification or advancement of Expenses
covered hereunder.

      Section 20.   Notices. All notices, requests, demands and other
                    -------
communications hereunder shall be in writing and shall be deemed to have been
duly given if (i) delivered by hand and receipted for by the party to whom said
notice or other communication shall have been directed, or (ii) mailed by
certified or registered mail with postage prepaid, on the third business day
after the date on which it is so mailed:

      (a)           If to Indemnitee, to:  The address set forth on the
                    signature page hereto.

      (b)           If to the Company to:

                           National Golf Properties, Inc.
                           2951 28th Street, Suite 3001
                           Santa Monica, California 90405
                           Attention:  President

or to such other address as may have been furnished to Indemnitee by the Company
or to the Company by Indemnitee, as the case may be.

      Section 21.   Governing Law. The parties agree that this Agreement shall
                    -------------
be governed by, and construed and enforced in accordance with, the laws of the
State of Maryland, which laws are applicable to contracts made and to be
performed in such state without giving effect to the principles of conflicts of
laws.

      Section 22.   Miscellaneous.  Use of the masculine pronoun shall be deemed
                    -------------
to include usage of the feminine pronoun where appropriate.

      Section 23.   Prior Agreements.  This Agreement replaces and supersedes
                    ----------------
any Prior Agreements to which the Indemnitee is a party,and such Prior
Agreements are hereby void and of no further force or effect.

                                       9

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.

ATTEST:                             NATIONAL GOLF PROPERTIES, INC.

/s/ Sylvia Adams                     By: /s/ James M. Stanich
-----------------                        --------------------
                                         James M. Stanich
                                         President

WITNESS:                            INDEMNITEE

/s/ Victoria Sullins                /s/ Bruce Karatz
--------------------                -------------------------------
                                        BRUCE KARATZ

                                    Address:   10990 Wilshire Boulevard
                                               Los Angeles, California 90024

                                       10

<PAGE>

                            INDEMNIFICATION AGREEMENT
                            -------------------------

         THIS INDEMNIFICATION AGREEMENT is made and entered into this 14/th/ day
of December, 2001 (this "Agreement"), by and between National Golf Properties,
Inc., a Maryland corporation (the "Company"), and John C. Cushman, III
("Indemnitee").

         WHEREAS, at the request of the Company, Indemnitee currently serves as
a director of the Company and may, therefore, be subjected to claims, suits or
proceedings arising as a result of his service; and

         WHEREAS, as an inducement to Indemnitee to continue to serve as such
director, the Company has agreed to indemnify and to advance expenses and costs
incurred by Indemnitee in connection with any such claims, suits or proceedings,
to the fullest extent permitted by law; and

         WHEREAS, each of the directors of the Company, including the
Indemnitee, has one or more previous agreements entitled "Indemnification
Agreement" with the Company or its predecessor (the "Prior Agreements"); and

         WHEREAS, the Company desires to replace and supersede the Prior
Agreements with a new form of indemnification agreement for all of the directors
of the Company; and

         WHEREAS, Indemnitee is relying upon the rights afforded under this
Agreement in continuing as a director of the Company.

         NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, the Company and Indemnitee do hereby covenant and agree as
follows:

         Section 1.  Definitions.  For purposes of this Agreement:
                     -----------

         (a)         "Change in Control" means a change in control of the
Company occurring after the Effective Date of a nature that would be required to
be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or in
response to any similar item on any similar schedule or form) promulgated under
the Securities Exchange Act of 1934 (the "Act"), whether or not the Company is
then subject to such reporting requirement; provided, however, that, without
limitation, such a Change in Control shall be deemed to have occurred if after
the Effective Date (i) any "person" (as such term is used in Sections 13(d) and
14(d) of the Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Act), directly or indirectly, of securities of the Company
representing 30% or more of the combined voting power of the Company's then
outstanding securities without the prior approval of at least two-thirds of the
members of the Board of Directors in office immediately prior to such person
attaining such percentage interest; (ii) there occurs a proxy contest, or the
Company is a party to a merger, consolidation, sale of assets, plan of
liquidation or other reorganization not approved by at least two-thirds of the
members of the Board of Directors then in office, as a consequence of which
members of the Board of Directors in office immediately prior to such
transaction or event constitute less than a majority of the Board of Directors
thereafter; or (iii) during any period of two consecutive years, other than as a
result of an event described in clause (a)(ii) of this Section 1, individuals
who at

<PAGE>

the beginning of such period constituted the Board of Directors (including
for this purpose any new director whose election or nomination for election by
the Company's stockholders was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning of such
period) cease for any reason to constitute at least a majority of the Board of
Directors.

         (b)         "Corporate Status" means the status of a person who is or
was a director, trustee, officer, partner, member, employee or agent of the
Company or of any other corporation, partnership, joint venture, trust, limited
liability company, employee benefit plan or other enterprise which such person
is or was serving at the request of the Company.

         (c)         "Disinterested Director" means a director of the Company
who is not and was not a party to the Proceeding in respect of which
indemnification is sought by Indemnitee.

         (d)         "Effective Date" means the date set forth in the first
paragraph of this Agreement.

         (e)         "Expenses" shall include all reasonable attorneys' fees,
retainers, court costs, transcript costs, fees of experts, witness fees, travel
expenses, duplicating costs, printing and binding costs, telephone charges,
postage, delivery service fees, and all other disbursements or expenses incurred
in connection with prosecuting, defending, preparing to prosecute or defend,
investigating, or being or preparing to be a witness in a Proceeding.

         (f)         "Independent Counsel" means a law firm, or a member of a
law firm, selected by the board of directors as provided in Section 8(b), that
is experienced in matters of corporation law and neither presently is, nor in
the past five years has been, retained to represent: (i) the Company, any of its
direct or indirect subsidiaries or any of their respective tenants, or
Indemnitee in any matter material to any such party, or (ii) any other party to
the Proceeding giving rise to a claim for indemnification hereunder.
Notwithstanding the foregoing, the term "Independent Counsel" shall not include
any person who, under the applicable standards of professional conduct then
prevailing, would have a conflict of interest in representing either the Company
or Indemnitee in an action to determine Indemnitee's rights under this
Agreement.

         (g)         "Proceeding" includes any action, suit, arbitration,
alternate dispute resolution mechanism, investigation, administrative hearing or
any other proceeding, whether civil, criminal, administrative or investigative
(including on appeal).

         Section 2.    Services by Indemnitee. Indemnitee agrees to serve as a
                       ----------------------
director of the Company and may at any time and for any reason resign from such
position (subject to any other contractual obligation or any obligation imposed
by operation of law), in which event the Company shall have no obligation under
this Agreement to continue Indemnitee in such position.

         Section 3.    Indemnification - General. The Company shall indemnify,
                       -------------------------
and advance Expenses to, Indemnitee (a) as provided in this Agreement and (b) to
the fullest extent permitted by Maryland law in effect on the date hereof and as
amended from time to time; provided, however, that no change in Maryland law
                           --------  -------
shall have the effect of reducing the benefits available to Indemnitee hereunder
based on Maryland law as in effect on the date hereof. The Company shall
indemnify Indemnitee's spouse (whether by statute or at common law and without
regard to

                                       2

<PAGE>

the location of the governing jurisdiction) and children to the same extent and
subject to the same limitations applicable to Indemnitee hereunder for claims
arising out of the status of such person as a spouse or child of Indemnitee,
including claims seeking damages from marital property (including community
property) or property held by such Indemnitee and such spouse or child or
property transferred to such spouse or child, but such indemnity shall not
otherwise extend to protect the spouse or child against liabilities caused by
the spouse's or child's own acts or inactions. The rights of Indemnitee provided
in this Section 3 shall include, but shall not be limited to, the rights set
forth in the other sections of this Agreement.

         Section 4.  Proceedings Other Than Proceedings by or in the Right of
                     --------------------------------------------------------
the Company. Indemnitee shall be entitled to the rights of indemnification
-----------
provided in this Section 4 if, by reason of his Corporate Status, he is, was or
is threatened to be made a party to any threatened, pending, or completed
Proceeding, other than a Proceeding by or in the right of the Company. Pursuant
to this Section 4, Indemnitee shall be indemnified against all Expenses,
judgments, awards, penalties, fines and amounts paid in settlement actually and
reasonably incurred by him or on his behalf in connection with a Proceeding by
reason of his Corporate Status unless it is established that (i) the act or
omission of the Indemnitee was material to the matter giving rise to the
Proceeding and (a) was committed in bad faith or (b) was the result of active
and deliberate dishonesty, (ii) the Indemnitee actually received an improper
personal benefit in money, property or services, or (iii) in the case of any
criminal Proceeding, the Indemnitee had reasonable cause to believe or should
have believed that his conduct was unlawful.

         Section 5.  Proceedings by or in the Right of the Company. Indemnitee
                     ---------------------------------------------
shall be entitled to the rights of indemnification provided in this Section 5
if, by reason of his Corporate Status, he is, was or is threatened to be made a
party to any threatened, pending or completed Proceeding brought by or in the
right of the Company to procure a judgment in its favor. Pursuant to this
Section 5, Indemnitee shall be indemnified against all amounts paid in
settlement and all Expenses actually and reasonably incurred by him or on his
behalf in connection with such Proceeding unless it is established that (i) the
act or omission of the Indemnitee was material to the matter giving rise to such
a Proceeding and (a) was committed in bad faith or (b) was the result of active
and deliberate dishonesty or (ii) the Indemnitee actually received an improper
personal benefit in money, property or services.

         Section 6.  Indemnification for Expenses of a Party Who is Wholly or
                     --------------------------------------------------------
Partly Successful. Notwithstanding any other provision of this Agreement, to the
-----------------
extent that Indemnitee is, by reason of his Corporate Status, made a party to
and is successful, on the merits or otherwise, in the defense of any Proceeding,
he shall be indemnified against all Expenses actually and reasonably incurred by
him or on his behalf in connection therewith. If Indemnitee is not wholly
successful in such Proceeding but is successful, on the merits or otherwise, as
to one or more but less than all claims, issues or matters in such Proceeding,
the Company shall indemnify Indemnitee under this Section 6 against all Expenses
actually and reasonably incurred by him or on his behalf in connection with each
successfully resolved claim, issue or matter. For purposes of this Section and
without limitation, the termination of any claim, issue or matter in such a
Proceeding by dismissal, with or without prejudice, shall be deemed to be a
successful result as to such claim, issue or matter. Nothing in this Section 6
shall be construed to limit any indemnification or advancement of Expenses to
which Indemnitee is otherwise entitled pursuant to this Agreement or otherwise.

                                       3

<PAGE>

         Section 7.  Advancement of Expenses. The Company shall advance all
                     -----------------------
reasonable Expenses incurred by or on behalf of Indemnitee in connection with
any Proceeding to which Indemnitee is, or is threatened to be, made a party,
within ten days after the receipt by the Company of a statement or statements
from Indemnitee requesting such advance or advances from time to time, whether
prior to or after final disposition of such Proceeding. Such statement or
statements shall reasonably evidence the Expenses incurred by Indemnitee and, to
the extent required by Maryland law, shall include or be preceded or accompanied
by a written affirmation by the Indemnitee of the Indemnitee's good faith belief
that the standard of conduct necessary for indemnification by the Company as
authorized by law and by this Agreement has been met and a written undertaking
by or on behalf of Indemnitee to repay any Expenses advanced if it shall
ultimately be determined that such standard of conduct has not been met. The
undertaking required by this Section 7 shall be an unlimited general obligation
of Indemnitee and shall be accepted without reference to the Indemnitee's
financial ability to repay such advanced Expenses.

         Section 8.  Procedure for Determination of Entitlement to
                     ---------------------------------------------
Indemnification.
---------------

         (a)       To obtain indemnification under this Agreement, Indemnitee
shall submit to the Company a written request, including therein or therewith
such documentation and information as is reasonably available to Indemnitee and
is reasonably necessary to determine whether and to what extent Indemnitee is
entitled to indemnification. The Secretary of the Company shall, promptly upon
receipt of such a request for indemnification, advise the Board of Directors in
writing that Indemnitee has requested indemnification.

         (b)       Upon written request by Indemnitee for indemnification
pursuant to the first sentence of Section 8(a) hereof, a determination, if
required by applicable law, with respect to Indemnitee's entitlement thereto
shall be made promptly, in the specific case: (i) if a Change in Control shall
have occurred, by, at the option of Indemnitee, the Board of Directors by a
majority vote of a quorum of Disinterested Directors or by Independent Counsel
in a written opinion to the Board of Directors, a copy of which shall be
delivered to Indemnitee; or (ii) if a Change of Control shall not have occurred,
(A) by the Board of Directors by a majority vote of a quorum consisting of
Disinterested Directors, or (B) if a quorum of the Board of Directors consisting
of Disinterested Directors is not obtainable or, even if obtainable, such quorum
of Disinterested Directors so directs, by Independent Counsel in a written
opinion to the Board of Directors, a copy of which shall be delivered to
Indemnitee, or (C) if so directed by a majority of the members of the Board of
Directors, by the stockholders of the Company; and, if it is so determined that
Indemnitee is entitled to indemnification, payment to Indemnitee shall be made
within ten days after such determination. Indemnitee shall cooperate with the
person, persons or entity making such determination with respect to Indemnitee's
entitlement to indemnification, including providing to such person, persons or
entity upon reasonable advance request any documentation or information which is
not privileged or otherwise protected from disclosure and which is reasonably
available to Indemnitee and reasonably necessary to such determination. Any
costs or Expenses (including reasonable attorneys' fees and disbursements)
incurred by Indemnitee in so cooperating with the person, persons or entity
making such determination shall be borne by the Company (irrespective of the
determination as to Indemnitee's entitlement to indemnification) and the Company
hereby indemnifies and agrees to hold Indemnitee harmless therefrom.

                                       4

<PAGE>

         Section 9.  Presumptions and Effect of Certain Proceedings.
                     ----------------------------------------------

         (a)       In making a determination with respect to entitlement to
indemnification under this Agreement, the person or persons or entity making
such determination shall presume that Indemnitee is entitled to indemnification
under this Agreement if Indemnitee has submitted a request for indemnification
in accordance with Section 8(a) of this Agreement, and the Company shall have
the burden of proof to overcome that presumption in connection with the making
of any determination contrary to that presumption.

         (b)       The termination of any Proceeding by judgment, order,
settlement (whether with or without court approval), conviction, a plea of nolo
                                                                           ----
contendere or its equivalent, or an entry of an order of probation prior to
----------
judgment, does not create a presumption that the Indemnitee did not meet the
requisite standard of conduct or have any particular belief or that a court has
determined that indemnification is not permitted by applicable law or this
Agreement.

         Section 10. Remedies of Indemnitee.
                     ----------------------

         (a)       If (i) a determination is made pursuant to Section 8 of this
Agreement that Indemnitee is not entitled to indemnification under this
Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 7
of this Agreement, (iii) no determination of entitlement to indemnification
shall have been made pursuant to Section 8(b) of this Agreement within thirty
(30) days (except that if such determination was to be made by the stockholders
of the Company, then within ninety (90) days) after receipt by the Company of
the request for indemnification, (iv) payment of indemnification is not made
pursuant to Section 6 of this Agreement within ten days after receipt by the
Company of a written request therefor, or (v) payment of indemnification is not
made within ten days after a determination has been made that Indemnitee is
entitled to indemnification, Indemnitee shall be entitled to an adjudication in
an appropriate court of the State of Maryland, or in any other court of
competent jurisdiction, of his entitlement to such indemnification or
advancement of Expenses. Alternatively, Indemnitee, at his option, may seek an
award in arbitration to be conducted by a single arbitrator pursuant to the
commercial Arbitration Rules of the American Arbitration Association. Indemnitee
shall commence such proceeding seeking an adjudication or an award in
arbitration within 180 days following the date on which Indemnitee first has the
right to commence such proceeding pursuant to this Section 10(a); provided,
                                                                  --------
however, that the foregoing clause shall not apply in respect of a proceeding
-------
brought by Indemnitee to enforce his rights under Section 6 of this Agreement.

         (b)       In any judicial proceeding or arbitration commenced pursuant
to this Section 10 the Company shall have the burden of proving that Indemnitee
is not entitled to indemnification or advancement of Expenses, as the case may
be.

         (c)       If a determination shall have been made pursuant to Section
8(b) of this Agreement that Indemnitee is entitled to indemnification, the
Company shall be bound by such determination in any judicial proceeding or
arbitration commenced pursuant to this Section 10, absent a misstatement by
Indemnitee of a material fact, or an omission of a material fact necessary to
make Indemnitee's statement not materially misleading, in connection with the
request for indemnification.

                                       5

<PAGE>

         (d)       In the event that Indemnitee, pursuant to this Section 10,
seeks a judicial adjudication of or an award in arbitration to enforce his
rights under, or to recover damages for breach of, this Agreement, Indemnitee
shall be entitled to recover from the Company, and shall be indemnified by the
Company against, any and all Expenses actually and reasonably incurred by him in
such judicial adjudication or arbitration, regardless of whether Indemnitee is
successful in whole or in part therein.

         Section 11. Defense of the Underlying Proceeding.
                     ------------------------------------

         (a)       Notice by Indemnitee. Indemnitee agrees to notify the Company
                   --------------------
promptly upon being served with or receiving any summons, citation, subpoena,
complaint, indictment, information, notice, request or other document relating
to any Proceeding which may result in the right to indemnification or the
advancement of Expenses hereunder; provided, however, that the failure to give
                                   --------  -------
any such notice shall not disqualify Indemnitee from the right, or otherwise
affect in any manner any right of Indemnitee, to indemnification or the
advancements of Expenses under this Agreement unless the Company's ability to
defend in such Proceeding or to obtain proceeds under any insurance policy is
materially and adversely prejudiced thereby, and then only to the extent the
Company is thereby actually prejudiced.

         (b)       Defense by Company. Subject to the provisions of the last
                   ------------------
sentence of this Section 11(b) and of Section 11(c) below, the Company shall
have the right to defend Indemnitee in any Proceeding which may give rise to
indemnification hereunder; provided, however, that the Company shall notify
                           --------  -------
Indemnitee of any such decision to defend within fifteen (15) calendar days
following receipt of notice of any such Proceeding under Section 11(a) above.
The Company shall not, without the prior written consent of Indemnitee, which
shall not be unreasonably withheld or delayed, consent to the entry of any
judgment against Indemnitee or enter into any settlement or compromise which (i)
includes an admission of fault of Indemnitee or (ii) does not include, as an
unconditional term thereof, the full release of Indemnitee from all liability in
respect of such Proceeding, which release shall be in form and substance
reasonably satisfactory to Indemnitee. This Section 11(b) shall not apply to a
Proceeding brought by Indemnitee under Section 10 above or Section 15 below.

         (c)       Indemnitee's Right to Counsel. Notwithstanding the provisions
                   -----------------------------
of Section 11(b) above, if in a Proceeding to which Indemnitee is a party by
reason of Indemnitee's Corporate Status, (i) Indemnitee reasonably concludes,
based upon an opinion of counsel, that he may have separate defenses or
counterclaims to assert with respect to any issue which may not be consistent
with other defendants in such Proceeding, (ii) Indemnitee reasonably concludes,
based upon an opinion of counsel, that an actual or apparent conflict of
interest or potential conflict of interest exists between Indemnitee and the
Company, or (iii) if the Company fails to assume the defense of such Proceeding
in a timely manner, Indemnitee shall be entitled to be represented by separate
legal counsel of Indemnitee's choice at the expense of the Company. In addition,
if the Company fails to comply with any of its obligations under this Agreement
or in the event that the Company or any other person takes any action to declare
this Agreement void or unenforceable, or institutes any Proceeding to deny or to
recover from Indemnitee the benefits intended to be provided to Indemnitee
hereunder, Indemnitee shall have the right to retain counsel of Indemnitee's
choice, at the expense of the Company, to represent Indemnitee in connection
with any such matter.

                                       6

<PAGE>

         Section 12. Non-Exclusivity; Survival of Rights; Insurance;
                     -----------------------------------------------
Subrogation.
-----------

         (a)       The rights of indemnification and advancement of Expenses as
provided by this Agreement shall be in addition to, and not deemed exclusive of,
any other rights to which Indemnitee may at any time be entitled under
applicable law, the charter or Bylaws of the Company, any agreement, a vote of
stockholders or a resolution of directors (or a committee of directors), or
otherwise. No amendment, alteration or repeal of this Agreement or of any
provision hereof shall limit or restrict any right of Indemnitee under this
Agreement in respect of any action taken or omitted by such Indemnitee in his
Corporate Status prior to such amendment, alteration or repeal.

         (b)       To the extent that the Company maintains an insurance policy
or policies providing liability insurance for directors, officers, employees, or
agents of the Company or of any other corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise which such person serves at the
request of the Company, Indemnitee shall be covered by such policy or policies
in accordance with its or their terms to the maximum extent of the coverage
available for any such director, officer, employee or agent under such policy or
policies. The purchase and maintenance of such insurance shall not in any way
limit or affect the rights and obligations of the parties hereto, and the
execution and delivery of this Agreement shall not in any way be construed to
limit or affect the rights and obligations of the Company or the other parties
under any such insurance policy.

         (c)       In the event of any payment under this Agreement, the Company
shall be subrogated to the extent of such payment to all of the rights of
contribution or recovery of Indemnitee, who shall take, at the request of the
Company, all reasonable actions necessary to secure such rights, including the
execution of such documents as are necessary to enable the Company to bring suit
to enforce such rights.

         (d)       The Company shall not be liable under this Agreement to make
any payment of amounts otherwise indemnifiable hereunder if and to the extent
that Indemnitee has otherwise actually received such payment under any insurance
policy, contract, agreement or otherwise.

         Section 13. Successors. This Agreement shall be (a) binding upon all
                     ----------
successors and assigns of the Company (including any transferee of all or a
substantial portion of the business, stock and/or assets of the Company and any
direct or indirect successor by merger or consolidation or otherwise by
operation of law) and (b) binding on and shall inure to the benefit of the
heirs, personal representatives, executors and administrators of Indemnitee.
This Agreement shall continue for the benefit of Indemnitee and such heirs,
personal representatives, executors and administrators after Indemnitee has
ceased to have Corporate Status.

                                       7

<PAGE>

         Section 14.  Severability. If any provision or provisions of this
                      ------------
Agreement shall be held to be invalid, illegal or unenforceable for any reason
whatsoever: (a) the validity, legality and enforceability of the remaining
provisions of this Agreement (including, without limitation, each portion of any
section of this Agreement containing any such provision held to be invalid,
illegal or unenforceable that is not itself invalid, illegal or unenforceable)
shall not in any way be affected or impaired thereby; and (b) to the fullest
extent possible, the provisions of this Agreement (including, without
limitation, each portion of any section of this Agreement containing any such
provision held to be invalid, illegal or unenforceable, that is not itself
invalid, illegal or unenforceable) shall be construed so as to give effect to
the intent manifested thereby.

         Section 15.  Exception to Right of Indemnification or Advancement of
                      -------------------------------------------------------
Expenses. Notwithstanding any provision herein to the contrary:
--------

         (a)        Except as provided in Section 10 of this Agreement,
Indemnitee shall not be entitled to indemnification or advancement of Expenses
under this Agreement with respect to any Proceeding brought by Indemnitee
against the Company, any entity controlled by the Company, any then current or
former director, officer or employee thereof, or any third party, unless the
Board of Directors has consented in writing to the initiation of such
Proceeding.

         (b)        Indemnitee shall not be entitled to indemnification or
advancement of Expenses under this Agreement if it has been finally adjudicated
by a court of competent jurisdiction that Indemnitee is liable to the Company
for an accounting of profits made from the purchase or sale by Indemnitee of
securities of the Company pursuant to the provisions of Section 16(b) of the
Securities Exchange Act of 1934, the rules and regulations promulgated
thereunder and amendments thereto or similar provisions of any federal, state or
local statutory law, or if Indemnitee agrees by way of settlement or otherwise
to pay any or all of such profits to the Company.

         Section 16.  Identical Counterparts. This Agreement may be executed in
                      ----------------------
one or more counterparts, each of which shall for all purposes be deemed to be
an original but all of which together shall constitute one and the same
Agreement. Only one such counterpart signed by the party against whom
enforceability is sought needs to be produced to evidence the existence of this
Agreement.

         Section 17.  Headings. The headings of the paragraphs of this Agreement
                      --------
are inserted for convenience only and shall not be deemed to constitute part of
this Agreement or to affect the construction thereof.

         Section 18.  Modification and Waiver. No supplement, modification or
                      -----------------------
amendment of this Agreement shall be binding unless executed in writing by both
of the parties hereto. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provisions hereof
(whether or not similar) nor shall such waiver constitute a continuing waiver.

                                       8

<PAGE>

         Section 19.  Notice by Indemnitee. Indemnitee agrees promptly to notify
                      --------------------
the Company in writing upon being served with any summons, citation, subpoena,
complaint, indictment, information or other document relating to any Proceeding
or matter which may be subject to indemnification or advancement of Expenses
covered hereunder.

         Section 20.  Notices. All notices, requests, demands and other
                      -------
communications hereunder shall be in writing and shall be deemed to have been
duly given if (i) delivered by hand and receipted for by the party to whom said
notice or other communication shall have been directed, or (ii) mailed by
certified or registered mail with postage prepaid, on the third business day
after the date on which it is so mailed:

         (a) If to Indemnitee, to: The address set forth on the signature page
hereto.

         (b) If to the Company to:

                   National Golf Properties, Inc.
                   2951 28th Street, Suite 3001
                   Santa Monica, California 90405
                   Attention:  President

or to such other address as may have been furnished to Indemnitee by the Company
or to the Company by Indemnitee, as the case may be.

         Section 21.  Governing Law. The parties agree that this Agreement shall
                      -------------
be governed by, and construed and enforced in accordance with, the laws of the
State of Maryland, which laws are applicable to contracts made and to be
performed in such state without giving effect to the principles of conflicts of
laws.

         Section 22.  Miscellaneous. Use of the masculine pronoun shall be
                      -------------
deemed to include usage of the feminine pronoun where appropriate.

         Section 23.  Prior Agreements. This Agreement replaces and supersedes
                      ----------------
any Prior Agreements to which the Indemnitee is a party, and such Prior
Agreements are hereby void and of no further force or effect.

                                       9

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.

ATTEST:                         NATIONAL GOLF PROPERTIES, INC.

/s/ SYLVIA ADAMS                /s/ JAMES M. STANICH

Sylvia Adams                    James M. Stanich
--------------------            --------------------------
                                James M. Stanich
                                President

WITNESS:                        INDEMNITEE

                                /s/ John C. Cushman
____________________            ------------------------------------
                                JOHN C. CUSHMAN, III

                                Address: 601 South Figueroa Street, 47/th/ Floor
                                         Los Angeles, California 90017

                                       10<PAGE>

                                                                   Exhibit 10.14

                              Employment Agreement

                                 by and Between

                            Cypress Bioscience, Inc.

                                       and

                                Michael Gendreau

<PAGE>

                                Table of Contents
<TABLE>
<CAPTION>
                                                                                                          Page

<S>                                                                                                       <C>
1.   Employment. .......................................................................................     1
2.   Loyal And Conscientious Performance; Noncompetition. ..............................................     2
3.   Compensation Of THE Executive. ....................................................................     3
4.   Termination. ......................................................................................     3
5.   Confidential And Proprietary Information; Nonsolicitation. ........................................     6
6.   Assignment And Binding Effect. ....................................................................     7
7.   Notices. ..........................................................................................     7
8.   Choice Of Law. ....................................................................................     7
9.   Integration. ......................................................................................     7
10.  Amendment. ........................................................................................     8
11.  Waiver. ...........................................................................................     8
12.  Severability. .....................................................................................     8
13.  Interpretation; Construction. .....................................................................     8
14.  Representations And Warranties. ...................................................................     8
15.  Counterparts. .....................................................................................     9
16.  Litigation Costs. .................................................................................     9
17.  Trade Secrets Of Others. ..........................................................................     9
18.  Advertising waiver. ...............................................................................     9
</TABLE>

                                       i.

<PAGE>

                              EMPLOYMENT AGREEMENT

     This Employment Agreement (the "Agreement") is made and entered into
effective as of December 1, 2001 (the "Effective Date"), by and between Cypress
Bioscience, Inc., Delaware corporation (the "Company"), and Michael Gendreau
(the "Executive"). The Company and the Executive are hereinafter collectively
referred to as the "Parties", and individually referred to as a "Party".

                                    Recitals

     A. The Company desires assurance of the association and services of the
Executive in order to retain the Executive's experience, skills, abilities,
background and knowledge, and is willing to engage the Executive's services on
the terms and conditions set forth in this Agreement.

     B. The Parties agree that this Agreement shall replace and supercede the
IMRE Employment Agreement between Executive and the Company dated January 29,
1996.

     C. The Executive desires to be in the employ of the Company, and is willing
to accept such employment on the terms and conditions set forth in this
Agreement.

                                    Agreement

     In consideration of the foregoing Recitals and the mutual promises and
covenants herein contained, and for other good and valuable consideration, the
Parties, intending to be legally bound, agree as follows:

     1. EMPLOYMENT.

        1.1 Term. The Company hereby employs the Executive, and the Executive
hereby accepts employment by the Company, upon the terms and conditions set
forth in this Agreement, subject to extension in accordance with Section 1.2
herein. The term of this Agreement shall commence on the Effective Date and
shall continue until September 1, 2002 (the "Term"), unless terminated earlier
in accordance with Section 4 herein or extended in accordance with Section 1.2
herein.

        1.2 Renewal. The Term of this Agreement may be extended by one (1) year
on September 1, 2002 (and each anniversary thereof) by written agreement between
the Parties pursuant to Section 7 herein prior to the end of the Term.
Notwithstanding anything herein to the contrary, either Party may terminate the
Executive's employment under this Agreement at any time, with or without Cause,
subject to the terms and conditions of Section 4 below.

        1.3 Title. The Executive shall have the title of Vice-President
Development and Chief Medical Officer of the Company and shall serve in such
other capacity or capacities as the Chief Executive Officer (CEO) or the Board
of Directors of the Company (the "Board") may from time to time prescribe. The
Executive shall report to the CEO.

                                       1.

<PAGE>

         1.4 Duties. The Executive shall do and perform all services, acts or
things necessary or advisable to manage and conduct the business of the Company
and which are normally associated with the positions held by Executive,
consistent with the bylaws of the Company and as required by the Board.

         1.5 Policies and Practices. The employment relationship between the
Parties shall be governed by the policies and practices established by the
Company and its Board. The Executive will acknowledge in writing that he has
read the Company's Employee Handbook, which will govern the terms and conditions
of his employment with the Company, along with this Agreement. In the event that
the terms of this Agreement differ from or are in conflict with the Company's
policies or practices or the Company's Employee Handbook, this Agreement shall
control.

         1.6 Location. Unless the Parties otherwise agree in writing, during the
term of this Agreement, the Executive shall perform the services Executive is
required to perform pursuant to this Agreement at the Company's offices, located
in San Diego, or at any other place at which the Company maintains an office;
provided, however, that the Company may from time to time require the Executive
to travel temporarily to other locations in connection with the Company's
business.

     2.  LOYAL AND CONSCIENTIOUS PERFORMANCE; NONCOMPETITION.

         2.1 Loyalty. During the Executive's employment by the Company, the
Executive shall devote Executive's full business energies, interest, abilities
and productive time to the proper and efficient performance of Executive's
duties under this Agreement.

         2.2 Covenant not to Compete. Except with the prior written consent of
the Company's Board of Directors, the Executive will not, during the Term of
this Agreement, and any period during which the Executive is receiving
compensation or any other consideration from the Company, including, but not
limited to, severance pay pursuant to Section 4.4.2 herein, engage in
competition with the Company or any of its affiliates, either directly or
indirectly, in any manner or capacity, as adviser, principal, agent, affiliate,
promoter, partner, officer, director, employee, stockholder, owner, co-owner,
consultant, or member of any association or otherwise, in any phase of the
business of developing, manufacturing and marketing of products or services
which are in the same field of use or which otherwise compete with the products
or services or proposed products or services of the Company or any of its
affiliates.

         2.3 Agreement not to Participate in Company's Competitors. During the
Term of this Agreement, the Executive agrees not to acquire, assume or
participate in, directly or indirectly, any position, investment or interest
known by Executive to be adverse or antagonistic to the Company, its business or
prospects, financial or otherwise or in any company, person or entity that is,
directly or indirectly, in competition with the business of the Company or any
of its affiliates. Ownership by the Executive, as a passive investment, of less
than two percent (2%) of the outstanding shares of capital stock of any
corporation with one or more classes of its capital

                                       2.

<PAGE>

stock listed on a national securities exchange or publicly traded on the
Nasdaq Stock Market or in the over-the-counter market shall not constitute a
breach of this paragraph.

     3.  COMPENSATION OF THE EXECUTIVE.

         3.1 Base Salary. The Company shall pay the Executive a base salary of
One Hundred Ninety Thousand Dollars ($190,000) per year ("Base Salary"), less
payroll deductions and all required withholdings payable in regular periodic
payments in accordance with Company policy. Such base salary shall be prorated
for any partial year of employment on the basis of a 365-day fiscal year.

         3.2 Discretionary Bonus. In addition to the Base Salary provided in
Section 3.1 above, Executive shall be eligible to receive an annual bonus (the
"Bonus") based on Executive's performance in the sole discretion of the Board.

         3.3 Stock Options. Upon the Effective Date of this Agreement and
subject to approval of the Board, Executive will be granted a stock option under
the Company's [Equity Incentive Plan] to purchase 50,000 shares of the Company's
Common Stock (the "Option"). To the maximum extent possible, the Option shall be
an Incentive Stock Option as such term is defined in Section 422 of the Internal
Revenue Code of 1986, as amended. The Option will be governed by and granted
pursuant to a separate Stock Option Agreement. The exercise price per share of
the Option will be equal to the fair market value of the common stock
established on the date of grant, subject to approval by the Board. The Option
will be subject to vesting over four (4) years so long as Executive continues to
be employed with the Company, according to the following schedule: 10,000 shares
will vest on September 1, 2001 and the remaining 40,000 shares will vest daily
thereafter over a period of four (4) years.

         3.4 Changes to Compensation. The Executive's compensation may be
changed from time to time as reasonably necessary in the discretion of the
Board.

         3.5 Employment Taxes. All of the Executive's compensation shall be
subject to customary withholding taxes and any other employment taxes as are
commonly required to be collected or withheld by the Company.

         3.6 Benefits. The Executive shall, in accordance with Company policy
and the terms of the applicable plan documents, be eligible to participate in
benefits under any executive benefit plan or arrangement which may be in effect
from time to time and made available to the Company's executive or key
management employees.

     4.  TERMINATION.

         4.1 Termination By the Company. The Executive's employment with the
Company may be terminated under the following conditions:

             4.1.1 Death or Disability. The Executive's employment with the
Company shall terminate effective upon the date of the Executive's death or
"Complete Disability" (as defined in Section 4.5.1).

                                       3.

<PAGE>

               4.1.2 For Cause. The Company may terminate the Executive's
employment under this Agreement for "Cause" (as defined in Section 4.5.2) by
delivery of written notice to the Executive specifying the Cause or Causes
relied upon for such termination. Any notice of termination given pursuant to
this Section 4.1.2 shall effect termination as of the date specified in such
notice or, in the event no such date is specified, on the last day of the month
in which such notice is delivered or deemed delivered as provided in Section 7
below.

               4.1.3 Without Cause. The Company may terminate the Executive's
employment under this Agreement at any time and for any reason by delivery of
written notice of such termination to the Executive. Any notice of termination
given pursuant to this Section 4.1.3 shall effect termination as of the date
specified in such notice or, in the event no such date is specified, on the last
day of the month in which such notice is delivered or deemed delivered as
provided in Section 7 below.

         4.2   Termination By The Executive. The Executive may terminate the
Executive's employment with the Company under this Agreement at any time and for
any reason by delivery of written notice of such termination to the Company. Any
notice of termination given pursuant to this Section 4.2 shall effect
termination as of the date specified in such notice or, in the event no such
date is specified, on the last day of the month in which such notice is
delivered or deemed delivered as provided in Section 7 below.

         4.3   Termination by Mutual Agreement of the Parties. The Executive's
employment pursuant to this Agreement may be terminated at any time upon a
mutual agreement in writing of the Parties. Any such termination of employment
shall have the consequences specified in such agreement.

         4.4   Compensation Upon Termination.

               4.4.1 Death, Complete Disability, Cause or by Executive. If the
Executive's employment shall be terminated by death, Complete Disability, Cause
(as such terms are defined below ) or by Executive, the Company shall pay the
Executive's accrued Base Salary and accrued and unused vacation benefits earned
through the date of termination, at the rate in effect at the time of
termination and subject to standard deductions and withholdings, to Executive
and/or Executive's heirs, and the Company shall thereafter have no further
obligations to the Executive and/or Executive's heirs under this Agreement.

               4.4.2 Without Cause. If the Company terminates the Executive's
employment without Cause, the Executive shall be entitled to the Executive's
Base Salary and accrued and unused vacation earned through the date of
termination, subject to standard deductions and withholdings. In addition, upon
the Executive's furnishing to the Company an effective waiver and release of
claims (a form of which is attached hereto as Exhibit A), the Executive shall be
entitled to the equivalent of the Executive's annual Base Salary in effect at
the time of termination for a period of four (4) months, less standard
deductions and withholdings, to be paid in a lump sum payment within thirty (30)
days of the effective date of the Executive's termination.

                                       4.

<PAGE>

               4.4.3 Covenant not to Compete. Notwithstanding any provisions in
this Agreement to the contrary, including any provisions contained in this
Section 4.4, the Company's obligations, and the Executive's rights, pursuant to
Section 4.4.2 shall cease and be rendered a nullity immediately should the
Executive violate any provision of Section 2 herein, or should the Executive
violate the terms and conditions of the Executive's Proprietary Information and
Inventions Agreement.

               4.4.4 Termination of Obligations. In the event of the termination
of the Executive's employment hereunder and pursuant to this Section 4, the
Company shall have no obligation to pay Executive any Base Salary, Bonus or
other compensation or benefits, except as provided in this Section 4 or for
benefits due to the Executive (and/or the Executive's dependents) under the
terms of the Company's benefit plans. The Company may offset any amounts
Executive owes it or its subsidiaries against any amount it owes Executive
pursuant to this Section 4.4.

         4.5   Definitions. For purposes of this Agreement, the following terms
shall have the following meanings:

               4.5.1 Complete Disability. "Complete Disability" shall mean the
inability of the Executive to perform the Executive's duties under this
Agreement because the Executive has become permanently disabled within the
meaning of any policy of disability income insurance covering employees of the
Company then in force. In the event the Company has no policy of disability
income insurance covering employees of the Company in force when the Executive
becomes disabled, the term "Complete Disability" shall mean the inability of the
Executive to perform the Executive's duties under this Agreement by reason of
any incapacity, physical or mental, which the Board, based upon medical advice
or an opinion provided by a licensed physician acceptable to the Board,
determines to have incapacitated the Executive from satisfactorily performing
all of the Executive's usual services for the Company for a period of at least
one hundred twenty (120) days during any twelve (12) month period (whether or
not consecutive). Based upon such medical advice or opinion, the determination
of the Board shall be final and binding and the date such determination is made
shall be the date of such Complete Disability for purposes of this Agreement.

               4.5.2 For Cause. "Cause" for the Company to terminate Executive's
employment hereunder shall mean the occurrence of any of the following events:

               (i)   the Executive's repeated failure to satisfactorily perform
the Executive's job duties;

               (ii)  the Executive's commission of an act that materially
injures the business of the Company;

               (iii) the Executive's refusal or failure to follow lawful and
reasonable directions of the Board or the appropriate individual to whom
Executive reports;

                                       5.

<PAGE>

             (iv) the Executive's conviction of a felony involving moral
turpitude that is likely to inflict or has inflicted material injury on the
business of the Company;

             (v)  the Executive's engaging or in any manner participating in
any activity which is directly competitive with or intentionally injurious to
the Company or any of its affiliates or which violates any material provisions
of Section 5 hereof; or

             (vi) the Executive's commission of any fraud against the Company,
its affiliates, employees, agents or customers or use or intentional
appropriation for his personal use or benefit of any funds or properties of the
Company not authorized by the Board to be so used or appropriated.

         4.6 Survival of Certain Sections. Sections 2.2, 4.4.2, 4.4.3, 5, 8 and
16 of this Agreement will survive the termination of this Agreement.

     5.  CONFIDENTIAL AND PROPRIETARY INFORMATION; NONSOLICITATION.

         5.1 As a condition of employment the Executive agrees to execute and
abide by the Proprietary Information and Inventions Agreement attached hereto as
Exhibit B.

         5.2 The Executive recognizes that Executive's employment with the
Company will involve contact with information of substantial value to the
Company, which is not generally known in the trade, and which gives the Company
an advantage over its competitors who do not know or use it, including but not
limited to, techniques, designs, drawings, processes, inventions know how,
strategies, marketing, and/or advertising plans or arrangements, developments,
equipment, prototypes, sales, supplier, service provider, vendor, distributor
and customer information, and business and financial information relating to the
business, products, services, practices and techniques of the Company,
(hereinafter referred to as "Confidential and Proprietary Information"). The
Executive will at all times regard and preserve as confidential such
Confidential and Proprietary Information obtained by the Executive from whatever
source and will not, either during Executive's employment with the Company or
thereafter, publish or disclose any part of such Confidential and Proprietary
Information in any manner at any time, or use the same except on behalf of the
Company, without the prior written consent of the Company.

         5.3 While employed by the Company and for one (1) year thereafter, the
Executive agrees that in order to protect the Company's Confidential and
Proprietary Information from unauthorized use, that the Executive will not,
either directly or through others, solicit or attempt to solicit any employee,
consultant or independent contractor of the Company to terminate his or her
relationship with the Company in order to become an employee, consultant or
independent contractor to or for any other person or business entity; or the
business of any customer, supplier, service provider, vendor or distributor of
the Company which, at the time of termination or one (1) year immediately prior
thereto, was doing business with the Company or listed on Company's customer,
supplier, service provider, vendor or distributor list.

                                       6.

<PAGE>

     6.  ASSIGNMENT AND BINDING EFFECT.

         This Agreement shall be binding upon and inure to the benefit of the
Executive and the Executive's heirs, executors, personal representatives,
assigns, administrators and legal representatives. Because of the unique and
personal nature of the Executive's duties under this Agreement, neither this
Agreement nor any rights or obligations under this Agreement shall be assignable
by the Executive. This Agreement shall be binding upon and inure to the benefit
of the Company and its successors, assigns and legal representatives.

     7.  NOTICES.

         All notices or demands of any kind required or permitted to be given by
the Company or the Executive under this Agreement shall be given in writing and
shall be personally delivered (and receipted for) or faxed during normal
business hours or mailed by certified mail, return receipt requested, postage
prepaid, addressed as follows:

         If to the Company:

                  CEO
                  Cypress Bioscience, Inc.
                  4350 Executive Square Drive, Suite 325
                  San Diego, CA 92121

         If to the Executive:

                  Michael Gendreau
                  [insert address]

Any such written notice shall be deemed received when personally delivered or
three (3) days after its deposit in the United States mail as specified above.
Either Party may change its address for notices by giving notice to the other
Party in the manner specified in this section.

     8.  CHOICE OF LAW.

         This Agreement is made in San Diego, California. This Agreement shall
be construed and interpreted in accordance with the laws of the State of
California.

     9.  INTEGRATION.

         This Agreement, including Exhibits A, B and C, as well as the Employee
Handbook contains the complete, final and exclusive agreement of the Parties
relating to the terms and conditions of the Executive's employment, and
supersedes all prior and contemporaneous oral and written employment agreements
or arrangements between the Parties, including the Employment Agreement between
Executive and the Company dated January 29, 1996. To the extent this Agreement
conflicts with the Proprietary Information and Inventions Agreement attached as
Exhibit B hereto, the Proprietary Information and Inventions Agreement controls.
To the extent this Agreement conflicts with the terms of the Employee Handbook,
this Agreement controls.

                                       7.

<PAGE>

     10. AMENDMENT.

         This Agreement cannot be amended or modified except by a written
agreement signed by the Executive and the Company.

     11. WAIVER.

         No term, covenant or condition of this Agreement or any breach thereof
shall be deemed waived, except with the written consent of the Party against
whom the wavier is claimed, and any waiver or any such term, covenant, condition
or breach shall not be deemed to be a waiver of any preceding or succeeding
breach of the same or any other term, covenant, condition or breach.

     12. SEVERABILITY.

         The finding by a court of competent jurisdiction of the
unenforceability, invalidity or illegality of any provision of this Agreement
shall not render any other provision of this Agreement unenforceable, invalid or
illegal. Such court shall have the authority to modify or replace the invalid or
unenforceable term or provision with a valid and enforceable term or provision
which most accurately represents the Parties' intention with respect to the
invalid or unenforceable term or provision.

     13. INTERPRETATION; CONSTRUCTION.

         The headings set forth in this Agreement are for convenience of
reference only and shall not be used in interpreting this Agreement. This
Agreement has been drafted by legal counsel representing the Company, but the
Executive has been encouraged to consult with, and has consulted with,
Executive's own independent counsel and tax advisors with respect to the terms
of this Agreement. The Parties acknowledge that each Party and its counsel has
reviewed and revised, or had an opportunity to review and revise, this
Agreement, and the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of this Agreement.

     14. REPRESENTATIONS AND WARRANTIES.

         The Executive represents and warrants that Executive is not restricted
or prohibited, contractually or otherwise, from entering into and performing
each of the terms and covenants contained in this Agreement, and that
Executive's execution and performance of this Agreement will not violate or
breach any other agreements between the Executive and any other person or
entity.

     15. COUNTERPARTS.

         This Agreement may be executed in two counterparts, each of which shall
be deemed an original, all of which together shall contribute one and the same
instrument.

                                       8.

<PAGE>

     16. LITIGATION COSTS.

         Should any litigation, arbitration, or administrative action be
commenced between the Parties or their personal representatives concerning any
provision of this Agreement or the rights and duties of any person in relation
to this Agreement, the Party prevailing in such action shall be entitled, in
addition to such other relief as may be granted to a reasonable sum as and for
that Party's attorney's fees in such litigation which shall be determined by the
court, arbitrator, or administrative agency, in such action or in a separate
action brought for that purpose.

     17. TRADE SECRETS OF OTHERS.

         It is the understanding of both the Company and the Executive that the
Executive shall not divulge to the Company and/or its subsidiaries any
confidential information or trade secrets belonging to others, including the
Executive's former employers, nor shall the Company and/or its affiliates seek
to elicit from the Executive any such information. Consistent with the
foregoing, the Executive shall not provide to the Company and/or its affiliates,
and the Company and/or its affiliates shall not request, any documents or copies
of documents containing such information.

     18. ADVERTISING WAIVER.

         The Executive agrees to permit the Company and/or its affiliates, and
persons or other organizations authorized by the Company and/or its affiliates,
to use, publish and distribute advertising or sales promotional literature
concerning the products and/or services of the Company and/or its affiliates, or
the machinery and equipment used in the provision thereof, in which the
Executive's name and/or pictures of the Executive taken in the course of the
Executive's provision of services to the Company and/or its affiliates, appear.
The Executive hereby waives and releases any claim or right the Executive may
otherwise have arising out of such use, publication or distribution.

                                       9.

<PAGE>

     In Witness Whereof, the Parties have executed this Agreement as of the date
first above written.

Cypress Bioscience, Inc.

By: /s/ John Bonfiglio
    ---------------------------------------
Its: Chief Operating Officer and Executive Vice President
     ----------------------------------------------------

Dated: 12/10/01
       ------------------------------------

Executive:

/s/ R. Michael Gendreau
--------------------------------------------
Michael Gendreau

Dated:  12/12/01
        ------------------------------------

                                      10.

<PAGE>

                                    EXHIBIT A
                          RELEASE AND WAIVER OF CLAIMS

         In consideration of the payments and other benefits set forth in
Section 4.4.2 of the Employment Agreement dated ___________, to which this form
is attached, I, Michael Gendreau, hereby furnish Cypress Bioscience, Inc. (the
"Company"), with the following release and waiver ("Release and Waiver").

         I hereby release, and forever discharge the Company, its officers,
directors, agents, employees, stockholders, successors, assigns, affiliates,
parent, subsidiaries, and benefit plans, of and from any and all claims,
liabilities, demands, causes of action, costs, expenses, attorneys' fees,
damages, indemnities and obligations of every kind and nature, in law, equity,
or otherwise, known and unknown, suspected and unsuspected, disclosed and
undisclosed, arising out of or in any way related to agreements, events, acts or
conduct at any time prior to and including the date that this Release and Waiver
is signed, including but not limited to: all such claims and demands directly or
indirectly arising out of or in any way connected with my employment with the
Company or the termination of that employment; claims pursuant to any federal,
state or local law relating to employment, including, but not limited to,
discrimination claims, claims under the California Fair Employment and Housing
Act, and the Federal Age Discrimination in Employment Act of 1967, as amended
("ADEA"), or claims for wrongful termination, breach of the covenant of good
faith, contract claims, tort claims, and wage or benefit claims, including but
not limited to, claims for salary, bonuses, commissions, stock, stock options,
vacation pay, fringe benefits, severance pay or any form of compensation.

         I also acknowledge that I have read and understand Section 1542 of the
California Civil Code which reads as follows: "A general release does not extend
to claims which the creditor does not know or suspect to exist in his favor at
the time of executing the release, which if known by him must have materially
affected his settlement with the debtor." I hereby expressly waive and
relinquish all rights and benefits under that section and any law of any
jurisdiction of similar effect with respect to any claims I may have against the
Company.

         I acknowledge that, among other rights, I am waiving and releasing any
rights I may have under ADEA, that this Release and Waiver is knowing and
voluntary, and that the consideration given for this Release and Waiver is in
addition to anything of value to which I was already entitled as an executive of
the Company. I further acknowledge that I have been advised, as required by the
Older Workers Benefit Protection Act, that: (a) the release and waiver granted
herein does not relate to claims under the ADEA which may arise after this
Release and Waiver is executed; (b) I have the right to consult with an attorney
prior to executing this Release and Waiver (although I may choose voluntarily
not to do so); and if I am 40 years of age or older upon execution of this
Release and Waiver: (c) I have twenty-one (21) days from the date of termination
of my employment with the Company in which to consider this Release and Waiver
(although I may choose voluntarily to execute this Release and Waiver earlier);
(d) I have seven (7) days following the execution of this Release and Waiver to
revoke my consent to this Release and Waiver; and (e) this Release and Waiver
shall not be effective until the seven (7) day revocation period has expired.

Date: __________________                    By: ________________________________
                                            Michael Gendreau

<PAGE>

                                    EXHIBIT B

                            Cypress Bioscience, Inc.

                PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT

                    In consideration of my employment or continued employment by
Cypress Bioscience, Inc.

          (the "Company"), and the compensation now and hereafter paid to me, I,
Michael Gendreau, hereby agree as follows:

         1.       Nondisclosure

         1.1      Recognition of Company's Rights; Nondisclosure. At all times
during my employment and thereafter, I will hold in strictest confidence and
will not disclose, use, lecture upon or publish any of the Company's [and/or its
Affiliates'] Proprietary Information (defined below), except as such disclosure,
use or publication may be required in connection with my work for the Company,
or unless an officer of the Company expressly authorizes such in writing. I will
obtain Company's written approval before publishing or submitting for
publication any material (written, verbal, or otherwise) that relates to my work
at Company and/or incorporates any Proprietary Information. I hereby assign to
the Company any rights I may have or acquire in such Proprietary Information and
recognize that all Proprietary Information shall be the sole property of the
Company and its assigns. [For purposes of this Agreement, "Affiliate" means,
with respect to any specific entity, any other entity that, directly or
indirectly, through one or more intermediaries, controls, is controlled by or is
under common control with such specified entity.]

         1.2      Proprietary Information. The term "Proprietary Information"
shall mean any and all confidential and/or proprietary knowledge, data or
information of the Company and/or its Affiliates. By way of illustration but not
limitation, "Proprietary Information" includes (a) trade secrets, inventions,
mask works, ideas, processes, formulas, source and object codes, data, programs,
other works of authorship, know-how, improvements, discoveries, developments,
designs and techniques (hereinafter collectively referred to as "Inventions");
and (b) information regarding plans for research, development, new products,
marketing and selling, business plans, budgets and unpublished financial
statements, licenses, prices and costs, suppliers and customers; and (c)
information regarding the skills and compensation of other employees of the
Company [and/or its Affiliates]. Notwithstanding the foregoing, it is understood
that, at all such times, I am free to use information which is generally known
in the trade or industry, which is not gained as result of a breach of this
Agreement, and my own, skill, knowledge, know-how and experience to whatever
extent and in whichever way I wish.

         1.3      Third Party Information. I understand, in addition, that the
Company has received and in the future will receive from third parties
confidential or proprietary information ("Third Party Information") subject to a
duty on the Company's part to maintain the confidentiality of such information
and to use it only for certain limited purposes. During the term of my
employment and thereafter, I will hold Third Party Information in the strictest
confidence and will not disclose to anyone (other than Company personnel who
need to know such information in connection with their work for the Company) or
use, except in connection with my work for the Company, Third Party Information
unless expressly authorized by an officer of the Company in writing.

         1.4      No Improper Use of Information of Prior Employers and Others.
During my employment by the Company I will not improperly use or disclose any
confidential information or trade secrets, if any, of any former employer or any
other person to whom I have an obligation of confidentiality, and I will not
bring onto the premises of the Company any unpublished documents or any property
belonging to any former employer or any other person to whom I have an
obligation of confidentiality unless consented to in writing by that former
employer or person. I will use in the performance of my duties only information
which is generally known and used by persons with training and experience
comparable to my own, which is common knowledge in the industry or otherwise
legally in the public domain, or which is otherwise provided or developed by the
Company.

         2.       Assignment of Inventions.

         2.1      Proprietary Rights.  The term "Proprietary Rights" shall mean
all trade secret, patent,

                                       1.

<PAGE>

copyright, mask work and other intellectual property rights throughout the
world.

         2.2      Prior Inventions. Inventions, if any, patented or unpatented,
which I made prior to the commencement of my employment with the Company are
excluded from the scope of this Agreement. To preclude any possible uncertainty,
I have set forth on Exhibit B-2 (Previous Inventions) attached hereto a complete
list of all Inventions that I have, alone or jointly with others, conceived,
developed or reduced to practice or caused to be conceived, developed or reduced
to practice prior to the commencement of my employment with the Company, that I
consider to be my property or the property of third parties and that I wish to
have excluded from the scope of this Agreement (collectively referred to as
"Prior Inventions"). If disclosure of any such Prior Invention would cause me to
violate any prior confidentiality agreement, I understand that I am not to list
such Prior Inventions in Exhibit B-2 but am only to disclose a cursory name for
each such invention, a listing of the party(ies) to whom it belongs and the fact
that full disclosure as to such inventions has not been made for that reason. A
space is provided on Exhibit B-2 for such purpose. If no such disclosure is
attached, I represent that there are no Prior Inventions. If, in the course of
my employment with the Company, I incorporate a Prior Invention into a Company
product, process or machine, the Company is hereby granted and shall have a
nonexclusive, royalty-free, irrevocable, perpetual, worldwide license (with
rights to sublicense through multiple tiers of sublicensees) to make, have made,
modify, use and sell such Prior Invention. Notwithstanding the foregoing, I
agree that I will not incorporate, or permit to be incorporated, Prior
Inventions in any Company Inventions without the Company's prior written
consent.

         2.3      Assignment of Inventions. Subject to Sections 2.4 and 2.6, I
hereby assign and agree to assign in the future (when any such Inventions or
Proprietary Rights are first reduced to practice or first fixed in a tangible
medium, as applicable) to the Company all my right, title and interest in and to
any and all Inventions (and all Proprietary Rights with respect thereto) whether
or not patentable or registrable under copyright or similar statutes, made or
conceived or reduced to practice or learned by me, either alone or jointly with
others, during the period of my employment with the Company. Inventions assigned
to the Company, or to a third party as directed by the Company pursuant to this
Section 2, are hereinafter referred to as "Company Inventions".

         2.4      Nonassignable Inventions. This Agreement does not apply to an
Invention which qualifies fully as a nonassignable Invention under Section 2870
of the California Labor Code (hereinafter "Section 2870"). I have reviewed the
notification on Exhibit B-1 (Limited Exclusion Notification) and agree that my
signature acknowledges receipt of the notification.

         2.5      Obligation to Keep Company Informed. During the period of my
employment and for six (6) months after termination of my employment with the
Company, I will promptly disclose to the Company fully and in writing all
Inventions authored, conceived or reduced to practice by me, either alone or
jointly with others. In addition, I will promptly disclose to the Company all
patent applications filed by me or on my behalf within a year after termination
of employment. At the time of each such disclosure, I will advise the Company in
writing of any Inventions that I believe fully qualify for protection under
Section 2870; and I will at that time provide to the Company in writing all
evidence necessary to substantiate that belief. The Company will keep in
confidence and will not use for any purpose or disclose to third parties without
my consent any confidential information disclosed in writing to the Company
pursuant to this Agreement relating to Inventions that qualify fully for
protection under the provisions of Section 2870. I will preserve the
confidentiality of any Invention that does not fully qualify for protection
under Section 2870.

         2.6      Government or Third Party. I also agree to assign all my
right, title and interest in and to any particular Company Invention to a third
party, including without limitation the United States, as directed by the
Company.

         2.7      Works for Hire. I acknowledge that all original works of
authorship which are made by me (solely or jointly with others) within the scope
of my employment and which are protectable by copyright are "works made for
hire", pursuant to United States Copyright Act (17 U.S.C., Section 101).

         2.8      Enforcement of Proprietary Rights. I will assist the Company
in every proper way to obtain, and from time to time enforce, United States and
foreign Proprietary Rights relating to Company Inventions in any and all
countries. To that end I will execute, verify and deliver such documents and
perform such other acts (including appearances as a witness) as the Company may
reasonably request for use in applying for, obtaining, perfecting, evidencing,

                                       2.

<PAGE>

sustaining and enforcing such Proprietary Rights and the assignment thereof. In
addition, I will execute, verify and deliver assignments of such Proprietary
Rights to the Company or its designee. My obligation to assist the Company with
respect to Proprietary Rights relating to such Company Inventions in any and all
countries shall continue beyond the termination of my employment, but the
Company shall compensate me at a reasonable rate after my termination for the
time actually spent by me at the Company's request on such assistance.

In the event the Company is unable for any reason, after reasonable effort, to
secure my signature on any document needed in connection with the actions
specified in the preceding paragraph, I hereby irrevocably designate and appoint
the Company and its duly authorized officers and agents as my agent and attorney
in fact, which appointment is coupled with an interest, to act for and in my
behalf to execute, verify and file any such documents and to do all other
lawfully permitted acts to further the purposes of the preceding paragraph with
the same legal force and effect as if executed by me. I hereby waive and
quitclaim to the Company any and all claims, of any nature whatsoever, which I
now or may hereafter have for infringement of any Proprietary Rights assigned
hereunder to the Company.

         3.   Records. I agree to keep and maintain adequate and current records
(in the form of notes, sketches, drawings and in any other form that may be
required by the Company) of all Proprietary Information developed by me and all
Inventions made by me during the period of my employment at the Company, which
records shall be available to and remain the sole property of the Company at all
times.

         4.   Additional Activities. I agree that during the period of my
employment by the Company I will not, without the Company's express written
consent, engage in any employment or business activity which is competitive
with, or would otherwise conflict with, my employment by the Company. I agree
further that for the period of my employment by the Company and for one (l) year
after the date of termination of my employment by the Company I will not induce
any employee of the Company to leave the employ of the Company.

         5.   No Conflicting Obligation. I represent that my performance of all
the terms of this Agreement and as an executive of the Company does not and will
not breach any agreement to keep in confidence information acquired by me in
confidence or in trust prior to my employment by the Company. I have not entered
into, and I agree I will not enter into, any agreement either written or oral in
conflict herewith.

         6.   Return of Company Documents. When I leave the employ of the
Company, I will deliver to the Company any and all drawings, notes, memoranda,
specifications, devices, formulas, and documents, together with all copies
thereof, and any other material containing or disclosing any Company Inventions,
Third Party Information or Proprietary Information of the Company. I further
agree that any property situated on the Company's premises and owned by the
Company, including disks and other storage media, filing cabinets or other work
areas, is subject to inspection by Company personnel at any time with or without
notice. Prior to leaving, I will cooperate with the Company in completing and
signing the Company's termination statement.

         7.   Legal and Equitable Remedies. Because my services are personal and
unique and because I may have access to and become acquainted with the
Proprietary Information of the Company, the Company shall have the right to
enforce this Agreement and any of its provisions by injunction, specific
performance or other equitable relief, without bond and without prejudice to any
other rights and remedies that the Company may have for a breach of this
Agreement.

         8.   Notices. Any notices required or permitted hereunder shall be
given to the appropriate party at the address specified below or at such other
address as the Party shall specify in writing. Such notice shall be deemed given
upon personal delivery to the appropriate address or if sent by certified or
registered mail, three (3) days after the date of mailing.

         9.   Notification of New Employer.  In the event that I leave the
employ of the Company, I hereby consent to the notification of my new employer
of my rights and obligations under this Agreement.

         10.  General Provisions.

         10.1 Governing Law; Consent to Personal Jurisdiction. This Agreement
will be governed by and construed according to the laws of the State of
California, as such laws are applied to agreements entered into and to be
performed entirely

                                       3.

<PAGE>

within California between California residents. I hereby expressly consent to
the personal jurisdiction of the state and federal courts located in San Diego
County, California for any lawsuit filed there against me by Company arising
from or related to this Agreement.

         10.2 Severability. In case any one or more of the provisions contained
in this Agreement shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect the other provisions of this Agreement, and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein. If moreover, any one or more of the provisions
contained in this Agreement shall for any reason be held to be excessively broad
as to duration, geographical scope, activity or subject, it shall be construed
by limiting and reducing it, so as to be enforceable to the extent compatible
with the applicable law as it shall then appear.

         10.3 Successors and Assigns. This Agreement will be binding upon my
heirs, executors, administrators and other legal representatives and will be for
the benefit of the Company, its successors, and its assigns.

         10.4 Survival. The provisions of this Agreement shall survive the
termination of my employment and the assignment of this Agreement by the Company
to any successor in interest or other assignee.

         10.5 Employment. I agree and understand that nothing in this Agreement
shall confer any right with respect to continuation of employment by the
Company, nor shall it interfere in any way with my right or the Company's right
to terminate my employment at any time, with or without Cause.

         10.6 Waiver. No waiver by the Company of any breach of this Agreement
shall be a waiver of any preceding or succeeding breach. No waiver by the
Company of any right under this Agreement shall be construed as a waiver of any
other right. The Company shall not be required to give notice to enforce strict
adherence to all terms of this Agreement.

         10.7 Entire Agreement. The obligations pursuant to Sections 1 and 2 of
this Agreement shall apply to any time during which I was previously employed,
or am in the future employed, by the Company as a consultant if no other
agreement governs nondisclosure and assignment of inventions during such period.
This Agreement is the final, complete and exclusive agreement of the Parties
with respect to the subject matter hereof and supersedes and merges all prior
discussions between us. No modification of or amendment to this Agreement, nor
any waiver of any rights under this Agreement, will be effective unless in
writing and signed by the Party to be charged. Any subsequent change or changes
in my duties, salary or compensation will not affect the validity or scope of
this Agreement.

         This Agreement shall be effective as of the first day of my employment
with the Company, namely: _______________, 2001.

         I have read this Agreement carefully and understand its terms. I have
completely filled out Exhibit B-1 to this agreement.

Dated:  12/10/01
        ---------------------------------------------------

/s/ R. Michael Gendreau
-----------------------------------------------------------
(Signature)

______________________________________________________
(Executive's Printed Name)

Accepted and Agreed To:

Cypress Bioscience, Inc.

          ________________________________________

          ________________________________________

By: /s/ John Bonfiglio
   --------------------------------------------------------

Title: Chief Operating Officer and Executive Vice President
      -----------------------------------------------------
Dated:  12/10/01
        ---------------------------------------------------

                                       4.

<PAGE>

                                   Exhibit B-1

                         LIMITED EXCLUSION NOTIFICATION

         This is to Notify The Executive in accordance with Section 2872 of the
California Labor Code that the foregoing Agreement between the Executive and the
Company does not require the Executive to assign or offer to assign to the
Company any invention that the Executive developed entirely on your own time
without using the Company's equipment, supplies, facilities or trade secret
information except for those inventions that either:

         1.    Relate at the time of conception or reduction to practice of the
               invention to the Company's business, or actual or demonstrably
               anticipated research or development of the Company;

         2.    Result from any work performed by The Executive for the Company.

         To the extent a provision in the foregoing Agreement purports to
require the Executive to assign an invention otherwise excluded from the
preceding paragraph, the provision is against the public policy of this state
and is unenforceable.

         This limited exclusion does not apply to any patent or invention
covered by a contract between the Company and the United States or any of its
agencies requiring full title to such patent or invention to be in the United
States.

         I acknowledge receipt of a copy of this notification.

                                       /s/ Michael Gendreau
                                       -----------------------------------------
                                       Michael Gendreau

                                       Date: 12/10/01
                                            ------------------------------------

Witnessed by:

/s/ John Bonfiglio
-------------------------------------
(Printed Name of Representative)

<PAGE>

                                   Exhibit B-2

TO:        Cypress Bioscience, Inc.

FROM:      Michael Gendreau

DATE:      December 10, 2001

SUBJECT:   Previous Inventions

1.  Except as listed in Section 2 below, the following is a complete list of all
inventions or improvements relevant to the subject matter of my employment by
Cypress Bioscience, Inc. (the "Company") that have been made or conceived or
first reduced to practice by me alone or jointly with others prior to my
engagement by the Company:

    [X]    No inventions or improvements.

    [_]    See below:

           _____________________________________________________________________

           _____________________________________________________________________

           _____________________________________________________________________

    [_]    Additional sheets attached.

2.  Due to a prior confidentiality agreement, I cannot complete the disclosure
under Section 1 above with respect to inventions or improvements generally
listed below, the proprietary rights and duty of confidentiality with respect to
which I owe to the following party(ies):

    Invention or Improvement    Party(ies)              Relationship

1.  __________________________  _____________________   ________________________

2.  __________________________  _____________________   ________________________

3.  __________________________  _____________________   ________________________

    [_]    Additional sheets attached.

                                       2.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00036-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00036-of-00352.parquet"}]]