<PAGE>


                                SECURITY AGREEMENT


          This SECURITY AGREEMENT (this "AGREEMENT") is dated as of April 14,
1998 and entered into by and between SANTA FE HOTEL INC., a Nevada corporation
("GRANTOR"), and SUNAMERICA LIFE INSURANCE COMPANY, an Arizona corporation, as
collateral agent for and representative of the Holders of the Notes from to time
to time (in such capacity herein called "SECURED PARTY").


                              PRELIMINARY STATEMENTS

          A.   Secured Party, Grantor, Santa Fe Gaming Corporation, a Nevada
corporation ("SFG"), and Credit Suisse First Boston Mortgage Capital LLC, a
Delaware limited liability company, have entered into a Note Purchase Agreement
of even date herewith (said Note Purchase Agreement, as it may hereafter be
amended, supplemented or otherwise modified from time to time, being the "NOTE
PURCHASE AGREEMENT", the terms defined therein and not otherwise defined herein
being used herein as therein defined), pursuant to which, among other things,
Grantor is issuing to Secured Party and/or to the other Holders certain secured
promissory notes in an aggregate principal amount of $14,000,000 (the "NOTES").

          B.   The Notes and the obligations of Grantor under the Note Purchase
Agreement and all other instruments and documents executed in connection
therewith are secured by certain real property (the "PREMISES") described in and
pursuant to the Deed of Trust, Fixture Filing and Financing Statement and
Security Agreement with Assignment of Rents of even date herewith, executed by
Grantor, as trustor, to United Title of Nevada, as trustee, for the benefit of
Secured Party, as collateral agent for the Holders, as beneficiary (the "COMPANY
DEED OF TRUST").

          C.   It is a condition precedent to the acquisition of the Notes that
Grantor shall have granted the security interests and undertaken the obligations
contemplated by this Agreement.

          NOW, THEREFORE, in consideration of the premises and in order to
induce Secured Party and the Holders to acquire the Notes, and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Grantor hereby agrees with Secured Party as follows:

          SECTION 1.  GRANT OF SECURITY.  Grantor hereby assigns to Secured
Party, and hereby grants to Secured Party a security interest in, all of
Grantor's right, title and interest in and to the following, in each case
whether now or hereafter existing or in which Grantor now has or hereafter
acquires an interest and wherever the same may be located (the "COLLATERAL"):


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          (a)  all present and future chattels, furniture, furnishings, goods,
equipment, fixtures and all other tangible personal property, of whatever kind
and nature, now or hereafter used in connection with or placed or located in or
on any part of the Premises (including, without limitation, any building or
structure that is now or that may hereafter be erected on the Premises),
including, but not limited to, machinery, materials, goods and equipment now or
hereafter used in any construction or operation relating thereto (including,
without limitation, air conditioning, heating, electrical, lighting, fire
fighting and fire prevention, food and beverage service, laundry, plumbing,
refrigeration, security, sound, signaling, telephone, television, window washing
and other equipment and fixtures, of whatever kind or nature, including
generators, transformers, switching gear, boilers, burners, furnaces, piping,
sprinklers, sinks, tubs, valves, compressors, motors, carts, dumb waiters,
elevators and other lifts, floor coverings, hardware, keys, locks, organs,
pianos, planters, railings, scales, shelving, signs, tools, machinery, molds,
dies, drills, presses, planers, saws, furniture, business fixtures, trade
fixtures, electric, gas and other motor vehicles, uniforms, vacuum cleaners,
hotel furniture, furnishings and equipment, bathroom furniture and furnishings
(including towels, bathmats, hamperettes, shower curtains and other bath
linens), beds and bedding (including mattresses, springs, pillows, bed pads,
sheets, blankets, comforters, spreads and other bed linens and furnishings),
bric-a-brac, chairs, chests, vanities, secretaries, bureaus, chiffonniers, love
seats, benches, costumers, smoking stands, sand jars, desks, dressers, hangings,
paintings, pictures, frames, sculptures, lamps, light bulbs, mirrors, night
stands, ornaments, radios, stereo equipment, sofas, statuary, tables,
telephones, televisions, vases, window coverings, foodstuffs, beverages
(including beer, wine, liquor and other alcoholic beverages), and other
consumables (including soap, shampoo, cleaning supplies and paper goods),
cutlery, cooking, baking and other kitchen utensils and apparatus (including
crockery, fryers, grills, kettles, mixers, pots, pans, pails, racks, steamers
and toasters), china and other dishes, flatware, glassware, hollowware, serving
pieces, trays, table linens, washers, dryers, irons, ironing boards and other
ironing equipment, cables, outlets, plugs, wiring and related apparatus and
fixtures, card readers, cash registers, adding machines, calculators, computers,
keyboards, monitors, printers, printing equipment, envelopes, stationary,
posting machines, blank forms, typewriters, typewriter stands, other office and
accounting equipment and supplies, time stamps, time recorders, bookkeeping
machines, checking machines, payroll machines, computer reservations systems,
and all other goods, equipment, furnishings, apparatus and fixtures which are
now or may hereafter be located at or used at or in connection with the
Premises) and all other tangible personal property used or to be used at or in
connection with, or placed or to be placed in, rooms, halls, lounges, offices,
lobbies, lavatories, basements, cellars, vaults or other portions of the
Premises or any facilities on the Premises or of any other building or buildings
hereafter constructed or erected thereon, whether herein enumerated or not, and
whether or not contained in any such building, and which are used or to be used
or useful in the operation and maintenance thereof, or in any business conducted
thereon, together with all replacements and substitutions for any and all
personal property in which Grantor has an interest, including without limitation
such goods and equipment as shall from time to time be located, placed,
installed or used in or upon, or procured for use, or to be used or useful in
connection with the operation of the whole, or any part of, the Premises or any
facilities on the Premises and all parts thereof and all accessions thereto (any
and all 


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<PAGE>


such equipment, replacements, substitutions, parts and accessions being the 
"EQUIPMENT"); excluding, however, any and all gaming equipment that is 
subject to Gaming Laws and located within or used in connection with the 
Premises;

          (b)  all present and future inventory and merchandise in all of its
forms (including, but not limited to, (i) all goods held by Grantor for sale or
lease or to be furnished under contracts of service or so leased or furnished,
(ii) all raw materials, work in process, (iii) all goods in which Grantor has an
interest in mass or a joint or other interest or right of any kind, (iv) all
goods that are returned to or repossessed by Grantor, and (v) all accessions
thereto and products thereof (all such inventory, accessions and products being
the "INVENTORY");

          (c)  all present and future accounts, accounts receivable, rentals,
revenues, receipts, payments, and income of any nature whatsoever derived from
or received with respect to any facilities on the Premises, agreements,
contracts, leases, contract rights, rights to payment, instruments, documents,
chattel paper, security agreements, guaranties, undertakings, surety bonds,
insurance policies, condemnation deposits and awards, notes and drafts,
securities, certificates of deposit and the right to receive all payments
thereon or in respect thereof (whether principal, interest, fees or otherwise),
contract rights (other than rights under contracts or governmental permits that
may not be transferred by law), including, without limitation, rights to all
deposits from tenants and other users of the Premises or any facilities on the
Premises, rights under all contracts relating to the construction, renovation or
restoration of any of the improvements now or hereafter located on the Premises
or the financing thereof and all rights under payment or performance bonds,
warranties, and guaranties, and all rights to payment from any credit/charge
card organization or entity such as or similar to, and including, without
limitation, the organizations or entities that sponsor and administer,
respectively, the American Express Card, the Carte Blanche Card, the Diners Club
Card, the Discover Card, the MasterCard and the Visa Card, books of account, and
principal, interest and payments due on account of goods sold, services
rendered, loans made or credit extended, on or in connection with the Premises
or any facilities on the Premises and all forms of obligations owing to and
rights of Grantor or in which Grantor may have any interest, however created or
arising (any and all such accounts, contract rights, chattel paper, documents,
instruments, general intangibles and other obligations being the "ACCOUNTS", and
any and all such security agreements, leases and other contracts being the
"RELATED CONTRACTS");

          (d)  all present and future right, title and interest of Grantor in
and to all leases, subleases, licenses, concessions, franchises and other use or
occupancy agreements (including room occupancy agreements), and any amendments,
modifications, extensions or renewals thereof (collectively, "LEASES"), whether
or not specifically herein described, that now or may hereafter pertain to or
affect the Premises or any portion thereof, and all amendments to the same,
including, but not limited to, the following:  (i) all payments due and to
become due under such Leases, whether as rent, damages, insurance payments,
condemnation awards, or otherwise; (ii) all claims, rights, powers, privileges
and remedies under such Leases; and (iii) all rights of the Grantor under such
Leases to exercise any 


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<PAGE>

election or option, or to give or receive any notice, consent, waiver or 
approval, or to accept any surrender of the premises or any part thereof, 
together with full power and authority in the name of the Grantor, or 
otherwise, to demand and receive, enforce, collect, and receipt for any or 
all of the foregoing, to endorse or execute any checks or any instruments or 
orders, to file any claims, and to take any other action that Secured Party 
may deem necessary or advisable in connection therewith;

          (e)  all fees, income, rents, issues, profits, oil, gas and mineral
rights, royalties and leaseholds, all earnings, receipts, royalties and revenues
(including, without limitation, revenue from hotel guests) which accrue from any
of the Premises or which may be received or receivable by Grantor from any
hiring, using, leasing, subhiring or subleasing therefor;

          (f)  all present and future deposit accounts of Grantor, any demand,
time, savings, passbook or like account maintained by Grantor with any bank,
savings and loan association, credit union or like organization, and all money,
cash and cash equivalents of Grantor, whether or not deposited in any such
deposit account;

          (g)  all present and future general intangibles (including but not
limited to all governmental permits relating to construction or other activities
on the premises), all tax refunds of every kind and nature to which Grantor now
or hereafter may become entitled, however arising, all other refunds, and all
deposits, goodwill, chooses in action, rights to payment or performance,
judgments taken on any rights or claims included in the Collateral, trade
secrets, computer programs, software, customer lists, business names,
trademarks, trade names and service marks, patents, patent applications,
licenses, copyrights, technology, processes, proprietary information and
insurance proceeds;

          (h)  all present and future books and records, including, without
limitation, books of account and ledgers of every kind and nature, ledger cards,
computer programs, tapes, disks and other information storage devices, all
related data processing software, and all electronically recorded data relating
to Grantor or its business or the Premises, all receptacles and containers for
such records, and all files and correspondence;

          (i)  all present and future maps, plans, specifications, surveys,
studies, reports, data and drawings (including, without limitation,
architectural, structural, mechanical and engineering plans and specifications,
studies, data and drawings) prepared for or relating to the Premises or the
construction, renovation or restoration of any improvements on the Premises or
the extraction of minerals, sand, gravel or other valuable substances from the
Premises, together with all amendments and modifications thereto;

          (j)  all present and future licenses, permits, variances, special
permits, franchises, certificates, rulings, certifications, validations,
exemptions, filings, registrations, authorizations, consents, approvals,
waivers, orders, rights and agreements (including options, option rights and
contract rights), other than those (including non-transferable gaming permits)
that may not be transferred by law, now or hereafter obtained by Grantor 


                                       4
<PAGE>

from any governmental authority having or claiming jurisdiction over the 
Premises or any other element of the Collateral or providing access thereto, 
or the operation of any business on, at, or from the Premises;

          (k)  all present and future stocks, bonds, debentures, securities,
subscription rights, options, warrants, puts, calls, certificates, partnership
interests, joint venture interests, investments, brokerage accounts and all
rights, preferences, privileges, dividends, distributions, redemption payments
and liquidation payments received or receivable with respect thereto;

          (l)  all present and future accessions, appurtenances, components,
repairs, repair parts, spare parts, replacements, substitutions, additions,
issue and improvements to or of or with respect to any of the foregoing;

          (m)  all other fixtures and storage and office facilities, and all
accessions thereto and products thereof and all water stock relating to the
Premises;

          (n)  all other tangible and intangible personal property of Grantor;

          (o)  all rights, remedies, powers and privileges of Grantor with
respect to any of the foregoing; and

          (p)  any and all fees, proceeds, products, rents, income and profits
of any of the foregoing, including, without limitation, all money, accounts,
general intangibles, deposit accounts, documents, instruments, chattel paper,
goods, insurance proceeds (whether or not the Secured Party is the loss payee),
and any other tangible or intangible property received upon the sale or
disposition of any of the foregoing (it being agreed, for purposes hereof, that
the term "PROCEEDS" includes whatever is receivable or received when any of the
Collateral is sold, collected, exchanged or otherwise disposed of, whether such
disposition is voluntary or involuntary).  Notwithstanding anything to the
contrary contained herein, Secured Party acknowledges that it has no security
interest in (x) any cash of Grantor described in CLAUSES (d), (e), (f), (g) and
(k) above, to the extent such a security interest is prohibited by any Gaming
Laws, or (y) any deposit account described in CLAUSE (f) above, to the extent
such a security interest is not permitted by applicable law.

          SECTION 2.  SECURITY FOR OBLIGATIONS.  This Agreement secures, and the
Collateral is collateral security for, the prompt payment or performance in full
when due of all obligations and liabilities of every nature of Grantor, now or
hereafter existing, under or arising out of or in connection with the Notes, the
Note Purchase Agreement, the Company Deed of Trust and the other Basic Documents
(including the payment of amounts that would become due but for the operation of
the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C.
Section 362(a)), and all extensions or renewals thereof, whether for principal,
interest (including without limitation interest that, but for the filing of a
petition in bankruptcy with respect to Grantor, would accrue on such
obligations), fees, expenses, indemnities or otherwise, whether voluntary or
involuntary, direct or indirect, absolute or 


                                       5
<PAGE>

contingent, liquidated or unliquidated, whether or not jointly owed with 
others, and whether or not from time to time decreased or extinguished and 
later increased, created or incurred, and all or any portion of such 
obligations or liabilities that are paid, to the extent all or any part of 
such payment is avoided or recovered directly or indirectly from Secured 
Party or any Holder as a preference, fraudulent transfer or otherwise (all 
such obligations and liabilities being the "UNDERLYING DEBT"), and all 
obligations of every nature of Grantor now or hereafter existing under this 
Agreement (all such obligations of Grantor, together with the Underlying 
Debt, being the "SECURED OBLIGATIONS").

          SECTION 3.  GRANTOR REMAINS LIABLE.  Anything contained herein to the
contrary notwithstanding, (a) Grantor shall remain liable under any contracts
and agreements included in the Collateral, to the extent set forth therein, to
perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (b) the exercise by Secured Party of any
of its rights hereunder shall not release Grantor from any of its duties or
obligations under the contracts and agreements included in the Collateral, and
(c) Secured Party shall not have any obligation or liability under any contracts
and agreements included in the Collateral by reason of this Agreement or
otherwise, nor shall Secured Party be obligated to perform any of the
obligations or duties of Grantor thereunder or to take any action to collect or
enforce any claim for payment assigned hereunder.

          SECTION 4.  REPRESENTATIONS AND WARRANTIES.  Grantor represents and
warrants as follows:

          (a)  OWNERSHIP OF COLLATERAL.  Except for the security interest
created by this Agreement and any Liens permitted pursuant to the Note Purchase
Agreement (including, without limitation, the Permitted Liens and Permitted
Additional Indebtedness described in the Note Purchase Agreement), Grantor owns
the Collateral free and clear of any Lien.  Except such as may have been filed
to perfect Liens permitted pursuant to the Note Purchase Agreement, no effective
financing statement or other instrument similar in effect covering all or any
part of the Collateral is on file in any filing or recording office.

          (b)  LOCATION OF EQUIPMENT AND INVENTORY.  All of the Equipment and
Inventory is, as of the date hereof, located at the Premises.

          (c)  OFFICE LOCATIONS; OTHER NAMES.  The chief place of business, the
chief executive office and the office where Grantor keeps its records regarding
the Accounts and all originals of all chattel paper that evidence Accounts is,
and has been for the four month period preceding the date hereof, located at
2535 Las Vegas Boulevard South, Las Vegas, Nevada 89109.  Grantor has not in the
past done, and does not now do, business under any other name (including any
trade-name or fictitious business name) except Santa Fe Hotel Inc.

          (d)  GOVERNMENTAL AUTHORIZATIONS.  No authorization, approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for either (i) the grant by Grantor of the security
interest granted hereby, (ii) the execution, delivery or performance of this
Agreement by Grantor, or (iii) the perfection of 


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or the exercise by Secured Party of its rights and remedies hereunder (except 
(i) the filing of Uniform Commercial Code financing statements with the 
office of the Secretary of State of the State of Nevada and (ii) as has been 
previously taken by or at the direction of Grantor).

          (e)  PERFECTION.  Upon recordation of the Subordination and
Intercreditor Agreement, this Agreement, together with the filing of a UCC-1
financing statement describing the Collateral with the Secretary of State of
Nevada and the Company Deed of Trust with the Clark County Recorder creates a
valid, perfected, enforceable and first priority security interest in the
Collateral, securing the payment of the Secured Obligations, and all filings and
other actions necessary or desirable to perfect and protect such security
interest have been duly made or taken.

          (f)  OTHER INFORMATION.  All information heretofore, herein or
hereafter supplied to Secured Party by or on behalf of Grantor with respect to
the Collateral is accurate and complete in all material respects.

          SECTION 5.  FURTHER ASSURANCES.

          (a)  Grantor agrees that from time to time, at the expense of Grantor,
Grantor will promptly execute and deliver all further instruments and documents,
and take all further action, that may be necessary or desirable, or that Secured
Party reasonably may request, in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable Secured Party to
exercise and enforce its rights and remedies hereunder with respect to any
Collateral.  Without limiting the generality of the foregoing, Grantor will: 
(i) at the request of Secured Party mark conspicuously each item of chattel
paper included in the Accounts, each Related Contract and, at the request of
Secured Party, each of its records pertaining to the Collateral, with a legend,
in form and substance satisfactory to Secured Party, indicating that such
Collateral is subject to the security interest granted hereby, (ii) at the
request of Secured Party, deliver and pledge to Secured Party hereunder all
promissory notes and other instruments (including checks) and all original
counterparts of chattel paper constituting Collateral, duly endorsed and
accompanied by duly executed instruments of transfer or assignment, all in form
and substance satisfactory to Secured Party, (iii) execute and file such
financing or continuation statements, or amendments thereto, and such other
instruments or notices, as may be necessary or desirable, or as Secured Party
may reasonably request, in order to perfect and preserve the security interests
granted or purported to be granted hereby, (iv) at any reasonable time, upon
request by Secured Party, exhibit the Collateral to and allow inspection of the
Collateral by Secured Party, or persons designated by Secured Party, and (v) at
Secured Party's reasonable request, appear in and defend any action or
proceeding that may affect Grantor's title to or Secured Party's security
interest in all or any significant part of the Collateral.

          (b)  Grantor hereby authorizes Secured Party to file one or more
financing or continuation statements, and amendments thereto, relative to all or
any part of the Collateral without the signature of Grantor.  Grantor agrees
that a carbon, photographic or 


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other reproduction of this Agreement or of a financing statement signed by 
Grantor shall be sufficient as a financing statement and may be filed as a 
financing statement in any and all jurisdictions.

          (c)  Grantor will furnish to Secured Party from time to time
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as Secured Party may
reasonably request, all in reasonable detail.

          SECTION 6.  CERTAIN COVENANTS OF GRANTOR.  Grantor shall:

          (a)  not use or permit any Collateral to be used unlawfully or in
violation of any provision of this Agreement or any applicable statute,
regulation or ordinance or any policy of insurance covering the Collateral;

          (b)  notify Secured Party of any change in Grantor's name or identity
within 15 days of such change;

          (c)  give Secured Party 30 days' prior written notice of any change in
Grantor's chief place of business, chief executive office or residence or the
office where Grantor keeps its records regarding the Accounts and all originals
of all chattel paper that evidence Accounts;

          (d)  if Secured Party gives value to enable Grantor to acquire rights
in or the use of any Collateral, use such value for such purposes; and

          (e)  pay prior to delinquency due all property and other taxes,
assessments and governmental charges or levies imposed upon, and all claims
(including claims for labor, materials and supplies) against, the Collateral,
except to the extent the validity thereof is being contested in good faith and
for which adequate reserves have been established; PROVIDED that Grantor shall
in any event pay such taxes, assessments, charges, levies or claims not later
than five days prior to the date of any proposed sale under any judgement, writ
or warrant of attachment entered or filed against Grantor or any of the
Collateral as a result of the failure to make such payment.

          SECTION 7.  SPECIAL COVENANTS WITH RESPECT TO EQUIPMENT AND INVENTORY.
Grantor shall:

          (a)  keep the Equipment and Inventory at the Premises or, upon 30
days' prior written notice to Secured Party, at such other places in
jurisdictions where all action that may be necessary or desirable, or that
Secured Party may reasonably request, in order to perfect and protect any
security interest granted or purported to be granted hereby, or to enable
Secured Party to exercise and enforce its rights and remedies hereunder, with
respect to such Equipment and Inventory shall have been taken;


                                       8
<PAGE>

          (b)  cause the Equipment to be maintained and preserved in the same
condition, repair and working order as when new, ordinary wear and tear
excepted, and shall forthwith make or cause to be made all repairs, replacements
and other improvements in connection therewith that are necessary or desirable
to such end.  Grantor shall promptly furnish to Secured Party a statement
respecting any material loss or damage to any of the Equipment (the requirements
under this SUBSECTION 7(B) being supplemental to and not exclusive of the
requirements under the Note Purchase Agreement and the Company Deed of Trust
relating to maintenance of property);

          (c)  notify Secured Party of the establishment after the date hereof
of any deposit accounts in which Secured Party may take a security interest
pursuant to applicable law and take such steps as may be requested by Secured
Party to perfect Secured Party's lien therein; and

          (d)  perform all acts that are necessary or desirable to cause all
licenses, permits, variances, special permits, franchises, certificates,
rulings, certifications, validations, exemptions, filings, registrations,
authorizations, consents, approvals, waivers, orders, rights, and agreements in
which a security interest has been conveyed to Secured Party pursuant to
SUBSECTION 1(i) to remain in full force and effect.

          SECTION 8.  INSURANCE.  Grantor shall, at its own expense, maintain
insurance with respect to the Equipment and Inventory in accordance with the
terms of the Note Purchase Agreement and the Company Deed of Trust.

          SECTION 9.  SPECIAL COVENANTS WITH RESPECT TO ACCOUNTS AND RELATED
CONTRACTS.

          (a)  Grantor shall keep its chief place of business and chief
executive office and the office where it keeps its records concerning the
Accounts and Related Contracts, and all originals of all chattel paper that
evidence Accounts, at the location therefor specified in SECTION 4 or, upon 30
days' prior written notice to Secured Party, at such other location in a
jurisdiction where all action that may be necessary or desirable, or that
Secured Party may reasonably request, in order to perfect and protect any
security interest granted or purported to be granted hereby, or to enable
Secured Party to exercise and enforce its rights and remedies hereunder, with
respect to such Accounts and Related Contracts shall have been taken.  Grantor
will hold and preserve such records and chattel paper and will permit
representatives of Secured Party at any time during normal business hours and
upon reasonable notice from the Secured Party to inspect and make abstracts from
such records and chattel paper, and Grantor agrees to render to Secured Party,
at Grantor's cost and expense, such clerical and other assistance as may be
reasonably requested with regard thereto.  Promptly upon the request of Secured
Party, Grantor shall deliver to Secured Party complete and correct copies of
each Related Contract.

          (b)  Grantor shall, for not less than 3 years from the date on which
such Account arose, maintain (i) complete records of each Account, including
records of all 


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<PAGE>

payments received, credits granted and merchandise returned, and (ii) all 
documentation relating thereto.

          (c)  Except as otherwise provided in this SUBSECTION (c), Grantor
shall continue to collect, at its own expense, all amounts due or to become due
to Grantor under the Accounts (but, other than with respect to security
deposits, in no event more than one month in advance) and Related Contracts.  In
connection with such collections, Grantor may take (and, at Secured Party's
direction, shall take) such action as Grantor or Secured Party may deem
necessary or advisable to enforce collection of amounts due or to become due
under the Accounts; PROVIDED, HOWEVER, that Secured Party shall have the right
at any time, upon the occurrence and during the continuation of an Event of
Default and upon written notice to Grantor of its intention to do so, to notify
the account debtors or obligors under any Accounts of the assignment of such
Accounts to Secured Party and to direct such account debtors or obligors to make
payment of all amounts due or to become due to Grantor thereunder directly to
Secured Party, to notify each Person maintaining a lockbox or similar
arrangement to which account debtors or obligors under any Accounts have been
directed to make payment to remit all amounts representing collections on checks
and other payment items from time to time sent to or deposited in such lockbox
or other arrangement directly to Secured Party and, upon such notification and
at the expense of Grantor, to enforce collection of any such Accounts and to
adjust, settle or compromise the amount or payment thereof, in the same manner
and to the same extent as Grantor might have done.  After receipt by Grantor of
the notice from Secured Party referred to in the PROVISO to the preceding
sentence, (i) all amounts and proceeds (including checks and other instruments)
received by Grantor in respect of the Accounts and the Related Contracts shall
be received in trust for the benefit of Secured Party hereunder, shall be
segregated from other funds of Grantor and shall be forthwith paid over or
delivered to Secured Party in the same form as so received (with any necessary
endorsement) to be held as cash Collateral and applied as provided by SECTION
17, and (ii) Grantor shall not adjust, settle or compromise the amount or
payment of any Account, or release wholly or partly any account debtor or
obligor thereof, or allow any credit or discount thereon (other than settlements
in the ordinary course of business and substantially consistent with the
practice at other gaming institutions in connection with their gaming operations
in the State of Nevada with payors of such Accounts reached to facilitate
collection from such payors of such Accounts).

          SECTION 10.  DEPOSIT ACCOUNTS.  Upon the occurrence and during the
continuation of an Event of Default or Potential Event of Default, Secured Party
may exercise dominion and control over, and refuse to permit further withdrawals
(whether of money, securities, instruments or other property) from any deposit
accounts maintained with Secured Party constituting part of the Collateral.

          SECTION 11.  LICENSE OF PATENTS, TRADEMARKS, COPYRIGHTS, ETC.  Grantor
hereby assigns, transfers and conveys to Secured Party, effective upon the
occurrence of any Event of Default, the nonexclusive right and license to use
all trademarks, tradenames, copyrights, customers lists, patents or technical
processes owned or used by Grantor that relate to the Collateral and any other
collateral granted by Grantor as security for the Secured 


                                      10

<PAGE>

Obligations, together with any goodwill associated therewith, all to the 
extent necessary to enable Secured Party to use, possess and realize on the 
Collateral and to enable any successor or assign to enjoy the benefits of the 
Collateral.  This right and license shall inure to the benefit of all 
successors, assigns and transferees of Secured Party and its successors, 
assigns and transferees, whether by voluntary conveyance, operation of law, 
assignment, transfer, foreclosure, deed in lieu of foreclosure or otherwise.  
Such right and license is granted free of charge, without requirement that 
any monetary payment whatsoever be made to Grantor.

          SECTION 12.  TRANSFERS AND OTHER LIENS.  Grantor shall not:

          (a)  sell, assign (by operation of law or otherwise) or otherwise
dispose of any of the Collateral, except as permitted by the Note Purchase
Agreement or any senior Lien; or

          (b)  except for the security interest created by this Agreement or as
permitted by the Note Purchase Agreement, create or suffer to exist any Lien
upon or with respect to any of the Collateral to secure the indebtedness or
other obligations of any Person.

          SECTION 13.  INTENTIONALLY DELETED.

          SECTION 14.  SECURED PARTY APPOINTED ATTORNEY-IN-FACT.  Grantor hereby
irrevocably appoints Secured Party as Grantor's attorney-in-fact, with full
authority in the place and stead of Grantor and in the name of Grantor, Secured
Party or otherwise, from time to time in Secured Party's discretion to take any
action and to execute any instrument that Secured Party may deem necessary or
advisable to accomplish the purposes of this Agreement, including without
limitation:

          (a)  to obtain and adjust insurance required to be maintained by
Grantor or paid to Secured Party pursuant to the Note Purchase Agreement and the
Company Deed of Trust;

          (b)  to ask for, demand, collect, sue for, recover, compound, receive
and give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral;

          (c)  to receive, endorse and collect any drafts or other instruments,
documents and chattel paper in connection with CLAUSES (a) and (b) above;

          (d)  to file any claims or take any action or institute any
proceedings (including, without limitation, any proceeding before any Gaming
Authority) that Secured Party may deem necessary or desirable for the collection
of any of the Collateral or otherwise to enforce the rights of Secured Party
with respect to any of the Collateral;

          (e)  to pay or discharge taxes or Liens (other than Liens permitted
under this Agreement or the Note Purchase Agreement) levied or placed upon or
threatened against the 


                                       11
<PAGE>

Collateral, the legality or validity thereof and the amounts necessary to 
discharge the same to be determined by Secured Party in its sole discretion, 
any such payments made by Secured Party to become obligations of Grantor to 
Secured Party, due and payable immediately without demand;

          (f)  to sign and endorse any invoices, freight or express bills, bills
of lading, storage or warehouse receipts, drafts against debtors, assignments,
verifications and notices in connection with Accounts and other documents
relating to the Collateral; and

          (g)  upon the occurrence and during the continuation of an Event of
Default, generally to sell, transfer, pledge, make any agreement with respect to
or otherwise deal with any of the Collateral as fully and completely as though
Secured Party were the absolute owner thereof for all purposes, and to do, at
Secured Party's option and Grantor's expense, at any time or from time to time,
all acts and things that Secured Party deems necessary to protect, preserve or
realize upon the Collateral and Secured Party's security interest therein in
order to effect the intent of this Agreement, all as fully and effectively as
Grantor might do.

          SECTION 15.  SECURED PARTY MAY PERFORM.  If Grantor fails to perform
any agreement contained herein, Secured Party may itself perform, or cause
performance of, such agreement, and the expenses of Secured Party incurred in
connection therewith shall be payable by Grantor under SECTION 18.

          SECTION 16.  STANDARD OF CARE.  The powers conferred on Secured Party
hereunder are solely to protect its interest in the Collateral and shall not
impose any duty upon it to exercise any such powers.  Except for the exercise of
reasonable care in the custody of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, Secured Party shall
have no duty as to any Collateral or as to the taking of any necessary steps to
preserve rights against prior parties or any other rights pertaining to any
Collateral, it being understood that Secured Party shall have no responsibility
for (a) ascertaining or taking action with respect to calls, conversions,
exchanges, maturities, tenders or other matters relating to any Collateral,
whether or not Secured Party has or is deemed to have knowledge of such matters,
(b) taking any necessary steps (other than steps taken in accordance with the
standard of care set forth above to maintain possession of the Collateral) to
preserve rights against any parties with respect to any Collateral, (c) taking
any necessary steps to collect or realize upon the Secured Obligations or any
guarantee therefor, or any part thereof, or any of the Collateral, or
(d) initiating any action to protect the Collateral against the possibility of a
decline in market value.  Secured Party shall be deemed to have exercised
reasonable care in the custody and preservation of Collateral in its possession
if such Collateral is accorded treatment substantially equal to that which
Secured Party accords its own property.


                                       12
<PAGE>

          SECTION 17.  REMEDIES.

          (a)  Notwithstanding any other provision hereof, if Secured Party
     elects, upon any Event of Default, to sell real property and any of the
     Collateral together under the Company Deed of Trust and applicable law,
     then the terms of the Company Deed of Trust shall, with respect to such
     sale and Collateral, control and supersede any terms in this Agreement with
     respect to such sale and Collateral; PROVIDED that Secured Party's election
     to exercise remedies under the Company Deed of Trust shall have no effect
     on the terms contained in this Agreement with respect to any Collateral as
     to which Secured Party has not so elected.

          (b)  If any Event of Default shall have occurred and be continuing,
     Secured Party may exercise in respect of the Collateral, in addition to all
     other rights and remedies provided for herein or otherwise available to it,
     all the rights and remedies of a secured party on default under the Uniform
     Commercial Code as in effect in any relevant jurisdiction (the "CODE")
     (whether or not the Code applies to the affected Collateral), and also may
     (i) require Grantor to, and Grantor hereby agrees that it will at its
     expense and upon request of Secured Party forthwith, assemble all or part
     of the Collateral as directed by Secured Party and make it available to
     Secured Party at a place to be designated by Secured Party that is
     reasonably convenient to both parties, (ii) enter onto the property where
     any Collateral is located and take possession thereof with or without
     judicial process, (iii) prior to the disposition of the Collateral, store,
     process, repair or recondition the Collateral or otherwise prepare the
     Collateral for disposition in any manner to the extent Secured Party deems
     appropriate, (iv) take possession of Grantor's premises or place custodians
     in exclusive control thereof, remain on such premises and use the same and
     any of Grantor's equipment for the purpose of completing any work in
     process, taking any actions described in the preceding clause, (v) collect
     any Secured Obligation, and (vi) without notice except as specified below,
     sell the Collateral or any part thereof in one or more parcels at public or
     private sale(s), at any of Secured Party's offices or elsewhere, for cash,
     on credit or for future delivery, at such time or times and at such price
     or prices and upon such other terms as Secured Party may deem commercially
     reasonable.  Secured Party may be the purchaser of any or all of the
     Collateral at any such sale and Secured Party shall be entitled, for the
     purpose of bidding and making settlement or payment of the purchase price
     for all or any portion of the Collateral sold at any such public sale, to
     use and apply any of the Secured Obligations as a credit on account of the
     purchase price for any Collateral payable by Secured Party at such sale. 
     Each purchaser at any such sale shall hold the property sold absolutely
     free from any claim or right on the part of Grantor, and Grantor hereby
     waives (to the extent permitted by applicable law) all rights of
     redemption, stay and/or appraisal which it now has or may at any time in
     the future have under any rule of law or statute now existing or hereafter
     enacted.  Grantor agrees that, to the extent notice of sale shall be
     required by law, at least ten days' notice to Grantor of the time and place
     of any public sale or the time after which any private sale is to be made
     shall constitute reasonable notification.  Secured Party shall not be
     obligated to make any sale of Collateral 


                                       13
<PAGE>

     regardless of notice of sale having been given.  Secured Party may 
     adjourn any public or private sale from time to time by announcement at 
     the time and place fixed therefor, and such sale may, without further 
     notice, be made at the time and place to which it was so adjourned.  
     Grantor hereby waives any claims against Secured Party arising by reason 
     of the fact that the price at which any Collateral may have been sold at 
     such a private sale was less than the price which might have been 
     obtained at a public sale, even if Secured Party accepts the first offer 
     received and does not offer such Collateral to more than one offeree.  
     If the proceeds of any sale or other disposition of the Collateral are 
     insufficient to pay all the Secured Obligations, Grantor shall be liable 
     for the deficiency and the fees of any attorneys employed by Secured 
     Party to collect such deficiency.

          (c)  Grantor recognizes that, by reason of certain prohibitions
     contained in the Securities Act of 1933, as from time to time amended (the
     "SECURITIES ACT"), and applicable state securities laws, Secured Party may
     be compelled, with respect to any sale of all or any part of the Collateral
     conducted without prior registration or qualification of such Collateral
     under the Securities Act and/or such state securities laws, to limit
     purchasers to those who will agree, among other things, to acquire the
     Collateral for their own account, for investment and not with a view to the
     distribution or resale thereof.  Grantor acknowledges that any such private
     sales may be at prices and on terms less favorable than those obtainable
     through a public sale without such restrictions (including, without
     limitation, a public offering made pursuant to a registration statement
     under the Securities Act) and, notwithstanding such circumstances, Grantor
     agrees that any such private sale shall be deemed to have been made in a
     commercially reasonable manner and that Secured Party shall have no
     obligation to engage in public sales and no obligation to delay the sale of
     any Collateral for the period of time necessary to permit the issuer
     thereof to register it for a form of public sale requiring registration
     under the Securities Act or under applicable state securities laws, even if
     such issuer would, or should, agree to so register it.

          SECTION 18.  APPLICATION OF PROCEEDS.  Except as expressly provided
elsewhere in this Agreement, all proceeds received by Secured Party in respect
of any sale of, collection from, or other realization upon all or any part of
the Collateral may, in the discretion of Secured Party, be held by Secured Party
as Collateral for, and/or then, or at any other time thereafter, applied in full
or in part by Secured Party against, the Secured Obligations in the following
order of priority:

          FIRST:  To the payment of all costs and expenses of such sale,
     collection or other realization, including costs and expenses of Secured
     Party and its agents and counsel, and all other expenses, liabilities and
     advances made or incurred by Secured Party in connection therewith, and all
     amounts for which Secured Party is entitled to indemnification hereunder
     and all advances made by Secured Party hereunder for the account of
     Grantor, and to the payment of all costs and expenses paid or incurred by


                                       14
<PAGE>

     Secured Party in connection with the exercise of any right or remedy
     hereunder, all in accordance with SECTION 19;

          SECOND:  To the payment of all other Secured Obligations (for the
     ratable benefit of the holders thereof) in such order as Secured Party
     shall elect as provided in Section 2.5A of the Note Purchase Agreement; and

          THIRD:  To the payment to or upon the order of Grantor, or to
     whomsoever may be lawfully entitled to receive the same or as a court of
     competent jurisdiction may direct, of any surplus then remaining from such
     proceeds.

          SECTION 19.  INDEMNITY AND EXPENSES.

          (a)  Grantor agrees to indemnify Secured Party from and against any
and all claims, losses and liabilities in any way relating to, growing out of or
resulting from this Agreement and the transactions contemplated hereby
(including, without limitation, enforcement of this Agreement), except to the
extent such claims, losses or liabilities result solely from Secured Party's
gross negligence or willful misconduct.

          (b)  Grantor shall pay to Secured Party upon demand the amount of any
and all costs and expenses, including the reasonable fees and expenses of its
counsel and of any experts and agents, that Secured Party may reasonably incur
in connection with (i) the administration of this Agreement, (ii) the custody,
preservation, use or operation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (iii) the exercise or enforcement of
any of the rights of Secured Party hereunder, or (iv) the failure by Grantor to
perform or observe any of the provisions hereof.

          SECTION 20.  CONTINUING SECURITY INTEREST; TRANSFER OF NOTES.  This
Agreement shall create a continuing security interest in the Collateral and
shall (a) remain in full force and effect until the indefeasible payment in full
of the Secured Obligations, (b) be binding upon Grantor, its successors and
assigns, and (c) inure, together with the rights and remedies of Secured Party
hereunder, to the benefit of Secured Party and its successors, transferees and
assigns.  Without limiting the generality of the foregoing CLAUSE (c), any
Holder may assign or otherwise transfer any Notes held by it to any other Person
in accordance with the Note Purchase Agreement, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted to
Secured Party herein or otherwise.  Upon the indefeasible payment in full of all
Secured Obligations, the security interest granted hereby shall terminate and
all rights to the Collateral shall revert to Grantor.  Upon any such termination
Secured Party will, at Grantor's expense, execute and deliver to Grantor such
documents as Grantor shall reasonably request to evidence such termination.

          SECTION 21.  SECURED PARTY AS COLLATERAL AGENT.

          (a)  Secured Party has been appointed to act as Secured Party
hereunder by Holders.  Secured Party shall be obligated, and shall have the
right hereunder, to make 


                                       15
<PAGE>

demands, to give notices, to exercise or refrain from exercising any rights, 
and to take or refrain from taking any action (including, without limitation, 
the release or substitution of Collateral), solely in accordance with this 
Agreement and the Note Purchase Agreement.

          (b)  Secured Party shall at all times be the same Person that is
Collateral Agent under the Note Purchase Agreement.  Written notice of
resignation by Collateral Agent pursuant to subsection 8.7 of the Note Purchase
Agreement shall also constitute notice of resignation as Secured Party under
this Agreement; removal of Collateral Agent pursuant to subsection 8.7 of the
Note Purchase Agreement shall also constitute removal as Secured Party under
this Agreement; and appointment of a successor Collateral Agent pursuant to
subsection 8.7 of the Note Purchase Agreement shall also constitute appointment
of a successor Secured Party under this Agreement.  Upon the acceptance of any
appointment as Collateral Agent under subsection 8.7 of the Note Purchase
Agreement by a successor Collateral Agent, that successor Collateral Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring or removed Secured Party under this Agreement, and
the retiring or removed Secured Party under this Agreement shall promptly
(i) transfer to such successor Secured Party all sums, securities and other
items of Collateral held hereunder, together with all records and other
documents necessary or appropriate in connection with the performance of the
duties of the successor Secured Party under this Agreement, and (ii) execute and
deliver to such successor Secured Party such amendments to financing statements,
and take such other actions, as may be necessary or appropriate in connection
with the assignment to such successor Secured Party of the security interests
created hereunder, whereupon such retiring or removed Secured Party shall be
discharged from its duties and obligations under this Agreement.  After any
retiring or removed Collateral Agent's resignation or removal hereunder as
Secured Party, the provisions of this Agreement shall inure to its benefit as to
any actions taken or omitted to be taken by it under this Agreement while it was
Secured Party hereunder.

          SECTION 22.  AMENDMENTS; ETC.  No amendment or waiver of any provision
of this Agreement, or consent to any departure by Grantor herefrom, shall in any
event be effective unless the same shall be in writing and signed by Secured
Party, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which it was given.

          SECTION 23.  NOTICES.  Any notice or other communication herein
required or permitted to be given shall be in writing and may be personally
served, telexed or sent by telefacsimile or United States mail or courier
service and shall be deemed to have been given when delivered in person or by
courier service, upon receipt of telefacsimile or telex prior to 5:00 p.m. on a
Business Day, or three Business Days after depositing it in the United States
mail with postage prepaid and properly addressed; PROVIDED that notices to
Secured Party shall only be effective upon receipt.  For the purposes hereof,
the address of each party hereto shall be as set forth under such party's name
on the signature pages hereof or, as to either party, such other address as
shall be designated by such party in a written notice delivered to the other
party hereto.


                                       16
<PAGE>

          SECTION 24.  FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. 
No failure or delay on the part of Secured Party in the exercise of any power,
right or privilege hereunder shall impair such power, right or privilege or be
construed to be a waiver of any default or acquiescence therein, nor shall any
single or partial exercise of any such power, right or privilege preclude any
other or further exercise thereof or of any other power, right or privilege. 
All rights and remedies existing under this Agreement are cumulative to, and not
exclusive of, any rights or remedies otherwise available.

          SECTION 25.  SEVERABILITY.  In case any provision in or obligation
under this Agreement shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.

          SECTION 26.  HEADINGS.  Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.

          SECTION 27.  GOVERNING LAW; TERMS.  THIS AGREEMENT SHALL BE GOVERNED
BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF
THE STATE OF NEVADA, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO
THE EXTENT THAT THE CODE PROVIDES THAT THE VALIDITY OR PERFECTION OF THE
SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
NEVADA.

          SECTION 28.  CONSENT TO JURISDICTION AND SERVICE OF PROCESS.  ALL
JUDICIAL PROCEEDINGS BROUGHT AGAINST GRANTOR ARISING OUT OF OR RELATING TO THIS
AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION
IN THE STATE OF CALIFORNIA OR NEVADA, AND BY EXECUTION AND DELIVERY OF THIS
AGREEMENT GRANTOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES,
GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID
COURTS AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN
CONNECTION WITH THIS AGREEMENT.  Grantor hereby agrees that service of all
process in any such proceeding in any such court may be made by registered or
certified mail, return receipt requested, to Grantor at its address as provided
in SECTION 23, such service being hereby acknowledged by Grantor to be
sufficient for personal jurisdiction in any action against Grantor in any such
court and to be otherwise effective and binding service in every respect. 
Nothing herein shall affect the right to serve process in any other manner
permitted by law.

          SECTION 29.  WAIVER OF JURY TRIAL.  GRANTOR AND SECURED PARTY HEREBY
AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY 


                                       17
<PAGE>

TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS 
AGREEMENT.  The scope of this waiver is intended to be all-encompassing of 
any and all disputes that may be filed in any court and that relate to the 
subject matter of this transaction, including without limitation contract 
claims, tort claims, breach of duty claims, and all other common law and 
statutory claims.  Grantor and Secured Party each acknowledge that this 
waiver is a material inducement for Grantor and Secured Party to enter into a 
business relationship, that Grantor and Secured Party have already relied on 
this waiver in entering into this Agreement and that each will continue to 
rely on this waiver in their related future dealings.  Grantor and Secured 
Party further warrant and represent that each has reviewed this waiver with 
its legal counsel, and that each knowingly and voluntarily waives its jury 
trial rights following consultation with legal counsel.  THIS WAIVER IS 
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, 
AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, 
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.  In the event of litigation, 
this Agreement may be filed as a written consent to a trial by the court.

          SECTION 30.  COUNTERPARTS.  This Agreement may be executed in one or
more counterparts and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed an original, but all
such counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.

          SECTION 31.  SUBORDINATION AND INTERCREDITOR AGREEMENT.  The parties
hereto hereby acknowledge and agree that the Subordination and Intercreditor
Agreement has been executed, delivered and recorded concurrently with the
execution, delivery and recordation of this Agreement.  Pursuant to the
Subordination and Intercreditor Agreement, the lien in the Collateral created in
favor of the Secured Party hereunder is senior to the lien in the Collateral
created by the Company Indenture Deed of Trust and other documents and
instruments evidencing or securing the Company Indenture (collectively, the
"COMPANY INDENTURE DOCUMENTS"), and the lien of the Company Indenture Documents
in and to the Collateral is thereby subordinated to the lien of this Agreement,
the Company Deed of Trust and the other Basic Documents.


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                                       18
<PAGE>

          IN WITNESS WHEREOF, Grantor and Secured Party have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.


                         SANTA FE HOTEL INC.,
                         a Nevada corporation


                         By: /s/ Thomas K. Land
                         Its: Senior Vice President and Chief Financial Officer

                         ADDRESS:
                         4949 North Rancho Road
                         Las Vegas, Nevada 89130
                         Attention:  Thomas Land


                         SUNAMERICA LIFE INSURANCE COMPANY,
                         an Arizona corporation


                         By: /s/ Stephen Hanover
                         Its: Authorized Agent

                         ADDRESS:

                         SunAmerica Life Insurance Company 
                         1 SunAmerica Center
                         Century City
                         Los Angeles, California 90067
                         Attention:  Stephen P. Hanover










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