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                                                                    EXHIBIT 10.1

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                           TERM LOAN CREDIT AGREEMENT

         THIS AGREEMENT is entered into as of October 8, 2004 (as amended from
time to time, this "Agreement"), by and between THE SANTA ANITA COMPANIES, INC.,
a Delaware corporation ("Borrower"), and WELLS FARGO BANK, NATIONAL ASSOCIATION
("Bank").

                                  R E C I T A L

         The Borrower has requested from the Bank the credit accommodation
described below, and the Bank has agreed to provide said credit accommodation to
the Borrower on the terms and conditions contained herein.

         NOW, THEREFORE, for valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Bank and the Borrower hereby agree as
follows:

                                    ARTICLE I

                                   DEFINITIONS

SECTION 1.1.             DEFINITIONS.

         The following terms with initial capital letters have the following
meanings:

         "Affiliate" means, with respect to any Person, any other Person that,
directly or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such first Person. The term
"control" means the possession, directly or indirectly, of the power, whether or
not exercised, (i) to vote 20% or more of the securities having voting power for
the election of directors (or Persons performing similar functions) of such
Person or (ii) to direct or cause the direction of the management or policies of
a Person, whether through the ownership of voting securities, by contract or
otherwise, and the terms "controlled" and "common control" have correlative
meanings. Unless otherwise indicated, "Affiliate" refers to an Affiliate of the
Borrower. Notwithstanding the foregoing, in no event shall the Bank or any
Affiliate of the Bank be deemed to be an Affiliate of the Borrower.

         "Applicable Law" means all applicable provisions of all (i)
constitutions, treaties, statutes, laws, rules, regulations and ordinances of
any Governmental Authority, (ii) Governmental Approvals and (iii) orders,
decisions, judgments, awards and decrees of any Governmental Authority
(including common law and principles of public policy).

         "Appraised Value of the Mortgaged Property" means the appraised value
of the Mortgaged Property as determined by the Bank pursuant to the appraisal
conducted by, or on behalf of, the Bank in form and substance satisfactory to
the Bank.

         "Approved Subordination Terms" means the terms of subordination set
forth in Exhibit G.

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         "Asset Disposition" means any sale or other disposition, in any single
transaction or series of related transactions, by the Borrower or any Subsidiary
of the Borrower, of any of its assets (including (x) by way of a Sale-Leaseback
Transaction and (y) in the case of a Subsidiary of the Borrower, any issuance of
any Capital Stock of such Subsidiary to any Person other than the Borrower or a
Wholly-Owned Subsidiary of the Borrower (other than directors qualifying
shares)); except that "Asset Disposition" shall not include (A) any disposition
of assets or issuance of Capital Stock by any Subsidiary to the Borrower or a
Wholly-Owned Subsidiary of the Borrower, (B) a merger or consolidation permitted
pursuant to Section 6.6 or (C) sales of inventory held or purchased for sale to
others or dispositions of other property that has become obsolete or worn out,
in each case in the ordinary course of business.

         "Assignment of Leases and Rents" means the Assignment of Leases and
Rents between the Borrower and the Bank in substantially the form of Exhibit F,
as amended from time to time.

         "Bankruptcy Code" means Title 11 of the United States Code (11 U.S.C.
Section 101 ET SEQ.), as amended from time to time.

         "Base LIBOR" means the rate per annum for Dollar deposits quoted by the
Bank as the Inter-Bank Market Offered Rate, with the understanding that such
rate is quoted by the Bank for the purpose of calculating effective rates of
interest for loans making reference thereto, on the first day of an Interest
Period for delivery of funds on said date for a period of time approximately
equal to the number of days in such Interest Period and in an amount
approximately equal to the principal amount to which such Interest Period
applies. The Borrower understands and agrees that the Bank may base its
quotation of the Inter-Bank Market Offered Rate upon such offers or other market
indicators of the Inter-Bank Market as the Bank in its discretion deems
appropriate including, but not limited to, the rate offered for Dollar deposits
on the London Inter-Bank Market.

         "Benefit Plan" means a defined benefit plan as defined in Section 3(35)
of ERISA (other than a Multiemployer Plan) in respect of which the Borrower or
any ERISA Affiliate is, or within the immediately preceding six (6) years was,
an "employer" as defined in Section 3(5) of ERISA.

         "BMO" means The Bank of Montreal, acting through its Chicago lending
office.

         "BMO Credit Agreement" means that certain Amended and Restated Credit
Agreement dated as of October 10, 2003 among Parent, the lenders party thereto
from time to time, BMO, as agent, and BMO Nesbitt Burns, a division of BMO, as
arranger (as the same may be amended, supplemented, modified, renewed or
replaced from time to time).

         "BMO Deed of Trust" means that certain Deed of Trust with Absolute
Assignment of Rents and Leases, Security Agreement and Fixture Filing executed
by the Borrower, as trustor, to First American Title Insurance Company, as
trustee, for the benefit of BMO, in its capacity as administrative agent for
itself, as lender, and the other lenders party to the BMO Credit Agreement.


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         "BMO Guarantees" means the guarantees set forth in Article 10 of the
BMO Credit Agreement entered into by the Borrower and LA Turf Club pursuant to
their execution of the BMO Credit Agreement.

         "BMO Subordination Agreement" means the Subordination Agreement between
the Bank and BMO, as agent under the BMO Credit Agreement, in substantially the
form of Exhibit J, as amended from time to time.

         "Borrower Pledge Agreement" means the Pledge Agreement between the
Borrower and the Bank in substantially the form of Exhibit B, as amended from
time to time.

         "Borrowing" means a borrowing consisting of a Term Loan.

         "Business Day" means any day that is not a Saturday, Sunday or other
day on which banks in Los Angeles, California are authorized or obligated to
close.

         "Capital Expenditures" means, for any period, expenditures (whether
paid in cash or accrued as liabilities and including Capital Leases entered into
during the period) of the Borrower and its Subsidiaries during such period that
are required in accordance with GAAP to be capitalized on the consolidated
balance sheet of the Borrower.

         "Capital Leases" means all leases of the Borrower and its Subsidiaries
of real or personal property that are required to be capitalized on the
consolidated balance sheet of the Borrower. The amount of any Capital Lease
shall be the capitalized amount thereof.

         "Capital Stock" means, with respect to any Person, all (i) shares,
interests, participations or other equivalents (howsoever designated) of capital
stock and other equity interests of such Person and (ii) rights (other than
Indebtedness securities convertible into capital stock or other equity
interests), warrants or options to acquire any such capital stock or other
equity interests.

         "Change of Control" means the failure by the Parent to continue to hold
all of the outstanding shares of all classes of the Capital Stock of the
Borrower.

         "Closing Date" means the date of the making of the Initial Term Loan,
which date shall be the date that all conditions set forth in Section 4.1 have
been satisfied or waived.

         "Closing Date Environmental Report" is defined in Section 4.1(g).

         "Code" means the Internal Revenue Code of 1986, as amended from time to
time.

         "Collateral" means all property in which a Lien is created or conveyed
in or under the Loan Documents, or any of them, in favor of the Bank.

         "Contingent Obligation" means, as to any Person, any obligation, direct
or indirect, contingent or otherwise, of such Person (i) with respect to any
Indebtedness or other obligation of another Person, including any direct or
indirect guarantee of such Indebtedness (other than


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any endorsement for collection in the ordinary course of business) or any other
direct or indirect obligation, by agreement or otherwise, to purchase or
repurchase any such Indebtedness or obligation or any security therefor, or to
provide funds for the payment or discharge of any such Indebtedness or
obligation (whether in the form of loans, advances, stock purchases, capital
contributions or otherwise), (ii) to provide funds to maintain the financial
condition of any other Person, if the primary purpose of such obligation is to
provide assurance that the Indebtedness or other obligations of such other
Person will be paid or discharged or the holders of such Indebtedness or other
obligations will be protected against loss, or (iii) otherwise to assure or hold
harmless the holders of Indebtedness or other obligations of another Person
against loss in respect thereof, or (iv) under Hedging Contracts. The amount of
any Contingent Obligation under clause (i) or (ii) shall be the lesser of (a) an
amount equal to the stated or determinable amount of the primary obligation in
respect of which such Contingent Obligation is made and (b) the maximum amount
for which such Person may be liable pursuant to the terms of the instrument
embodying such Contingent Obligation, unless such primary obligation and the
maximum amount for which such Person may be liable are not stated or
determinable, in which case the amount of such Contingent Obligation shall be
such Person's maximum reasonably anticipated liability in respect thereof.

         "Contractual Obligation" means, as applied to any Person, any provision
of any security issued by that Person or of any agreement or other instrument to
which that Person is a party or by which it or any of the properties owned or
leased by it is bound or otherwise subject.

         "Current Portion of Long-Term Debt" means, as of any date of
determination and without duplication, the current portion of all Indebtedness
due more than one year from the date of determination that would properly be
classified as a current liability of the Borrower and its Subsidiaries as of
such date, determined on a consolidated basis in accordance with GAAP.

         "Deed of Trust" means the Deed of Trust and Assignment of Rents and
Leases executed by the Borrower for the benefit of the Bank, in substantially
the form of Exhibit E, as amended from time to time.

         "Default" means any condition or event that, with the giving of notice
or lapse of time or both, would, unless cured or waived, become an Event of
Default.

         "DOL" means the United States Department of Labor and any Person
succeeding to the functions thereof.

         "Dollars" and "$" means lawful money of the United States of America.

         "EBITDA" means, for any period on a consolidated basis for the Borrower
and its Subsidiaries (i) the sum of (a) Net Income, (b) Interest Expense
deducted in the determination of Net Income, (c) income tax expense deducted in
the determination of Net Income, (d) depreciation and amortization expense
deducted in determining Net Income, and (e) extraordinary losses included in the
determination of Net Income, in each case, for such


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period, MINUS (ii) extraordinary gains included in the determination of Net
Income, for such period.

         "EBITDA Coverage Ratio" means, on the last day of any fiscal quarter,
the ratio of (i) EBITDA for the period of four consecutive fiscal quarters
ending on such date to (ii) the sum of (a) the Current Portion of Long-Term Debt
as of the first day of such four-quarter period and (b) Interest Expense for
such four-quarter period.

         "Environmental Damages" means all claims, judgments, damages, losses,
penalties, liabilities (including strict liability), costs and expenses,
including costs of investigation, remediation, defense, settlement and
reasonable attorneys' fees and consultants' fees, that are incurred at any time
as a result of the existence of Hazardous Material upon, about or beneath the
Mortgaged Property or any other real property owned by the Borrower or any of
its Subsidiaries or migrating or threatening to migrate to or from any such real
property, or arising from any investigation, proceeding or remediation of any
location at which the Borrower, any of its Subsidiaries or any predecessors are
alleged to have directly or indirectly disposed of Hazardous Materials or
arising in any manner whatsoever out of any violation of Environmental
Requirements.

         "Environmental Lien" means a Lien in favor of any Governmental
Authority for Environmental Damages.

         "Environmental Requirements" means all Applicable Laws relating to
Hazardous Materials or the protection of human health or the environment,
including all requirements pertaining to reporting, permitting, investigation
and remediation of releases or threatened releases of Hazardous Materials into
the environment, or relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Materials.

         "ERISA" means the Employee Retirement Income Security Act of 1974, any
amendments thereto, any successor statutes, and any regulations promulgated
thereunder.

         "ERISA Affiliate" means (i) any corporation which is a member of the
same controlled group of corporations (within the meaning of Section 414(b) of
the Code) as the Borrower; (ii) any trade or business (whether or not
incorporated) which is under common control (within the meaning of Section
414(c) of the Code) with the Borrower; and (iii) a member of the same affiliated
service group (within the meaning of Section 414(m) of the Code) as the
Borrower, any corporation described in clause (i) above or any trade or business
described in clause (ii) above or (iv) any other Person which is required to be
aggregated with the Borrower pursuant to regulations promulgated under Section
414(o) of the Code.

         "Event of Default" is defined in Section 7.1.

         "Extended Maturity Date" means October 8, 2009.

         "Extension Date" is defined in Section 2.1(e).


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         "Extension Notice" is defined in Section 2.1(e).

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         "Fair Market Value" means, with respect to any asset or property, the
sale value that could be obtained in an arm's-length transaction, for cash,
between a willing seller and a willing buyer, neither of whom is under pressure
or compulsion to complete the transaction.

         "Federal Reserve Board" means the Board of Governors of the Federal
Reserve System, or any successor thereto.

         "Fees" means, collectively, the fees described or referenced in Section
2.5.

         "Fiscal Year" means the fiscal year of the Borrower, which shall be the
12 month-period ending on December 31 in each year or such other period as the
Borrower may designate and the Bank may approve in writing (which approval shall
not be unreasonably withheld or delayed). "Fiscal Quarter" or "fiscal quarter"
means any quarter of a Fiscal Year.

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

         "Governmental Approval" means an authorization, consent, approval,
permit or license issued by, or a registration or filing with, any Governmental
Authority.

         "Governmental Authority" means any nation and any state or political
subdivision thereof and any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government and any
tribunal or arbitrator of competent jurisdiction.

         "Hazardous Materials" means any substance (i) the presence of which
requires investigation or remediation under any Applicable Law; (ii) that is or
becomes defined as a "hazardous waste" or "hazardous substance" under any
Applicable Law, including the Comprehensive Environmental Response, Compensation
and Liability Act (42 U.S.C. Section 9601 ET SEQ.) or the Resource Conservation
and Recovery Act (42 U.S.C. Section 6901 ET SEQ.); (iii) that is toxic,
explosive, corrosive, inflammable, infectious, radioactive, carcinogenic,
mutagenic, or otherwise hazardous and is or becomes regulated by any
Governmental Authority; (iv) the presence of which on the Mortgaged Property or
any other real property owned by the Borrower or any of its Subsidiaries causes
or threatens to cause a nuisance upon such real property or to adjacent
properties or poses or threatens to pose a hazard to any such real property or
to the health or safety of Persons on or about any such real property; or (v)
without limitation, that contains gasoline or other petroleum hydrocarbons,
polychlorinated biphenyls or asbestos.

         "Hedging Contract" means, for any Person, any interest rate, commodity,
foreign exchange or other hedging agreement (including swaps, collars, caps and
forward contracts) between such Person and one or more financial institutions
providing for the transfer or mitigation of fluctuations of interest rates,
exchange rates or other prices either generally or under specific contingencies.

         "Incremental Term Loan Commitment" means $0.


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         "Incremental Term Loan Commitment Termination Date" means October 8,
2004.

         "Indebtedness", as applied to any Person, means, at any time, without
duplication, (a) all Indebtedness, obligations or other liabilities of such
Person (i) for borrowed money or evidenced by debt securities, debentures,
acceptances, notes or other similar instruments, and any past due interest, fees
and charges relating thereto, (ii) payable under profit payment agreements or in
respect of obligations to redeem, repurchase or exchange any securities of such
Person or to pay dividends in respect of any Capital Stock, (iii) with respect
to letters of credit issued for such Person's account, (iv) to pay the deferred
purchase price of property or services, except accounts payable and accrued
expenses arising in the ordinary course of business or (v) in respect of Capital
Leases; (b) all Contingent Obligations of such Person; (c) all Indebtedness,
obligations or other liabilities of such person or others secured by a Lien on
any property of such Person, whether or not such Indebtedness, obligations or
liabilities are assumed by such Person, all as of such time; and (d) all
Indebtedness, obligations or other liabilities of such Person in respect of
Hedging Contracts, net of liabilities owed to such Person by the counterparties
thereon.

         "Initial Term Loan" is defined in Section 2.1(a).

         "Intangible Assets" means assets of the Borrower or any Subsidiary that
are classified as "intangible assets" in accordance with GAAP.

         "Intercompany Debt" means any Indebtedness of any Subsidiary that is
owed to any Wholly-Owned Subsidiary or the Borrower.

         "Interest Expense" means, for any period, consolidated interest expense
of the Borrower and its Subsidiaries, determined in accordance with GAAP,
including Fees and the portion of any Capital Lease obligations allocable to
interest expense.

         "Interest Period" means, with respect to each LIBOR Loan, the period
commencing on the date specified in the related Notice of Borrowing or Notice of
Conversion/Continuation (or telephonic notice in lieu thereof) and ending on the
numerically corresponding day in the calendar month that is one, two, three or
six months thereafter, as the Borrower may elect pursuant to Section 2.1 or
Section 2.4; PROVIDED that (i) in the case of immediately successive Interest
Periods, the succeeding Interest Period shall commence on the day on which the
preceding Interest Period expires; (ii) any Interest Period (A) that would
otherwise end on a day that is not a Business Day shall be extended to the next
succeeding Business Day, unless such succeeding Business Day falls in another
calendar month, in which case such Interest Period shall end on the next
preceding Business Day or (B) that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end on the last
Business Day of the calendar month at the end of such Interest Period; (iii) the
Borrower may not select an Interest Period with respect to any portion of the
principal of any Term Loan which extends beyond a date on which the Borrower is
required to make a scheduled payment of such portion of principal; and (iv) no
Interest Period for any Term Loan shall end after the Maturity Date.


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         "Investment" means, with respect to any Person, (i) any direct or
indirect purchase or other acquisition by that Person of Capital Stock or
securities, or any beneficial interest in Capital Stock or other securities, of
any other Person, any partnership (whether general or limited) or limited
liability company interest in any other Person, or all or any substantial part
of the business or assets of any other Person, and (ii) any direct or indirect
loan, advance or capital contribution by that Person to any other Person,
including all Indebtedness and accounts receivable from that other Person that
are not current assets or did not arise from sales to that other Person in the
ordinary course of business. The amount of any Investment shall be the original
cost of such Investment PLUS the cost of all additions thereto, without any
adjustments for increases or decreases in value, or write-ups, write-downs or
write-offs with respect to such Investment.

         "LA Turf Club" means the Los Angeles Turf Club, Incorporated, a
California corporation and a Wholly-Owned Subsidiary of the Borrower.

         "Leases" is defined in Section 3.21.

         "LIBOR" means the rate per annum (rounded upward, if necessary, to the
nearest whole 1/8 of 1%) equal to a fraction, the nominator of which shall equal
Base LIBOR and the denominator of which shall equal 100% MINUS the LIBOR Reserve
Percentage.

         "LIBOR Loan" means that portion of a Term Loan which bears interest at
a rate determined by reference to a LIBOR as provided in Section 2.3.

         "LIBOR Reserve Percentage" means the reserve percentage prescribed by
the Board of Governors of the Federal Reserve System (or any successor) for
"Eurocurrency liabilities" (as defined in Regulation D of the Federal Reserve
Board, as amended), adjusted by Bank for expected changes in such reserve
percentage during the applicable Fixed Rate Term.

         "Lien" means any lien, mortgage, pledge, security interest, charge, or
encumbrance of any kind (including any conditional sale or other title retention
agreement or any lease in the nature thereof) and any agreement to give or
refrain from giving any lien, mortgage, pledge, security interest, charge, or
other encumbrance of any kind.

         "Loan Account" is defined in Section 2.2.

         "Loan Documents" means, collectively, this Agreement, the Note, the
Deed of Trust, the Borrower Pledge Agreement, the Parent Pledge Agreement, the
Subsidiary Guaranty, the Assignment of Leases and Rents, the BMO Subordination
Agreement and any other agreement, instrument or other writing executed or
delivered by the Borrower or any Subsidiary in connection herewith, and all
amendments, exhibits and schedules to any of the foregoing.

         "Margin Regulations" means Regulations U and X of the Federal Reserve
Board, as amended from time to time.

         "Margin Stock" means "margin stock" as defined in the Margin
Regulations.


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         "Material Adverse Effect" or "Material Adverse Change" means the
occurrence of an event or events, or the existence of facts or circumstances,
that has or have a material adverse effect on, or result in a material adverse
change in, as the case may be, any one or more of the following:

         (A) the ability of the Borrower or of any Subsidiary to conduct a
Racetrack Business at the Track; or

         (B) the ability of the Borrower and its Subsidiaries to perform their
respective obligations under the Loan Documents; or

         (C) the validity, legality or enforceability of any Loan Document, any
material provision therein, or the rights and remedies of the Bank thereunder;
or

         (D) the validity, enforceability, perfection or priority of any of the
Liens in favor of the Bank arising or created under the Loan Documents or any of
them.

         "Material Adverse Effect" or "Material Adverse Change" shall also
include the occurrence of an event or events or the existence of facts or
circumstances that could reasonably be expected to adversely affect the
business, assets, results of operations, financial condition or financial
prospects of the Borrower and its Subsidiaries, taken as a whole, and thereby:

         (i) result in the incurrence by the Borrower or a Subsidiary of a
liability or liabilities, or require an expenditure or expenditures, in an
aggregate amount in excess of $2,000,000;

         (ii) impair or diminish the value of any asset or assets of the
Borrower or a Subsidiary in an aggregate amount in excess of $2,000,000; or

         (iii) reduce the actual or projected operating revenue or cash flow in
the Fiscal Year in which such event occurs, or in which such facts or
circumstances occur, or in the next succeeding Fiscal Year, by 10% or more in
relation to the respective amounts thereof (x) in the Fiscal Year preceding the
Fiscal Year in which such event occurs, or in which such facts or circumstances
occur, or (y) reflected in the forecast most recently delivered in respect of
such Fiscal Years pursuant to Section 5.1(h) hereof.

         "Material Environmental Amount" means an amount payable by the Borrower
or any of its Subsidiaries in excess of $1,500,000 in respect of any
Environmental Damage or in connection with the violation or alleged violation
of, or compliance or attempted compliance with, any Environmental Requirement.

         "Maturity Date" means (i) October 8, 2007 or (ii) if provisions of
Section 2.1(f) have been satisfied, the Extended Maturity Date.

         "MID" means MI Developments Inc., a corporation incorporated under the
laws of the Province of Ontario, Canada.


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         "Mortgaged Property" means the Borrower's real property located at 285
West Huntington Drive, Arcadia, California 91066 and known as Santa Anita Park
(and the surrounding land) as described more fully in the Deed of Trust.

         "Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA which is, or within the immediately preceding six (6) years
was, contributed to by the Borrower or any ERISA Affiliate.

         "Net Income" means, for any period, net income (or loss) after taxes of
the Borrower and its Subsidiaries on a consolidated basis for such period
determined in accordance with GAAP.

         "Note" means the Term Loan Promissory Note made by the Borrower payable
to the order of the Bank in substantially the form of Exhibit A, as amended from
time to time.

         "Notice of Borrowing" is defined in Section 2.1.

         "Notice of Conversion/Continuation" is defined in Section 2.4.

         "Oak Tree" means Oak Tree Racing Association, a California non-profit
corporation.

         "Obligations" means all present and future obligations and liabilities
of the Borrower or any of its Subsidiaries of every type and description arising
under or in connection with the Loan Documents due or to become due to the Bank
or any Person entitled to indemnification under the Loan Documents, or any of
their respective successors, transferees or assigns, whether for principal,
interest, letter of credit or other reimbursement obligations, cash collateral
cover, Fees, expenses, indemnities or other amounts (including attorneys' fees
and expenses).

         "Operating Lease" means, as applied to any Person, any lease of any
property (whether real, personal, or mixed) under which such Person is the
lessee and that is not capitalized on the balance sheet of such Person.

         "Parent" means Magna Entertainment Corp., a Delaware corporation.

         "Parent Pledge Agreement" means the Pledge Agreement between the Parent
and the Bank in substantially the form of Exhibit C, as amended from time to
time.

         "PBGC" means the Pension Benefit Guaranty Corporation and any Person
succeeding to the functions thereof.

         "Permitted Acquisition" means any acquisition by the Borrower of assets
from, or shares or other equity interests in, any Person, PROVIDED that: (i) at
the time thereof and immediately after giving effect thereto, no Default or
Event of Default shall have occurred and be continuing; (ii) all transactions
related thereto shall be consummated in accordance with Applicable Laws; (iii)
in the case of any acquisition of shares or other equity interests in any
Person, such acquisition is an acquisition of 100% of the shares or other equity
interests of such Person; (iv) all actions required to be taken, if any, with
respect to any acquired or newly formed


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Subsidiary under Section 5.8 shall have been taken or shall be simultaneously
taken; (v) such assets, shares or other equity interests pertain to a line of
business in which the Borrower or any of its Subsidiaries is engaged on the date
hereof or as contemplated in the business plan delivered to the Bank pursuant to
Section 4.1; (vi) after giving effect to such acquisition, the Borrower shall be
in compliance, on a PRO FORMA basis, with the covenants set forth in Sections
6.17 and 6.18, as if such acquisition had occurred on the first day of the
relevant period; and (vii) the aggregate total consideration (including cash
purchase price, deferred or financed purchase price (including the maximum
amount of any earn-out obligations) and assumed liabilities) for Permitted
Acquisitions consummated in any Fiscal Year shall not exceed $10,000,000.

         "Permitted Liens" means, with respect to any asset, the Liens (if any)
permitted to exist on such asset under Section 6.2.

         "Person" means an individual, a corporation, a partnership, a limited
liability company, a trust, an unincorporated organization or any other entity
or organization, including a government or any agency or political subdivision
thereof.

         "Plan" means an employee benefit plan defined in Section 3(3) of ERISA
in respect of which the Borrower or any ERISA Affiliate is, or within the
immediately preceding six years was, an "employer" as defined in Section 3(5) of
ERISA.

         "Prime Rate" means at any time the rate of interest most recently
announced within the Bank at its principal office as its Prime Rate, with the
understanding that the Prime Rate is one of the Bank's base rates and serves as
the basis upon which effective rates of interest are calculated for those loans
making reference thereto, and is evidenced by the recording thereof in such
internal publication or publications as the Bank may designate. Each change in
the rate of interest shall become effective on the date each Prime Rate change
is announced within the Bank.

         "Prime Rate Loan" means any portion of a Term Loan which bears interest
at a rate determined by reference to the Prime Rate.

         "Racetrack Business" means the operation of the Track and all
horseracing, gaming, entertainment, and other activities associated therewith in
a manner consistent with past practices of the Track.

         "Racing Day" means any day with respect to which horseracing and
associated gaming, entertainment, and other associated activities have been
authorized to be conducted at the Track pursuant to a valid Racing License.

         "Racing License" means a license or permit issued by the California
Horse Racing Board, or such other relevant Governmental Authority, pursuant to
which the licensee or permitee is authorized to hold horseracing and related
events on a specified number of days during any racing year at a specified
location.


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         "Regulation D" means Regulation D of the Federal Reserve Board, as
amended from time to time.

         "Regulatory Change" means (i) the adoption or becoming effective after
the date hereof of any treaty, law, rule or regulation, (ii) any change in any
such treaty, law, rule or regulation (including Regulation D), or any change in
the administration or enforcement thereof, by any Governmental Authority,
central bank or other monetary authority charged with the interpretation or
administration thereof, in each case after the date hereof, or (iii) compliance
by the Bank (or, in the case of capital adequacy requirements, any holding
company of the Bank) with, any interpretation, directive, request, order or
decree (whether or not having the force of law) of any such Governmental
Authority, central bank or other monetary authority issued or made after the
date hereof.

         "Release Parcel" is defined in Section 5.13(d).

         "Remainder Parcel" is defined in Section 5.13(d).

         "Reportable Event" means any of the events described in Section 4043 of
ERISA.

         "Restricted Payment" means (i) any dividend, distribution or payment,
direct or indirect, to or for the benefit of any holder of any Capital Stock of
the Borrower now or hereafter outstanding, except (a) a dividend or other
distribution payable solely in shares of the same class of Capital Stock of the
Person paying such dividend or making such distribution, (b) the issuance of
Capital Stock upon the exercise of outstanding warrants, options or other
rights, or (ii) any redemption, retirement, sinking fund or similar payment,
purchase or other acquisition for value, direct or indirect, of any Capital
Stock of the Borrower now or hereafter outstanding, or (iii) any payment of
principal of or interest on, or any payment made to redeem, repurchase, defease
(by way either of in-substance or legal defeasance) or otherwise acquire or
retire for value, (a) any Subordinated Debt of the Borrower or (b) any
Contingent Obligation with respect to any such Subordinated Debt, except, so
long as no Default or Event of Default has occurred and is continuing, any
payment of accrued interest when due in accordance with the terms of the
documents or instruments governing or evidencing such Subordinated Debt, or (iv)
any payment of principal of or interest on any Indebtedness or other obligation
(other than Subordinated Debt and Intercompany Debt) owing by the Borrower or
any Subsidiary to the Parent or any other Affiliate of the Borrower, or (v) any
payment required under or made in respect of the BMO Guarantees.

         "Sale-Leaseback Transaction" means any arrangement with any Person
providing for the leasing by the Borrower of any real or personal property that,
or of any property similar to and used for substantially the same purposes as
any other property that, has been or is to be sold or otherwise transferred by
the Borrower to such Person with the intention of entering into such a lease.

         "SEC" means the United States Securities and Exchange Commission, and
any successor.

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         "Senior Officer" means, with respect to the Borrower, the Chairman of
the Board of Directors, the President, the Chief Executive Officer, the Chief
Operating Officer, the Chief Financial Officer, the Treasurer or any Vice
President.

         "Subordinated Debt" means (A) Indebtedness of the Borrower under the
BMO Credit Agreement, so long as the BMO Subordination Agreement is in full
force and effect; and (B) any other Indebtedness of the Borrower existing on the
date hereof or hereafter incurred that is subordinated to the Obligations on the
Approved Subordination Terms or on other terms approved in advance in writing by
the Bank and which (i) is unsecured, (ii) has an effective interest rate not
greater than the interest rate that is applicable to the Term Loans at the time
such Indebtedness is incurred (if such Indebtedness bears interest at a fixed
rate) or from time to time (if such Indebtedness bears interest at a floating
rate), (iii) has a stated maturity date no earlier than one year following the
Extended Maturity Date, (iv) contains no financial or operating covenants, (v)
does not require any payment of principal prior to the Extended Maturity Date,
and (vi) (x) is governed and evidenced only by a promissory note in
substantially the form of Exhibit I hereto or (y) has other terms and provisions
that are reasonably satisfactory to the Bank.

         "Subsidiary" means, with respect to any Person, (i) any other Person of
which more than 50% of the total voting power of the Capital Stock entitled to
vote in the election of the board of directors (or other Persons performing
similar functions) is at the time directly or indirectly owned by such first
Person and (ii) any other Person the accounts of which would be consolidated
with those of such Person in a consolidated balance sheet of such Person
prepared in accordance with GAAP. Unless otherwise indicated, "Subsidiary"
refers to a Subsidiary of the Borrower.

         "Subsidiary Guaranty" means the guaranty of the Obligations by LA Turf
Club and each other Subsidiary of the Borrower, in substantially form of Exhibit
D, as amended from time to time.

         "Tangible Net Worth" means, at any date of determination, the
consolidated stockholders' equity of the Borrower and its Subsidiaries, as
determined in accordance with GAAP, as of such date PLUS the outstanding
principal amount of the Borrower's Subordinated Debt at such date MINUS (i) the
aggregate book value of the Intangible Assets of the Borrower and its
Subsidiaries as of such date and (ii) the aggregate amount of all amounts owing
to the Borrower from its Affiliates, including, without limitation, any
Indebtedness or accounts receivable owing from such Affiliates (but excluding
receivables arising in the ordinary course of business that are not more than 90
days past due).

         "Taxes" means any present or future income, stamp and other taxes,
charges, fees, levies, duties, imposts, withholdings or other assessments,
together with any interest and penalties, additions to tax and additional
amounts imposed by any federal, state, local or foreign taxing authority upon
any Person.

         "Term Loans" is defined in Section 2.1(a).


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         "Termination Event" means (i) a Reportable Event with respect to any
Benefit Plan; (ii) the withdrawal of the Borrower or any ERISA Affiliate from a
Benefit Plan during a plan year in which the Borrower or such ERISA Affiliate
was a "substantial employer" as defined in Section 4001(a)(2) of ERISA or the
cessation of operations which results in the termination of employment of at
least 20% of Benefit Plan participants who are employees of the Borrower or any
ERISA Affiliate; (iii) the imposition of an obligation on the Borrower or any
ERISA Affiliate under Section 4041 of ERISA to provide affected parties written
notice of intent to terminate a Benefit Plan in a distress termination described
in Section 4041(c) of ERISA; (iv) the institution by the PBGC of proceedings to
terminate a Benefit Plan; (v) any event or condition which could reasonably
constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Benefit Plan; or (vi) the partial or
complete withdrawal of the Borrower or any ERISA Affiliate from a Multiemployer
Plan.

         "Track" means the race track located on the Mortgaged Property and
commonly known as Santa Anita Park.

         "Uniform Commercial Code" means the Uniform Commercial Code as enacted
in the State of California, as it may be amended from time to time.

         "Wholly-Owned" means, with respect to any Subsidiary, that all the
Capital Stock (except for directors' qualifying shares) of such Subsidiary is
directly or indirectly owned by the Borrower.

SECTION 1.2.             RELATED MATTERS.

         (a) CONSTRUCTION. Unless the context of this Agreement clearly requires
otherwise, references to the plural include the singular, the singular includes
the plural, the part includes the whole, "including" is not limiting, and "or"
has the inclusive meaning represented by the phrase "and/or." The words
"hereof," "herein," "hereby," "hereunder" and similar terms in this Agreement
refer to this Agreement as a whole (including the Preamble, the Recitals, the
Schedules and the Exhibits) and not to any particular provision of this
Agreement. Article, section, subsection, exhibit, schedule, recital and preamble
references in this Agreement are to this Agreement unless otherwise specified.
References in this Agreement to any agreement, other document or law "as
amended" or "as amended from time to time," or to amendments of any document or
law, shall include any amendments, supplements, replacements, renewals, waivers
or other modifications not prohibited by the Loan Documents. References in this
Agreement to any law (or any part thereof) include any rules and regulations
promulgated thereunder (or with respect to such part) by the relevant
Governmental Authority, as amended from time to time.

         (b) DETERMINATIONS. Any determination or calculation contemplated by
this Agreement that is made by the Bank shall be final and conclusive and
binding upon the Borrower in the absence of manifest error. References in this
Agreement to any "determination" by the Bank include good faith estimates by the
Bank (in the case of quantitative determinations), and good faith beliefs by the
Bank (in the case of qualitative determinations).


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         (c) ACCOUNTING TERMS AND DETERMINATIONS. Unless otherwise specified
herein (and whether or not expressly stated), all accounting terms used herein
shall be interpreted, all accounting determinations hereunder shall be made, and
all financial statements required to be delivered hereunder shall be prepared in
accordance with GAAP, as in effect from time to time; PROVIDED, HOWEVER, that if
there occurs after the date hereof any change in GAAP that affects in any
respect the calculation of any covenant contained in Article VI, the Bank and
the Borrower shall negotiate in good faith amendments to the provisions of this
Agreement that relate to the calculation of such covenant with the intent of
having the respective positions of the Bank and the Borrower after such change
in GAAP conform as nearly as possible to their respective positions as of the
date of this Agreement and, until any such amendments have been agreed upon, the
Borrower's compliance with the covenants in Article VI shall be determined as if
no such change in GAAP has occurred.

                                   ARTICLE II

                                   THE CREDIT

SECTION 2.1.             TERM LOANS.

         (a) TERM LOANS. Subject to the terms and conditions set forth herein,
the Bank hereby agrees to make, on the Closing Date, a term loan (the "Initial
Term Loan"), in Dollars, to the Borrower in a principal amount of $75,000,000;
and, subject to the terms and conditions set forth in Section 4.2, to make
incremental term loans (each, an "Incremental Term Loan"; and, together with the
Initial Term Loan, each a "Term Loan"), in Dollars, to the Borrower in a
principal amount of the Incremental Term Loan Commitment, from time to time
during the period from the Closing Date to the Business Day next preceding the
Incremental Term Loan Commitment Termination Date.

         (b) NOTICE OF BORROWING. The Borrower shall deliver to the Bank an
irrevocable notice of borrowing (a "Notice of Borrowing"), signed by it, no
later than 1:00 p.m. (Los Angeles time) (i) on the Business Day next preceding
the proposed funding date, in the case of a Borrowing of Prime Rate Loans and
(ii) at least three (3) Business Days in advance of the proposed funding date,
in the case of a Borrowing of LIBOR Loans. Such Notice of Borrowing shall
specify (i) the proposed funding date (which shall be a Business Day), (ii) the
aggregate amount of the proposed Borrowing (which, in the case of the Initial
Term Loan, shall be $75,000,000 and, in the case of an Incremental Term Loan,
zero), (iii) whether the proposed Borrowing will be of Prime Rate Loans or LIBOR
Loans, (iv) in the case of LIBOR Loans, the length of the initial Interest
Period with respect to such Borrowing and (v) instructions for the disbursement
of the proceeds of the proposed Borrowing.

         (c) MAKING OF TERM LOANS. Promptly after receipt of a Notice of
Borrowing under Section 2.1(b), the Bank, subject to the satisfaction of the
conditions set forth in Section 4.1, in the case of the Initial Term Loan, and
Section 4.2, in the case of an Incremental Term Loan, shall make the amount of
such Borrowing available to the Borrower on the funding date proposed in the
applicable Notice of Borrowing, in immediately available funds, or shall
disburse such


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proceeds in accordance with the Borrower's disbursement instructions set forth
in the applicable Notice of Borrowing.

         (d) USE OF PROCEEDS OF TERM LOANS. The proceeds of the Term Loans may
be used solely for the following purposes: (i) to make distributions to the
Parent in respect of the Borrower's Capital Stock in accordance with the terms
hereof, (ii) to repay in whole or in part any Indebtedness of the Borrower owed
to the Bank or Parent, (iii) to pay transaction costs, including any Fees, of
the Borrower incurred with respect to this Agreement and the other Loan
Documents, (iv) for working capital, and (v) for general corporate purposes in
the ordinary course of the Borrower's business (including to make Permitted
Acquisitions); PROVIDED that the aggregate amount of (x) any distributions in
respect of the Borrower's Capital Stock permitted under clause (i) above and (y)
any repayments of Indebtedness of the Borrower to Parent described under clause
(ii) above shall not exceed the amount thereof permitted under Section 5.9 and
Section 6.3.

         (e) EXTENSION OF MATURITY DATE. The Maturity Date may be extended to
the Extended Maturity Date at the election of the Borrower, subject to the
following conditions (the first date upon which all such conditions have been
satisfied being referred to herein as the "Extension Date"):

                  (A) on any Business Day between April 1, 2006 and April 1,
2007, the Borrower shall have delivered to the Bank a notice that the Borrower
wishes to extend the Maturity Date to the Extended Maturity Date (an "Extension
Notice");

                  (B) following the receipt of such Extension Notice, the Bank
shall conduct an appraisal of the Mortgaged Property and (i) if the Bank is
satisfied, in its reasonable judgment, that the aggregate principal amount of
the Term Loans then outstanding does not exceed 45% of the Appraised Value of
the Mortgaged Property at such time, the Bank shall so notify the Borrower; and
(ii) in the event the aggregate principal amount of the Term Loans then
outstanding exceeds 45% of the Appraised Value of the Mortgaged Property, the
Borrower shall, within five Business Days of written notification from the Bank
of such occurrence, either (1) make a prepayment of the Term Loans in an
aggregate amount such that the outstanding principal balance of the Term Loans
after giving effect to such prepayment does not exceed 45% of the Appraised
Value of the Mortgaged Property or (2) provide Bank with written notice of
Borrower's withdrawal of the Extension Notice;

                  (C) no Default or Event of Default shall have occurred and be
continuing at the time of the Borrower's Extension Notice or on the Extension
Date, including, without limitation, the failure to comply with the provisions
of Section 5.10(b);

PROVIDED, HOWEVER, that, notwithstanding the occurrence of the Extension Date,
the extension of the Maturity Date to the Extended Maturity Date shall not be
effective until the Borrower pays to the Bank the fee provided in, and
reimburses to the Bank its expenses required by, Section 2.5(b).


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SECTION 2.2.             EVIDENCE OF INDEBTEDNESS;
                         REPAYMENT OF TERM LOAN.

         (a) NOTE. The Borrower shall execute and deliver to the Bank on the
Closing Date a Note evidencing the Term Loans from time to time outstanding
hereunder.

         (b) LOAN ACCOUNT. The Bank shall maintain in accordance with its usual
practice an account or accounts (a "Loan Account") evidencing the Indebtedness
of the Borrower to the Bank resulting from the Term Loans owing to the Bank from
time to time, including the amount of principal and interest payable and paid to
the Bank from time to time hereunder and under the Note.

         (c) REPAYMENT OF THE TERM LOANS. The Borrower shall make monthly
principal payments in respect to the Term Loans on the last Business Day of each
calendar month in the aggregate monthly installment of $416,666.67, commencing
on the last Business Day of the calendar month in which the Closing Date occurs,
and continuing up to and including the calendar month immediately prior to the
Maturity Date, with a final installment consisting of all the remaining unpaid
principal due and payable in full on the Maturity Date.

         (d) PREPAYMENTS. In addition to the scheduled payments on the Term
Loans, the Borrower may make the voluntary prepayments of principal of the Term
Loans pursuant to Section 2.6 and shall make the mandatory prepayments of
principal of the Term Loans prescribed in the Deed of Trust. Any amount paid in
respect of the Term Loans may not be reborrowed.

SECTION 2.3.             INTEREST; INTEREST PAYMENTS.

         (a) INTEREST. Each Term Loan shall bear interest on the unpaid
principal amount thereof, from and including the date of the making of such Term
Loan to and excluding the due date or the date of any repayment in full thereof,
at the following rates per annum: (i) for so long as and to the extent that such
Term Loan is a Prime Rate Loan, at the Prime Rate (as in effect from time to
time) for each day on which all or any portion of a Loan is a Prime Rate Loan;
and (i) for so long as and to the extent that such Term Loan is a LIBOR Loan, at
the LIBOR for each day during each Interest Period applicable thereto PLUS
2.00%. When interest is determined in relation to the Prime Rate, each change in
the rate of interest hereunder shall become effective on the date each Prime
Rate change is announced within the Bank.

         (b) INTEREST PAYMENTS. Accrued interest shall be payable in arrears (i)
on the last day of each calendar month; (ii) in the case of any interest accrued
at the rate specified in Section 2.3(c) below, on demand; and (iii) when the
Loans shall become due (whether at maturity, by reason of prepayment,
acceleration or otherwise).

         (c) DEFAULT INTEREST. Notwithstanding the rates of interest specified
in Section 2.3(a) or elsewhere herein, if all or a portion of the principal of
any Term Loan or any interest thereon or any other amount that is due and
payable hereunder or under any other Loan Document is not paid when due (whether
at stated maturity, by acceleration or otherwise), the Borrower shall pay


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interest on such overdue amount of the principal of such Term Loan, interest or
other amount owing to the Bank hereunder or under any other Loan Document, on
demand from time to time, to the extent permitted by law, (i) in the case of
overdue principal, at the rate otherwise applicable to the Prime Rate Loans or
LIBOR Loans, as the case may be, PLUS two percent (2%) per annum and (ii) in the
case of all other amounts owing to the Bank, at a rate per annum equal to the
Prime Rate PLUS two percent (2%), in each case, from and including such date of
non-payment to but excluding the date on which such amount is paid in full
(after as well as before judgment).

         (d) COMPUTATION OF INTEREST. Interest on all Obligations shall be
computed on the basis of the actual number of days elapsed in the period during
which interest accrues and a year of 360 days. In computing interest on any Term
Loan, the first day of any applicable Interest Period shall be included and the
last day of such Interest Period shall be excluded.

SECTION 2.4.             CONVERSION/CONTINUATION; LIBOR PROVISIONS.

         (a) CONVERSION OR CONTINUATION. (i) The Borrower shall have the option
(A) at any time, to convert all or any part of outstanding Prime Rate Loans to
LIBOR Loans; (B) on the last day of the Interest Period applicable thereto, (1)
to convert all or any part of outstanding LIBOR Loans to Prime Rate Loans, or
(2) continue all or any part of outstanding LIBOR Loans as LIBOR Loans, and the
succeeding Interest Period of such continued LIBOR Loans shall commence on last
day of the then current Interest Period; PROVIDED, HOWEVER, no outstanding Term
Loan (or portion thereof) may be continued as, or be converted into, a LIBOR
Loan if (x) the continuation of, or the conversion into, would violate any of
the provisions of this Section 2.4 or (y) an Event of Default or Default has
occurred and is continuing.

         (ii) To convert or continue all or any part of any Term Loan (or
portion thereof) under Section 2.4(a)(i), the Borrower shall deliver a Notice of
Conversion/Continuation (a "Notice of Conversion/Continuation") to the Bank no
later than 11:00 a.m. (Los Angeles time) at least (x) one Business Day in the
case of the conversion into a Prime Rate Loan or (y) three (3) Business Days in
the case of conversion into or continuation as a LIBOR Loan, advance of the
proposed conversion/continuation date. A Notice of Conversion/Continuation shall
specify (A) the principal amount of the Term Loan (or portion thereof) to be
converted or continued, (B) the proposed conversion/continuation date (which
shall be a Business Day), (C) whether the Term Loan (or portion thereof) shall
be converted or continued, and (D) in the case of a conversion into, or
continuation of, a LIBOR Loan, the requested Interest Period. In lieu of
delivering a Notice of Conversion/Continuation, the Borrower may give the Bank
telephonic notice of any proposed conversion/continuation by the time required
under this Section, and such notice shall be confirmed in writing delivered to
the Bank promptly (but in no event later than 3:00 p.m. (Los Angeles time) on
the same day). Any Notice of Conversion/Continuation for conversion to, or
continuation of, any Term Loan (or any portion thereof) (or telephonic notice in
lieu thereof) shall be irrevocable, and the Borrower shall be bound to convert
or continue in accordance therewith.


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         (b) CHANGES; LEGAL RESTRICTIONS. If after the date hereof the Bank
determines that the adoption or implementation of or any change in or in the
interpretation or administration of any law or regulation or any guideline or
request from any central bank or other Governmental Authority or
quasi-governmental authority exercising jurisdiction, power or control over the
Bank or over banks or financial institutions generally (whether or not having
the force of law), compliance with which, in each case after the date hereof:

         (i) subjects the Bank to charges (other than Taxes) in respect of the
Term Loans or in respect of the Bank's Incremental Term Loan Commitment or
changes the basis of taxation of payments to the Bank of principal, fees,
interest, or any other amount payable hereunder with respect to LIBOR Loans; or

         (ii) imposes, modifies, or holds applicable, any reserve (other than
reserves taken into account in calculating the LIBOR), special deposit,
compulsory loan, FDIC insurance or similar requirement against assets held by,
or deposits or other liabilities in or for the account of, advances or loans by,
commitments made, or other credit extended by, or any other acquisition of funds
by, the Bank;

and the result of any of the foregoing is to increase the cost to the Bank of
making, converting or continuing any portion of a Term Loan as a LIBOR Loan, or
reduce any amount receivable thereunder; then, in such case, the Borrower shall,
within fourteen (14) days after written demand by the Bank, pay to the Bank from
time to time as specified by the Bank, such amount or amounts as may be
necessary to compensate the Bank (in the form of an increased rate of, or
different method of calculating, interest or otherwise) for any such additional
cost incurred or reduced amount received. Such demand shall be accompanied by a
statement as to the amount of such compensation and include a summary of the
basis for such demand (it being agreed that such summary, showing in reasonable
detail the basis for the calculation of such compensation, shall, absent clearly
demonstrable error, be final and conclusive and binding on the Borrower).

         (c) CONFIRMATION OF LIBOR. Upon the reasonable request of the Borrower
from time to time, the Bank shall promptly provide to the Borrower such
information with respect to the applicable LIBOR as may be so requested.

         (d) INTEREST RATE UNASCERTAINABLE, INADEQUATE OR UNFAIR. In the event
that at least one (1) Business Day before any Interest Period in which any Term
Loan (or portion thereof) is to be converted into, or made or continued as, a
LIBOR Loan:

         (i) the Bank determines that adequate and fair means do not exist for
ascertaining the applicable interest rates by reference to which the LIBOR then
being determined is to be fixed; or

         (ii) the Bank determines that Dollar deposits in the outstanding
principal amount of any portion of a Term Loan at such time are not generally
available in the London interbank market for a period equal to such proposed
Interest Period;


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then the Bank shall forthwith give written notice thereof to the Borrower,
whereupon (until the Bank notifies the Borrower that the circumstances giving
rise to such suspension no longer exist) the right of the Borrower to elect to
have such Term Loan (or portion thereof) bear interest based upon the LIBOR
shall be suspended and any LIBOR Loan shall be converted into a Prime Rate Loan
on the last day of the then current Interest Period therefor.

         (e) ILLEGALITY. (i) If at any time the Bank determines (which
determination shall, absent manifest error, be final and conclusive and binding
upon all parties) that the conversion into, or the making or continuation of, a
LIBOR Loan has become unlawful or impermissible by compliance by the Bank with
any law, governmental rule, regulation or order of any Governmental Authority
(whether or not having the force of law and whether or not failure to comply
therewith would be unlawful or would result in costs or penalties), then, and in
any such event, the Bank may give notice of that determination, in writing, to
the Borrower.

         (ii) When notice is given by the Bank under this Section, the
Borrower's right to request from the Bank and the Bank's obligation, if any, to
make, convert or continue any Term Loan (or a portion thereof) as a LIBOR Loan
shall be immediately suspended, and the Borrower shall immediately, or if
permitted by applicable law, no later than the date permitted thereby, upon at
least one (1) Business Day's prior written notice to the Bank, convert any LIBOR
Loan into a Prime Rate Loan.

         (iii) If at any time after the Bank gives notice under this Section the
Bank determines that it may lawfully make LIBOR Loans, the Bank shall promptly
give notice of that determination, in writing, to the Borrower. The Borrower's
right to request, and the Bank's obligation, if any, to convert to or make or
continue a LIBOR Loan shall thereupon be restored.

         (f) COMPENSATION. In addition to all amounts required to be paid by the
Borrower pursuant to this Agreement, the Borrower shall compensate the Bank,
within fourteen (14) days after written demand by the Bank, for all losses,
expenses and liabilities (including, without limitation, any loss or expense
incurred by reason of the liquidation or reemployment of deposits or other funds
acquired by the Bank to fund or maintain the LIBOR Loans to the Borrower) which
the Bank may sustain (i) if for any reason a Borrowing, conversion into, or
continuation of LIBOR Loans does not occur on a date specified therefor in a
Notice of Borrowing or a Notice of Conversion/Continuation given by the Borrower
or in a telephonic request by it for borrowing or conversion/continuation or a
successive Interest Period does not commence after notice therefor is given
pursuant to this Section 2.4, including, without limitation, pursuant to Section
2.4(d), (ii) if for any reason a LIBOR Loan is prepaid (including, without
limitation, mandatorily pursuant to Section 2.6) on a date which is not the last
day of the applicable Interest Period, (iii) as a consequence of a required
conversion of a LIBOR Loan to a Prime Rate Loan as a result of any of the events
indicated in Section 2.4(d) or (e), or (iv) as a consequence of any failure by
the Borrower to repay the any LIBOR Loan when required by the terms hereof. The
Bank shall deliver to the Borrower concurrently with such demand a written
statement in reasonable detail as to such losses, expenses and liabilities, and
this statement shall be conclusive as to the amount of compensation due to the
Bank, absent manifest error.


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SECTION 2.5.             FEES.

         (a) INCREMENTAL TERM LOAN COMMITMENT FEE. The Borrower shall pay to the
Bank on the Closing Date a commitment fee equal to $67,625 PLUS all reasonable
out-of-pocket costs and expenses of the Bank (including, without limitation, (i)
disbursements and reasonable fees of outside legal counsel to the Bank and (ii)
expenses incurred by the Bank in connection with any appraisal of the Mortgaged
Property and the review of existing environmental reports with respect thereto)
incurred in connection with this Agreement.

         (b) MATURITY DATE EXTENSION FEE. In the event that the Maturity Date is
extended to the Extended Maturity Date pursuant to Section 2.1(f), the Borrower
shall pay to the Bank on the Extension Date, a maturity extension fee equal to
fifteen one-hundredths of one percent (0.15%) of the aggregate principal amount
of the Term Loans outstanding at such time plus any and all out-of-pocket costs
and expenses of the Bank (including, without limitation, (i) disbursements and
reasonable legal fees of outside legal counsel to the Bank and (ii) expenses
incurred by the Bank in connection with any appraisal of, or updates to title
insurance in respect of, the Mortgaged Property initiated pursuant to such
extension of the Maturity Date provided that such appraisal costs shall not
exceed $10,000) incurred by the Bank in connection with the extension of the
Maturity Date.

         (c) CALCULATION AND PAYMENT OF FEES. The Fees shall be calculated on
the basis of the actual number of days elapsed in a 360-day year. All Fees shall
be payable in addition to, and not in lieu of, interest, expense reimbursements,
indemnification and other Obligations. Fees shall be payable to the Bank's
Account in accordance with Section 2.7 except as otherwise provided by the Bank
in writing.

SECTION 2.6.             REDUCTION OF THE COMMITMENT; PREPAYMENTS.

         (a) VOLUNTARY REDUCTIONS. The Borrower, upon at least three (3)
Business Days' prior written notice to the Bank, shall have the right, from time
to time, to terminate in whole or permanently reduce in part the Incremental
Term Loan Commitment. Any partial reduction of the Incremental Term Loan
Commitment shall be in an aggregate minimum amount of $500,000 and integral
multiples of $100,000 in excess of that amount. Any notice of termination or
reduction given to the Bank under this Section shall specify the date (which
shall be a Business Day) of such termination or reduction and, with respect to a
partial reduction, the aggregate principal amount thereof.

         (b) VOLUNTARY PREPAYMENTS. Subject to this Section, the Borrower may,
at its option, at any time or from time to time, prepay the Term Loans in whole
or in part, without premium or penalty, PROVIDED that (a) any prepayment shall
be in an aggregate principal amount of at least $500,000 and in integral
multiples of $100,000 in excess thereof (or, alternatively, the whole amount of
Term Loans then outstanding) and (b) any prepayment of a LIBOR Loan shall be
made only together with amounts payable pursuant to Section 2.4(f).


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SECTION 2.7.             MANNER OF PAYMENT.

         (a) Except as otherwise expressly provided, the Borrower shall make
each payment under the Loan Documents to the Bank in Dollars and in immediately
available funds, without any deduction whatsoever, including any deduction for
any setoff, recoupment, counterclaim or Taxes, by depositing such payment in the
account specified by the Bank from time to time not later than 10:00 a.m. (Los
Angeles time) on the due date thereof. Any payments received after 10:00 a.m.
(Los Angeles time) on any Business Day shall be deemed received on the next
succeeding Business Day.

         (b) PAYMENTS ON NON-BUSINESS DAYS. Whenever any payment to be made
hereunder shall be due on a day that is not a Business Day, such payment shall
instead be made on the next succeeding Business Day, together with interest
accrued during the period of such extension.

         (c) APPLICATION OF PAYMENTS. (i) Subject to the provisions of paragraph
(ii) below and except as otherwise provided herein, all payments in respect of
the Term Loans shall be applied FIRST to outstanding Prime Rate Loans and then
to outstanding LIBOR Loans, in each case, in the inverse order of termination of
Interest Periods applicable thereto.

         (ii) After the occurrence and during the continuance of an Event of
Default, the Bank may, and shall upon the acceleration of the Obligations, apply
all payments in respect of any Obligations and all proceeds of Collateral in the
following order:

                  (A) FIRST, to pay Obligations in respect of any expense
reimbursements, indemnities and other similar amounts then due to the Bank,
including without limitation, any amounts in respect of cash management services
provided to the Borrower and its Subsidiaries by the Bank in connection with
this Agreement;

                  (B) SECOND, to pay Obligations in respect of any Fees then due
to the Bank;


                  (C) THIRD, to pay interest due in respect of the Term Loans;
and

                  (D) FOURTH, to pay or prepay principal outstanding on Term
Loans.

         The order of priority set forth above may at any time and from time to
time be changed by the Bank without necessity of notice to or consent of or
approval by the Borrower or any other Person.

         (d) PAYMENTS SET ASIDE. To the extent the Bank receives payment of any
amount under the Loan Documents, whether by way of payment by the Borrower,
setoff, as proceeds of Collateral or otherwise, which payment is subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to
be repaid to a trustee, receiver or any other party under any bankruptcy law,
other law or equitable cause, in whole or in part, then, to the extent of such
payment received, the Obligations or part thereof intended to be satisfied
thereby shall be


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revived and continue in full force and effect, together with all Collateral
security therefor, as if such payment had not been received by the Bank.

         (e) AUTOMATIC DEBIT. The Borrower authorizes the Bank to collect all
principal, interest and fees due under this Agreement and any other Loan
Document by charging Borrower's demand deposit account number 4375-672300 with
the Bank, or any other demand deposit account maintained by the Borrower with
the Bank, for the full amount thereof. Should there be insufficient funds in any
such demand deposit account to pay all such sums when due, the full amount of
such deficiency shall be immediately due and payable by the Borrower.

SECTION 2.8.             REGULATORY CHANGES.

         (a) CAPITAL COSTS. If a Regulatory Change regarding capital adequacy
(including the adoption or becoming effective of any treaty, law, rule,
regulation or guideline adopted pursuant to or arising out of the July 1988
report of the Basle Committee on Banking Regulations and Supervisory Practices
entitled "International Convergence of Capital Measurement and Capital
Standards") has or would have the effect of reducing the rate of return on the
capital of or maintained by the Bank or any company controlling the Bank as a
consequence of any Term Loan (or portion thereof) or other obligations hereunder
and other commitments of this type to a level below that which the Bank or
company could have achieved but for such Regulatory Change (taking into account
the Bank's or company's policies with respect to capital adequacy), then the
Borrower shall from time to time pay to the Bank, within 10 days after request
by the Bank, such additional amounts as the Bank determines to be sufficient to
compensate the Bank or company for such reduction in return, to the extent the
Bank or such company determines such reduction to be attributable to the
existence, issuance or maintenance of any Term Loan (or a portion thereof) or
other obligations for the account of the Borrower. Such demand shall be
accompanied by a statement as to the amount of such compensation and include a
summary of the basis for such demand (it being agreed that such summary, showing
in reasonable detail the basis for the calculation of such compensation, shall,
absent clearly demonstrable error, be final and conclusive and binding on the
Borrower).

         (b) TAXES. (i) If the Borrower is required by Applicable Law to make
any deduction or withholding in respect of any Taxes (other than Excluded Taxes)
from any amount payable under any Loan Document to or for the account of the
Bank, the Borrower shall pay to or for the account of the Bank, on the date such
amount is payable, such additional amounts as the Bank reasonably determines may
be necessary so that the net amounts received by it or for its account, in the
aggregate, after all applicable deductions or withholdings, shall equal the
amount that the Bank would have been entitled to receive if no deductions or
withholdings were made. "Excluded Taxes" means, with respect to any payment to
the Bank, any taxes imposed on or measured by the overall net income (including
a franchise tax based on net income) of the Bank by the jurisdiction in which it
is incorporated, maintains its principal executive office or in which its
agent's office is located.

         (ii) If the Bank is required by law to make any payment on account of
Taxes (other than Excluded Taxes) on or in relation to any sum received or
receivable by it under any Loan


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Document, or any liability for Taxes (other than Excluded Taxes) in respect of
any such payment is imposed, levied or assessed against the Bank, then the
Borrower shall pay when due such additional amounts as the Bank reasonably
determines to be necessary so that the amount received by it, less any such
Taxes paid, imposed, levied or assessed, including any Taxes (other than
Excluded Taxes) imposed on such additional amounts, shall equal the amount that
the Bank would have been entitled to retain in the absence of the payment,
imposition, levy or assessment of such Taxes.

SECTION 2.9.             COLLATERAL.

         As security for all the Obligations, (a) the Borrower shall (i) grant
to the Bank a first priority Lien on the Mortgaged Property pursuant to the Deed
of Trust and (ii) grant to the Bank a first priority Lien on all the Capital
Stock of each of its Subsidiaries pursuant to the Borrower Pledge Agreement and
(b) Parent shall grant to the Bank a first priority Lien on all of the Capital
Stock of the Borrower pursuant to the Parent Pledge Agreement.

         All of the foregoing shall be evidenced by and subject to the terms of
such security agreements, financing statements, deeds of trust, assignments of
leases and rents and other documents as Bank shall reasonably require, all in
form and substance satisfactory to Bank. Borrower shall reimburse Bank
immediately upon demand for all out-of-pocket costs and expenses incurred by
Bank in connection with any of the foregoing security, including without
limitation, filing and recording fees and out-of-pocket costs of appraisals,
audits and title insurance.

SECTION 2.10.            GUARANTIES.

         The Obligations of the Borrower to the Bank shall be guaranteed in full
by LA Turf Club as evidenced by and subject to the terms of the Subsidiary
Guaranty.

                                   ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

         The Borrower makes the following representations and warranties to the
Bank, which representations and warranties shall survive the execution of this
Agreement and shall continue in full force and effect until the full and final
payment, and satisfaction and discharge, of the Obligations:

SECTION 3.1.             ORGANIZATION, POWERS AND GOOD STANDING.

         The Borrower and each of its Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization, and has all requisite corporate power and
authority and the legal right to own and operate its properties, to carry on its
business as heretofore conducted and as proposed to be conducted, to enter into
the Loan Documents to which it is a party and to carry out the transactions
contemplated thereby. The Borrower and each of its Subsidiaries is duly
qualified to do business and in good standing


                                       24

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in each jurisdiction in which it owns or operates any material property or
conducts any business or in which it otherwise is required by law to be so
qualified, except any jurisdictions where any failure to be so qualified,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.

SECTION 3.2.             AUTHORIZATION, BINDING EFFECT, NO CONFLICTS.

         (a) AUTHORIZATION. The execution, delivery and performance by the
Borrower and each of its Subsidiaries of each Loan Document to which they are a
party have been duly authorized by all necessary corporate or other action on
the part of such Person. Each such Loan Document has been duly executed and
delivered by the Borrower and each of its Subsidiaries party thereto and is the
legal, valid and binding obligation of such Person, enforceable against it in
accordance with its terms, except as enforcement may be limited by equitable
principles and by bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to creditors' rights generally.

         (b) NO CONFLICT. The execution, delivery and performance by any of the
Borrower or its Subsidiaries of each Loan Document to which they are a party,
and the consummation of the transactions contemplated thereby, do not (a)
violate any provision of the charter or other organizational documents of such
Person, (b) except for consents that have been obtained and are in full force
and effect, conflict with, result in a breach of, or constitute (or, with the
giving of notice or lapse of time or both, would constitute) a default under, or
require the approval or consent of any Person pursuant to, any Contractual
Obligation of the Borrower or any of its Subsidiaries, or violate any Applicable
Law binding on the Borrower or any of its Subsidiaries, except where such
violation, conflict, breach, or default could not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect, or (c)
result in the creation or imposition of any Lien upon any asset of the Borrower
or any of its Subsidiaries, or any income or profits therefrom, except for Liens
in favor of the Bank under the Loan Documents.

         (c) GOVERNMENTAL APPROVALS. Except for filings and recordings in
connection with the perfection of Liens created by the Loan Documents, no
Governmental Approval is or will be required in connection with the execution,
delivery and performance by the Borrower or any of its Subsidiaries of any Loan
Document to which it is a party or the transactions contemplated thereby or to
ensure the legality, validity or enforceability thereof.

SECTION 3.3.             SUBSIDIARIES; CAPITAL STOCK.

         (a) SUBSIDIARIES. Each Subsidiary of the Borrower, the authorized and
issued Capital Stock of each such Subsidiary and the record and beneficial owner
of such Capital Stock are identified in Schedule 3.3, as amended from time to
time. All of the outstanding shares of Capital Stock of each of the Subsidiaries
of the Borrower have been duly authorized and validly issued, are fully paid and
nonassessable and are free and clear of any Liens. Except as disclosed in
Schedule 3.3, as amended from time to time, there are not outstanding any
securities convertible into or exchangeable for shares of Capital Stock of any
of the Subsidiaries of the Borrower, or any options, warrants or other rights to
purchase any such Capital Stock, or any


                                       25

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commitments of any kind for the issuance of additional shares of such Capital
Stock or any such convertible or exchangeable securities or options, warrants or
rights to purchase such Capital Stock. Except as disclosed in Schedule 3.3,
neither the Borrower nor any of its Subsidiaries is a party to any agreement
with respect to the issuance, voting or sale of issued or unissued shares of
Capital Stock of any Subsidiary.

         (b) BORROWER CAPITAL STOCK. As of the Closing Date, (i) the authorized
and outstanding Capital Stock of the Borrower is as set forth in Schedule 3.3
and (ii) all outstanding shares of such Capital Stock are duly authorized and
validly issued, are fully paid and nonassessable and are owned beneficially and
of record as set forth in Schedule 3.3, free and clear of all Liens.

SECTION 3.4.             LITIGATION.

         Except as disclosed in Schedule 3.4, there are no actions, suits or
proceedings pending or, to the knowledge of the Borrower, threatened against or
affecting the Borrower, any of its Subsidiaries or any of their properties that
(a) if adversely determined, individually or in the aggregate, could have a
Material Adverse Effect, or (b) draws into question the validity, legality or
enforceability of any Loan Document or any transaction contemplated thereby.

SECTION 3.5.             CORRECTNESS OF FINANCIAL STATEMENT.

         The internally prepared consolidated financial statement of the
Borrower and its Subsidiaries dated June 30, 2004, a true copy of which has been
delivered by the Borrower to the Bank prior to the date hereof, (a) is complete
and correct and presents fairly the financial condition of the Borrower and its
Subsidiaries on a consolidated basis and (b) has been prepared in accordance
with GAAP consistently applied. Since the date of such financial statement there
has been no Material Adverse Change in the financial condition of the Borrower,
nor has Borrower mortgaged, pledged, granted a security interest in or otherwise
encumbered any of its assets or properties except (i) in favor of the Bank, (ii)
Permitted Liens or (iii) as otherwise permitted by the Bank in writing.

SECTION 3.6.             AGREEMENTS; APPLICABLE LAW.

         (a) Neither the Borrower nor any of its Subsidiaries is in violation of
or in default under its charter or bylaws or any of its Contractual Obligations,
except where such violation or default could not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.

         (b) Except as disclosed in Schedule 3.6, the Borrower and its
Subsidiaries are in material compliance with all Applicable Laws and the use of
the Track and operation of the Racetrack Business are in material compliance
with all Applicable Laws relating thereto including, without limitation, the
regulations and requirements of the California Horse Racing Board, and, to the
Borrower's knowledge, it has not received any notice of non-compliance with
Applicable Laws.


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SECTION 3.7.             INCOME TAX RETURNS.

         All United States federal income tax returns and all other material tax
returns required to be filed by the Borrower or any of its Subsidiaries have
been filed and all Taxes due pursuant to such returns have been paid, except
such Taxes, if any, as are being contested in good faith and as to which
adequate reserves have been established in accordance with GAAP. To the
knowledge of the Borrower, there have not been asserted or proposed to be
asserted any Tax deficiency against the Borrower or any of its Subsidiaries
(except deficiencies that, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect) that is not reserved
against on the financial books of the Borrower or such Subsidiary, as the case
may be.

SECTION 3.8.             GOVERNMENTAL REGULATIONS.

         Neither the Borrower nor any of its Subsidiaries is (a) an "investment
company" registered or required to be registered under the Investment Company
Act of 1940, as amended, or a company controlled by or principal underwriter of
such a company, or (b) subject to regulation under the Public Utility Holding
Company Act of 1935 or to any federal or state, statute or regulation limiting
its ability to incur Debt for money borrowed (other than the Margin
Regulations).

SECTION 3.9.             MARGIN REGULATIONS.

         Neither the Borrower nor any of its Subsidiaries is engaged
principally, or as one of its important activities, in the business of extending
credit for the purposes of purchasing or carrying Margin Stock. The value of all
Margin Stock held by the Borrower or any of its Subsidiaries constitutes less
than 25% of the value, as determined in accordance with the Margin Regulations,
of all assets of the Borrower and its Subsidiaries.

SECTION 3.10.            TITLE TO PROPERTY.

         Except as disclosed on Schedule 3.10, each of the Borrower and its
Subsidiaries has good title to or valid and subsisting leasehold interests in
all of its property reflected in its books and records as being owned or leased
by it. No such property is subject to any Lien, other than Permitted Liens.

SECTION 3.11.            ENVIRONMENTAL CONDITION.

         Except as disclosed in Schedule 3.11:

         (a) The Mortgaged Property and any other real property owned by the
Borrower or any of its Subsidiaries and, to the Borrower's knowledge, each
property adjacent thereto, is free from contamination from any Hazardous
Materials, except contamination that, individually or in the aggregate, could
not reasonably be expected to result in the payment of a Material Environmental
Amount. Neither the Borrower nor any of its Subsidiaries or, to the knowledge of
the Borrower, any prior owner or other user of the Mortgaged Property or any
other real


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property owned by the Borrower or any of its Subsidiaries or any such adjacent
property has caused or suffered any Environmental Damages in connection with
such real property, such adjacent property or the business or operations of the
Borrower or its Subsidiaries, except for (i) Environmental Damages that could
not reasonably be expected to, individually or in the aggregate, result in the
payment of a Material Environmental Amount or (ii) Environmental Damages that
have been remediated prior to the Closing Date in accordance with Applicable
Law.

         (b) Neither the Borrower nor any of its Subsidiaries or, to the
knowledge of the Borrower, any prior owner or other user of the Mortgaged
Property or any other real property owned by the Borrower or any of its
Subsidiaries or any adjacent property has received notice of any actual or
alleged violation of Environmental Requirements, or notice of any actual or
alleged liability for Environmental Damages in connection with such real
property or such adjacent property or the business or operations of the
Borrower, except for violations and liabilities that (i) could not reasonably be
expected, individually or in the aggregate, to result in the payment of a
Material Environmental Amount or (ii) have been remediated or paid, as the case
may be, prior to the Closing Date. There exists no order, judgment or decree,
and there is not pending or, to the knowledge of the Borrower, threatened, any
action, suit, proceeding or investigation relating to any actual or alleged
liability arising out of the presence or suspected presence of Hazardous
Material, any actual or alleged violation of Environmental Requirements or any
actual or alleged liability for Environmental Damages in connection with the
Mortgaged Property or any other real property owned by the Borrower or any of
its Subsidiaries or the business or operations of the Borrower or its
Subsidiaries (except for Environmental Damages that have not had and could not
reasonably be expected to, individually or in the aggregate, result in the
payment of a Material Environmental Amount).

SECTION 3.12.            ABSENCE OF CERTAIN RESTRICTIONS.

         Except as disclosed in Schedule 3.12, neither the Borrower nor any of
its Subsidiaries is subject to any Contractual Obligation that restricts or
limits the ability of any Subsidiary to (a) make Restricted Payments to the
Borrower, (b) pay Indebtedness owed the Borrower or any Subsidiary thereof, (c)
make any loans or advances to the Borrower or (d) except as provided in
Contractual Obligations respecting the specific assets subject to Permitted
Liens, transfer any of its property to the Borrower.

SECTION 3.13.            LABOR MATTERS.

         There are no material strikes or other labor disputes pending or, to
the knowledge of the Borrower, threatened against the Borrower or any of its
Subsidiaries. Except as set forth in Schedule 3.13, there are no collective
bargaining agreements to which the Borrower or any of its Subsidiaries is a
party.


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SECTION 3.14.            TRANSACTIONS WITH AFFILIATES.

         As of the Closing Date, except as disclosed in Schedule 3.15 and except
for transactions on arm's length terms pursuant to which the Borrower or any
Subsidiary makes payments in the ordinary course of business upon terms no less
favorable than the Borrower or such Subsidiary could obtain from third parties,
none of the officers, directors or employees of the Borrower or any of its
Subsidiaries is presently a party to any transaction with the Borrower or any
Subsidiary (other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Borrower, any corporation,
partnership, trust or other entity in which any officer, director or any such
employee has a substantial interest or is an officer, director, trustee or
partner.

SECTION 3.15.            DISCLOSURE.

         The information in each document, certificate or written statement
furnished to the Bank by or on behalf of the Borrower or any of its Subsidiaries
with respect to the business, assets, prospects, results of operation or
financial condition of the Borrower of such Subsidiary or use in connection with
the transactions contemplated by this Agreement at the time of delivery thereof,
was true and correct in all material respects and did not omit, when considered
as a whole, any material fact necessary in order to make the statements made not
misleading, in light of the circumstances under which they were made. There is
no fact known to the Borrower (other than matters of a general economic nature)
that has had or could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect and that has not been disclosed herein or
in such other documents, certificates or statements.

SECTION 3.16.            NO SUBORDINATION.

         There is no agreement, indenture, contract or instrument to which
Borrower or any of its Subsidiaries is a party or by which Borrower or any of
its Subsidiaries may be bound that requires the subordination in right of
payment of any of the Obligations to which the Borrower or such Subsidiary is
obligated to make payment with respect to under this Agreement or any other Loan
Document.

SECTION 3.17.            LICENSES, PERMITS, FRANCHISES.

         The Borrower and each of its Subsidiaries possesses all Governmental
Approvals (other than Governmental Approvals which the failure to obtain could
not, either individually or in the aggregate, have a Material Adverse Effect)
that are necessary for the ownership, maintenance and operation of its
properties and conduct of its business as now conducted and proposed to be
conducted, and is not in material violation thereof. Without limitation, the
Borrower and its Subsidiaries possess, and will hereafter possess (i) all
governmental permits, consents, approvals, franchises, licenses and approvals
relating to the use or occupancy of the Track and operation of the Racetrack
Business, including a Racing License that permits, together with a Racing
License


                                       29

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obtained by Oak Tree for the 2004/2005 racing season, no less than 100 Racing
Days at the Track for the 2004/2005 racing season, and all gaming permits and
licenses, racing licenses, certificates of occupancy, certificates of
compliance, food handlers permits, liquor licenses, and any certificates of
unofficial bodies that may be required or customary for the conduct of the
Racetrack Business and (ii) rights to all trademarks, trade names, patents, and
fictitious names, if any, in each case, necessary to enable the Borrower and its
Subsidiaries to conduct the Racetrack Business or any other business in which
the Borrower or any of its Subsidiaries is currently engaged in compliance with
applicable law.

SECTION 3.18.            ERISA.

         The Borrower is, and all ERISA Affiliates are, in compliance in all
material respects with all applicable provisions of the ERISA; neither the
Borrower nor any ERISA Affiliate has violated any provision of any Plan; no
Reportable Event has occurred and is continuing with respect to any Plan
initiated by the Borrower or any ERISA Affiliate; the Borrower and all ERISA
Affiliates have met their minimum funding requirements under ERISA with respect
to each Plan; and each Plan will be able to fulfill its benefit obligations as
they come due in accordance with the Plan documents and under generally accepted
accounting principles.

SECTION 3.19.            MORTGAGED PROPERTY.

         Except as disclosed by the Borrower to the Bank in writing prior to the
date hereof, with respect to the Mortgaged Property:

         (a) All taxes, governmental assessments, insurance premiums, and water,
sewer and municipal charges, and rents (if any) which previously became due and
owing in respect thereof have been paid as of the date hereof.

         (b) None of the improvements which were included for purpose of
determining the appraised value of any such real property lies outside of the
boundaries and/or building restriction lines thereof, and no improvements on
adjoining properties materially encroach upon any such real property.

         (c) There is no pending, or to the best of the Borrower's knowledge
threatened, proceeding for the total or partial condemnation of all or any
portion of any such real property, and all such real property is in good repair
and free and clear of any damage that would materially and adversely affect the
value thereof as security and/or the intended use thereof.

SECTION 3.20.            LEASES.

         Schedule 3.21 lists all material leases or subleases to which the
Borrower or any Subsidiary, as of the Closing Date, is a lessor or sublessor and
affecting any portion of the Mortgaged Property, the operation of the Racetrack
Business or any other business of the Borrower and its Subsidiaries as presently
conducted (collectively, the "Leases").


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                                   ARTICLE IV

                                   CONDITIONS

SECTION 4.1.             CLOSING CONDITIONS.

         The occurrence of the Closing Date and the obligation of the Bank to
make the Initial Term Loan is subject to the fulfillment to Bank's satisfaction
of all of the following conditions:

         (a) APPROVAL OF BANK COUNSEL. All legal matters incidental to the
extension of credit by the Bank shall be satisfactory to the Bank's counsel.

         (b) CERTAIN DOCUMENTS. The Bank shall have received the documents
listed in Schedule 4.1 all of which shall be in form and substance satisfactory
to the Bank.

         (c) FEES AND EXPENSES PAID. The Borrower shall have paid (i) all Fees
due on or before the Closing Date and (ii) all expenses of the Bank which the
Borrower has agreed herein to pay and for which the Borrower shall have been
billed on or before the Closing Date.

         (d) ABSENCE OF LITIGATION EVENTS. There has not been issued any
injunction, order or decree that prohibits or limits any of the transactions
contemplated by the Loan Documents and there shall not be any action, suit,
proceeding or investigation pending or, to the knowledge of the Borrower,
currently threatened against the Borrower or any of its Subsidiaries that (i)
draws into question the validity, legality or enforceability of any Loan
Document or the ability of any such Person to consummate the transactions
contemplated thereby or (ii) might result, either individually or in the
aggregate, in any Material Adverse Change.

         (e) APPROVALS. All governmental and third party approvals (including
landlords' and other consents) necessary or, in the discretion of the Bank,
advisable in connection with the continuing operations of the Borrower and its
Subsidiaries and the transactions contemplated hereby and under the other Loan
Documents shall have been obtained and be in full force and effect.

         (f) LIEN SEARCHES. The Bank shall have received the results of a recent
lien search in each of the jurisdictions where assets of the Borrower and/or its
Subsidiaries are located, and such search shall reveal no Liens on any of the
assets of the Borrower or its Subsidiaries except for Permitted Liens and Liens
discharged on or prior to the Closing Date pursuant to documentation
satisfactory to the Bank.

         (g) ENVIRONMENTAL MATTERS. (i) The Bank shall have received and
reviewed the "Phase I Environmental Site Assessment" dated February 10, 2003 and
the "Updated Phase I Environmental Site Assessment" dated October 1, 2004, each
prepared by Environmental Resources Management (collectively, the "Closing Date
Environmental Report") and the Bank shall be reasonably satisfied with the
nature of any environmental hazards or liabilities, and the anticipated costs of
any remedial actions, noted therein and with the Borrower's remediation plans
with respect thereto.


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         (ii) The Bank shall have received from Environmental Resource
Management an original executed copy of the Closing Date Environmental Report
and a letter executed by Environmental Resource Management authorizing the Bank
to rely on the assessments and other determinations set forth therein.

         (h) APPRAISALS. The Bank shall have obtained an appraisal of the
Mortgaged Property, and all improvements thereon, issued by an appraiser
acceptable to the Bank and in form and substance reasonably satisfactory to
Bank.

         (i) TITLE INSURANCE. The Bank shall have received an ALTA Policy of
Title Insurance, with such endorsements as the Bank may reasonably require,
issued by First American Title Insurance Company or another company and in form
and substance satisfactory to Bank, in an amount equal to the aggregate
principal amount of the Term Loans that may be advanced hereunder, insuring the
Bank's Lien on the Mortgaged Property to be of first priority, subject only to
such exceptions as the Bank shall approve in its discretion (the "Loan Policy"),
with all costs thereof to be paid by Borrower.

         (j) FILINGS, REGISTRATIONS AND RECORDINGS. Each document (including the
Deed of Trust and any Uniform Commercial Code financing statement) required by
the Loan Documents or under law or reasonably requested by the Bank to be filed,
registered or recorded in order to create in favor of the Bank a perfected Lien
on the Collateral described therein, prior and superior in right to any other
Person (other than Permitted Liens), shall be in proper form for filing,
registration or recordation.

         (k) ENVIRONMENTAL PERMITS. The Bank shall have received an officer's
certificate in form and substance satisfactory to the Bank certifying that the
Borrower and its Subsidiaries possess all material environmental permits
necessary for the conduct of their businesses and that copies of all such
permits have been provided to the Bank.

         (l) CERTIFICATIONS; LICENSES; MISC.. The Bank shall have received an
officer's certificate in form and substance satisfactory to the Bank certifying
(i) that the Borrower and its Subsidiaries possess (A) a Racing License for the
2004/2005 racing year and (B) all permits or licenses (except for permits or
licenses which the failure to obtain would not have a Material Adverse Effect)
specified in Section 3.17 and (ii) that the attached promissory notes are true,
correct and complete copies of all promissory notes evidencing Subordinated Debt
owing by the Borrower to the Parent.

         (m) LEASES. With respect to the Leases to be assigned under the Deed of
Trust or any other Loan Document, the Borrower or the applicable Subsidiary has
obtained all consents from third parties required in order to make valid and
enforceable assignments of such Leases.

         (n) BALANCE SHEET OF MID. The Bank shall have received from the
Borrower a copy of the annual report to shareholders of MID, which shall include
a consolidated balance sheet of MID and its Subsidiaries as of December 31,
2003.


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         (o) BUSINESS PLAN. The Bank shall have received a report from the
Borrower, which shall include (i) a historical review of the Borrower's business
and operations and (ii) a three year business plan for the Borrower and its
Subsidiaries (including projected financial results for such period), in form
and substance satisfactory to the Bank.

         (p) INSURANCE. Within five Business Days of the Closing Date, the Bank
shall have received insurance certificates satisfying the requirements of this
Agreement and the Loan Documents.

         (q) OPINION OF COUNSEL. The Bank shall have received an opinion of
counsel, in form and substance satisfactory to the Bank and its counsel.

         (r) NOTICE OF BORROWING. The Borrower shall have delivered to the Bank
a Notice of Borrowing (or telephonic notice in lieu thereof).

         (s) REPRESENTATIONS AND WARRANTIES. All of the representations and
warranties of the Borrower and its Subsidiaries contained in the Loan Documents
shall be true and correct in all material respects on and as of the Closing Date
as though made on and as of that date (except to the extent that such
representations and warranties expressly were made only as of a specific date).

         (t) NO DEFAULT. No Default or Event of Default shall exist or result
from the making of the Initial Term Loan or any other action contemplated by
this Agreement or any other Loan Document.

         (u) NO MATERIAL ADVERSE CHANGE. No Material Adverse Change shall have
occurred since the date of the financial statements referred to in Section 3.5
and no material adverse change shall have occurred in the Applicable Laws
affecting the Bank or the Borrower.

         (v) DOCUMENTATION. The Bank shall have received all additional
documents which it reasonably may request in connection with such the making of
the Initial Term Loan or any other transaction contemplated by this Agreement or
any other Loan Document.

SECTION 4.2.               CONDITIONS PRECEDENT TO INCREMENTAL
                           TERM LOANS.

         The obligation of the Bank to make any Incremental Term Loan on any
date shall be subject to the fulfillment to Bank's satisfaction of all of the
following conditions precedent:

         (a) SATISFACTION OF CLOSING CONDITIONS. The conditions precedent set
forth in Section 4.1 shall have been satisfied or waived in writing by the Bank.

         (b) NOTICE OF BORROWING. The Borrower shall have delivered to the Bank,
in accordance with the applicable provisions of this Agreement, a Notice of
Borrowing.


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         (c) TERM LOAN PROMISSORY NOTE; REAFFIRMATION OF LOAN DOCUMENTS. Each
guarantor of the Term Loans then outstanding shall have delivered to the Bank a
duly executed reaffirmation of its obligations under the Loan Documents to which
each is a party after giving effect to the making of the proposed Incremental
Term Loan.

         (d) REPRESENTATIONS AND WARRANTIES. All of the representations and
warranties of the Borrower and its Subsidiaries contained in the Loan Documents
shall be true and correct in all material respects on and as of the Closing Date
as though made on and as of that date (except to the extent that such
representations and warranties expressly were made only as of a specific date).

         (e) NO DEFAULT. No Default or Event of Default shall exist or result
from the making of the Incremental Term Loan or any other action contemplated by
this Agreement or any other Loan Document.

         (f) NO MATERIAL ADVERSE CHANGE. No Material Adverse Change shall have
occurred since the date of the financial statements referred to in Section 3.5
and no material adverse change shall have occurred in the Applicable Laws
affecting the Bank or the Borrower.

         (g) OFFICER'S CERTIFICATE. Bank shall have received a officer's
certificate of the Borrower certifying (i) as to the satisfaction of the
conditions set forth in Sections 4.2(c), (d) and (e) and (ii) that after giving
effect to the making of the Incremental Term Loan the aggregate principal amount
of the Term Loans outstanding does not exceed 45% of the Appraised Value of the
Mortgaged Property.

         (h) APPRAISAL. If the Bank so elects, an appraisal of the Mortgaged
Property, and all improvements thereon, issued by an appraiser acceptable to the
Bank and in form and substance reasonably satisfactory to Bank, which appraisal
shall confirm that the aggregate principal amount of the Term Loans outstanding
after giving effect to the proposed Incremental Term Loan does not exceed 45% of
the Appraised Value of the Mortgaged Property.

         (i) SATISFACTION OF CONDITIONS. Each Borrowing of an Incremental Term
Loan shall constitute a representation and warranty by the Borrower as of the
date of such Borrowing that the conditions contained in clauses (c) through (g)
above have been satisfied.

                                    ARTICLE V

                              AFFIRMATIVE COVENANTS

         The Borrower covenants that so long as any portion of the Term Loans
are outstanding, the Borrower shall, and shall cause each of its Subsidiaries
to:

SECTION 5.1.             FINANCIAL STATEMENTS AND OTHER REPORTS.

         Deliver, or cause to be delivered, to the Bank:


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         (a) ANNUAL FINANCIAL REPORTS. As soon as practicable and in any event
within 120 days after the end of each Fiscal Year, the consolidated (and
consolidating) balance sheet of the Borrower and its Subsidiaries as of the end
of such Fiscal Year and the related consolidated (and, except as to statements
of stockholders' equity, consolidating) statements of income, stockholders'
equity and cash flow of the Borrower and its Subsidiaries for such Fiscal Year,
setting forth in each case in comparative form the consolidated (and
consolidating) figures for the previous Fiscal Year, all in reasonable detail
and (i) in the case of such consolidated financial statements, accompanied by an
unqualified report thereon of Ernst & Young LLP or other independent certified
public accountants of recognized national standing selected by the Borrower and
reasonably satisfactory to the Bank and (ii) in the case of such consolidating
financial statements, certified by the chief financial officer of the Borrower
as being fairly stated in all material respects when considered in relation to
the audited consolidated financial statements of the Borrower and its
Subsidiaries;

         (b) QUARTERLY FINANCIALS. As soon as practicable and in any event
within 60 days after the end of each fiscal quarter (other than the last fiscal
quarter of any Fiscal Year), an unaudited consolidated (and consolidating)
balance sheet of the Borrower and its Subsidiaries as of the end of such quarter
and the related unaudited consolidated statements of income, stockholders'
equity and cash flow for such quarter and the portion of the Fiscal Year ended
at the end of such quarter, setting forth in each case in comparative form the
consolidated figures for the corresponding periods of the prior Fiscal Year, all
in reasonable detail and certified by the Borrower's chief financial officer as
fairly presenting the consolidated financial condition of the Borrower and its
Subsidiaries as of the dates indicated, and their consolidated results of
operations and cash flows for the periods indicated, in conformity with GAAP,
subject to normal year-end adjustments and the absence of footnotes;

         (c) SEC FILINGS OF THE PARENT. Promptly after the filing thereof with
the SEC, all annual reports on Form 10-K and quarterly reports on Form 10-Q
filed by the Parent with the SEC;

         (d) EVIDENCE OF COMPLIANCE WITH FINANCIAL COVENANTS. Together with each
delivery of financial statements pursuant to clauses (a) and (b) above, a
certificate of the chief financial officer of the Borrower in substantially the
form of Exhibit H hereto, duly completed and setting forth the calculations
required to establish compliance with Sections 6.17 and 6.18 on the date of such
financial statements;

         (e) EVENT OF DEFAULT. Within three Business Days after the Borrower
becomes aware of the occurrence of any Default or Event of Default, a
certificate of a Senior Officer of the Borrower setting forth the details
thereof and the action that the Borrower is taking or proposes to take with
respect thereto;

         (f) NOTICE OF LITIGATION. Within three Business Days after the Borrower
obtains knowledge of the threat or commencement of litigation or proceedings
affecting the Borrower or any of its Subsidiaries, or of any material
development in any pending or future litigation, (i) that alleges liability in
excess of $1,000,000, (ii) in which injunctive or similar relief is sought that,
if


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obtained could have a Material Adverse Effect or (iii) that questions the
validity or enforceability of any Loan Document, notice providing reasonable
details about the threat or commencement of such litigation or about such
material development;

         (g) AUDIT REPORTS. Within three Business Days after receipt thereof,
copies of all final reports or letters submitted to the Borrower by its
independent certified public accountants in connection with each audit of the
financial statements of the Borrower or its Subsidiaries made by such
accountants, including any management report, which reports the Borrower agrees
to obtain in connection with each of its annual audits;

         (h) BUSINESS PLAN. Within 90 days after the end of each Fiscal Year of
the Borrower, a forecast for each of the next succeeding two Fiscal Years of the
consolidated balance sheet and the consolidated results of operations and cash
flow of the Borrower and its Subsidiaries, together with (i) an outline of the
major assumptions upon which the forecast is based and (ii) a calculation in
reasonable detail evidencing compliance with all covenants set forth herein on
the basis of, and after giving effect to, such forecast;

         (i) ENVIRONMENTAL NOTICES. Within three Business Days after the receipt
thereof by the Borrower, a copy of any notice, summons, citation or written
communication concerning any actual, alleged, suspected or threatened violation
of Environmental Requirements, or liability of the Borrower or any of its
Subsidiaries for Environmental Damages;

         (j) CORPORATE CHANGES. Within three Business Days after the occurrence
of any change in the name or the organizational structure of Borrower, including
amendments or other modifications to the Borrower's articles of incorporation or
bylaws;

         (k) CANCELLATION OF INSURANCE. Within three Business Days after the
occurrence of any termination or cancellation of any insurance policy which
Borrower or any of its Subsidiaries is required to maintain pursuant to this
Agreement or any other Loan Document, or any uninsured or partially uninsured
loss through liability or property damage, or through fire, theft or any other
cause affecting Borrower's property in excess of an aggregate of $1,000,000;

         (l) BMO INDEBTEDNESS. Prior to the earlier of (x) three Business Days
after the execution of any term sheet, letter of intent, commitment letter or
any similar agreement evidencing an intent to refinance, replace or refund the
Indebtedness evidenced by the BMO Credit Agreement or (y) twenty days prior to
the anticipated effective date of any refinancing, restatement or refunding of
the BMO Credit Agreement, written notice of the occurrence thereof, accompanied
by a reasonably detailed description of the proposed transaction; and

         (m) OTHER INFORMATION. From time to time such additional information
regarding the Borrower or any of its Subsidiaries or any of their respective
businesses, assets, liabilities, prospects, results of operations or condition
(financial or otherwise) as the Bank may reasonably request.


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SECTION 5.2.             RECORDS AND INSPECTION, ETC.

         Maintain adequate books, records and accounts as may be required or
necessary to permit the preparation of consolidated financial statements in
accordance with sound business practices and GAAP and permit such Persons as the
Bank may designate, at reasonable times and as often as may be reasonably
requested, under reasonable circumstances, to (a) visit and inspect any of its
properties, (b) inspect and copy its books and records, and (c) discuss with its
officers and its independent accountants (so long as no Default or Event of
Default has occurred and is continuing, with prior coordination through the
Borrower), its business, assets, liabilities, prospects, results of operations
or financial condition.

SECTION 5.3.             CORPORATE EXISTENCE, ETC.

         At all times preserve and keep in full force and effect its corporate
existence and all material rights, franchises and other Governmental Approvals,
PROVIDED, HOWEVER, that (a) the corporate existence of any Subsidiary may be
terminated as contemplated and permitted by Section 6.6 and (b) the corporate
existence of any Subsidiary may be terminated, and any such Governmental
Approval may be terminated or not renewed, if such termination or nonrenewal, as
the case may be, is determined by the Board of Directors of the Borrower to be
in the best interest of the Borrower and is not disadvantageous in any material
respect to the Bank.

SECTION 5.4.             PAYMENT OF TAXES.

         Pay and discharge all material Taxes imposed upon it or any of its
properties or in respect of any of its franchises, business, income or property
before any penalty shall be incurred with respect to such Taxes, PROVIDED,
HOWEVER, that, unless and until foreclosure, distraint, levy, sale or similar
proceedings shall have commenced, the Borrower and its Subsidiaries need not pay
or discharge any such Tax so long as the validity or amount thereof is being
contested in good faith and by appropriate proceedings and so long as any
reserves or other appropriate provisions as may be required by GAAP shall have
been made therefor.

SECTION 5.5.             MAINTENANCE OF PROPERTIES.

         Maintain or cause to be maintained in good repair, working order and
condition (ordinary wear and tear excepted and subject to alterations made in
connection with the renovations described in the business plan delivered to the
Bank pursuant to Section 5.1(h)) all properties and other assets necessary to
its business (including, without limitation, the Mortgaged Property and all
improvements thereon), and from time to time the Borrower or the applicable
Subsidiary shall make or cause to be made all appropriate repairs, renewals and
replacements thereto, except where the failure to do so could not reasonably be
expected to have a Material Adverse Effect.

SECTION 5.6.             MAINTENANCE OF INSURANCE.

         (a) Maintain with financially sound and reputable insurance companies
satisfactory to the Bank, insurance in at least such amounts, of such character
and against at least such risks as is maintained by the Borrower and each such
Subsidiary on the date of this Agreement and


                                       37

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described in Schedule 5.6, or, if such insurance is not available on a
commercially reasonable basis, with the Bank's prior written consent, such
insurance, in at least such amounts, of such character and against at least such
risks as is usually maintained by companies of established repute engaged in the
same or a similar business in the same general area. Such insurance shall
include fire and extended coverage, public liability, property damage, workers'
compensation, business interruption, flood (if the Bank determines that such
insurance is required under Applicable Law) and such other coverage as the Bank
may reasonably request, PROVIDED, HOWEVER, that the Bank shall not require the
Borrower to obtain earthquake loss insurance.

         (b) In addition to any requirements under the Loan Documents, (i) all
property loss or damage insurance policies with respect to any assets of the
Borrower or any of its Subsidiaries shall contain lenders loss payable
endorsements in favor of the Bank in form and substance satisfactory to it,
which shall provide that all insurance proceeds (A) in excess of $2,000,000 or
(B) payable after the insurer has received written notice from the Bank that an
Event of Default then exists (until a contrary notice is received), shall be
payable directly to the Bank, PROVIDED that any business interruption insurance
proceeds resulting from a business interruption of less than five (5) days shall
be released to the Borrower, (ii) all insurance policies shall (A) provide that
no cancellation, reduction in amount or material adverse change in coverage
thereof shall be effective until at least 30 days after receipt by the Bank of
written notice thereof, (B) insure the interests of the Bank regardless of any
breach of or violation by the Borrower or any of its Subsidiaries or any other
Person of any warranties, declarations or conditions contained therein, and (C)
provide that the Bank shall have no obligation or liability for premiums,
commissions, assessments or calls in connection with such insurance or in
connection with any representation or warranty made by the Borrower or any of
its Subsidiaries or any Subsidiary thereof in connection with obtaining of such
insurance, and (iii) all business interruption and extra expense insurance shall
name the Bank as a loss payee.

SECTION 5.7.             CONDUCT OF BUSINESS; POSSESSION OF LICENSES.

         (a) Engage only in the businesses in which the Borrower or such
Subsidiary is engaged on the date hereof except for other businesses that are
ancillary or incidental to its ongoing business as presently conducted or as
contemplated in the business plan delivered pursuant to Section 4.1. The
Borrower shall, and shall cause each of its Subsidiaries to, conduct its
business in compliance in all material respects with all Applicable Law, all its
Governmental Approvals and all its Contractual Obligations except to the extent
any noncompliance could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect.

         (b) (i) Maintain all licenses, permits and other consents and approvals
required with respect to the operation of the Racetrack Business; (ii) the LA
Turf Club shall (A) maintain any then current Racing License, (B) promptly apply
for a Racing License for each racing season subsequent to the 2004/2005 racing
season, (iii) use its best efforts to obtain a valid Racing License for each
such subsequent racing season in a timely fashion in accordance with customary
practice within the industry and (iv) obtain a Racing License for each racing
season that permits, together with any Racing License obtained by Oak Tree for
such racing season, at least 100 Racing Days at the Track.


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SECTION 5.8.             ADDITIONAL GUARANTIES AND COLLATERAL.

         Upon the creation or acquisition after the date hereof of any
Subsidiary, the Borrower shall, at the Bank's request, cause such Subsidiary to
execute and deliver a Subsidiary Guaranty and the Borrower shall grant, or cause
to be granted, a first priority Lien on all of the issued and outstanding
Capital Stock of such Subsidiary pursuant to the Borrower Pledge Agreement, in
each case in form and substance satisfactory to the Bank. The Borrower, at its
own expense, shall execute and deliver, or cause to be executed and delivered,
and thereafter cause to be registered, filed or recorded with the appropriate
Governmental Authority, any and all documents and instruments deemed by the Bank
to be necessary or desirable for the creation and perfection of the foregoing
Liens and shall pay all Taxes and fees related to such registration, filing or
recording.

SECTION 5.9.             SUBORDINATION OF OTHER INDEBTEDNESS.

         Cause all Intercompany Debt and Subordinated Debt to be subordinated to
the prior payment in full in cash of the Obligations or the obligations under
the Subsidiary Guaranty, as applicable, on terms of subordination satisfactory
to the Bank; PROVIDED, HOWEVER, that as long as no Event of Default then exists,
(a) the Borrower and/or any of its Subsidiaries may pay such Intercompany Debt
in the ordinary course of business consistent with past practice and (b) the
Borrower may prepay Subordinated Debt owed from time to time by the Borrower to
the Parent so long as (i) after giving effect to such prepayment not less than
$30,000,000 aggregate principal amount of such Subordinated Debt remains
outstanding and (ii) all other conditions to such prepayment set forth in
Section 6.3 hereof have been satisfied.

SECTION 5.10             ENVIRONMENTAL COMPLIANCE.

         (a) Comply, in all material respects with all Environmental
Requirements and shall not cause or permit to exist on the Mortgaged Property
and any other real property owned by the Borrower or any of its Subsidiaries any
Hazardous Materials, unless the presence of such materials is necessary for the
conduct of the business of the Borrower or its Subsidiaries, all necessary
Governmental Approvals for such activity have been obtained and there is no
material risk that any Environmental Damages could result from such activity.

         (b) Within six (6) months of the Closing Date (or twelve (12) months
from the Closing Date, if the failure by the Borrower to perform within six (6)
months of the Closing Date is based solely upon an un-affiliated third parties
failure to perform or delays caused by Governmental Authorities), deliver to the
Bank, in each case, in form and substance reasonably satisfactory to the Bank:

                  (i) with respect to the underground storage tank located in
the boiler area of the Track, (A) an underground storage tank closure report
documenting removal of the applicable underground storage tank and related
pipelines and pumps; and (B) if any contamination is identified during the
removal of the applicable underground storage tank and

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related pipelines and pumps, a "no further action letter" issued by the
appropriate Governmental Authority;

                  (ii) with respect to the underground storage tanks located in
the maintenance area of the Track, (A) copies of the underground storage tank
registration documents for the corresponding underground storage tanks; (B)
customary reports describing tightness tests conducted within the last 12 months
on the corresponding underground storage tanks, such tests to demonstrate that
the corresponding underground storage tanks and related pipelines and pumps are
not leaking; (C) evidence that the monitoring system with respect to the
underground storage tanks is operational and has not detected any releases,
which evidence must be current within 30 days of the date such evidence is
provided to the Bank for review; and (D) certification by an appropriate
environmental consultant that the corresponding underground storage tanks and
related pipelines, pumps and fill ports are in compliance with all current
regulatory requirements; and

                  (iii) with respect to the staining referenced in the Closing
Date Environmental Report, either (A) evidence that the stained materials have
been sampled and, where appropriate, removed from the Track, together with
copies of all regulatory approvals required in connection with such sampling and
removal; or (B) a letter from Environmental Resource Management clarifying its
conclusions with respect to the staining.

SECTION 5.11.            ERISA.

         Maintain and operate all Plans that are maintained and operated by the
Borrower or any of its Subsidiaries so as to comply with the provisions of
ERISA, the Code, all other applicable laws, and the regulations and
interpretations thereunder and the respective requirements of the governing
documents for such Plans to the extent that failure to comply with such
provisions, regulations, interpretations and requirements have a Material
Adverse Effect.

SECTION 5.12.            AGREEMENTS REGARDING REAL PROPERTY.

         (a) In the event that the Borrower finally acquires fee title to, or
otherwise acquires the exclusive right, via easement or otherwise, of access
over and use of, the Gate 1 Tract (as defined herein), or any portion thereof,
following a final and nonappealable judgment with respect thereto, the Borrower
shall (i) provide notice thereof to the Bank and shall, at its sole cost and
expense and upon request of the Bank, execute in recordable form and cause to be
recorded, if applicable, such amendments to this Agreement, the Deed of Trust,
the Assignment of Leases and Rents and the other Loan Documents as the Bank may
reasonably request to reflect the new legal description of the Mortgaged
Property, and (ii) obtain, at its sole cost and expense, such available
endorsements to the Loan Policy as the Bank may reasonably request insuring that
the Gate 1 Tract and Parcels B1 and B2 are, or continue to be, as applicable,
portions of the Mortgaged Property.

         (b) Whether or not such amendments are executed or delivered,
immediately upon the effectiveness of the vesting of interests in the Gate 1
Tract and/or Parcel B1 or B2, or any


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portions thereof, in the Borrower as described above, and without any further
action on the part of any party, the Deed of Trust shall be deemed to encumber
any and all such real property.

         (c) As used herein, the "Gate 1 Tract" means that certain tract of land
containing approximately 2.36 acres located adjacent to and southwesterly of the
Mortgaged Property (along Huntington Drive) on which Entrance Gate #1 to the
Racetrack currently is located and legally described as: Parcel 4 of Parcel Map
No. 4626, in the City of Arcadia, County of Los Angeles, State of California, as
per Map filed in Book 51, Page 50 of Parcel Maps, in the Office of the County
Recorder of said County. As used herein, "Parcels B1 and B2" mean those easement
parcels described as Parcels B1 and B2 in the Loan Policy.

         (d) The Bank shall release one or more parcels of real estate
(collectively, the "Release Parcel") from the Lien of the Deed of Trust upon the
written request of the Borrower and upon satisfaction of all of the following
requirements:

                  (i) At the sole cost and expense of the Borrower, the Bank
shall receive from First American Title Insurance Company (or if such company no
longer exists, from another title insurance company acceptable to the Bank) such
title insurance endorsements as are reasonably requested by the Bank to insure
the continued priority and validity of the Lien of the Deed of Trust in respect
of the remaining portion of the Mortgaged Property (the "Remainder Parcel");

                  (ii) At the time of the requested release, no Default or Event
of Default shall have occurred and be continuing and the Borrower has provided
to the Bank evidence of the satisfactory completion of the items described in
Section 5.10(b);

                  (iii) Prior to the release of the Release Parcel, the Borrower
shall have notified the Bank in writing of the Borrower's intended use for the
Release Parcel;

                  (iv) The Release Parcel shall not be necessary, in the
reasonable determination of the Bank (such determination to be evaluated in the
context of any common use agreements covering the Remainder Parcel and the
Release Parcel), for the conduct of horseracing operations on the Remainder
Parcel in substantially the manner such operations theretofore were conducted by
Borrower and neither the release of the Release Parcel nor the Borrower's
intended use of the Release Parcel shall, in the reasonable determination of the
Bank, have a Material Adverse Effect on the horseracing operations conducted on
the Remainder Parcel;

                  (v) The Bank shall have received evidence satisfactory to the
Bank that: (x) the Release Parcel and the Remainder Parcel comply with all
applicable subdivision laws and ordinances and, at the Borrower's sole cost, the
Bank shall have received any title insurance endorsements to that effect which
the Bank reasonably deems necessary; and (y) the Remainder Parcel will have or
continue to have the benefit of all utilities, easements, public and/or private
streets, covenants, conditions and restrictions as may be necessary, in the
Bank's reasonable determination, for the continued operation and maintenance
thereof;


                                       41

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                  (vi) The Borrower shall, at its sole cost and expense, provide
the Bank with an appraisal of the Remainder Parcel in form and substance
reasonably satisfactory to the Bank and by an appraiser selected by the Bank;

                  (vii) As a condition precedent to the release of any Release
Parcel, the outstanding aggregate principal amount of the Term Loans shall not
exceed 45% of the value of the Remainder Parcel, as set forth in the appraisal
performed pursuant to clause (vi) above; PROVIDED, that, in order to satisfy the
condition set forth in this clause (vii), the Borrower shall have the right to
prepay a portion of the Term Loans then outstanding in connection with the
release of the Release Parcel; and

                  (viii) The Borrower shall pay all fees and costs in connection
with the release of the Release Parcel, including recording and reconveyance
fees and costs, and any fees and costs reasonably incurred by the Bank.

         (e) Anything contained herein or in any other Loan Document to the
contrary notwithstanding, from and after the satisfaction of the conditions
precedent set forth in the preceding clause (d):

                  (i) the Borrower may (A) execute and deliver a ground lease in
respect of a Release Parcel; (B) sell or otherwise dispose of the Release
Parcel; (C) subordinate its interest in a ground lease executed in respect of a
Release Parcel; or (D) grant a Lien in its interests in the Release Parcel, so
long as any and all obligations secured by such Lien or incurred in connection
with such Lien are made expressly non-recourse to the Borrower and to each of
its Subsidiaries;

                  (ii) the Borrower may burden the Remainder Parcel with
covenants, conditions and restrictions, reciprocal easement agreements or
similar instruments relating to the use and development of the Release Parcel so
long as (A) such covenants, conditions and restrictions, reciprocal easement
agreements and similar instruments do not materially interfere with the ordinary
conduct of the business of the Borrower; and (B) such covenants, conditions and
restrictions, reciprocal easement agreements and similar instruments are in
form, scope and substance acceptable to the Bank in its reasonable discretion;
and, in connection with such instruments, the Bank agrees to consent to, and
will execute and deliver such documents required to effect, the subordination of
the Lien of the Deed of Trust to such covenants, conditions and restrictions,
reciprocal easement agreements and similar instruments, provided that the Bank
shall have received evidence (including, without limitation, title endorsements)
that the Lien and priority of the Deed of Trust shall otherwise remain
unimpaired and unaffected by such subordination; and

                  (iii) an Affiliate of the Borrower (other than the Borrower or
one of its Subsidiaries) may become a joint venture partner or other participant
in the Person organized to develop the Release Parcel.


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                                   ARTICLE VI

                               NEGATIVE COVENANTS

         The Borrower covenants and agrees that so long as any portion of the
Term Loans remain outstanding, the Borrower will not, and will neither cause nor
permit any of its Subsidiaries to:

SECTION 6.1.             INDEBTEDNESS.

         Incur, create, assume or permit to exist any Indebtedness, except:

         (a)      the Obligations;

         (b)      Intercompany Debt;

         (c)      Subordinated Debt;

         (d) Indebtedness existing on the date hereof and set forth in Schedule
6.1, and Indebtedness incurred to refinance such Indebtedness;

         (e)      Indebtedness under any Hedging Contract; and

         (f) Indebtedness consisting of purchase money Indebtedness incurred in
the ordinary course of business after the Closing Date to finance Capital
Expenditures, PROVIDED that (i) the Indebtedness incurred shall not exceed 85%
of the purchase price of the assets financed thereby and (ii) the aggregate
principal amount of any Indebtedness incurred pursuant to this paragraph (f)
during any Fiscal Year shall not exceed $2,000,000, and Indebtedness incurred to
refinance such Indebtedness.

SECTION 6.2.             LIENS.

         Create, incur, assume or permit to exist any Lien on or with respect to
any asset, or any income or profits therefrom, whether now owned or hereafter
acquired, except:

         (a) Liens securing the Obligations;

         (b) Liens existing on the date hereof and set forth on Schedule 6.2;

         (c) Liens for taxes, assessments or charges of any Governmental
Authority for claims that are not material and are not yet due or being
contested in good faith by appropriate proceedings and with respect to which
adequate reserves or other appropriate provisions are being maintained in
accordance with GAAP;

         (d) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, materialmen, bankers and other Liens imposed by law and created in
the ordinary course of business;


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         (e) Liens incurred and deposits made in the ordinary course of business
in connection with workers' compensation, unemployment insurance and other types
of social security benefits or to secure the performance (including by way of
surety bonds or appeal bonds) of tenders, bids, leases, contracts, statutory
obligations or similar obligations or arising as a result of progress payments
under contracts, in each case in the ordinary course of business and not
relating to the repayment of Indebtedness;

         (f) easements, rights-of-way, covenants, consents, reservations,
encroachments, variations and other restrictions, charges or encumbrances
(whether or not recorded) that do not materially interfere with the ordinary
conduct of business;

         (g) building restrictions, zoning laws and other statutes, laws, rules,
regulations, ordinances and restrictions;

         (h) leases or subleases granted in the ordinary course of business to
others not materially interfering with the business of, and consistent with past
practices of, the Borrower or any Subsidiary;

         (i) any attachment or judgment Lien not constituting an Event of
Default;

         (j) Liens existing on assets of any Person at the time such Person
becomes a Subsidiary, PROVIDED that (i) such Lien was not created in
contemplation of such Person becoming a Subsidiary, and (ii) such Lien does not
encumber any assets other than the assets subject to such Lien at the time such
Person becomes a Subsidiary;

         (k) other Liens incidental to the conduct of the business or the
ownership of the assets of the Borrower or any Subsidiary that (i) were not
incurred in connection with borrowed money, (ii) do not in the aggregate
materially detract from the value of the assets subject thereto or materially
impair the use thereof in the operation of such business and (iii) do not secure
obligations aggregating in excess of $250,000;

         (l) Liens on equipment or other personal property assets hereafter
acquired by the Borrower or any of its Subsidiaries, PROVIDED that (i) such
Liens secure Indebtedness permitted by Section 6.1(f), (ii) such Liens are
incurred, and the Indebtedness secured thereby is created, within 90 days after
such acquisition of such equipment or other acquired assets, (iii) the
Indebtedness secured thereby does not exceed 85% of the lesser of the cost of
such equipment or other acquired asset and (iv) such Liens do not attach to or
otherwise encumber the Mortgaged Property or any other property or assets of the
Borrower or any of its Subsidiaries other than the equipment or other asset so
acquired.

SECTION 6.3.             RESTRICTED PAYMENTS.

         Pay or make, or agree to declare, pay or make, any Restricted Payment,
except (a) dividends, distributions or payments by any Subsidiary to the
Borrower, (b) the payment to Parent by Borrower and its Subsidiaries of a
management fee in an aggregate amount not to exceed 2.5% of the gross revenues
of Borrower and its Subsidiaries on a consolidated basis for


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such year, (c) payments by the Borrower of principal of Indebtedness owing to
Parent, PROVIDED that, in the case of clause (c), (i) no Event of Default then
exists or would result therefrom, (ii) immediately after making any such
payment, and after giving effect thereto, the Borrower shall be in compliance,
on a PRO FORMA basis, with Section 6.18, and (iii) immediately after making any
such payment, not less than $30,000,000 aggregate principal amount of
Subordinated Debt remains outstanding and (d) the declaration and payment to the
Parent by the Borrower of a one-time dividend in an amount not to exceed
$27,050,000, PROVIDED, that no Event of Default then exists or would result
therefrom.

SECTION 6.4.             LOANS, ADVANCES, INVESTMENTS.

         Make or permit to exist any loans or advances to or Investments in any
person or entity, except:

         (a)(i) marketable direct obligations issued or unconditionally
guaranteed by the United States Government or issued by any agency thereof and
backed by the full faith and credit of the United States, in each case maturing
within one year from the date of acquisition thereof, (ii) marketable direct
obligations issued by any state of the United States or any political
subdivision of any such state or any public instrumentality thereof maturing
within one year from the date of acquisition thereof and having, at the time of
acquisition, the highest rating obtainable from either Standard & Poor's Rating
Group or Moody's Investors Service, Inc., (iii) commercial paper having, at the
time of acquisition, the highest rating obtainable from either Standard & Poor's
Rating Group or Moody's Investors Service, Inc., (iv) demand deposits,
certificates of deposit, other time deposits, and bankers' acceptances maturing
within one year from the date of acquisition thereof issued by any bank
operating under the laws of the United States or any state thereof or the
District of Columbia that has combined capital and surplus of not less than
$500,000,000, or (v) institutional money market funds organized under the laws
of the United States of America or any state thereof that are approved in
writing by the Bank or, if not so described or approved, substantially all of
whose assets are securities of the types described in the foregoing clauses (i),
(ii), (iii), and (iv);

         (b)(i) trade credit extended on usual and customary terms in the
ordinary course of business, (ii) advances to employees for moving, relocation
and travel expenses, drawing accounts and similar expenditures in the ordinary
course of business and not to exceed $500,000 at any time outstanding, and (iii)
acquisitions of capital stock, debt, securities, or other property received in
connection with the bankruptcy, reorganization or similar proceeding of, or
settlement of delinquent accounts and disputes with, customers in the ordinary
course of business, and, in each case, extensions, modifications, and renewals
thereof;

         (c) any Investment identified in Schedule 6.4, limited to the amount of
such Investment on the date hereof;

         (d) Intercompany Debt;


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         (e) Investments by the Borrower in any Wholly-Owned Subsidiary so long
as such Subsidiary has executed a Subsidiary Guaranty in substantially the form
of Exhibit D; and

         (f) Investments by the Borrower in connection with Permitted
Acquisitions.

SECTION 6.5.             LEASE EXPENDITURES.

         Incur expenses with respect to Operating Leases (excluding LA Turf
Club's obligations under that certain Amended and Restated Lease dated November
9, 1994, as amended prior to the date hereof, between the Borrower and LA Turf
Club) in any fiscal year in excess of an aggregate of $500,000.

SECTION 6.6.             FUNDAMENTAL CHANGES.

         Enter into any merger or consolidation, or liquidate, wind-up or
dissolve (or suffer any liquidation or dissolution) or enter into any agreement
providing for any of the foregoing, except for a merger of a Wholly Owned
Subsidiary of the Borrower into the Borrower or (with the Borrower as the
surviving corporation) or another Wholly Owned Subsidiary, or convey, lease,
sell, transfer or otherwise dispose of, in one transaction or series of
transactions, all or substantially all of the Borrower's or any Subsidiary's
business or assets, whether now or hereafter acquired.

SECTION 6.7.             ASSET DISPOSITIONS.

         Make any Asset Disposition, except:

         (a)      the sale of inventory in the ordinary course of business;

         (b) sales of assets outside of the ordinary course of business not in
excess of $250,000 in a single transaction or series of related transactions or
aggregating less than $1,000,000 in any Fiscal Year; and

         (c) in addition to dispositions permitted under clauses (a) and (b) of
this Section 6.7, the disposition of equipment if such equipment is obsolete or
no longer useful in the ordinary course of the Borrower's or such Subsidiary's
business; PROVIDED that the aggregate Fair Market Value of all such equipment
disposed of in any Fiscal Year shall not exceed $1,000,000.

SECTION 6.8.             SALE-LEASEBACKS.

         Enter into any arrangement, directly or indirectly, whereby the
Borrower or any of its Subsidiaries shall sell or transfer any property owned by
it in order then or thereafter to lease such property or lease other property
which the Borrower or such Subsidiary intends to use for substantially the same
purpose as the property being sold or transferred, without the prior written
consent of the Bank.


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SECTION 6.9.             TRANSACTIONS WITH AFFILIATES.

         Enter into any transaction (including the transfer or lease of any
property or the rendering of any service) with any Affiliate of the Borrower,
unless such transaction is on fair and reasonable terms no less favorable to the
Borrower or its Subsidiary, as the case may be, than those terms that might be
obtained at the time in a comparable arm's length transaction with a Person who
is not an Affiliate of the Borrower or, if such transaction is not one that by
its nature could be obtained from such other Person, is on fair and reasonable
terms and was negotiated in good faith, PROVIDED that this Section shall not
restrict (a) dividends, distributions and other payments and transfers on
account of the Capital Stock of the Borrower or any Wholly-Owned Subsidiary or
(b) the transactions contemplated under this Agreement or any other Loan
Document.

SECTION 6.10.            AMENDMENTS OF CHARTER DOCUMENTS.

         Amend its charter, bylaws or other charter documents in any respect
that affects the voting rights of Capital Stock included in the Collateral or
holders thereof, increases payment obligations of the Borrower, affects the
validity or enforceability of any Loan Document or Lien thereunder or that
otherwise could reasonably be expected to have a Material Adverse Effect,
without in each case obtaining the prior written consent of the Bank.

SECTION 6.11.            RESTRICTIVE AGREEMENTS.

         Enter into any Contractual Obligation that, directly or indirectly,
restricts or limits the ability of such Subsidiary to (a) pay dividends or make
distributions on its Capital Stock, (b) pay Indebtedness owed to the Borrower or
any Subsidiary or (c) make any loans or advances to the Borrower or any
Subsidiary (except as provided hereunder).

SECTION 6.12.            NEGATIVE PLEDGES.

         Enter into or otherwise become subject to, directly or indirectly, any
agreement prohibiting or restricting the Borrower or any Subsidiary in any
manner (including by way of covenant, representation or default), from
incurring, creating or assuming any Lien upon any of its assets.

SECTION 6.13.              AMENDMENTS OR WAIVERS OF SUBORDINATED DEBT DOCUMENTS.

         Amend any loan or other documents pursuant to which any Subordinated
Debt (or any related Contingent Obligation) is outstanding, or waive or
otherwise relinquish any of its rights or causes of action under or arising out
of such documents, with respect to terms and provisions regarding interest
rates, principal or interest payment amounts, principal or interest payment
dates, subordination, representations by or covenants of the Borrower, any
Subsidiary, or events of default, or other material provisions, without in each
case obtaining the prior written consent of the Bank.

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SECTION 6.14.            ISSUANCE OF CAPITAL STOCK.

         Issue any Capital Stock to any Person other than (a) in the case of the
Borrower, to the Parent and (b) in the case of any Subsidiary, to the Borrower,
in each case, subject to a Lien in favor of the Bank under the Loan Documents.

SECTION 6.15.            ERISA.

         (a) Engage, or permit any Subsidiary to engage, in any prohibited
transaction described in Sections 406 of ERISA or 4975 of the Code for which a
statutory or class exemption is not available or a private exemption has not
been previously obtained from the DOL;

         (b) Terminate, or permit any Subsidiary to terminate, any Benefit Plan
which would result in any liability of the Borrower or any Subsidiary under
Title IV of ERISA in excess of $1,000,000;

         (c) Fail to make any contribution or payment to any Multiemployer Plan
which the Borrower or any Subsidiary may be required to make under any agreement
relating to such Multiemployer Plan, or any law pertaining thereto;

         (d) Fail, or permit any Subsidiary to fail, to timely pay contributions
or installments required under Section 412 of the Code or due with respect to
any waived funding deficiency with respect to any Benefit Plan; or

         (e) Amend, or permit any Subsidiary to amend, a Benefit Plan resulting
in an increase in current liability for the plan year such that the Borrower or
any Subsidiary is required to provide security to such Benefit Plan under
Section 401(a)(29) of the Code;

SECTION 6.16.            USE OF PROCEEDS.

         Use the proceeds of any Term Loan except for the purposes stated in
Section 2.1 hereof.

SECTION 6.17.            EBITDA COVERAGE RATIO.

         Permit the EBITDA Coverage Ratio as of the end of any fiscal quarter to
be less than 1.25 to 1.00.

SECTION 6.18.            MINIMUM TANGIBLE NET WORTH.

         Permit the Borrower's Tangible Net Worth on the last day of any fiscal
quarter to be less than $80,000,000.

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                                   ARTICLE VII

                                EVENTS OF DEFAULT

SECTION 7.1.             EVENTS OF DEFAULT.

         The occurrence of any of the following shall constitute an "Event of
Default" under this Agreement:

         (a) The Borrower (i) shall fail to pay as and when due (whether at
stated maturity, upon acceleration, upon required prepayment or otherwise) all
or any portion of the principal of the Term Loans, or (ii) shall fail to pay any
interest, Fees or other amounts payable under the Loan Documents within three
Business Days of the date when due under the Loan Documents; or

         (b) the Borrower shall fail to perform, comply with or observe any
agreement, covenant or obligation under Sections 5.1(e), 5.1(g), Section 5.3 or
5.7, or any Section of Article VI; or

         (c) The Borrower shall fail to perform, comply with or observe any
agreement, covenant or obligation under any provision of any Loan Document
(other than those covenants set forth in clause (b) above) and such failure
shall not have been remedied within 30 days after the Borrower becomes aware of
such failure; or

         (d) Any representation or warranty or certification made or furnished
by any the Borrower under any Loan Document shall prove to have been false or
incorrect in any material respect when made (or deemed made); or

         (e) (i) The Borrower shall default in the payment (whether at stated
maturity, upon acceleration, upon required prepayment or otherwise), beyond any
period of grace provided therefor, of (A) any principal of or interest on any
Indebtedness for borrowed money in an aggregate principal amount in excess of
$250,000 or the deferred purchase price of any property or (B) any principal of
or interest on any Indebtedness (other than for borrowed money or the deferred
purchase price of any property), so long as the validity or amount thereof is
being contested in good faith and by appropriate proceedings and no action has
been commenced to enforce any Lien securing such Indebtedness or (ii) any other
breach or default (or other event or condition) shall occur under any agreement,
indenture or instrument relating to any such Indebtedness, if the effect of such
breach or default (or such other event or condition) is to cause, or to permit
the holder or holders of such Indebtedness (or a Person on behalf of such holder
or holders) to cause (upon the giving of notice, the lapse of time or both, or
otherwise), such Indebtedness to become or be declared due and payable, or
required to be prepaid, redeemed, purchased or defeased (or an offer of
prepayment, redemption, purchase or defeasance be made), prior to its stated
maturity; or

         (f) There shall be commenced against the Borrower or any of its
Subsidiaries an involuntary case seeking the liquidation or reorganization of
the Borrower or such Subsidiary

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under the Bankruptcy Code or any similar proceeding under any other
Applicable Law or an involuntary case or proceeding seeking the appointment
of a receiver, liquidator, sequestrator, custodian, trustee or other officer
having similar powers of the Borrower or such Subsidiary or to take
possession of all or a substantial portion of its property or to operate all
or a substantial portion of its business, and any of the following events
occur: (i) the Borrower or such Subsidiary consents to the institution of
such involuntary case or proceeding; (ii) the petition commencing the
involuntary case or proceeding is not timely controverted; (iii) the petition
commencing such involuntary case or proceeding remains undismissed and
unstayed for a period of 60 days; or (iv) an order for relief shall have been
issued or entered therein; or

         (g) The Borrower or any of its Subsidiaries shall institute a voluntary
case seeking liquidation or reorganization under the Bankruptcy Code or any
similar proceeding under any other Applicable Law, or shall consent thereto; or
shall consent to the conversion of an involuntary case to a voluntary case; or
shall file a petition, answer a complaint or otherwise institute any proceeding
seeking, or shall consent to or acquiesce in the appointment of, a receiver,
liquidator, sequestrator, custodian, trustee or other officer with similar
powers of it or to take possession of all or a substantial portion of its
property or to operate all or a substantial portion of its business; or shall
make a general assignment for the benefit of creditors; or shall generally not
pay its debts as they become due; or the Board of Directors of the Borrower or
such Subsidiary (or any committee thereof) adopts any resolution or otherwise
authorizes action to approve any of the foregoing; or

         (h) The Borrower or any of its Subsidiaries shall suffer (i) any money
judgments, fines, writs or warrants of attachment or similar processes that,
individually or in the aggregate, involve an amount or value in excess of
$500,000 (excluding therefrom money judgments to the extent covered by insurance
as to which the carrier has accepted liability), or (ii) any other material
non-monetary judgment or decree (including a judgment for injunctive relief),
and, in any such case, such judgments, writs, warrants or other orders shall
continue unsatisfied and unstayed for a period of 60 days or any action shall be
taken by a judgment creditor to levy upon the assets of the Borrower or any
Subsidiary to enforce any such judgment; or

         (i) The Borrower, any Subsidiary or any ERISA Affiliate shall: (a)
engage in any prohibited transaction described in Sections 406 of ERISA or 4975
of the Code for which a statutory or class exemption is not available or a
private exemption has not been previously obtained from the DOL; (b) terminate
any Benefit Plan which would result in any liability of the Borrower (including
joint and several liability with another Person) under Title IV of ERISA in
excess of $1,000,000; (c) fail to make any contribution or payment to any
Multiemployer Plan which the Borrower or any Subsidiary or any ERISA Affiliate
may be required to make under any agreement relating to such Multiemployer Plan,
or any law pertaining thereto that could result in liability of the Borrower
(including joint and several liability with another Person) in excess of
$1,000,000; (d) fail to timely pay contributions or installments required under
Section 412 of the Code or due with respect to any waived funding deficiency
with respect to any Benefit Plan that could result in liability of the Borrower
(including joint and several liability with another Person) in excess of
$1,000,000; or (e) amend a Benefit Plan resulting in an increase in current
liability for the plan year such that the Borrower or any Subsidiary or any

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ERISA Affiliate is required to provide security to such Benefit Plan under
Section 401(a)(29) of the Code; or

         (j) Any Loan Document, or any material provision thereof, shall cease
to be in full force and effect for any reason, or any Lien in favor of the Bank
thereunder shall fail to have the priority required thereunder, except upon a
release or termination of such Loan Document or Lien pursuant to the terms
thereof; or the Borrower or any of its Subsidiaries shall contest or purport to
repudiate or disavow any of its obligations under or the validity of
enforceability of any Loan Document or any material provision thereof; or

         (k)      A Change of Control shall occur at any time; or

         (l) (i) There shall have occurred and be continuing any "Default" or
"Event of Default" under the BMO Credit Agreement (as such terms are defined
therein), (ii) the Parent, the Borrower or any of the Borrower's Subsidiaries
shall default in the payment (whether at stated maturity, upon acceleration,
upon required prepayment or otherwise), beyond any period of grace provided
therefor, of any principal of or interest on any Indebtedness arising under the
BMO Credit Agreement or (iii) any other breach or default (or other event or
condition) shall occur under the BMO Credit Agreement or any other agreement,
indenture or instrument relating to the Indebtedness arising thereunder, if the
effect of such breach or default (or such other event or condition) is to cause,
or to permit the holder or holders of such Indebtedness (or a Person on behalf
of such holder or holders) to cause (upon the giving of notice, the lapse of
time or both, or otherwise), such Indebtedness to become or be declared due and
payable, or required to be prepaid, redeemed, purchased or defeased (or an offer
of prepayment, redemption, purchase or defeasance be made), prior to its stated
maturity; or

         (m) (i) The BMO Deed of Trust or the BMO Guarantees set forth in
Article 10 of the BMO Credit Agreement shall be amended, supplemented or
otherwise modified without the prior written consent of the Bank; (ii) BMO (or
any other lender or agent under the BMO Credit Agreement or other Person on
their behalf) shall demand payment under or with respect to the BMO Guarantees
in an amount in excess of the amount of Restricted Payments that at the time of
such demand are permitted to be made pursuant to this Agreement; or (iii) BMO
(or any other lender or agent or other Person on their behalf) shall take any
action to enforce the rights of BMO under the BMO Deed of Trust; or

         (n) Any governmental permit, consent, approval, franchise or license
relating to the use or occupancy of the Track and operation of the Racetrack
Business, including any Racing License issued to the LA Turf Club or Oak Tree
the loss or absence of which would prevent the completion of at least 100 Racing
Days (each, a "Governmental Approval") is revoked, suspended or any notice by
the relevant governmental authority is received indicating an intent to revoke
or suspend any such Governmental Approval; or the Borrower, LA Turf Club or Oak
Tree, collectively, fail to have in full force and effect Governmental Approvals
that permit at least 100 Racing Days at the Track for any racing season.

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SECTION 7.2.             REMEDIES.

         (a) Upon the occurrence of an Event of Default under Section 7.1(f) or
(g), then (i) all indebtedness of the Borrower under each of the Loan Documents,
any term thereof to the contrary notwithstanding, automatically shall become
immediately due and payable without presentment, demand, protest or notice of
dishonor, all of which are hereby expressly waived by the Borrower; (ii) the
obligation, if any, of the Bank to extend any further credit under any of the
Loan Documents shall immediately cease and terminate; and (iii) the Bank shall
have all rights, powers and remedies available under each of the Loan Documents,
or accorded by law, including without limitation the right to resort to any or
all security for any credit accommodation from the Bank subject hereto and to
exercise any or all of the rights of a beneficiary or secured party pursuant to
applicable law.

         (b) Upon the occurrence of an Event of Default under 7.1 (other than
under Section 7.1(f) or (g)), then (i) the Bank may take either or both of the
following actions, at the same or at different times (A) declare all
indebtedness of the Borrower under each of the Loan Documents, any term thereof
to the contrary notwithstanding, to be immediately due and payable without
presentment, demand, protest or notice of dishonor, all of which are hereby
expressly waived by the Borrower and (B) terminate the Incremental Term Loan
Commitment immediately upon which termination the obligation, if any, of the
Bank to extend any further credit under any of the Loan Documents shall
immediately cease and terminate; and (ii) the Bank shall have all rights, powers
and remedies available under each of the Loan Documents, or accorded by law,
including without limitation the right to resort to any or all security for any
credit accommodation from the Bank subject hereto and to exercise any or all of
the rights of a beneficiary or secured party pursuant to applicable law.

         (c) All rights, powers and remedies of the Bank may be exercised at any
time by the Bank and from time to time after the occurrence of an Event of
Default, are cumulative and not exclusive, and shall be in addition to any other
rights, powers or remedies provided by law or equity.

                                  ARTICLE VIII

                                  MISCELLANEOUS

SECTION 8.1.             NO WAIVER.

         No delay, failure or discontinuance of Bank in exercising any right,
power or remedy under any of the Loan Documents shall affect or operate as a
waiver of such right, power or remedy; nor shall any single or partial exercise
of any such right, power or remedy preclude, waive or otherwise affect any other
or further exercise thereof or the exercise of any other right, power or remedy.
Any waiver, permit, consent or approval of any kind by Bank of any breach of or
default under any of the Loan Documents must be in writing and shall be
effective only to the extent set forth in such writing.

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SECTION 8.2.             NOTICES.

         All notices, requests and demands which any party is required or may
desire to give to any other party under any provision of this Agreement must be
in writing delivered to each party at the following address:

         BORROWER:                  THE SANTA ANITA COMPANIES, INC.
                                    285 West Huntington Drive
                                    Arcadia, California  91066
                                    Attention: President
                                    Facsimile: (626) 446-9565

         with a copy to:

                                    Magna Entertainment Corp.
                                    337 Magna Drive
                                    Aurora, Ontario, Canada  L4G 7K1
                                    Attention: Blake Tohana
                                    Facsimile: (905) 726-7169

         BANK:             WELLS FARGO BANK, NATIONAL ASSOCIATION

                                    Ivy Wong
                                    Wells Fargo Bank
                                    1000 Lakes Drive, Suite 250
                                    West Covina, California 91790
                                    Facsimile: 626-919-2909

or to such other address as any party may designate by written notice to all
other parties. Each such notice, request and demand shall be deemed given or
made as follows: (a) if sent by hand delivery, upon delivery; (b) if sent by
mail, upon the earlier of the date of receipt or three (3) days after deposit in
the U.S. mail, first class and postage prepaid; and (c) if sent by telecopy,
upon receipt.

SECTION 8.3.             COSTS, EXPENSES AND ATTORNEYS' FEES.

         Borrower shall pay to Bank immediately upon demand (a) the Bank's
out-of-pocket costs and expenses, including reasonable attorneys' fees expended
or incurred by the Bank in connection with the negotiation and preparation of
this Agreement and the other Loan Documents, the Bank's continued administration
hereof and thereof, and the preparation of any amendments and waivers hereto and
thereto, and (b) the Bank's costs and expenses, including attorney's fees (to
include outside counsel fees but exclude costs of the Bank's in-house counsel)
expended or incurred by the Bank in connection with the enforcement of Bank's
rights and/or the collection of any amounts which become due to Bank under any
of the Loan Documents, or the prosecution or defense of any action in any way
related to any of the Loan Documents, including without limitation, any action
for declaratory relief, whether incurred at the trial or appellate

                                      53

<Page>

                                                                  EXECUTION COPY

level, in an arbitration proceeding or otherwise, and including any of the
foregoing incurred in connection with any bankruptcy proceeding (including
without limitation, any adversary proceeding, contested matter or motion
brought by Bank or any other person) relating to the Borrower or any other
person or entity.

SECTION 8.4.             INDEMNITY.

         The Borrower shall indemnify, defend and hold harmless the Bank and the
officers, directors, employees, agents, attorneys, affiliates, successors and
assigns of the Bank (collectively, the "Indemnitees") from and against (a) any
and all transfer taxes, documentary taxes, assessments or charges made by any
Governmental Authority by reason of the execution delivery, filing or recording
of the Loan Documents or the making of the Term Loans, and (b) any and all
liabilities, losses, damages, penalties, judgments, claims, costs and expenses
of any kind or nature whatsoever (including reasonable attorneys' fees (to
include outside counsel fees but exclude costs of the Bank's in-house counsel)),
and disbursements in connection with any actual or threatened investigative,
administrative or judicial proceeding, whether or not such Indemnitee shall be
designated a party thereto (and provided that such Indemnitee shall be entitled
to select its own counsel in all such proceedings) that may be imposed on,
incurred by or asserted against such Indemnitee, in any manner relating to or
arising out of the Loan Documents, the Term Loans, the use or intended use of
the proceeds of the Term Loans, or any Permitted Acquisition (the "Indemnified
Liabilities"); PROVIDED that (i) no Indemnitee shall have the right to be
indemnified or held harmless hereunder for its own gross negligence or willful
misconduct, as determined by a final judgment of a court of competent
jurisdiction, and (ii) the Borrower shall have no obligation hereunder in
respect of Indemnified Liabilities arising from a breach of any Loan Document by
the Indemnitee making a claim hereunder.

         Without limiting the generality of the foregoing, the Borrower further
agrees to fully and promptly pay, perform, discharge, defend, indemnify and hold
harmless each Indemnitee from and against any Environmental Damages; PROVIDED
that the Borrower shall not have any obligation to any Indemnitee hereunder with
respect to any Environmental Damages to the extent such Environmental Damages
arise solely from the gross negligence or willful misconduct of that Indemnitee
as determined by a final judgment of a court of competent jurisdiction.

         To the extent that the undertaking to indemnify and hold harmless set
forth herein may be unenforceable as violative of any Applicable Law or public
policy, the Borrower shall make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities that is permissible under
Applicable Law. All Indemnified Liabilities shall be payable on demand.

SECTION 8.5.             SUCCESSORS, ASSIGNMENT.

         This Agreement shall be binding upon and inure to the benefit of the
heirs, executors, administrators, legal representatives, successors and
assigns of the parties; PROVIDED, HOWEVER, that the Borrower may not assign
or transfer its interest hereunder without the Bank's prior written consent.
The Bank reserves the right to sell, assign, transfer, negotiate or grant
participation in all or any part of, or any interest in, Bank's rights and
benefits under each of the

                                      54

<Page>

                                                                  EXECUTION COPY

Loan Documents; PROVIDED, HOWEVER, that the Bank agrees that, in the
event that it assigns less than (i) prior to the Incremental Term Loan
Commitment Termination Date, the full amount of the Incremental Term Loan
Commitment and the Term Loans or (ii) following the Incremental Term Loan
Commitment Termination Date, the full amount of the Term Loans, in either case,
the Bank shall act as "Administrative Agent" for itself and any such assignees.
In connection therewith, the Bank may disclose all documents and information
which the Bank now has or may hereafter acquire relating to any credit extended
by the Bank to the Borrower, the Borrower or its business, any Subsidiary or the
business of such Subsidiary, or any Collateral.

SECTION 8.6.             ENTIRE AGREEMENT; AMENDMENT.

         This Agreement and the other Loan Documents constitute the entire
agreement between the Borrower and the Bank with respect to any extension of
credit by the Bank subject hereto and supersede all prior negotiations,
communications, discussions and correspondence concerning the subject matter
hereof. This Agreement may be amended or modified only in writing signed by each
party hereto.

SECTION 8.7.             NO THIRD PARTY BENEFICIARIES.

         This Agreement is made and entered into for the sole protection and
benefit of the parties hereto and their respective permitted successors and
assigns, and no other person or entity shall be a third party beneficiary of, or
have any direct or indirect cause of action or claim in connection with, this
Agreement or any other of the Loan Documents to which it is not a party.

SECTION 8.8.             TIME.

         Time is of the essence of each and every provision of this Agreement
and each other of the Loan Documents.

SECTION 8.9.             SEVERABILITY OF PROVISIONS.

         If any provision of this Agreement shall be prohibited by or invalid
under applicable law, such provision shall be ineffective only to the extent of
such prohibition or invalidity without invalidating the remainder of such
provision or any remaining provisions of this Agreement.

SECTION 8.10.            COUNTERPARTS.

         This Agreement may be executed in any number of counterparts, each of
which when executed and delivered shall be deemed to be an original, and all of
which when taken together shall constitute one and the same Agreement.

SECTION 8.11.            GOVERNING LAW.

         This Agreement shall be governed by and construed in accordance with
the laws of the State of California.

                                      55

<Page>

                                                                  EXECUTION COPY

SECTION 8.12.            ARBITRATION.

         (a) ARBITRATION. Upon the demand of any party, any Dispute shall be
resolved by binding arbitration (except as set forth in (e) below) in accordance
with the terms of this Agreement. A "Dispute" shall mean any action, dispute,
claim or controversy of any kind, whether in contract or tort, statutory or
common law, legal or equitable, now existing or hereafter arising under or in
connection with, or in any way pertaining to, any of the Loan Documents, or any
past, present or future extensions of credit and other activities, transactions
or obligations of any kind related directly or indirectly to any of the Loan
Documents, including without limitation, any of the foregoing arising in
connection with the exercise of any self-help, ancillary or other remedies
pursuant to any of the Loan Documents. Any party may by summary proceedings
bring an action in court to compel arbitration of a Dispute. Any party who fails
or refuses to submit to arbitration following a lawful demand by any other party
shall bear all costs and expenses incurred by such other party in compelling
arbitration of any Dispute.

         (b) GOVERNING RULES. Arbitration proceedings shall be administered by
the American Arbitration Association ("AAA") or such other administrator as the
parties shall mutually agree upon in accordance with the AAA Commercial
Arbitration Rules. All Disputes submitted to arbitration shall be resolved in
accordance with the Federal Arbitration Act (Title 9 of the United States Code),
notwithstanding any conflicting choice of law provision in any of the Loan
Documents. The arbitration shall be conducted at a location in California
selected by the AAA or other administrator. If there is any inconsistency
between the terms hereof and any such rules, the terms and procedures set forth
herein shall control. All statutes of limitation applicable to any Dispute shall
apply to any arbitration proceeding. All discovery activities shall be expressly
limited to matters directly relevant to the Dispute being arbitrated. Judgment
upon any award rendered in an arbitration may be entered in any court having
jurisdiction; PROVIDED HOWEVER, that nothing contained herein shall be deemed to
be a waiver by any party that is a bank of the protections afforded to it under
12 U.S.C. section 91 or any similar applicable state law.

         (c) NO WAIVER; PROVISIONAL REMEDIES, SELF-HELP AND FORECLOSURE. No
provision hereof shall limit the right of any party to exercise self-help
remedies such as setoff, foreclosure against or sale of any real or personal
property collateral or security, or to obtain provisional or ancillary remedies,
including without limitation injunctive relief, sequestration, attachment,
garnishment or the appointment of a receiver, from a court of competent
jurisdiction before, after or during the pendency of any arbitration or other
proceeding. The exercise of any such remedy shall not waive the right of any
party to compel arbitration or reference hereunder.

         (d) ARBITRATOR QUALIFICATIONS AND POWERS; AWARDS. Arbitrators must be
active members of the California State Bar or retired judges of the state or
federal judiciary of California, with expertise in the substantive laws
applicable to the subject matter of the Dispute. Arbitrators are empowered to
resolve Disputes by summary rulings in response to motions filed prior to the
final arbitration hearing. Arbitrators (i) shall resolve all Disputes in
accordance with the substantive law of the state of California, (ii) may grant
any remedy or relief that a court of the state of California could order or
grant within the scope hereof and such ancillary relief as is necessary to make
effective any award, and (iii) shall have the power to award recovery of all

                                      56

<Page>

                                                                  EXECUTION COPY

costs and fees, to impose sanctions and to take such other actions as they deem
necessary to the same extent a judge could pursuant to the Federal Rules of
Civil Procedure, the California Rules of Civil Procedure or other applicable
law. Any Dispute in which the amount in controversy is $5,000,000 or less shall
be decided by a single arbitrator who shall not render an award of greater than
$5,000,000 (including damages, costs, fees and expenses). By submission to a
single arbitrator, each party expressly waives any right or claim to recover
more than $5,000,000. Any Dispute in which the amount in controversy exceeds
$5,000,000 shall be decided by majority vote of a panel of three arbitrators;
PROVIDED HOWEVER, that all three arbitrators must actively participate in all
hearings and deliberations.

         (e) JUDICIAL REVIEW. Notwithstanding anything herein to the contrary,
in any arbitration in which the amount in controversy exceeds $25,000,000, the
arbitrators shall be required to make specific, written findings of fact and
conclusions of law. In such arbitrations (i) the arbitrators shall not have the
power to make any award which is not supported by substantial evidence or which
is based on legal error, (ii) an award shall not be binding upon the parties
unless the findings of fact are supported by substantial evidence and the
conclusions of law are not erroneous under the substantive law of the state of
California, and (iii) the parties shall have in addition to the grounds referred
to in the Federal Arbitration Act for vacating, modifying or correcting an award
the right to judicial review of (A) whether the findings of fact rendered by the
arbitrators are supported by substantial evidence, and (B) whether the
conclusions of law are erroneous under the substantive law of the state of
California. Judgment confirming an award in such a proceeding may be entered
only if a court determines the award is supported by substantial evidence and
not based on legal error under the substantive law of the state of California.

         (f) REAL PROPERTY COLLATERAL; JUDICIAL REFERENCE. Notwithstanding
anything herein to the contrary, no Dispute shall be submitted to arbitration if
the Dispute concerns Indebtedness secured directly or indirectly, in whole or in
part, by any real property unless (i) the holder of the mortgage, lien or
security interest specifically elects in writing to proceed with the
arbitration, or (ii) all parties to the arbitration waive any rights or benefits
that might accrue to them by virtue of the single action rule statute of
California, thereby agreeing that all Indebtedness and obligations of the
parties, and all mortgages, liens and security interests securing such
Indebtedness and obligations, shall remain fully valid and enforceable. If any
such Dispute is not submitted to arbitration, the Dispute shall be referred to a
referee in accordance with California Code of Civil Procedure Section 638 et
seq., and this general reference agreement is intended to be specifically
enforceable in accordance with said Section 638. A referee with the
qualifications required herein for arbitrators shall be selected pursuant to the
AAA's selection procedures. Judgment upon the decision rendered by a referee
shall be entered in the court in which such proceeding was commenced in
accordance with California Code of Civil Procedure Sections 644 and 645.

         (g) MISCELLANEOUS. To the maximum extent practicable, the AAA, the
arbitrators and the parties shall take all action required to conclude any
arbitration proceeding within 180 days of the filing of the Dispute with the
AAA. No arbitrator or other party to an arbitration proceeding may disclose
the existence, content or results thereof, except for disclosures of


                             57

<Page>

                                                                  EXECUTION COPY

information by
a party required in the ordinary course of its business, by applicable law or
regulation, or to the extent necessary to exercise any judicial review rights
set forth herein. If more than one agreement for arbitration by or between the
parties potentially applies to a Dispute, the arbitration provision most
directly related to the Loan Documents or the subject matter of the Dispute
shall control. This arbitration provision shall survive termination, amendment
or expiration of any of the Loan Documents or any relationship between the
parties.
                         [Signatures on following page]



                                      58

<Page>

                                                                  EXECUTION COPY


         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first written above.

                                THE SANTA ANITA COMPANIES, INC.


                                 By: _____________________________________
                                     Name:
                                     Title:


                                 By: _____________________________________
                                     Name:
                                     Title:



                                 WELLS FARGO BANK, NATIONAL ASSOCIATION


                                 By: _____________________________________
                                     Name:
                                     Title:



                                      59

<Page>

                                                                  EXECUTION COPY




 ------------------------------------------------------------------------------









                           TERM LOAN CREDIT AGREEMENT



                                 BY AND BETWEEN



                         THE SANTA ANITA COMPANIES, INC.



                                       AND



                     WELLS FARGO BANK, NATIONAL ASSOCIATION







                              AS OF OCTOBER 8, 2004











 ------------------------------------------------------------------------------



<Page>






                                TABLE OF CONTENTS

<Table>
<Caption>
                                                                                                              PAGE
                                                                                                              ----
<S>                                                                                                           <C>

ARTICLE I  DEFINITIONS...........................................................................................1

         SECTION 1.1.         DEFINITIONS........................................................................1

         SECTION 1.2.         RELATED MATTERS...................................................................14

ARTICLE II  THE CREDIT..........................................................................................15

         SECTION 2.1.         TERM LOANS........................................................................15

         SECTION 2.2.         EVIDENCE OF INDEBTEDNESS;  REPAYMENT OF TERM LOAN.................................17

         SECTION 2.3.         INTEREST; INTEREST PAYMENTS.......................................................17

         SECTION 2.4.         CONVERSION/CONTINUATION; LIBOR PROVISIONS.........................................18

         SECTION 2.5.         FEES..............................................................................21

         SECTION 2.6.         REDUCTION OF THE COMMITMENT; PREPAYMENTS..........................................21

         SECTION 2.7.         MANNER OF PAYMENT.................................................................22

         SECTION 2.8.         REGULATORY CHANGES................................................................23

         SECTION 2.9.         COLLATERAL........................................................................24

         SECTION 2.10.        GUARANTIES........................................................................24

ARTICLE III  REPRESENTATIONS AND WARRANTIES.....................................................................24

         SECTION 3.1.         ORGANIZATION, POWERS AND GOOD STANDING............................................24

         SECTION 3.2.         AUTHORIZATION, BINDING EFFECT, NO CONFLICTS.......................................25

         SECTION 3.3.         SUBSIDIARIES; CAPITAL STOCK.......................................................25

         SECTION 3.4.         LITIGATION........................................................................26

         SECTION 3.5.         CORRECTNESS OF FINANCIAL STATEMENT................................................26

         SECTION 3.6.         AGREEMENTS; APPLICABLE LAW........................................................26

</Table>

                                       i

<Page>

                                TABLE OF CONTENTS
                                   (CONTINUED)

<Table>
<Caption>
                                                                                                              PAGE
                                                                                                              ----
<S>                                                                                                           <C>

        SECTION 3.7.         INCOME TAX RETURNS.................................................................27

         SECTION 3.8.         GOVERNMENTAL REGULATIONS..........................................................27

         SECTION 3.9.         MARGIN REGULATIONS................................................................27

         SECTION 3.10.        TITLE TO PROPERTY.................................................................27

         SECTION 3.11.        ENVIRONMENTAL CONDITION...........................................................27

         SECTION 3.12.        ABSENCE OF CERTAIN RESTRICTIONS...................................................28

         SECTION 3.13.        LABOR MATTERS.....................................................................28

         SECTION 3.14.        TRANSACTIONS WITH AFFILIATES......................................................29

         SECTION 3.15.        DISCLOSURE........................................................................29

         SECTION 3.16.        NO SUBORDINATION..................................................................29

         SECTION 3.17.        LICENSES, PERMITS, FRANCHISES.....................................................29

         SECTION 3.18.        ERISA.............................................................................30

         SECTION 3.19.        MORTGAGED PROPERTY................................................................30

         SECTION 3.20.        LEASES............................................................................30

ARTICLE IV  CONDITIONS..........................................................................................31

         SECTION 4.1.         CLOSING CONDITIONS................................................................31

         SECTION 4.2.         CONDITIONS PRECEDENT TO INCREMENTAL TERM LOANS....................................33

ARTICLE V  AFFIRMATIVE COVENANTS................................................................................34

         SECTION 5.1.         FINANCIAL STATEMENTS AND OTHER REPORTS............................................34

         SECTION 5.2.         RECORDS AND INSPECTION, ETC.......................................................37

         SECTION 5.3.         CORPORATE EXISTENCE, ETC..........................................................37

         SECTION 5.4.         PAYMENT OF TAXES..................................................................37

</Table>
                                       ii

<Page>

                                TABLE OF CONTENTS
                                   (CONTINUED)


<Table>
<Caption>
                                                                                                              PAGE
                                                                                                              ----
<S>                                                                                                           <C>

         SECTION 5.5.         MAINTENANCE OF PROPERTIES.........................................................37

         SECTION 5.6.         MAINTENANCE OF INSURANCE..........................................................37

         SECTION 5.7.         CONDUCT OF BUSINESS; POSSESSION OF LICENSES.......................................38

         SECTION 5.8.         ADDITIONAL GUARANTIES AND COLLATERAL..............................................39

         SECTION 5.9.         SUBORDINATION OF OTHER INDEBTEDNESS...............................................39

         SECTION 5.10         ENVIRONMENTAL COMPLIANCE..........................................................39

         SECTION 5.11.        ERISA.............................................................................40

         SECTION 5.12.        AGREEMENTS REGARDING REAL PROPERTY................................................40

ARTICLE VI  NEGATIVE COVENANTS..................................................................................43

         SECTION 6.1.         INDEBTEDNESS......................................................................43

         SECTION 6.2.         LIENS.............................................................................43

         SECTION 6.3.         RESTRICTED PAYMENTS...............................................................44

         SECTION 6.4.         LOANS, ADVANCES, INVESTMENTS......................................................45

         SECTION 6.5.         LEASE EXPENDITURES................................................................46

         SECTION 6.6.         FUNDAMENTAL CHANGES...............................................................46

         SECTION 6.7.         ASSET DISPOSITIONS................................................................46

         SECTION 6.8.         SALE-LEASEBACKS...................................................................46

         SECTION 6.9.         TRANSACTIONS WITH AFFILIATES......................................................47

         SECTION 6.10.        AMENDMENTS OF CHARTER DOCUMENTS...................................................47

         SECTION 6.11.        RESTRICTIVE AGREEMENTS............................................................47

         SECTION 6.12.        NEGATIVE PLEDGES..................................................................47

         SECTION 6.13.        AMENDMENTS OR WAIVERS OF SUBORDINATED DEBT DOCUMENTS..............................47
</Table>
                                      iii


<Page>

                                TABLE OF CONTENTS
                                   (CONTINUED)

<Table>
<Caption>
                                                                                                              PAGE
                                                                                                              ----
<S>                                                                                                          <C>
         SECTION 6.14.        ISSUANCE OF CAPITAL STOCK.........................................................48

         SECTION 6.15.        ERISA.............................................................................48

         SECTION 6.16.        USE OF PROCEEDS...................................................................48

         SECTION 6.17.        EBITDA COVERAGE RATIO.............................................................48

         SECTION 6.18.        MINIMUM TANGIBLE NET WORTH........................................................48

ARTICLE VII  EVENTS OF DEFAULT..................................................................................49

         SECTION 7.1.         EVENTS OF DEFAULT.................................................................49

         SECTION 7.2.         REMEDIES..........................................................................52

ARTICLE VIII  MISCELLANEOUS.....................................................................................52

         SECTION 8.1.         NO WAIVER.........................................................................52

         SECTION 8.2.         NOTICES...........................................................................53

         SECTION 8.3.         COSTS, EXPENSES AND ATTORNEYS' FEES...............................................53

         SECTION 8.4.         INDEMNITY.........................................................................54

         SECTION 8.5.         SUCCESSORS, ASSIGNMENT............................................................54

         SECTION 8.6.         ENTIRE AGREEMENT; AMENDMENT.......................................................55

         SECTION 8.7.         NO THIRD PARTY BENEFICIARIES......................................................55

         SECTION 8.8.         TIME..............................................................................55

         SECTION 8.9.         SEVERABILITY OF PROVISIONS........................................................55

         SECTION 8.10.        COUNTERPARTS......................................................................55

         SECTION 8.11.        GOVERNING LAW.....................................................................55

         SECTION 8.12.        ARBITRATION.......................................................................56


</Table>



                                      iv

<Page>

                                                                  EXECUTION COPY

                               EXHIBITS; SCHEDULES


Exhibit A         -    Form of Note
Exhibit B         -    Form of Borrower Pledge Agreement
Exhibit C         -    Form of Parent Pledge Agreement
Exhibit D         -    Form of Subsidiary Guaranty
Exhibit E         -    Form of Deed of Trust
Exhibit F         -    Form of Assignment of Leases and Rents
Exhibit G         -    Approved Subordination Terms
Exhibit H         -    Form of Compliance Certificate
Exhibit I         -    Form of Subordinated Note
Exhibit J         -    Form of BMO Subordination Agreement





Schedule 3.3      -    Capitalization
Schedule 3.4      -    Litigation
Schedule 3.6      -    Compliance with Laws
Schedule 3.10     -    Title to Property
Schedule 3.11     -    Environmental
Schedule 3.12     -    Absence of Restructuring
Schedule 3.13     -    Labor Matters
Schedule 3.14     -    Affiliate Transactions
Schedule 3.21     -    Material Leases
Schedule 4.1      -    Loan Documents
Schedule 5.6      -    Insurance
Schedule 6.1      -    Permitted Indebtedness
Schedule 6.2      -    Permitted Liens
Schedule 6.4      -    Investments


                                      v

<Page>


                                                                       EXHIBIT A
                                               FORM OF TERM LOAN PROMISSORY NOTE

                                    TERM LOAN
                                 PROMISSORY NOTE


$_________________                                       Los Angeles, California
                                                            ___________ __, 200_


         This Term Loan Promissory Note (the "NOTE") is the Note referred to in,
and is issued pursuant to, that certain Term Loan Credit Agreement dated as of
October 8, 2004 (as same amended, restated, supplemented or otherwise modified
from time to time, the "CREDIT AGREEMENT"), between THE SANTA ANITA COMPANIES,
INC., a Delaware corporation (the "BORROWER"), and WELLS FARGO BANK, NATIONAL
ASSOCIATION, a national banking association (the "BANK"). All of the terms,
covenants and conditions of the Credit Agreement and the Loan Documents (as
defined in the Credit Agreement) are hereby made a part of this Note and are
deemed incorporated herein in full. All capitalized terms used herein, unless
otherwise specifically defined in this Note, shall have the meanings ascribed to
them in the Credit Agreement.

         FOR VALUE RECEIVED, the Borrower hereby promises to pay to the order of
the Bank in lawful money of the United States of America and in immediately
available funds, in accordance with the Credit Agreement, the principal amount
of SEVENTY FIVE MILLION AND 00/100 DOLLARS ($75,000,000) or, if less, the
aggregate principal amount of Term Loans outstanding under the Credit Agreement,
together with interest from and after the date hereof on the unpaid principal
balance outstanding at the applicable rates set forth in the Credit Agreement.

         Subject to prepayments pursuant to Sections 2.1(e)(B), 2.6 and
5.12(d)(vii) of the Credit Agreement, principal payments pursuant to Section 2.2
of the Credit Agreement and/or acceleration upon the occurrence of an Event of
Default under the Credit Agreement or termination of the Credit Agreement, the
principal amount of this Note shall be due and payable on the Maturity Date.

         Upon the occurrence of an Event of Default, the Bank shall have all of
the rights and remedies set forth in Article VII of the Credit Agreement.

         Time is of the essence of this Note. To the fullest extent permitted by
applicable law, the Borrower, for itself and its legal representatives,
successors and assigns, expressly waives presentment, demand, protest, notice of
dishonor, notice of non-payment, notice of maturity, notice of protest,
presentment for the purpose of accelerating maturity, diligence in collection,
and the benefit of any exemption or insolvency laws.



                                      1

<Page>


         Wherever possible, each provision of this Note shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Note shall be prohibited or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity
without invalidating the remainder of such provision or remaining provisions of
this Note. No delay or failure on the part of the Bank in the exercise of any
right or remedy hereunder shall operate as a waiver thereof, nor as an
acquiescence in any default, nor shall any single or partial exercise by the
Bank of any right or remedy preclude any other right or remedy. The Bank, at its
option, may enforce its rights against any collateral securing this Note without
enforcing its rights against the Borrower, any guarantor of the indebtedness
evidenced hereby or any other property or indebtedness due or to become due to
the Borrower. The Borrower agrees that, without releasing or impairing the
Borrower's liability hereunder, the Bank may at any time release, surrender,
substitute or exchange any collateral securing this Note and may at any time
release any party primarily or secondarily liable for the indebtedness evidenced
by this Note.

         THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA.

         IN WITNESS WHEREOF, the Borrower has caused this Note to be duly
executed and delivered on the date first above written.


                         THE SANTA ANITA COMPANIES, INC.


                                     By: ________________________________
                                         Name:
                                         Title:

                                     By: ________________________________
                                         Name:
                                         Title:



                                      2

<Page>


                                                                       EXHIBIT B
                                               FORM OF BORROWER PLEDGE AGREEMENT


                                       1
<Page>




                                                                       EXHIBIT C
                                                 FORM OF PARENT PLEDGE AGREEMENT


                                       1
<Page>



                                                                       EXHIBIT D
                                                     FORM OF SUBSIDIARY GUARANTY


                                       1
<Page>




                                                                       EXHIBIT E
                                                           FORM OF DEED OF TRUST


                                       1
<Page>



                                                                       EXHIBIT F
                                          FORM OF ASSIGNMENT OF LEASES AND RENTS



                                       1
<Page>



                                                                       EXHIBIT G
                                                    APPROVED SUBORDINATION TERMS


                                       1
<Page>



                                                                       EXHIBIT H
                                                  FORM OF COMPLIANCE CERTIFICATE


                                       1
<Page>



                                                                       EXHIBIT I
                                                       FORM OF SUBORDINATED NOTE


                                       1
<Page>



                                                                       EXHIBIT J
                                             FORM OF BMO SUBORDINATION AGREEMENT

                                       1

<Page>



                                                                    SCHEDULE 3.2
                                                                  CAPITALIZATION


                                       1
<Page>



                                                                    SCHEDULE 3.4
                                                                      LITIGATION


                                       1
<Page>



                                                                    SCHEDULE 3.6
                                                            COMPLIANCE WITH LAWS

                                       1
<Page>



                                                                   SCHEDULE 3.10
                                                               TITLE TO PROPERTY

                                       1


<Page>



                                                                   SCHEDULE 3.11
                                                                   ENVIRONMENTAL

                                       1
<Page>




                                                                   SCHEDULE 3.12
                                                        ABSENCE OF RESTRUCTURING

                                       1
<Page>



                                                                   SCHEDULE 3.13
                                                                   LABOR MATTERS

                                       1

<Page>



                                                                   SCHEDULE 3.14
                                                          AFFILIATE TRANSACTIONS


                                       1
<Page>



                                                                   SCHEDULE 3.21
                                                                 MATERIAL LEASES

                                       1

<Page>




                                                                    SCHEDULE 4.1
                                                                  LOAN DOCUMENTS
                                                                  (CLOSING DATE)

1.   Credit Agreement
2.   Term Loan Promissory Note
3.   Subsidiary Guaranty (LA Turf Club)
4.   Parent Pledge Agreement
5.   Borrower Pledge Agreement
6.   Deed of Trust
7.   Assignment of Leases and Rents
8.   Lessee's Estoppel Certificate (LA Turf Club)
9.   (Sub)Lessee's Estoppel Certificate (Oak Tree Racing Association)
10.  Estoppel Certificates from other (Sub)Lessees, as required by the Bank
11. Certified copies of (i) resolutions of the Borrower, Parent and the LA Turf
Club authorizing the execution, delivery and performance of such Person's
obligations under the Loan Documents to which each is party; and (ii) the
constituent documents of such Person; together with evidence of the incumbency
of the officers of such Person executing the Loan Documents.



                                       1
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                                                                    SCHEDULE 5.6
                                                                       INSURANCE

                                       1

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                                                                    SCHEDULE 6.1
                                                          PERMITTED INDEBTEDNESS

                                       1
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                                                                    SCHEDULE 6.2
                                                                 PERMITTED LIENS

                                       1
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                                                                    SCHEDULE 6.4
                                                                     INVESTMENTS

                                       1