Assignment of Leases And Rents

Exhibit 10.7


ASSIGNMENT OF LEASES AND RENTS


NOTICE: This Document Is Exempt From Taxation Pursuant To Virginia Code
Section 58.1-809


Made as of the 26th day of June, 1997, by COLONIAL DOWNS, L.P., a Virginia limited partnership (hereinafter the "Assignor"), with an address at 6201 North Courthouse Road, P.O. Box 456, Providence Forge, Virginia 23140, Attn: O. J. Peterson, to PNC BANK, NATIONAL ASSOCIATION ("Assignee"), a national banking association with an address at One PNC Plaza, P1-POPP-19-2, 249 Fifth Avenue, Pittsburgh, PA 15222-2707.


FOR VALUE RECEIVED, and intending to be legally bound, Assignor hereby grants, sells, assigns, transfers, sets over and delivers unto Assignee (as additional collateral to further secure Assignee) all right, title and interest of Assignor in and to all Leases (as hereinafter defined) covering all or any part of those certain premises described in Exhibit A attached hereto and made a part hereof or covering all or any part of the improvements now or hereafter located thereon (hereinafter collectively called the "Premises"), together with all the Rents (hereinafter defined) due and to become due to Assignor, and together with all rights of Assignor to amend, modify, terminate, extend or renew the Leases or to waive the Rents or the terms of the Leases.


TO HAVE AND TO HOLD the same unto Assignee, its successors and assigns, for the purpose of securing the performance and discharge by Assignor of the Obligations (as hereinafter defined).


Assignor hereby covenants, promises and agrees as follows:


1. As used in this Assignment, the following terms shall have the meanings indicated, unless the context otherwise requires:


(a) "Leases" shall mean (i) all present and future leases and subleases covering all or any portion of the Premises, (ii) all agreements for use or occupancy of any portion of the Premises, (iii) all modifications, supplements, extensions and renewals of any such Lease and any and all further Leases (including rights in respect of lessees and sublessees holding over and tenancies following attornment) of all or any part of the Premises, and (iv) any and all guaranties of the performance of any lessee or sublessee under any Lease.


(b) "Obligations" shall mean (i) the prompt and punctual payment of all principal and interest and other sums coming due under that certain Deed of Trust Note of even date herewith, from Assignor to Assignee in the principal amount of $10,000,000, as the same may be amended, supplemented, renewed, increased or replaced from time to time (the "Deed of Trust Note"), the proceeds of the loan evidenced by the Deed of Trust Note to be advanced in accordance with the provisions of the Construction Loan Agreement of even date herewith between Assignor and Assignee (such Construction Loan Agreement, as same may be amended, supplemented, modified or restated from time to time, the "Construction Loan Agreement"), (ii)


the prompt and punctual payment of all principal and interest and other sums coming due under that certain Revolving Credit Note of even date herewith from Assignor to Assignee in the principal amount of $5,000,000, as the same may be amended, supplemented, renewed, increased or replaced from time to time (the "Credit Note"), the proceeds of the loan evidenced by the Credit Note to be advanced in accordance with the provisions of the Revolving Line of Credit Agreement of even date herewith between Assignor and Assignee (such Revolving Line of Credit Agreement, as the same may be amended, supplemented, modified or restated from time to time, the "Credit Agreement") (the Construction Loan Agreement and the Credit Agreement are hereinafter collectively referred to as the "Loan Agreements", and the Deed of Trust Note and the Credit Note are hereinafter collectively referred to as the "Notes"); and (iii) the prompt and punctual payment and performance of all obligations, liabilities, covenants and sums now or hereafter to be paid or performed by Assignor under that certain Deed of Trust and Security Agreement (the "Deed of Trust") of even date herewith from Assignor and Colonial Downs Holdings, Inc., a Virginia corporation to Lawyers Title Realty Services, Inc., a Virginia corporation, as Trustee for the benefit of Assignee and under all other agreements, instruments and documents given to Assignee to evidence, secure or otherwise support the indebtedness evidenced by the Notes (all such agreements, instruments and documents, including the Notes, the Deed of Trust, the Loan Agreements and this Assignment, being hereinafter referred to as the "Loan Documents").


(c) "Rents" shall include all of the rents, income, receipts, revenues, security deposits, issues and profits now due or which may hereafter become due under any Lease and all other rents, income, receipts, revenues, issues and profits now due or which may hereafter become due with respect to the Premises, or any part thereof, or the use, occupancy or operation of the same; and the proceeds of all such Rents, both cash and noncash, including, but not limited to, any minimum rents, additional rents, percentage rents, parking, maintenance, insurance proceeds, tax contributions, any damages following default by a lessee or sublessee under any Lease, any penalties or premiums payable by tenant under any Lease and the proceeds of any policy of insurance covering loss of rents resulting from destruction or damage to any portion of the Premises.


(d) "Major Leases" shall mean all Leases, but shall not include any lease of less than five hundred (500) square feet, any lease of space to the Virginia Racing Commission, any leases of stalls, dormitory rooms, seats or skyboxes, any lease or license of office space to horsemen's groups, or any license agreement with any concessionaire, provided that any such license agreement shall be subject to termination by the Assignee within twelve (12) months following Assignee's acquisition of the Premises.


2. The parties intend that this Assignment shall be a present, absolute and unconditional assignment and shall, immediately upon execution, give Assignee the right to collect the Rents and to apply them in payment of the principal and interest and all other sums payable on the Obligations. However, Assignee hereby grants to Assignor a license, subject to the provisions set forth below, to collect the Rents as they become due for its own account so long as no Remedies Event exists under the Loan Agreements and so long as there is no default by Assignor in the performance of the terms, covenants or provisions of the other Loan


Documents. Nothing contained herein, nor any collection of Rents by Assignee or by a receiver, shall be construed to make Assignee a "mortgagee-in-possession" of the Premises so long as Assignee has not itself entered into actual possession of the Premises.


3. Upon the occurrence of a Remedies Event (as defined in the Construction Loan A ...