Document:

AMENDED AND RESTATED CONVERTIBLE TERM NOTE
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$15,000,000.00                                        August  30,  2000

                                    RECITALS
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     COLONIAL  DOWNS,  L.P.,  a  Virginia  limited  partnership  (the  "Maker"),
originally  executed  a  Deed  of  Trust Note, dated as of June 26, 1997, in the
original  principal  amount  of  $10,000,000  in  favor  of  PNC  BANK, NATIONAL
ASSOCIATION, a national banking association ("PNC") and a Revolving Credit Note,
dated  as  of  June 26, 1997, in the original principal amount of $5,000,000, in
favor of PNC (collectively, the "PNC Notes").  Pursuant to an Assignment of even
date  herewith  (the "Assignment") by and between PNC, CD ENTERTAINMENT LTD., an
Ohio limited liability company (the "Noteholder"), the Maker, COLONIAL HOLDINGS,
INC.,  a Virginia corporation ("Holdings") and STANSLEY RACING CORP., a Virginia
corporation ("SRC"), PNC assigned all of its rights, privileges, title, interest
and  obligations  under the PNC Notes to the Noteholder.  The payment of the PNC
Notes was guaranteed by each of Holdings and SRC pursuant to guaranty agreements
(the "Guaranty Agreement") originally executed in favor of PNC, all right, title
and  interest  of  which  were assigned to the Noteholder in connection with the
Assignment.  As  collateral  for  the  PNC  Notes,  Holdings  and the Maker also
granted  a  security  interest in the horse racing facility located in New Kent,
Virginia,  pursuant  to  a  Deed  of  Trust and Security Agreement (the "Deed of
Trust"),  from Holdings and the Maker to Lawyers Title Realty Services, Inc., as
Trustee  for the benefit of PNC, in the principal amount of $15,000,000 recorded
on  July  31,  1997,  and  assigned  to  the  Noteholder  in connection with the
Assignment.  As additional collateral for the PNC Notes, the Maker also executed
an  Assignment  of Rents and Leases (the "Assignment of Leases") in favor of PNC
and filed July 31, 1997, all right, title and interest of which were assigned to
the  Noteholder  pursuant  to the Assignment.  The Maker and the Noteholder have
agreed  to  the  terms  of  this Amended and Restated Convertible Term Note (the
"Note")  to consolidate the indebtedness originally owed under the PNC Notes and
assigned  to the Noteholder, to set forth certain revised payment and additional
terms.

                                 PROMISSORY NOTE
                                 ---------------

     FOR  VALUE  RECEIVED, the Maker, with its principal office located at 10515
Colonial  Downs  Parkway,  New  Kent,  Virginia 23124, promises to pay to to the
order  of  the  Noteholder,  at  its  principal  office  located  at  c/o Jacobs
Entertainment,  Inc., 1231 Main Avenue, Cleveland, Ohio  44113, or at such other
place as the Noteholder may designate in writing, the sum of Fifteen Million and
00/100  Dollars  ($15,000,000),  together  with  interest  thereon from the date
hereof until payment in full, payable as set forth below.  This Note is governed
by  the  terms  of  an Amended and Restated Loan Agreement, dated as of the date
hereof  (the  "Loan Agreement"), between the Maker, Holdings and the Noteholder.
Capitalized  terms not defined herein are used as defined in the Loan Agreement.

     1.     Interest  and Principal Payments.  Interest, calculated on a 360 day
            --------------------------------
calendar  year,  shall  accrue on the outstanding principal balance of this Note
from  the  date  hereof  at the rate per annum of LIBOR plus three percent (3%).
The interest rate shall be determined as of August 29, 2000 and remain fixed for
the  term of the Note until all principal and all accrued interest thereon shall
be  repaid  in  full.  The  Noteholder shall maintain a record of each principal
payment  and  interest  accrual  under  the  terms  of  this Note which shall be
presumptive  evidence  of  the principal amount thereof owing and unpaid, absent
manifest  error,  but  the  failure  to  record any such amount on the books and
records shall not limit or affect the obligations of the Maker hereunder to make
payments of principal and interest when due.  LIBOR shall mean the interest rate
per  annum  (rounded  to  the  nearest one-sixteenth (1/16) of one percent (1%))
equal  to  the  London  Interbank  Offered  Rate as published in the Wall Street
                                                                     -----------
Journal  for  a  maturity equal to one (1) year, as reported on August 29, 2000.
     --
Interest  shall be payable on the first day of each month beginning on September
1,  2000 and on the date of any prepayment.  Principal payments in the amount of
One  Million and 00/100 Dollars ($1,000,000) shall be due and payable on June 30
of  2002, 2003 and 2004 (the "Annual Payments").  If not sooner paid pursuant to
the  terms  hereof,  the remaining outstanding principal balance hereof together
with  interest accrued thereon shall be due and payable in full on June 30, 2005
(the  "Maturity  Date").

     2.     Application of Payments.  All payments shall be applied first to the
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payment  of  any  sums  other than principal and interest of this Note which are
secured  by the Deed of Trust (in such manner as the Noteholder may elect), then
to  accrued  interest  on this Note and then to the payment of principal of this
Note.

     3.     Prepayment.  The  Maker reserves the right to prepay the outstanding
            ----------
balance  of  this  Note, in whole or in part, at any time and from time to time,
without premium or penalty.  All payments hereunder shall be applied in the same
manner  set  forth  in paragraph 2 above, with principal installments applied in
the inverse order of maturity.  Whenever the Maker desires to make a prepayment,
it  shall  provide  a  prepayment  notice  to  the  Noteholder at least five (5)
business  days  prior  to  the  date of prepayment setting forth the date, which
shall  be  a business day on which the proposed prepayment is to be made and the
total principal amount of such prepayment which shall be not less than $100,000.

     4.     Default.  If there is a default in the payment of any installment of
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principal or interest as provided for herein for any reason whatever or an Event
of  Default as defined in the Deed of Trust which secures this Note or any other
Loan  Document,  all  outstanding  principal  of  this Note and accrued interest
thereon  at  the  Default  Rate  shall  become immediately due and payable.  The
Default  Rate shall equal the Prime Rate plus four percent (4%) and shall accrue
before  and  after any judgment has been entered with respect to this Note.  The
Maker  shall  also pay upon demand by the Noteholder a late payment charge equal
to  five  percent (5%) of the amount of any payment due under the Note, prior to
the  Maturity or acceleration, which is not received by the Noteholder within 10
days  after  the  date  such  payment  is  due.

     5.     Lawful  Interest  Rate.  Nothing contained herein shall be construed
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or  shall  operate  either  presently  or  prospectively  (a)  to  require  the
undersigned  to  pay  interest  at  a rate greater than the then lawful rate for
which the undersigned can contract, but shall require payment to be made only to
the  extent of such a lawful rate, or (b) to require the undersigned to make any
payment  or  to  take  any  action  contrary  to  law.

     6.     Conversion  of  the  Note.
            -------------------------

     (a)     All  or  any  portion  of the unpaid principal balance of this Note
shall  be  convertible into shares of Class A Common Stock of Holdings, $.01 par
value  per  Share  (the  "Common  Stock")  at  any time upon the election of the
Noteholder,  subject  to  obtaining  the  approval,  if  any is required, of the
Virginia  Racing  Commission (the "Commission").  The number of shares of Common
Stock  into  which  this  Note  may  be converted ("Conversion Shares") shall be
determined  by  dividing the amount of the then-unpaid principal balance and all
accrued  unpaid  interest  thereon  of  this Note by $1.03 (which is 125% of the
average  closing price per share of Holdings Class A Common Stock for the period
of  June 23, 2000 through and including June 29, 2000) (the "Conversion Price").
Notwithstanding  the  foregoing,  conversion  of this Note shall at all times be
subject  to  Holdings' ability to issue authorized shares of common stock as the
Conversion  Shares  as  provided  in  Section  6(h)  hereof.

     (b)     Noteholder  may  convert all or any portion of the unpaid principal
balance  and  all  accrued  unpaid interest thereon of this Note into Conversion
Shares  at any time prior to maturity of this Note or upon notice of the Maker's
intent  to  prepay  this Note within two (2) days of such notice.  Conversion of
this  Note  shall  be  effected  by  delivery of written notice by mail, postage
prepaid,  or  by carrier, to the Maker at its principal corporate office, of the
election  to  convert  the  same specifying the principal amount and all accrued
unpaid  interest  thereon of this Note being converted and the name in which the
certificates  evidencing  the  Conversion Shares shall be issued, accompanied by
this  Note.  To  the  extent  that the entire unpaid balance of this Note is not
being  converted, the Maker and the Noteholder shall each credit the Note on its
books  to  the  extent  of  the principal being converted by the Noteholder into
Conversion  Shares.

     (c)     No fractional share of Common Stock shall be issued upon conversion
of  this  Note.  In  lieu  of  Holdings  issuing  any  fractional  share  to the
Noteholder  upon  the  conversion of this Note, the Maker shall pay, in cash, to
the  Noteholder  the  amount of outstanding principal that is applicable to such
fractional  share.

     (d)     If Holdings has authorized the Conversion Shares and the Noteholder
has  elected  to  convert  the Note as provided herein, at its expense, Holdings
shall, as soon as practicable thereafter, issue and deliver to the Noteholder at
such principal office a certificate or certificates for the number of Conversion
Shares  to  which the Noteholder shall be entitled upon such conversion (bearing
such  legends  as  are  required  by applicable state and federal securities and
other  laws  in  the  opinion  of  counsel to Holdings), together with any other
securities and property to which the Noteholder is entitled upon such conversion
under  the  terms  of this Note, including a check payable to the Noteholder for
any  cash  amounts  payable  as  described  above  and  for  all interest on the
converted  principal  amount  hereof  accrued  and  unpaid  as  of  the  date of
conversion.  Such  conversion  shall  be deemed to have been made on the date of
delivery  of the notice of conversion, and on and after such date the Noteholder
shall  be  treated  for  all  purposes  as  the record holder of such Conversion
Shares.  Upon  conversion  of this Note and delivery of the certificates and the
check  described  above,  the  Maker  shall  be  forever  released  from all its
obligations  and  liabilities  under  this  Note  to the extent of the amount of
unpaid  principal  that  the  Noteholder  has elected to convert into Conversion
Shares.

          (e)     In  the event Holdings should at any time or from time to time
after  the  date  of issuance hereof fix a record date for the effectuation of a
split  or  subdivision  of  the  outstanding  shares  of  Common  Stock  or  the
determination of holders of Common Stock entitled to receive a dividend or other
distribution payable in additional shares of Common Stock or other securities or
rights  convertible into, or entitling the holder thereof to receive directly or
indirectly,  additional shares of Common Stock (hereafter referred to as "Common
Stock  Equivalents") without payment of any consideration by such holder for the
additional shares of Common Stock or the Common Stock Equivalents (including the
additional shares of Common Stock issuable upon conversion or exercise thereof),
then,  as  of such record date (or the date of such dividend distribution, split
or  subdivision  if  no record date is fixed), the Conversion Price of this Note
shall  be  appropriately  decreased  so  that  the  number  of Conversion Shares
issuable  upon  conversion of this Note shall be increased in proportion to such
increase  of  outstanding  shares.

          (f)     If  the  number  of  shares of Common Stock outstanding at any
time  after  the  date  hereof  is  decreased  by  a  reverse  stock  split or a
combination  of  the  outstanding  shares  of  Common Stock, then, following the
record  date  of  such  combination, the Conversion Price for this Note shall be
appropriately  increased  so  that  the  number of Conversion Shares issuable on
conversion  hereof  shall  be  decreased  in  proportion  to  such  decrease  in
outstanding  shares.

          (g)     In  the event of (i) any taking by Holdings of a record of the
holders  of  any  class of securities of Holdings for the purpose of determining
the  holders thereof who are entitled to receive any dividend (other than a cash
dividend)  or  other  distribution,  or  any right to subscribe for, purchase or
otherwise  acquire  any  shares of stock of any class or any other securities or
property,  or  to receive any other right, or (ii) any capital reorganization of
Holdings,  any  reclassification  or  recapitalization  of  the capital stock of
Holdings  or  any transfer of all or substantially all of the assets of Holdings
to  any other person or any consolidation or merger involving Holdings, or (iii)
any  voluntary  or  involuntary  dissolution,  liquidation,  or  winding  up  of
Holdings,  Holdings will mail to the Noteholder a notice specifying (A) the date
on  which  any  such  record  is  to  be taken for the purpose of such dividend,
distribution,  or  right,  and  the  amount  and  character  of  such  dividend,
distribution,  or  right,  (B)  the  date  on  which  any  such  reorganization,
reclassification,  transfer, consolidation, merger, dissolution, liquidation, or
winding  up  is  expected to become effective and the record date of determining
stockholders  entitled  to  vote  thereon,  and (C) the new Conversion Price, if
applicable,  after  giving  effect  to  the  adjustment event, if any, which new
Conversion  Price  shall  represent  an  appropriate increase or decrease in the
Conversion  Price  to  preserve  the  proportionate amount of Conversion Shares.
Such notice, if necessary shall be mailed at least twenty (20) days prior to the
date  described  in  clause  (A)  or  (B)  above.

          (h)     If  the Conversion Shares are authorized, thereafter, Holdings
shall at all times reserve and keep available out of its authorized but unissued
shares  of Common Stock such number of shares that are solely for the purpose of
effecting  the  conversion  of the Note into such number of Conversion Shares as
shall  from time to time be sufficient to effect the conversion of the Note; and
if  at  any  time  the  number of authorized but unissued shares of Common Stock
shall  not  be  sufficient  to  effect  the conversion of the entire outstanding
principal  amount  of  this Note, in addition to such other remedies as shall be
available  to  the  Noteholder, the Maker will use its best efforts to take such
corporate action as may, in the opinion of its counsel, be necessary to increase
its  authorized  but unissued shares of Common Stock to such number of shares as
shall  be  sufficient  for such purposes within twelve (12) months from the date
hereof.

     (i)     Any adjustment pursuant to this paragraph 6 shall be based upon the
proportion that the maximum number of Conversion Shares into which this Note was
convertible  immediately prior to the event giving rise to such adjustment bears
to the aggregate number of shares of Common Stock (or issuable in respect of any
Common  Stock  equivalents)  outstanding  immediately  prior  to  such  event.

     7.     No  Waivers.  Without  affecting,  modifying, altering, releasing or
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limiting  the  liability of any person liable or who may become liable hereon or
who  has  assumed,  served  as  a surety or guaranteed the obligation hereof and
without  affecting,  modifying,  altering, releasing or limiting the lien of the
Deed  of  Trust  or  any  other  security for this Note given at any time, it is
agreed  that  the  following  actions  may  take place at the sole option of the
Noteholder  without further notice or consent:  (i) this Note may be extended or
renewed at any time notwithstanding the fact that any extensions or renewals may
be  for  a  period  or  periods  in excess of the original term hereof; (ii) any
security  for this Note may be released; (iii) any one or more parties liable or
who  may  become  liable  hereon,  or  who  have  assumed, served as a surety or
guaranteed  the  obligation  hereof  may  be  released;  (iv)  any indulgence or
forbearance  whatsoever  regarding  this  obligation may be granted; and (v) the
Noteholder  may  fail  to  act  with diligence or may delay in the collection or
enforcement  hereof.  Any  person  liable or who may become liable hereon or who
has  assumed,  served  as  a  surety  or guaranteed the obligation hereof waives
presentment,  demand,  protest  and  notice  of  dishonor.

     8.     Time  of  the  Essence.  Time  is  of  the  essence  of  this  Note.
            ----------------------

     9.     Waiver  of Exemptions.  The undersigned and any person who is or may
            ---------------------
become  liable  hereon  or who has assumed, served as a surety or guaranteed the
obligation  hereof waive homestead and all exemption rights and insolvency laws,
waive  all rights to the benefit of any moratorium, reinstatement, marshaling of
assets,  forbearance,  valuation, stay, redemption and appraisement now provided
or  which  may  hereafter  be  provided,  both as to itself and its property and
agree,  jointly  and  severally,  that  they  will  pay all reasonable costs and
expenses, including attorney's fees, (i) if the Noteholder finds it necessary or
desirable  to secure the services or advice of one or more attorneys with regard
to  the  collection  of  this Note; (ii) if the Noteholder finds it necessary or
desirable  to  secure  the  services  or  advice  of  one  or  more attorneys in
connection with the protection of its rights under this Note, the Deed of Trust,
other security for this Note or other documents executed in connection with this
Note  or  the  rights  and  title  of  which  were assigned to the Noteholder in
connection  with  the  Assignment  (the  "Loan  Documents");  or  (iii)  if  the
Noteholder  seeks  to have any property described in the Deed of Trust abandoned
by or reclaimed from any estate in bankruptcy, or in attempting to have any stay
or  injunction  against  the  enforcement  or collecting of this Note or against
foreclosure  of  any  property  conveyed  by  the  Deed  of  Trust lifted by any
bankruptcy  or  other  court.

     10.     Security.  Subject  to  the  terms of the next succeeding paragraph
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and  notwithstanding  anything to the contrary otherwise contained in this Note,
but  without  in  any way releasing, impairing or otherwise affecting this Note,
the  Deed  of Trust or any of the other Loan Documents or the validity hereof or
thereof, or the lien of the Deed of Trust, it is agreed that Noteholder's source
of  satisfaction of said indebtedness and of Maker's other obligations hereunder
and under the Loan Documents is limited to the collateral identified in the Loan
Documents  and  the  Guaranty  Agreement.

     11.     Additional  Liability.  Notwithstanding the foregoing limitation of
             ---------------------
liability  provision, it is expressly understood and agreed that the Maker shall
be  liable  for  the  payment  to  the  Noteholder  of:

(a)     the  application  of  rents,  security deposits or other income, issues,
profits  and revenues derived from the properties described in the Deed of Trust
(the  "Property")  after the occurrence of an Event of Default to anything other
than  the  indebtedness evidenced by this Note.  It is understood that any rents
collected  more than one month in advance as of the time of the Event of Default
shall  be  considered  to  have  been  collected  after  the  Event  of Default;
(b)     any  loss, cost or damages arising out of or in connection with fraud or
material  misrepresentations  to  Noteholder  by Maker (or by any of its general
partners,  officers,  shareholders,  members  or  their  agents, if applicable);
(c)     any  loss,  cost or damages arising out of or in connection with Maker's
misapplication  of  (i) any proceeds paid under any insurance policies by reason
of  damage, loss or destruction to any portion of the Property, or (ii) proceeds
or  awards  resulting  from  the  condemnation  or  other  taking  in  lieu  of
condemnation  of  any portion of the Property, for purposes other than those set
forth  in  the  Deed  of  Trust  executed  in  connection  with  this  Note;
(d)     any loss, cost or damages arising out of or in connection with any waste
of  the  Property  or  any portion thereof, and all reasonable costs incurred by
Noteholder  to  protect  the  Property;
(e)     any  taxes, assessments and insurance premiums for which Maker is liable
under  this Note, the Deed of Trust or any of the other Loan Documents and which
are  paid  by  Noteholder;
(f)     any  loss,  cost  or  damages  arising  out of or in connection with the
covenants,  obligations  and  liabilities under that certain Hazardous Materials
Certificate and Indemnity Agreement originally made by Holdings and the Maker in
favor  of  PNC,  the  rights  of  which  have  been  assigned  to  Noteholder;
(g)     any  loss, cost or damages to Noteholder arising out of or in connection
with  any construction lien, mechanic's lien, materialmen's lien or similar lien
against  the  Property  arising  out  of  acts  or  omissions  of  Maker;
(h)     any and all loss, cost or damages arising out of or incurred in order to
cause  the  Improvements  (as  defined  in the Deed of Trust) to comply with the
accessibility  provisions  of  The  Americans  With  Disabilities  Act;
(i)     all  loss,  costs,  damages  and  fees,  including  without  limitation,
reasonable  attorneys'  fees,  incurred  by Noteholder in the enforcement of the
provisions  of  this  Note.
     The  provisions  of  this  Note  shall  be  governed  by  the  laws  of the
Commonwealth  of  Virginia  and  shall  be  binding  upon  the  heirs,  legal
representatives,  successors  and  assigns  of  the Maker.  Its provisions shall
inure  to  the  benefit  of  all  holders  of  this  Note.

     WITNESS  the  signature  of  the  Maker hereof the day and year first above
written.

                              COLONIAL  DOWNS,  L.P.,
                              a  Virginia  limited  partnership

                              By:     Stansley  Racing  Corp.,
                                   a  Virginia  corporation
                              Its:     General  Partner

                                   By:          ________________________
                                   Name:     Ian  M.  Stewart
                                   Title:          PresidentCREDIT LINE CONVERTIBLE NOTE
                          ----------------------------

$10,700,000.00                                        August  30,  2000

     FOR  VALUE  RECEIVED,  COLONIAL HOLDINGS, INC., a Virginia corporation (the
"Maker"), with its principal office located at 10515 Colonial Downs Parkway, New
Kent,  Virginia 23124, promises to pay to the order of CD ENTERTAINMENT LTD., an
Ohio  limited  liability  company  (the  "Noteholder"),  at its principal office
located  at  c/o  Jacobs  Entertainment, Inc., 1231 Main Avenue, Cleveland, Ohio
44113,  or  at  such other place as the Noteholder may designate in writing, the
sum  of  Ten Million Seven Hundred Thousand and 00/100 Dollars ($10,700,000), or
so  much  thereof  as  may  be  advanced and outstanding, together with interest
thereon from the date of each such advance until payment in full, payable as set
forth  below.  This Credit Line Convertible Note (the "Note") is governed by the
terms  of  an  Amended  and Restated Loan Agreement, dated as of the date hereof
(the  "Loan  Agreement"),  by  and  between  the  Maker, Colonial Downs, L.P., a
Virginia  limited  partnership  (the  "Partnership")  and  the  Noteholder.
Capitalized  terms not defined herein are used as defined in the Loan Agreement.
This  Note  shall be secured by a Second Deed of Trust, as amended, on the horse
racing  facility  in  New  Kent,  Virginia  granted by the Maker in the original
principal  amount  of  $9,700,000  and a Deed of Trust on the satellite wagering
facility  located  in  Hampton,  Virginia  granted  by  the  Partnership  in the
principal  amount  of  $1,000,000  (collectively,  the  "Deed  of  Trust").

     1.     Interest  and Principal Payments.  Interest, calculated on a 360 day
            --------------------------------
calendar  year,  shall  accrue on the outstanding principal balance of this Note
from  the  date  of each advance of principal until paid in full at the rate per
annum  of LIBOR plus three percent (3%).  The interest rate upon each advance of
principal  shall  be  determined  as of the date of the advance and shall remain
fixed  for  the  term  of  the  Loan until such advance and all accrued interest
thereon shall be repaid in full.  The Noteholder shall maintain a record of each
advance,  principal  payment  and  interest accrual under the terms of this Note
which  shall  be  presumptive evidence of the principal amount thereof owing and
unpaid,  absent manifest error, but the failure to record any such amount on the
books  and  records  shall  not  limit  or  affect  the obligations of the Maker
hereunder to make payments of principal and interest when due.  LIBOR shall mean
the  interest rate per annum (rounded to the nearest one-sixteenth (1/16) of one
percent  (1%))  equal  to  the London Interbank Offered Rate as published in the
Wall  Street Journal for a maturity equal to one (1) year, as reported on August
   -----------------
29, 2000.  Interest shall be payable on the first day of each month beginning on
September  1, 2000 and on the date of any prepayment.  Principal payments in the
amount  of  One Million and 00/100 Dollars ($1,000,000) shall be due and payable
on  June  30 of 2002, 2003 and 2004 (the "Annual Payments").  If not sooner paid
pursuant to the terms hereof, the remaining outstanding principal balance hereof
together  with interest accrued thereon shall be due and payable in full on June
30,  2005  (the  "Maturity  Date").  The  Maker  shall make additional principal
payments  with  each Annual Payment in an amount equal to fifty percent (50%) of
Free  Cash  Flow  for  the preceding year ending December 31, as defined herein.
Free  Cash  Flow  shall  mean  the  earnings  of the Maker plus depreciation and
amortization  less  all  taxes,  interest  payments, amounts expended on capital
expenditures,  principal  payments,  plus  or  minus  any changes in the working
capital  of  the  Maker,  all  calculated  in accordance with generally accepted
accounting  principles.

     2.     Application of Payments.  All payments shall be applied first to the
            -----------------------
payment  of  any  sums  other than principal and interest of this Note which are
secured  by  the  Deed  of  Trust which secures this Note (in such manner as the
Noteholder  may  elect),  then  to accrued interest on this Note and then to the
payment  of  principal  of  this  Note.

     3.     Prepayment.  The  Maker reserves the right to prepay the outstanding
            ----------
balance  of  this  Note, in whole or in part, at any time and from time to time,
without premium or penalty.  All payments hereunder shall be applied in the same
manner  set  forth  in paragraph 2 above, with principal installments applied in
the inverse order of maturity.  Whenever the Maker desires to make a prepayment,
it  shall  provide  a  prepayment  notice  to  the  Noteholder at least five (5)
business  days  prior  to  the  date of prepayment setting forth the date, which
shall  be  a business day on which the proposed prepayment is to be made and the
total principal amount of such prepayment which shall be not less than $100,000.

     4.     Default.  If there is a default in the payment of any installment of
            -------
principal or interest as provided for herein for any reason whatever or an Event
of  Default as defined in the Deed of Trust which secures this Note or any other
Loan  Document,  all  outstanding  principal  of  this Note and accrued interest
thereon  at  the  Default  Rate  shall  become immediately due and payable.  The
Default  Rate  shall  equal  the  Prime Rate plus 4% and shall accrue before and
after  any judgment has been entered with respect to this Note.  The Maker shall
also  pay upon demand by the Noteholder a late payment charge equal to 5% of the
amount of any payment due under the Note, prior to the Maturity or acceleration,
which  is  not  received  by  the  Noteholder within 10 days after the date such
payment  is  due.

     5.     Lawful  Interest  Rate.  Nothing contained herein shall be construed
            ----------------------
or  shall  operate  either  presently  or  prospectively  (a)  to  require  the
undersigned  to  pay  interest  at  a rate greater than the then lawful rate for
which the undersigned can contract, but shall require payment to be made only to
the  extent of such a lawful rate, or (b) to require the undersigned to make any
payment  or  to  take  any  action  contrary  to  law.

<PAGE>
     6.     Conversion  of  the  Note.
            -------------------------

     (a)     All  or  any  portion  of  the  unpaid  principal  balance shall be
convertible into shares of Class A Common Stock of the Maker, $.01 par value per
Share  (the  "Common  Stock")  at  any time upon the election of the Noteholder,
subject  to  obtaining  the approval, if any is required, of the Virginia Racing
Commission  (the "Commission").  The number of shares of Common Stock into which
this Note may be converted ("Conversion Shares") shall be determined by dividing
the  amount of the then-unpaid principal balance of this Note by $1.03 (which is
125%  of the average closing price per share of the Maker's Class A Common Stock
for  the  period  of  June  23,  2000  through and including June 29, 2000) (the
"Conversion  Price").

     (b)     Noteholder  may  convert all or any portion of the unpaid principal
balance  of  this  Note  into Conversion Shares at any time prior to maturity of
this  Note  or  upon notice of the Maker's intent to prepay this Note within two
(2)  days of such notice.  Conversion of this Note shall be effected by delivery
of  written  notice by mail, postage prepaid, or by carrier, to the Maker at its
principal  corporate  office, of the election to convert the same specifying the
principal  amount  of  this  Note  being  converted  and  the  name in which the
certificates  evidencing  the  Conversion Shares shall be issued, accompanied by
this  Note.  To  the  extent  that the entire unpaid balance of this Note is not
being  converted, the Maker and the Noteholder shall each credit the Note on its
books  to  the  extent  of  the principal being converted by the Noteholder into
Conversion  Shares.

     (c)     No fractional share of Common Stock shall be issued upon conversion
of  this  Note.  In  lieu  of  the  Maker  issuing  any  fractional share to the
Noteholder  upon  the  conversion of this Note, the Maker shall pay, in cash, to
the  Noteholder  the  amount of outstanding principal that is applicable to such
fractional  share.

     (d)     If  the  Maker  has  authorized  the  Conversion  Shares  and  the
Noteholder  has  elected to convert the Note as provided herein, at its expense,
the  Maker  shall,  as  soon as practicable thereafter, issue and deliver to the
Noteholder at such principal office a certificate or certificates for the number
of  Conversion  Shares  to  which  the  Noteholder  shall  be entitled upon such
conversion (bearing such legends as are required by applicable state and federal
securities and other laws in the opinion of counsel to the Maker), together with
any  other securities and property to which the Noteholder is entitled upon such
conversion  under  the  terms  of  this  Note,  including a check payable to the
Noteholder  for any cash amounts payable as described above and for all interest
on  the  converted  principal amount hereof accrued and unpaid as of the date of
conversion.  Such  conversion  shall  be deemed to have been made on the date of
delivery  of the notice of conversion, and on and after such date the Noteholder
shall  be  treated  for  all  purposes  as  the record holder of such Conversion
Shares.  Upon  conversion  of this Note and delivery of the certificates and the
check  described  above,  the  Maker  shall  be  forever  released  from all its
obligations  and  liabilities  under  this  Note  to the extent of the amount of
unpaid  principal  that  the  Noteholder  has elected to convert into Conversion
Shares.

          (e)     In the event the Maker should at any time or from time to time
after  the  date  of issuance hereof fix a record date for the effectuation of a
split  or  subdivision  of  the  outstanding  shares  of  Common  Stock  or  the
determination of holders of Common Stock entitled to receive a dividend or other
distribution payable in additional shares of Common Stock or other securities or
rights  convertible into, or entitling the holder thereof to receive directly or
indirectly,  additional shares of Common Stock (hereafter referred to as "Common
Stock  Equivalents") without payment of any consideration by such holder for the
additional shares of Common Stock or the Common Stock Equivalents (including the
additional shares of Common Stock issuable upon conversion or exercise thereof),
then,  as  of such record date (or the date of such dividend distribution, split
or  subdivision  if  no record date is fixed), the Conversion Price of this Note
shall  be  appropriately  decreased  so  that  the  number  of Conversion Shares
issuable  upon  conversion of this Note shall be increased in proportion to such
increase  of  outstanding  shares.

          (f)     If  the  number  of  shares of Common Stock outstanding at any
time  after  the  date  hereof  is  decreased  by  a  reverse  stock  split or a
combination  of  the  outstanding  shares  of  Common Stock, then, following the
record  date  of  such  combination, the Conversion Price for this Note shall be
appropriately  increased  so  that  the  number of Conversion Shares issuable on
conversion  hereof  shall  be  decreased  in  proportion  to  such  decrease  in
outstanding  shares.

          (g)     In the event of (i) any taking by the Maker of a record of the
holders  of  any class of securities of the Maker for the purpose of determining
the  holders thereof who are entitled to receive any dividend (other than a cash
dividend)  or  other  distribution,  or  any right to subscribe for, purchase or
otherwise  acquire  any  shares of stock of any class or any other securities or
property,  or  to receive any other right, or (ii) any capital reorganization of
the  Maker, any reclassification or recapitalization of the capital stock of the
Maker  or any transfer of all or substantially all of the assets of the Maker to
any  other  person  or any consolidation or merger involving the Maker, or (iii)
any  voluntary  or  involuntary  dissolution,  liquidation, or winding up of the
Maker, the Maker will mail to the Noteholder a notice specifying (A) the date on
which  any  such  record  is  to  be  taken  for  the  purpose of such dividend,
distribution,  or  right,  and  the  amount  and  character  of  such  dividend,
distribution,  or  right,  (B)  the  date  on  which  any  such  reorganization,
reclassification,  transfer, consolidation, merger, dissolution, liquidation, or
winding  up  is  expected to become effective and the record date of determining
stockholders  entitled  to  vote  thereon,  and (C) the new Conversion Price, if
applicable,  after  giving  effect  to  the  adjustment event, if any, which new
Conversion  Price  shall  represent  an  appropriate increase or decrease in the
Conversion  Price  to  preserve  the  proportionate amount of Conversion Shares.
Such notice, if necessary shall be mailed at least twenty (20) days prior to the
date  described  in  clause  (A)  or  (B)  above.

          (h)     If the Conversion Shares are authorized, thereafter, the Maker
shall at all times reserve and keep available out of its authorized but unissued
shares  of Common Stock such number of shares that are solely for the purpose of
effecting  the  conversion  of the Note into such number of Conversion Shares as
shall  from time to time be sufficient to effect the conversion of the Note; and
if  at  any  time  the  number of authorized but unissued shares of Common Stock
shall  not  be  sufficient  to  effect  the conversion of the entire outstanding
principal  amount  of  this Note, in addition to such other remedies as shall be
available  to  the  Noteholder, the Maker will use its best efforts to take such
corporate action as may, in the opinion of its counsel, be necessary to increase
its  authorized  but unissued shares of Common Stock to such number of shares as
shall  be  sufficient  for such purposes within twelve (12) months from the date
hereof.

     (i)     Any adjustment pursuant to this paragraph 6 shall be based upon the
proportion that the maximum number of Conversion Shares into which this Note was
convertible  immediately prior to the event giving rise to such adjustment bears
to the aggregate number of shares of Common Stock (or issuable in respect of any
Common  Stock  equivalents)  outstanding  immediately  prior  to  such  event.

     7.     No  Waivers.  Without  affecting,  modifying, altering, releasing or
            -----------
limiting  the  liability of any person liable or who may become liable hereon or
who  has  assumed,  served  as  a surety or guaranteed the obligation hereof and
without  affecting,  modifying,  altering, releasing or limiting the lien of any
Deed  of Trust which secures this Note or any other security for this Note given
at  any time, it is agreed that the following actions may take place at the sole
option  of  the Noteholder without further notice or consent:  (i) this Note may
be  extended or renewed at any time notwithstanding the fact that any extensions
or  renewals  may  be  for  a  period  or periods in excess of the original term
hereof;  (ii)  any security for this Note may be released; (iii) any one or more
parties liable or who may become liable hereon, or who have assumed, served as a
surety  or guaranteed the obligation hereof may be released; (iv) any indulgence
or  forbearance whatsoever regarding this obligation may be granted; and (v) the
Noteholder  may  fail  to  act  with diligence or may delay in the collection or
enforcement  hereof.  Any  person  liable or who may become liable hereon or who
has  assumed,  served  as  a  surety  or guaranteed the obligation hereof waives
presentment,  demand,  protest  and  notice  of  dishonor.

     8.     Time  of  the  Essence.  Time  is  of  the  essence  of  this  Note.
            ----------------------

     9.     Waiver  of Exemptions.  The undersigned and any person who is or may
            ---------------------
become  liable  hereon  or who has assumed, served as a surety or guaranteed the
obligation  hereof waive Homestead and all exemption rights and insolvency laws,
waive  all rights to the benefit of any moratorium, reinstatement, marshaling of
assets,  forbearance,  valuation, stay, redemption and appraisement now provided
or  which  may  hereafter  be  provided,  both as to itself and its property and
agree,  jointly  and  severally,  that  they  will  pay all reasonable costs and
expenses, including attorney's fees, (i) if the Noteholder finds it necessary or
desirable  to secure the services or advice of one or more attorneys with regard
to  the  collection  of  this Note; (ii) if the Noteholder finds it necessary or
desirable  to  secure  the  services  or  advice  of  one  or  more attorneys in
connection  with the protection of its rights under this Note, the Deed of Trust
securing  this Note, other security for this Note or other documents executed in
connection with this Note; or (iii) if the Noteholder seeks to have any property
described in the Deed of Trust securing this Note abandoned by or reclaimed from
any  estate  in  bankruptcy,  or  in  attempting  to have any stay or injunction
against the enforcement or collecting of this Note or against foreclosure of any
property  conveyed  by  the  Deed of Trust which secures this Note lifted by any
bankruptcy  or  other  court.

     10.     Security.  Subject  to  the  terms of the next succeeding paragraph
             --------
and  notwithstanding  anything to the contrary otherwise contained in this Note,
but  without  in  any way releasing, impairing or otherwise affecting this Note,
the Deed of Trust or any of the other documents executed in connection with this
Note  or the validity hereof or thereof, or the lien of the Deed of Trust, it is
agreed  that  Noteholder's  source  of  satisfaction of said indebtedness and of
Maker's  other  obligations  hereunder  and  under  the documents evidencing and
securing  the  Note  is  limited  to (a) the properties described in the Deed of
Trust  executed  and  recorded  in  connection  with  the  Loan  Agreement  (the
"Property")  and (b) the rents, income, issues, proceeds and profits arising out
of  the  Property;  provided,  however,  that  nothing herein contained shall be
deemed  to  be  a  release  or  impairment  of said indebtedness or the security
therefor intended by the Deed of Trust, or be deemed to preclude Noteholder from
foreclosing  any  Deed  of Trust or from enforcing any of Noteholder's rights or
remedies  in  law  or  in  equity  thereunder, or in any way or manner affecting
Noteholder's  rights  and  privileges  under  any  of  the documents executed in
connection  with  this  Note  and/or  performance  hereunder  and/or thereunder.

     11.     Additional  Liability.  Notwithstanding the foregoing limitation of
             ---------------------
liability  provision, it is expressly understood and agreed that the Maker shall
be  liable  for  the  payment  to  the  Noteholder  of:

(a)     the  application  of  rents,  security deposits or other income, issues,
profits  and revenues derived from the Property after the occurrence of an Event
of  Default  to anything other than the indebtedness evidenced by this Note.  It
is  understood that any rents collected more than one month in advance as of the
time  of  the  Event of Default shall be considered to have been collected after
the  Event  of  Default;
(b)     any  loss, cost or damages arising out of or in connection with fraud or
material  misrepresentations  to  Noteholder  by Maker (or by any of its general
partners,  officers,  shareholders,  members  or  their  agents, if applicable);
(c)     any  loss,  cost or damages arising out of or in connection with Maker's
misapplication  of  (i) any proceeds paid under any insurance policies by reason
of  damage, loss or destruction to any portion of the Property, or (ii) proceeds
or  awards  resulting  from  the  condemnation  or  other  taking  in  lieu  of
condemnation  of  any portion of the Property, for purposes other than those set
forth  in  the  Deed  of  Trust  executed  in  connection  with  this  Note;
(d)     any loss, cost or damages arising out of or in connection with any waste
of  the  Property  or  any portion thereof, and all reasonable costs incurred by
Noteholder  to  protect  the  Property;
(e)     any  taxes, assessments and insurance premiums for which Maker is liable
under  this  Note,  any  Deed of Trust or any of the other documents executed in
connection  with  this  Note  and  which  are  paid  by  Noteholder;
(f)     any  loss, cost or damages to Noteholder arising out of or in connection
with  any construction lien, mechanic's lien, materialmen's lien or similar lien
against  the  Property  arising  out  of  acts  or  omissions  of  Maker;
(g)     any and all loss, cost or damages arising out of or incurred in order to
cause  the  Improvements  (as  defined  in the Deed of Trust) to comply with the
accessibility  provisions  of  The  Americans  With  Disabilities  Act;
(h)     all  loss,  costs,  damages  and  fees,  including  without  limitation,
reasonable  attorneys'  fees,  incurred  by Noteholder in the enforcement of the
provisions  of  this  Note.
     The  provisions  of  this  Note  shall  be  governed  by  the  laws  of the
Commonwealth  of  Virginia  and  shall  be  binding  upon  the  heirs,  legal
representatives,  successors  and  assigns  of  the Maker.  Its provisions shall
inure  to  the  benefit  of  all  holders  of  this  Note.

<PAGE>
     WITNESS  the  signature  of  the  Maker hereof the day and year first above
written.

                              COLONIAL  HOLDINGS,  INC.,
                              a  Virginia  corporation

                              By:     _______________________________
                                   Ian  M.  Stewart,  President

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