


                   AGREEMENT FOR SALE OF MEMBERSHIP INTERESTS

              IN PNGI CHARLES TOWN GAMING LIMITED LIABILITY COMPANY

         Agreement  made as of this 15th day of March,  2000,  by,  between  and
among Thomas Hale Boggs, Jr., William C. Bryant,  James A. Reeder,  Sun Mountain
Development, LLC and Timber Nation Limited Partnership (hereinafter individually
a "Seller" and  collectively  the "Sellers" or the "BDC  Group"),  Penn National
Gaming of West Virginia,  Inc., a West Virginia  Corporation,  or its affiliated
designee,  (hereinafter  "Buyer"),  PNGI Charles Town Gaming  Limited  Liability
Company, a West Virginia limited liability company (hereinafter the "LLC"), Penn
National Gaming, Inc., a Pennsylvania  Corporation (hereinafter "PENN"), and Dr.
Henry G. Jarecki (hereinafter "Jarecki").

                                   BACKGROUND:

         The BDC Group owns eleven  percent of the  Membership  Interests in the
LLC  (collectively  the "BDC Membership  Interest" and  individually a "Seller's
Membership Interest").

         The BDC Group desires to sell to the Buyer the BDC Membership  Interest
in accordance with that certain Second Amended and Restated Operating  Agreement
of the LLC dated as of October 17, 1997 among the BDC Group,  the Buyer, the LLC
and Bryant Development Company, Nominee (the "Operating Agreement").

         The Buyer desires to purchase the BDC Membership Interest in accordance
with the Operating Agreement and the terms and provisions hereof.

                                A G R E E M E N T

         NOW  THEREFORE,   in  consideration  of  the  mutual  covenants  herein
contained, and intending to be legally bound hereby, the parties hereto agree as
follows:

                                    ARTICLE I

                PURCHASE AND SALE OF THE BDC MEMBERSHIP INTEREST

         1.1 Basic  Transaction.  On and subject to the terms and  conditions of
this  Agreement,  the Buyer agrees to and does hereby  purchase from each Seller
and each Seller  agrees to and does hereby sell to the Buyer his or its Seller's
Membership  Interest,   collectively  constituting  the  entire  BDC  Membership
Interest, for the consideration specified in this Article I.

         1.2 Purchase Price.  The Buyer agrees to pay to the Sellers Six Million
($6,000,000)  Dollars (the "Purchase  Price") in immediately  available funds at
the Closing  (defined below) by wire transfer to such accounts and divided among
the Sellers as set forth on Schedule 1.2.1, Column A, attached hereto and made a
part  hereof;  provided  that to the extent any amount is owed to Jarecki by any
member of the BDC Group, the amount which is set forth on Schedule 1.2.1, Column
B for such  member  shall be  deducted  by the Buyer from the  amount  otherwise
payable  to such  member  of the BDC  Group  and  shall be paid by the  Buyer to
Jarecki at the  Closing.  The net amount  payable by the Buyer to each BDC Group
member and Jarecki is set forth on Schedule 1.2.1, Column C.

         1.3 The Closing.  The closing of the  transaction  contemplated by this
Agreement  (the  "Closing")  shall  take  place  promptly  after  each party has
executed and  delivered  this  Agreement  to PENN,  but not later than March 31,
2000, or such other date as the parties hereto may agree (the "Closing Date").
                                       23
<PAGE>

                                    ARTICLE 2

                         REPRESENTATIONS AND WARRANTIES

                           CONCERNING THE TRANSACTION

         2.1      Representations  and  Warranties of the Sellers.
Each Seller  individually  represents  and warrants to the Buyer as
                  -----------------------------------------------
follows as of the date hereof and as of the Closing Date:

                  2.1.1 Authorization of Transaction. Each Seller has full power
and  authority to execute and deliver this  Agreement  and to perform his or its
obligations hereunder.  This Agreement constitutes the valid and legally binding
obligation of each Seller  enforceable in accordance with its terms. Each Seller
has given notice to, made any filing with or obtained any authorization, consent
or approval  of any person,  firm,  corporation  or federal or state  government
agency,  commissioner or board (hereinafter referred to as a "Person") necessary
in order to consummate the transaction contemplated by this Agreement.

                  2.1.2 Noncontravention. Neither the execution and the delivery
of this Agreement nor the  consummation of the transaction  contemplated  hereby
will violate any judgment, order, decree, ruling, charge or other restriction of
any government,  governmental  agency or court to which any Seller is subject or
conflict  with or  result  in a breach  of or  constitute  a  default  under any
agreement,  contract,  instrument or other  arrangement to which any Seller is a
party or by which any Seller or any of any Seller's assets is subject.

                  2.1.3 Broker's Fees. No Seller has any liability or obligation
to pay any fees or commission to any broker, finder or agent with respect to the
transaction  contemplated  by this  Agreement  for which the Buyer could  become
liable or obligated.

                  2.1.4 Seller  Membership  Interest.  Except for the promissory
notes executed by various BDC Group members to Jarecki,  which  promissory notes
will be  extinguished  at the  Closing  when the  amounts  set forth on Schedule
1.2.1.,  Column B are paid to Jarecki  pursuant to the provisions of Section 1.2
above,  each  Seller  owns  the  Seller's  Membership  Interest  of  record  and
beneficially  and has not issued or granted to any person,  firm or  corporation
any present or future right to acquire the Seller's  Membership  Interest or any
interest  therein except as set forth in the Operating  Agreement.  The Sellers'
Membership Interests in the aggregate constitute all the BDC Membership Interest
and individually the entire Membership Interest of each Seller in the LLC.

          2.1.5No Seller Action.  No Seller has taken any action or incurred any
     liability on behalf of the LLC. ----------------

                  2.1.6 No Litigation.  No action, suit or proceeding is pending
or threatened before any court or quasi-judicial or administrative agency of any
federal,  state, local or foreign  jurisdiction or before any arbitrator wherein
an unfavorable injunction,  judgment,  order, decree, ruling or charge would (i)
prevent  consummation of the transactions  contemplated by this Agreement,  (ii)
cause the transaction  contemplated by this Agreement to be rescinded  following
the  consummation,  or (iii) adversely affect the right of the Buyer to own each
Seller's Membership Interest (and no such injunction,  judgment,  order, decree,
ruling or charge is in effect).

         2.2  Representations  and Warranties of the Buyer.  The Buyer and PENN,
jointly and severally, represent and warrant to the Sellers as follows as of the
date of this Agreement and as of the Closing Date:

                  2.2.1  Organization  and  Qualification.  PENN and each of its
subsidiaries is a corporation duly organized and existing in good standing under
the laws of the jurisdiction in which it is incorporated,  and has the requisite
corporate  power to own its properties and to carry on its business as now being
                                       24
<PAGE>

conducted.  PENN and each of its  subsidiaries  is duly  qualified  as a foreign
corporation  to do business  and is in good  standing in every  jurisdiction  in
which the  nature  of the  business  conducted  by it makes  such  qualification
necessary  and where the  failure  so to qualify  would have a material  adverse
effect. The Buyer is an indirect wholly owned subsidiary of PENN.

                  2.2.2  Authorization  of Transaction.  The Buyer and PENN have
full power and  authority to execute and deliver this  Agreement  and to perform
their respective obligations hereunder. This Agreement constitutes the valid and
legally binding  obligation of the Buyer and PENN enforceable in accordance with
its terms and  conditions.  The Buyer and PENN have given  notice  to,  made any
filing with or  obtained  any  authorization,  consent or approval of any Person
necessary in order to consummate the transaction contemplated by this Agreement.

                  2.2.3 Noncontravention. Neither the execution and the delivery
of this Agreement nor the  consummation of the transaction  contemplated  hereby
will violate any judgment, order, decree, ruling, charge or other restriction of
any government,  governmental  agency or court to which Buyer or PENN is subject
or  conflict  with or result in a breach of or  constitute  a default  under any
agreement, contract, instrument or other arrangement to which Buyer or PENN is a
party or by which Buyer or PENN or any of their assets is subject.

                  2.2.4 Broker's Fees.  Neither Buyer nor PENN has any liability
or obligation to pay any fees or commission to any broker,  finder or agent with
respect to the  transaction  contemplated by this Agreement for which any of the
Sellers could become liable or obligated.

                  2.2.5   Investment.   The  Buyer  is  not  acquiring  the  BDC
Membership  Interest  with  a  view  to or  for  sale  in  connection  with  any
distribution in violation of the Securities Act of 1933, as amended (the "Act").

                  2.2.6 Full Knowledge.  The Buyer is the Managing Member of the
LLC and has full and complete knowledge of the assets, liabilities and financial
affairs of the LLC and is not relying on any  representations  or  warranties of
the Sellers  (other than those  specifically  set forth  herein) in reaching its
decision to enter into this Agreement.

                  2.2.7 No Litigation.  No action, suit or proceeding is pending
or threatened before any court or quasi-judicial or administrative agency of any
federal,  state, local or foreign  jurisdiction or before any arbitrator wherein
an unfavorable injunction,  judgment,  order, decree, ruling or charge would (i)
prevent consummation of the transactions contemplated by this Agreement, or (ii)
cause the transaction  contemplated by this Agreement to be rescinded  following
the consummation (and no such injunction,  judgment,  order,  decree,  ruling or
charge is in effect).

                                    ARTICLE 3

                                   TAX MATTERS

         3.1 In the case of  termination of the LLC for tax purposes (or if such
a termination is deemed to occur) at Closing,  a final federal income tax return
shall be filed through March 15, 2000, the effective date hereof.  Except in the
event of such  termination (or a deemed  termination),  and in the case of state
and local income tax  returns,  if there is no deemed  termination  for such tax
purposes,  with respect to each of the Sellers, the LLC shall close its books as
of the Closing Date to determine  each  Seller's  distributive  share of income,
gain, loss, deduction or credit for the year in which the Closing occurs.

                                    ARTICLE 4

                              CONDITIONS TO CLOSING

         4.1 The  obligation of Sellers to close  hereunder  shall be subject to
the satisfaction or waiver of the following conditions on or prior to Closing:
                                       25
<PAGE>

          4.1.1  Buyer  shall  have   delivered  to  the  Sellers  and  Jarecki,
     respectively,  the cash amounts set forth on Schedule  1.2.1,  Column C, by
     wire transfer, as more fully set forth on Schedule 1.2.1.

          4.1.2  Buyer and PENN shall have  delivered  to each  Seller a release
     substantially  in the form of Exhibit "A",  attached hereto and made a part
     hereof.

                  4.1.3 Each of the  representations and warranties of Buyer and
PENN  contained  in Section 2.2 above shall be true and correct on and as of the
Closing Date to the same extent as if made on and as of the Closing Date.

         4.2 The  obligation  of  Buyer  and PENN to  close  hereunder  shall be
subject to the satisfaction of the following conditions on or prior to Closing:

                  4.2.1 Each of the  representations  and  warranties of each of
the Sellers  contained  in Section 2.1 above shall be true and correct on and as
of the Closing Date to the same extent as if made on and as of the Closing Date.

                  4.2.2 Each  Seller  shall have  delivered  to Buyer and PENN a
release substantially in the form of Exhibit "B" attached hereto and made a part
hereof.

                                    ARTICLE 5

                                    COVENANTS

         5.1 Further  Action.  In case at any time,  either  before or after the
Closing,  any  further  action is  necessary  to carry out the  purpose  of this
Agreement,  each of the parties will take such further  commercially  reasonable
action,  including the execution  and delivery of such further  instruments  and
documents, as any other party may reasonably request.

         5.2  Dissociation.  Effective  the close of business on March 15, 2000,
each Seller shall be deemed to have  dissociated from the LLC in accordance with
Article 6 of the West Virginia  Uniform  Limited  Liability  Company Act and the
Operating Agreement and shall thereafter cease to have any rights or obligations
under the Operating Agreement or otherwise as a "Member" of the LLC.

         5.3  Public   Announcements.   Neither   party  shall  make  any  pubic
announcement of the existence of this Agreement or the transaction  contemplated
hereby without the prior approval of the other parties;  provided,  however,  if
PENN  determines  it is required to make a public  announcement  pursuant to the
Rules of the NASD or the Securities  Exchange Act of 1934, as amended, it may do
so.

         5.4  Delivery  of K-1's.  The Buyer and PENN agree to  furnish  all BDC
Group  members  with  K-1's  and any other  necessary  tax  related  information
pertaining to the LLC concerning the period through March 15, 2000, prior to the
filing of the LLC's federal tax return  concerning such period;  and each Seller
shall be given a reasonable opportunity to review and comment on such tax return
before it is filed by the LLC. Within 90 days after the Closing,  the Buyer will
provide  each Seller with a  reasonable  estimate of the  information  that will
appear in such Seller's final K-1 with respect to the LLC.

         5.5.  PENN  Guaranty.  PENN  agrees  that it shall  cause  the Buyer to
perform all of its agreements and obligations  under this Agreement,  including,
but not limited to, the purchase of the BDC Group Membership  Interest  pursuant
to this Agreement.

                                    ARTICLE 6

                      REMEDIES FOR BREACH OF THIS AGREEMENT

         6.1 Survival. All the representations,  warranties and covenants of the
parties contained in this Agreement shall survive the Closing hereunder (even if
the other party knew or had reason to know of any misrepresentation or breach of
                                       26
<PAGE>

any  warranty at the time of Closing)  and continue in full force and effect for
the period of the applicable statute of limitations.

         6.2 Indemnification Provision for the Benefit of the Buyer and PENN. In
the event any Seller breaches any of his or its representations,  warranties and
covenants  contained herein,  provided that if the Buyer or PENN makes a written
claim for  indemnification  against such Seller within the  applicable  survival
period,  then such  Seller  agrees to  indemnify  the Buyer from and against the
entirety of any  adverse  consequences  the Buyer or PENN may suffer  (including
legal fees and any adverse  consequences  the Buyer may suffer  after the end of
the applicable  survival period) resulting from,  arising out of, or relating to
or caused by the breach.

         6.3  Indemnification  Provision for the Benefit of each Seller.  In the
event  Buyer or PENN  breaches  any of  their  representations,  warranties  and
covenants contained herein, provided that if one or more Sellers makes a written
claim for  indemnification  against Buyer or PENN within the applicable survival
period, then Buyer and PENN agree to indemnify such Sellers from and against the
entirety of any adverse  consequences  such Sellers may suffer  (including legal
fees and any  adverse  consequences  the Seller may suffer  after the end of the
applicable  survival period)  resulting from,  arising out of, or relating to or
caused by the breach.

                                    ARTICLE 7

                                  MISCELLANEOUS

          7.1 No Third Party Beneficiaries.  This Agreement shall not confer any
     right    or    remedy     upon    any     Persons     other     than    the
     -----------------------------   parties   hereto   and   their   respective
     successors and assigns.

         7.2 Entire  Agreement.  This  Agreement,  including  the  documents and
schedules referred to herein,  constitute the entire agreement among the parties
with  respect  to  the  subject   matter   hereof  and   supersedes   any  prior
understandings,  agreements or representations by and among the parties, written
or oral, to the extent they relate in any way to the subject matter hereof.

         7.3 Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties named herein and their respective successors
and permitted  assigns.  No party may assign either this Agreement or any of his
rights,  interests or  obligations  hereunder  without the prior approval of the
other parties, which consent shall not be unreasonably withheld.

         7.4  Counterparts.  This  Agreement  may be  executed  in  one or  more
counterparts each of which shall be deemed an original but all of which together
shall constitute one and the same instrument.

          7.5  Headings.   The  Section  headings  contained  are  inserted  for
     convenience  only and shall not affect in any way the  --------  meaning or
     interpretation of this Agreement.

         7.6  Notices.  All written  notices,  demands and  requests of any kind
which a party may be  required  or may  desire to serve  upon the other  parties
hereto in connection  with this Agreement  shall be delivered only by nationally
recognized  overnight  courier or other means of personal service which provides
written verification of receipt (a "Notice").  All Notices shall be addressed to
each of the parties to be served as follows:

               Buyer or PENN

                  Peter M. Carlino, Chairman
                  Wyomissing Professional Center
                  825 Berkshire Boulevard, Suite 200
                  Wyomissing, Pennsylvania  19610


               All Notices with a copy to:
                                       27
<PAGE>

              Robert P. Krauss, Esquire
              Mesirov Gelman Jaffe Cramer & Jamieson, LLP
              1735 Market Street, 38th Floor
              Philadelphia, Pennsylvania  19103-7598

          Sellers  and  Jarecki  (all such  Notices  to go to one or more of the
     following, as appropriate) -------------------

              James A. Reeder, with an address at:
              ---------------

              c/o Patton Boggs, L.L.P.
              2550 M Street, N.W.
              Washington, D.C.  20037

                                       28
<PAGE>



               Thomas Hale Boggs, Jr., with an address at:
               ----------------------
              c/o Patton Boggs, L.L.P.
              2550 M Street, N.W.
               Washington, D.C.  20037

              William C. Bryant, with an address at:
              -----------------

              c/o James A. Reeder
              Patton Boggs, L.L.P.
              2550 M. Street, N.W.
              Washington, D.C. 20037

              Sun Mountain Development, LLC, with an address at:

                c/o Gerald L. Diddy
                   8525 N. 84th Place
                   Scottsdale, AZ  85258-2401

              Timber Nation Limited Partnership or Jarecki, with an address at:

              c/o Falconwood Corporation
              565 Fifth Avenue, 3rd Floor
              New York, NY  10017

          All Notices to Timber  Nation  Limited  Partnership  or Jarecki with a
     copy to:

               Nancy A. Lieberman, Esquire
              Skadden, Arps, Slate, Meagher & Flom LLP
              Four Times Square

               New York, New York  10036

or other such  address as shall be furnished in writing by any such party to the
other  parties,  and such Notice shall be  effective  and be deemed to have been
given as of the date actually received.

                                       29
<PAGE>



         7.7 Governing Law. This Agreement shall be governed by and construed in
accordance  with the laws of the  Commonwealth  of  Pennsylvania  without giving
effect to any choice or conflict of law provisions or rules that would cause the
application  of the laws of any  jurisdiction  other  than the  Commonwealth  of
Pennsylvania.

         7.8  Amendment  and  Waivers.  No  amendment  of any  provision of this
Agreement  shall be valid  unless the same shall be in writing and signed by the
Buyer,  PENN,  each Seller and  Jarecki.  No waiver by any party of any default,
misrepresentation   or  breach  of  warranty  or  covenant  hereunder,   whether
intentional  or not,  shall be  deemed  to  extend  to any  prior or  subsequent
default, misrepresentation or breach of warranty or covenant hereunder or effect
in any way  any  right  arising  by  virtue  of any  prior  or  subsequent  such
occurrence.

         7.9  Severability.  Any term or  provision  of this  Agreement  that is
invalid or unenforceable  in any situation in any jurisdiction  shall not affect
the validity or enforceability of the remaining terms and provisions  hereof, or
the validity or  enforceability  of the offending term or provision in any other
situation or in any other jurisdiction.

         7.10  Expenses.  Each of the parties shall bear his or its own costs or
expenses  (including  legal fees and expenses)  incurred in connection with this
Agreement and the transaction contemplated hereby.

         7.11  Construction.  The  parties  have  participated  jointly  in  the
negotiation  and  drafting  of this  Agreement.  In the  event an  ambiguity  or
question of intent or interpretation  arises,  this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise  favoring or  disfavoring  any party by virtue of the authorship of any of
the provisions of this Agreement.  Any reference to any federal, state, local or
foreign  statute  or law  shall  be  deemed  to  also  refer  to all  rules  and
regulations promulgated thereunder,  unless the context requires otherwise.  The
word "including" shall mean including without limitation.

                                       30
<PAGE>



         IN WITNESS  WHEREOF the parties  hereto have executed this Agreement on
the date first written above.

                                    SELLERS:

                   __/s/Thomas Hale Boggs_______
                            Thomas Hale Boggs, Jr.
                            Resident of Maryland


                   _/s/William C. Bryant____________
                            William C. Bryant
                            Resident of Virginia


                   ___/s/James A. Reeder______________
                            James A. Reeder
                            Resident of Virginia

                   SUN MOUNTAIN DEVELOPMENT,
                   LLC, a Nevada Limited Liability Company


                   By:___/s/Gerald L. Diddy____________
                            Gerald L. Diddy, Member

                   TIMBER NATION LIMITED
                   PARTNERSHIP, a Delaware
                   Limited Partnership

                   By:__/s/Henry G. Jarecki_____________
                            Dr. Henry G. Jarecki,
                            General Partner


                   ____/s/Henry G. Jarecki_____
                            Dr. Henry G. Jarecki

                                       31
<PAGE>




         BUYER

         PENN NATIONAL GAMING OF
         WEST VIRGINIA, INC.


         By:_/s/William J. Bork______________
                  William J. Bork, President



         PENN NATIONAL GAMING, INC.



         By:__/s/Peter M. Carlino____________
                  Peter M. Carlino,
                  Chairman and
                  Chief Executive Officer



         PNGI CHARLES TOWN GAMING
         LIMITED LIABILITY COMPANY

         By:  PENN NATIONAL GAMING OF
                WEST VIRGINIA, INC.,
                 MANAGING MEMBER

         By:__/s/William J. Bork_____________
                  William J. Bork, President

                                       32
<PAGE>


                                    EXHIBIT A

                                     RELEASE

         For and in  consideration of the execution and delivery of that certain
Agreement for Sale of Membership Interests dated as of March 15, 2000 (the "Sale
Agreement") among the undersigned and others pertaining to the purchase and sale
of Membership  Interests in PNGI Charles Town Gaming Limited Liability  Company,
and a mutual Release being received by the  undersigned on the date hereof,  the
undersigned does hereby remise,  release and forever discharge PNGI Charles Town
Gaming Limited Liability  Company,  Penn National Gaming of West Virginia,  Inc.
and Penn  National  Gaming,  Inc.  and  their  respective  officers,  directors,
employees,  successors  and  assigns  (collectively  referred  to  herein as the
"Releasees")  of and from any and all actions  and causes of action,  claims and
demands  whatsoever,  at law or in equity,  whether known or unknown,  which the
undersigned  ever had,  now has, or which the  undersigned's  heirs,  executors,
administrators, successors or assigns, or any of them, hereinafter can, shall or
may have, for or by reason of or related to the undersigned having been a Member
of PNGI Charles Town Gaming  Limited  Liability  Company or any rights under the
Second  Amended and  Restated  Operating  Agreement  of PNGI Charles Town Gaming
Limited  Liability  Company  dated as of October 17, 1997 or of the  undersigned
arising out of or with respect to having been such a Member,  from the beginning
of the  world  to the  date  hereof,  provided,  however,  that  notwithstanding
anything to the contrary in this Release,  none of the undersigned are releasing
any of the  Releasees  from any of their  duties or  obligations  under the Sale
Agreement.

         IN WITNESS  WHEREOF,  the  undersigned  has executed this Release as of
this 15th day of March, 2000.

                  ___/s/Thomas Hale Boggs_________
                           Thomas Hale Boggs, Jr.

                  ____/s/William C. Bryant____
                           William C. Bryant

                  ____/s/James A. Reeder_____
                           James A. Reeder

                  SUN MOUNTAIN DEVELOPMENT,
                  LLC

                  By:/s/Gerald L. Diddy

Gerald L. Diddy, Member

                                         TIMBER NATION LIMITED
              PARTNERSHIP

                                         By:_/s/Dr. Henry G. Jarecki _
                                         Dr. Henry G. Jarecki, General Partner

                                       33
<PAGE>


                                    EXHIBIT B

                                     RELEASE

         For and in  consideration of the execution and delivery of that certain
Agreement for Sale of Membership Interests dated as of March 15, 2000 (the "Sale
Agreement") among the undersigned and others pertaining to the purchase and sale
of Membership  Interests in PNGI Charles Town Gaming Limited Liability  Company,
and a mutual Release being received by the  undersigned on the date hereof,  the
undersigned does hereby remise, release and forever discharge Thomas Hale Boggs,
Jr., William C. Bryant, James A. Reeder, Sun Mountain  Development,  LLC, Timber
Nation Limited Partnership and their respective  officers,  directors,  members,
partners, employees,  successors and assigns (collectively referred to herein as
the  "Releasees")  of and from any and all actions and causes of action,  claims
and demands whatsoever, at law or in equity, whether known or unknown, which the
undersigned ever had, now has, or which the undersigned's successors or assigns,
or any of them,  hereinafter  can,  shall or may  have,  for or by  reason of or
related  to the  Releasees  having  been a Member of PNGI  Charles  Town  Gaming
Limited Liability Company, including, but not limited to, any obligations of the
Releasees  with respect to any  financial or other  obligations  of PNGI Charles
Town Gaming Limited  Liability Company or any obligations of the Releasees under
that certain  Second  Amended and Restated  Operating  Agreement of PNGI Charles
Town Gaming Limited Liability Company dated October 17, 1997, as amended, or any
rights of the  Releasees  arising  out of or with  respect to having been such a
Member, from the beginning of the world to the date hereof,  provided,  however,
that  notwithstanding  anything  to the  contrary in this  Release,  none of the
undersigned  are  releasing  any of the  Releasees  from any of their  duties or
obligations under the Sale Agreement.

          IN WITNESS  WHEREOF,  the  undersigned has executed this Release as of
     this 15th day of March, 2000.


PENN NATIONAL GAMING OF WEST VIRGINIA, INC.

 By:/s/William J. Bork

William J. Bork, President

        PENN NATIONAL GAMING, INC.

        By: /s/Peter M. Carlino
                 Peter M. Carlino,
                 Chairman and
                 Chief Executive Officer

        PNGI CHARLES TOWN GAMING
        LIMITED LIABILITY COMPANY
        By:  PENN NATIONAL GAMING OF
               WEST VIRGINIA, INC.,
                                             MANAGING MEMBER
        By:__/s/William J. Bork
                 William J. Bork, President

                                       34
<PAGE>



                                 SCHEDULE 1.2.1

I.       Cash portion of the Purchase Price:
         ----------------------------------


Name                                   Column A    Column B   Column C

Thomas Hale Boggs, Jr.     2.9167%   $1,590,909  $(149,888)  1,441,021
William C. Bryant            1.25%      681,818    (41,816)    640,002
James A. Reeder            2.9166%    1,590,909   (149,888)  1,441,021
Sun Mountain
Development, LLC             1.00%      545,455    (30,096)    515,359
Timber Nation Limited
Partnership                2.9167%    1,590,909              1,590,909
Dr. Henry G. Jarecki                    371,688                371,688
Total                          11%    6,000,000      _____   6,000,000

II.      Wire Instructions

                           Phone            Fax                   Wire Amount

Thomas Boggs               202-457-6040     202-457-6315           $1,441,021
First Union Natl Bank
ABA#                                        054001220
A/C Thomas Boggs
A/C#                                        100050335274
James Reeder               202-457-5616     202-457-6315           $1,441,021
Chase Manhattan Bank
ABA #                                       021000021
A/C James A. Reeder
A/C #                                       066-296390
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<PAGE>
                           Phone            Fax                   Wire Amount
William L. Bryant          703-430-3100     703-444-1052          $   640,002
First Union Natl Bank
Herndon Junction
47040 Community Plaza
Sterling, VA 20164
ABA#                                        051400549
A/C William L. Bryant
A/C#                                        1050000847115
Jerry Diddy
Sun Mountain Development   480-948-6725     480-948-0065          $  515,359
Western Security Bank
7401 E. Camelback Road
Scottsdale, AZ 85251
ABA#                                        122105184
A/C Sun Mountain Development, LLC
A/C#                                        6376701021
Timber National LP         212-984-1444     212-984-1442          $1,590,909
Chase Manhattan Bank
ABA#                                        021000021
A/C Henry G. Jarecki
A/C#                                        910-1-590157
Dr. Henry G. Jarecki       212-984-1444     212-984-1442          $  371,688
Chase Manhattan Bank

ABA#                                        021000021
A/C Henry G. Jarecki

A/C#                                        910-1-590157


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