<PAGE>
Exhibit 10(a)












                       ASSET PURCHASE AGREEMENT

                     dated as of October 31, 1998

                           by and between

                          PP&L GLOBAL, INC.

                               and

                     THE MONTANA POWER COMPANY

<PAGE>
                        TABLE OF CONTENTS

	This Table of Contents is not part of the Agreement to 
which it is attached but is inserted for convenience only.

                         ARTICLE I
                SALE OF ASSETS AND CLOSING

1.01  The Sale............................................... 1
1.02  The Liabilities........................................ 8
1.03  Purchase Price; Allocation.............................12
1.04  Purchase Price Adjustment..............................12
1.05  Closing; Additional Purchase Price Payments............14
1.06  Prorations.............................................16
1.07  Further Assurances.....................................17
1.08  Third Party Consents...................................18
1.09  Insurance Proceeds.....................................19
1.10  Inclusion/Exclusion of Certain Assets..................19

                           ARTICLE II

              REPRESENTATIONS AND WARRANTIES OF SELLER

2.01  Corporate Existence of Seller..........................23
2.02  Authority..............................................23
2.03  No Conflicts...........................................23
2.04  Governmental Approvals and Filings.....................24
2.05  Reports................................................25
2.06  Taxes..................................................25
2.07  Legal Proceedings......................................25
2.08  Compliance with Laws and Orders........................26
2.09  Benefit Plans; ERISA...................................26
2.10  Real Property..........................................28
2.11  Tangible Personal Property.............................29
2.12  Intellectual Property Rights...........................29
2.13  Contracts..............................................30
2.14  Licenses...............................................31
2.15  Insurance..............................................32
2.16  Labor Relations........................................32
2.17  Environmental Matters..................................33
2.18  Absences of Condemnation Proceedings...................34
2.19  Regulation as a Utility................................34
2.20  Brokers................................................34
2.21  Year 2000..............................................35
2.22  Disclaimers Regarding Assets...........................35

                           ARTICLE III

             REPRESENTATIONS AND WARRANTIES OF PURCHASER

3.01  Corporate Existence....................................35
3.02  Authority..............................................36
3.03  No Conflicts...........................................36
3.04  Governmental Approvals and Filings.....................37
3.05  Legal Proceedings......................................37
3.06  Compliance with Laws and Orders........................37
3.07  Regulation as a Utility................................38
3.08  Brokers................................................38
3.09  Financing..............................................38
3.10  Financial Statements...................................38
3.11  Opportunity to Inspect Assets..........................38

                          ARTICLE IV

                      COVENANTS OF SELLER

4.01  Regulatory and Other Approvals.........................39
4.02  HSR Filings............................................40
4.03  Investigation by Purchaser.............................40
4.04  No Solicitations.......................................41
4.05  Conduct of Business....................................41
4.06  Employee Matters.......................................42
4.07  Certain Restrictions...................................44
4.08  Security Deposits......................................45
4.09  Delivery of Books and Records, etc.; Removal of Property
      .......................................................45
4.10  Fulfillment of Conditions..............................46
4.11  Observation, Inspection and Participation..............46
4.12  Notice of Breach.......................................47
4.13  Bridge Financing Fees..................................47
4.14  Special Maintenance and Capital Expenditures...........47

                          ARTICLE V

                    COVENANTS OF PURCHASER

5.01  Regulatory and Other Approvals.........................48
5.02  HSR Filings............................................49
5.03  Employees..............................................49
5.04  PPUC Approval for Holding Company......................54
5.05  Notice of Breach.......................................54
5.06  Fulfillment of Conditions..............................54
5.07  Tax-Exempt Bond Financed Pollution Control Facilities..54
5.08  Purchaser Financing....................................55

                          ARTICLE VI

               CONDITIONS TO OBLIGATIONS OF PURCHASER

6.01  Representations and Warranties.........................56
6.02  Performance............................................56
6.03  Officers' Certificates.................................56
6.04  Orders and Laws........................................56
6.05  Regulatory Consents and Approvals......................56
6.06  Third Party Consents...................................57
6.07  Colstrip Rights of First Refusal.......................57
6.08  No Seller Material Adverse Effect......................57
6.09  Proceedings............................................57
6.10  Deliveries.............................................57
6.11  Colstrip Operations Arrangements.......................58
6.12  Purchaser Financing....................................58
6.13  Opinion of Counsel.....................................58

                            ARTICLE VII

                 CONDITIONS TO OBLIGATIONS OF SELLER

7.01  Representations and Warranties.........................58
7.02  Performance............................................58
7.03  Officers' Certificates.................................59
7.04  Orders and Laws........................................59
7.05  Regulatory Consents and Approvals......................59
7.06  Third Party Consents...................................59
7.07  Collective Bargaining Agreements.......................59
7.08  No Purchaser Material Adverse Effect...................59
7.09  Proceedings............................................60
7.10  Colstrip Rights of First Refulsal......................60
7.11  Opinion of Counsel.....................................60
7.12  Deliveries.............................................60

                           ARTICLE VIII

                  TAX MATTERS AND POST-CLOSING TAXES

8.01  Transfer Taxes.........................................61
8.02  Returns with Respect to Prorated Taxes.................61



                           ARTICLE IX

                SURVIVAL; NO OTHER REPRESENTATIONS

9.01  Survival of Representations, Warranties, Coventants and
      Agreements............................................62
9.02  No Other Representations..............................63

                           ARTICLE X

                        INDEMNIFICATION

10.01  Other Indemnification.................................63
10.02  Method of Asserting Claims............................67
10.03  Exclusivity...........................................71
10.04  Purchaser's Release of Seller under the Colstrip 
       Contracts.............................................71

                           ARTICLE XI

                           TERMINATION

11.01  Termination...........................................72
11.02  Effect of Termination.................................73

                            ARTICLE XII

                            DEFINITIONS

12.01  Definitions............................................74

                            ARTICLE XIII

                            MISCELLANEOUS

13.01  Notices................................................96
13.02  Bulk Sales Act.........................................97
13.03  Entire Agreement.......................................97
13.04  Expenses...............................................98
13.05  Public Announcements...................................98
13.06  Confidentiality........................................98
13.07  Waiver.................................................99
13.08  Amendment.............................................100
13.09  No Third Party Beneficiary............................100
13.10  No Assignment; Binding Effect.........................100
13.11  Headings..............................................101
13.12  Invalid Provisions....................................101
13.13  Governing Law........................................101
13.14  Counterparts.........................................101


EXHIBITS

     Exhibit A     General Assignment and Bill of Sale
     Exhibit B     Assumption Agreement
     Exhibit C     Pollution Control Facilities
     Exhibit D     Officer's Certificate of Seller
     Exhibit E     Secretary's Certificate of Seller
     Exhibit F-1   Colstrip Unit Number 3 Wholesale Transition 
                   Service Agreement
     Exhibit F-2   Non-Colstrip Unit Number 3 Wholesale 
                   Transition Service Agreement
     Exhibit G     Interconnection Agreement
     Exhibit H-1   Opinion of Counsel to Seller
     Exhibit H-2   Opinion of General Counsel of Seller
     Exhibit H-3   Opinion of Outside Montana counsel to Seller
     Exhibit I     Officer's Certificate of Purchaser
     Exhibit J     Secretary's Certificate of Purchaser
     Exhibit K     Opinion of Counsel to Purchaser
     Exhibit L     Confirmation of Reciprocal Sharing Agreement

                         SCHEDULES

	Schedule I    Asset Groups
	Schedule II   Pre-Closing Known Environmental Liabilities



<PAGE>
	This ASSET PURCHASE AGREEMENT dated as of October 31, 1998 
is made and entered into by and between PP&L Global, Inc., a 
Pennsylvania corporation ("Purchaser"), and The Montana Power 
Company, a Montana corporation ("Seller").  Capitalized terms 
not otherwise defined herein have the meanings set forth in 
Section 12.01.

	WHEREAS, Seller and its subsidiaries engage in a number of 
diversified energy and communication related businesses;

	WHEREAS, Seller's principal business is the regulated 
utility operations involving the generation, purchase, 
transmission and distribution of electricity and the production, 
purchase, transportation and distribution of natural gas in 
Montana; and

	WHEREAS, Seller desires to sell, transfer and assign to 
Purchaser, and Purchaser desires to purchase and acquire from 
Seller, the Thermal Units (including the Colstrip 4 Transmission 
Assets) and the Hydro Units (excluding the Milltown 
Hydroelectric Project) (each as defined herein and together, the 
"Generating Assets") and certain other assets of Seller relating 
to the operation of the Generating Assets, and in connection 
therewith, Purchaser has agreed to assume certain of the 
liabilities of Seller relating to such assets, all on the terms 
set forth herein;

	WHEREAS, on the date hereof PP&L Resources, Inc., a 
Pennsylvania corporation and the parent of Purchaser ("Parent"), 
has entered into an Equity Contribution Agreement (the 
"Contribution Agreement") with Purchaser and Seller;

	NOW, THEREFORE, in consideration of the mutual covenants 
and agreements set forth in this Agreement, and for other good 
and valuable consideration, the receipt and sufficiency of which 
are hereby acknowledged, the parties hereto agree as follows:


                         ARTICLE I

                SALE OF ASSETS AND CLOSING

	1.01  The Sale.  (a) On the terms and subject to the 
conditions set forth in this Agreement, Seller will sell, 
transfer, convey, assign and deliver to Purchaser, and Purchaser 
will purchase and pay for, at the Closing, free and clear of all 
Liens other than Permitted Liens (as such term is defined with 
respect to any date after the Closing), all of Seller's right, 
title and interest in, to and under the Generating Assets and 
the Assets and Properties of Seller used or held for use 
principally in connection with the operation of the Generating 
Assets, except as otherwise provided in Section 1.01(b), as the 
same shall exist as of the Closing including, but not limited to 
the following (collectively with any proceeds and awards 
referred to in Section 1.09, the "Assets"):

	(i)  Real Property.  The real property (including all 
buildings, structures, fixtures and other improvements thereon) 
used or held for use in connection with or related to the 
operation of the Generating Assets, as described in Section 
1.01(a)(i) of the Disclosure Schedule, which real property is 
held in fee, easement, permit interest or other interest, as the 
case may be (the "Real Property");

	(ii)  Real Property Leases.  (A) The leases and subleases 
of real property used or held for use in connection with or 
related to the operation of the Generating Assets, as described 
in Section 1.01(a)(ii)(A) of the Disclosure Schedule, as to 
which Seller is the lessor or sublessor and (B) the leases and 
subleases of real property used in connection with or related to 
the operation of the Generating Assets, as described in Section 
1.01(a)(ii)(B) of the Disclosure Schedule, as to which Seller is 
the lessee or sublessee, together with any options to purchase 
the underlying property and leasehold improvements thereon, and 
in each case all other rights, subleases, licenses, permits, 
deposits and profits appurtenant to or related to such leases 
and subleases (the leases and subleases described in 
subclauses (A) and (B),  the "Real Property Leases");

	(iii)  Inventory.  All inventories of fuels, supplies, 
materials and spares used or held for use in connection with the 
operation of the Generating Assets located on the Real Property 
or the real property subject to the Real Property Leases, held 
for use principally in connection with, or in transit to the 
Generating Assets on the date of Closing (a listing of the fuel 
inventories, as of September 30, 1998, is included in Section 
1.01(a)(iii) of the Disclosure Schedule) (the "Inventory");

	(iv)  Tangible Personal Property.  All machinery, 
equipment, vehicles, furniture and other personal property 
located where the operation of the Generating Assets is 
conducted, or used or held for use in connection with the 
operation of the Generating Assets (including but not limited to 
the items listed in Section 1.01(a)(iv) of the Disclosure 
Schedule), together with all buildings and structures 
("Improvements") pertaining to Colstrip Units 3 and 4 (as to 
Colstrip Unit 4 only to the extent of Seller's rights therein), 
including the facilities shared by Colstrip Units 1, 2, 3 and 4 
relating thereto, as to those Improvements which have been 
severed from the Real Property and are to be treated as personal 
property, and all warranties against manufacturers or vendors 
relating thereto, to the extent that such warranties are freely 
transferable (the "Tangible Personal Property");

	(v)  Business Contracts.  All contracts, agreements and 
personal property leases (other than the Real Property Leases, 
the Transferable Permits, the Fuel Contracts, the Colstrip 
Contracts and the Power Purchase/Exchange Agreements) used 
primarily in the operation of the Generating Assets that are 
listed in Section 1.01(a)(v) of the Disclosure Schedule (the 
"Business Contracts");

	(vi)  Transferable Permits.  All Licenses and Environmental 
Permits owned or held by Seller and used or held for use in 
connection with the operation of the Generating Assets that are 
transferable by Seller to Purchaser as listed in Section 
1.01(a)(vi) of the Disclosure Schedule and the water rights 
owned or held by Seller, whether or not such rights are created 
or evidenced by a License, and used or held for use in 
connection with the operation of the Generating Assets including 
those listed in Section 1.01(a)(vi) of the Disclosure Schedule 
(the "Transferable Permits");

	(vii)  Intangible Personal Property.  All Intellectual 
Property used or held for use principally in connection with the 
operation of the Generating Assets and all rights, privileges, 
claims, causes of action and options relating or pertaining to 
the operation of the Generating Assets or the Assets, including 
but not limited to the items listed in Section 1.01(a)(vii) of 
the Disclosure Schedule (the "Intangible Personal Property");

(viii)  Security Deposits.  All security deposits deposited 
by or on behalf of Seller as lessee or sublessee under the Real 
Property Leases (the "Tenant Security Deposits");

(ix)  Prepaid Expenses.  Except for prepaid expenses and 
deposits of Seller attributable to any Excluded Asset or 
Retained Liabilities, all prepaid expenses, progress payments 
and deposits of or by Seller, rights to receive a prepaid 
expense, deposit or progress payment, and cash in transit that 
constitutes a prepaid expense, progress payment or deposit, 
relating to the Assets or the ownership, operation and 
maintenance of the Generating Assets;

	(x)  Fuel Contracts.  All of the fuel contracts listed in 
Section 1.01(a)(x) of the Disclosure Schedule (the "Fuel 
Contracts");

	(xi)  Colstrip Contracts.  Seller's undivided interests in, 
and all of Seller's rights under the Contracts relating to, the 
Thermal Units listed in Section 1.01(a)(xi) of the Disclosure 
Schedule (the "Colstrip Contracts");

	(xii)  Power Purchase/Exchange Agreements.  All of the 
Power Purchase/Exchange Agreements;

	(xiii)  Allowance and Emission Reduction Credits.  All of 
the allowances and/or emission reduction credits described in 
Section 1.01(a)(xiii) of the Disclosure Schedule;

	(xiv)  Personnel Records of Transferring Employees.  All 
personnel records of the Transferring Employees;

	(xv)  Warranties.  Any other warranties and indemnities 
given by third parties relating to the Assets or to the 
ownership, operation and maintenance of the Generating Assets 
other than in connection with any Excluded Assets or Retained 
Liabilities;

	(xvi)  Certain Insurance Policies of Transferring 
Employees.  All life insurance policies of Transferring 
Employees owned by Seller, to the extent such policies are 
transferable to Purchaser without any cost to Seller as 
described in Section 1.01(a)(xvi) of the Disclosure Schedule 
(the "Transferable Insurance Policies");

	(xvii)  Books and Records.  All books, operating and 
maintenance records, operating, safety and maintenance manuals, 
engineering or design plans, drawings, blue prints and as-built 
plans, specifications, procedures and similar items of Seller 
relating specifically to the aforementioned assets, other than 
the minute books, stock transfer books and corporate seal of 
Seller (the "Business Books and Records");

	(xviii)  Colstrip 4 Transmission Assets.  Subject to 
Section 1.10, the Colstrip 4 Transmission Assets as described in 
Section 1.01(a)(xviii) of the Disclosure Schedule ("Colstrip 4 
Transmission Assets"); and

	(xix)  Colstrip 1, 2 and 3 Transmission Assets.  Subject to 
Section 1.10, the Colstrip 1, 2 and 3 Transmission Assets as 
described in  Section 1.01(a)(xix) of the Disclosure Schedule 
("Colstrip 1, 2 and 3 Transmission Assets").

	To the extent any of the Business Books and Records are 
items susceptible to duplication and are either (x) used in 
connection with any of Seller's businesses other than the 
operation of the Generating Assets or (y) are required by Law to 
be retained by Seller, Seller may deliver photostatic copies or 
other reproductions from which, in the case of Business Books 
and Records referred to in clause (x), information solely 
concerning Seller's businesses other than the operation of the 
Generating Assets has been deleted.  To the extent that any 
Contract to be transferred hereunder to Purchaser is also 
utilized by or is for the benefit of any of Seller's businesses 
other than the operation of the Generating Assets, the rights 
and obligations under such Contracts shall be to the extent 
practicable allocated between the operation of the Generating 
Assets and such other businesses in a fair and equitable manner 
that is reasonably satisfactory to the parties.  Prior to the 
Closing, Seller will cooperate with Purchaser to transfer the 
computer equipment and software needed to operate the Generating 
Assets but that can not be transferred pursuant to Section 
1.01(a)(vii) due to restrictions in third party software 
licenses and that are listed on Section 1.01(a) of the 
Disclosure Schedule or are used by Seller in connection with its 
other businesses.  Any computer equipment and software which 
cannot be transferred to Purchaser by the Closing shall be 
referred to herein as the "Non-Transferable Software."  After 
the Closing, Seller (subject to restrictions in third party 
software licenses) will process certain data of Purchaser 
necessary to operate the Generating Assets on commercially 
reasonable terms to be mutually agreed upon by Purchaser and 
Seller; provided, however, such terms shall include the 
following:  (x) Seller shall process such data for the period 
commencing on the Closing and ending two (2) years after the 
Closing, provided that Purchaser shall have no right to modify 
or enhance the Non-Transferrable Software or to make derivative 
works from the Non-Transferrable Software; and (y) Purchaser 
agrees to pay Seller for all costs relating to future upgrades, 
software, hardware or otherwise (including Year 2000 costs) 
relating to the Non-Transferrable Software that are done at 
Purchaser's request (provided that Seller shall not be obligated 
to comply with any such request) and Seller agrees to assume any 
Liabilities arising therefrom.

	(b)  Excluded Assets.  Notwithstanding anything in this 
Agreement to the contrary, the Assets shall not include the 
following assets of Seller (the "Excluded Assets"):

          (i)  Cash.  All cash, commercial paper, certificates 
of deposit and other bank deposits, treasury bills and other 
cash equivalents;

         (ii)  Investments. Certificates of deposit, shares of 
stock, securities, evidences of Indebtedness, interest in joint 
ventures, partnerships, limited liability companies and other 
entities;

        (iii)  Tax Refunds.  All refunds or credits, if any, of 
Taxes relating to the Assets due to Seller attributable to any 
period ending on or prior to the Closing;

         (iv)  Real and Personal Property.  The real or personal 
property located at the sites where the Generating Assets are 
located described in Section 1.01(b)(iv) of the Disclosure 
Schedule, the delineation and composition of which shall be 
subject to the Separation Document;

          (v)  Corporate Records.  The minute books, stock 
transfer books and corporate seal of Seller;

         (vi)  Litigation Claims.  Any rights (including 
indemnification) and claims and recoveries under litigation of 
Seller against third parties attributable to the period on or 
prior to the Closing except to the extent relating to the 
Assumed Liabilities;

        (vii)  Excluded Obligations.  The rights of Seller in, 
to and under all Contracts of any nature, the obligations of 
Seller under which are not expressly assumed by Purchaser 
pursuant to Section 1.02(b);

       (viii)  Tradename and Logo.  All tradenames, trademarks, 
service marks or logos owned by Seller or its Subsidiaries 
including all of Seller's right, title and interest in, to and 
under the name "The Montana Power Company" or any related or 
similar trade names, trademarks, service marks or logos; 
provided, however, that Purchaser shall be authorized to 
continue to use for internal purposes only and not for public 
use, materials bearing such names, trademarks or logos (such as 
employee manuals) used by Seller prior to the Closing for up to 
six (6) months following the Closing;

         (ix)  Transmission, Distribution, Communication and 
Software Assets.  Subject to Section 1.01(a)(xviii), the 
electric and gas transmission and distribution, substation and 
communication facilities located at the sites where the 
Generating Assets are located and related support equipment and 
gas rights, interconnection rights, rights-of-way and corridor 
easements related to such facilities, each as described in 
Section 1.01(b)(ix) of the Disclosure Schedule; provided that 
communications facilities and related support equipment that are 
used solely in connection with the Generating Assets shall be a 
part of the Assets unless identified in Section 1.01(b)(ix) of 
the Disclosure Schedule, and Purchaser shall be entitled to use 
communications facilities and related support equipment that are 
also utilized by Seller in connection with Seller's businesses 
other than the operation of the Generating Assets pursuant to a 
service agreement to be entered into between Purchaser and 
Seller at or prior to the Closing on commercially reasonable 
mutually satisfactory terms ("Communications Service 
Agreement").

          (x)  Accounts Receivable.  All trade accounts 
receivable and all notes, bonds and other evidences of 
Indebtedness of and rights to receive payments arising out of 
sales occurring in connection with the operation of the 
Generating Assets prior to the Closing and the security 
agreements related thereto, including any rights of Seller with 
respect to any third party collection procedures or any other 
Actions or Proceedings which have been commenced in connection 
therewith;

         (xi)  Insurance.  Subject to Section 1.01(a)(xvi), life 
insurance policies of Transferring Employees and all other 
insurance policies relating to the operation of the Generating 
Assets;

        (xii)  Employee Benefit Plans.  Except as set forth in 
Section 5.03, all assets owned or held by any Benefit Plans;

       (xiii)  Other Personnel Records.  All personnel records 
other than the Transferring Employee records or other records, 
the disclosure of which is required by Law, legal process or 
subpoena;

        (xiv)  All Other Assets.  All other Assets and 
Properties owned by Seller or its Subsidiaries not used in the 
operation of the Generating Assets; and

         (xv)  Other. Seller's rights under this Agreement and 
the Operative Agreements.

	1.02  Liabilities.  (a)  Assumed Liabilities.  In 
connection with the sale, transfer, conveyance, assignment and 
delivery of the Assets pursuant to this Agreement, on the terms 
and subject to the conditions set forth in this Agreement, at 
the Closing, Purchaser will assume and agree to pay, perform and 
discharge when due all of the following Liabilities of Seller, 
direct or indirect, known or unknown, absolute or contingent, 
which arise and are attributable to the period after the date of 
the Closing and relate solely to the Assets or which arose and 
relate to the period on or prior to the date of the Closing and 
are specifically referred to in this Section 1.02(a) as being 
assumed by Purchaser (in all cases, except for Seller's 
Liabilities in connection with the Pollution Control Bonds and 
Liabilities constituting Retained Liabilities) (the "Assumed 
Liabilities"):

	(i)  Real Property Lease Obligations.  All Liabilities of 
Seller under the Real Property Leases arising and to be 
performed after the date of the Closing, and excluding any such 
Liabilities arising or to be performed on or prior to the date 
of the Closing;

	(ii)  Tangible Personal Property Obligations.  All 
Liabilities of Seller under any Contract related to the Tangible 
Personal Property arising and to be performed after the date of 
the Closing, and excluding any such Liabilities arising or to be 
performed on or prior to the date of the Closing;

	(iii)  Liabilities under Business Contracts and 
Transferable Permits.  All Liabilities of Seller under the 
Business Contracts and Transferable Permits, to the extent 
transferred to Purchaser, arising and to be performed after the 
date of the Closing, and excluding any such Liabilities arising 
or to be performed on or prior to the date of the Closing;

	(iv)  Security Deposits.  All Liabilities of Seller with 
respect to any security deposit held by Seller as lessor or 
sublessor under the Real Property Leases, to the extent and only 
to the extent of the respective amount of the security deposit 
delivered to Purchaser at the date of the Closing with respect 
to any such Real Property Lease (the "Landlord Security 
Deposits"); 

	(v)  Fuel Contracts, Colstrip Contracts and Power 
Purchase/Exchange Agreements.  All Liabilities of Seller under 
the Fuel Contracts, the Colstrip Contracts and the Power 
Purchase/Exchange Agreements arising and to be performed after 
the date of the Closing, and excluding any such Liabilities 
arising or to be performed on or prior to the date of the 
Closing;

	(vi)  Pre-Closing Colstrip Liabilities.  All Liabilities of 
Seller described in Section 1.02(a)(vi) of the Disclosure 
Schedule;.

	(vii)  Transferring Employee Liabilities.  All Liabilities 
of Seller with respect to the Transferring Employees for which 
Purchaser is responsible pursuant to Section 5.03; 

	(viii)  Transferable Insurance Policy Liabilities.  All 
Liabilities of Seller with respect to the Transferable Insurance 
Policies to the extent transferred to Purchaser; 

	(ix)  Certain Employment Agreement Liabilities.  All 
Liabilities of Seller under the Employment Agreements described 
on Section 1.02(a)(ix) of the Disclosure Schedule ("Change of 
Control Liabilities"); and

	(x)  Environmental Liabilities.  Subject to Section 
10.01(b), all Environmental Liabilities; provided, however, that 
nothing set forth in this Section 1.02(a) shall require 
Purchaser to assume any Liability for (x) payment of any fines 
or penalties imposed by a Governmental or Regulatory Authority 
relating to the ownership operation and maintenance of the 
Generating Assets on or prior to the date of the Closing 
("Environmental Fines and Penalties"), (y) any Off-Site 
Environmental Liabilities, or (z) any Pre-Closing Environmental 
Liabilities related to the Thompson Falls Hydroelectric Project 
(including the reservoir)if, at any time on or after the Bid 
Date, the DEQ changes the Thompson Falls Environmental Status or 
requires Purchaser to remediate metals contamination that 
occurred on or prior to the date of the Closing at the Thompson 
Falls Hydroelectric Project (including the reservoir) ("Thompson 
Falls Liabilities").

	Except with respect to Environmental Liabilities that are 
Assumed Liabilities, Assumed Liabilities shall not include 
Liabilities to the extent such Liabilities, but for a breach or 
default by Seller of its obligations, would have been paid, 
performed or otherwise discharged specifically by their terms or 
the terms hereof on or prior to the Closing as it relates to the 
Assets or to the extent the same arise out of any such breach or 
default.

	(b)  Retained Liabilities.  Except for the Assumed 
Liabilities, Purchaser shall not assume by virtue of this 
Agreement or the transactions contemplated hereby, and shall 
have no liability for any Liabilities of Seller including 
Seller's Liabilities under this Agreement and the Operative 
Agreements and including, but not limited to the following (the 
"Retained Liabilities"):

	(i)  any Liabilities of Seller in connection with the 
Pollution Control Bonds or claims by bondholders;

    (ii)  any Environmental Fines and Penalties;

   (iii)  any Off-Site Environmental Liabilities;

    (iv)  any Thompson Falls Liabilities;

     (v)  any Liabilities of Seller in respect of any Excluded 
Assets;

    (vi)  any Liabilities of Seller for Taxes;

   (vii)  any Liabilities of Seller with respect to commitments 
for the purchase or sale of power or fuel, other than as 
provided in Section 1.02(a);

  (viii)  except as set forth in Section 5.03, any Liabilities 
relating to Seller's employment of, termination of employment 
of, provision of benefits to, and compensation of employees 
employed at the Assets, including but not limited to an Employee 
whose employment principally relates to any Assets, and any 
personal injury, discrimination, harassment, wrongful discharge 
or other wrongful employment practice, unfair labor practice, 
claims for benefits (including claims arising under ERISA or 
workers' compensation laws), or similar claims or causes of 
action, known or unknown, absolute or contingent, asserted or 
unasserted, of any such person arising out of acts or omissions 
occurring or otherwise attributable to the period on or before 
the Closing; and

    (ix)  except as set forth in Section 5.03, any Liabilities 
of Seller relating to any Benefit Plan, or to any "employee 
pension benefit plan" (as defined in Section 3(2) of ERISA) of 
Seller, whether or not terminated, established, maintained or 
contributed to by Seller or any of its ERISA Affiliates at any 
time, or to which any of Seller or any of its ERISA Affiliates 
are or have been obligated to contribute to at any time ("ERISA 
Affiliate Plan"); including any liability (A) to the Pension 
Benefit Guaranty Corporation under Title IV of ERISA; (B) 
relating to a multiemployer plan; (C) with respect to non-
compliance with COBRA or HIPAA; (D) with respect to 
noncompliance with any other applicable provision of the Code, 
ERISA or any other applicable laws; or (E) with respect to any 
suit, proceeding or claim which is brought against Purchaser 
with respect to any such Benefit Plan or ERISA Affiliate Plan, 
against any such Benefit Plan or ERISA Affiliate Plan, or 
against any fiduciary or former fiduciary of any such Benefit 
Plan or ERISA Affiliate Plan.

	1.03  Purchase Price; Allocation.  (a)  Purchase Price.  
Subject to any adjustment required pursuant to Section 1.10, the 
aggregate purchase price for the Assets shall be an amount equal 
to the sum of (x) the Base Purchase Price, as may be adjusted 
pursuant to Section 1.10, (y) the Adjustment Amount and, (z) if 
applicable, the Colstrip 4 Transmission Amount (collectively, 
the "Purchase Price"), payable in immediately available United 
States funds at the Closing in the manner provided in Section 
1.05 or thereafter (as provided in Section 1.04). 

	(b)  Allocation of Purchase Price.  Purchaser and Seller 
shall negotiate in good faith prior to the Closing and determine 
the allocation of the consideration paid by Purchaser for the 
Assets.  Each party hereto agrees (i) that any such allocation 
shall be consistent with the requirements of Section 1060 of the 
Code and the regulations thereunder, (ii) to complete jointly 
and to file separately Form 8594 with its Federal Income Tax 
Return consistent with such allocation for the tax year in which 
the Closing occurs and (iii) that no party will take a position 
on any income, transfer or gains Tax Return, before any 
Governmental or Regulatory Authority charged with the collection 
of any such Tax or in any judicial proceeding, that is in any 
manner inconsistent with the terms of any such allocation 
without the consent of the other party.

	1.04  Purchase Price Adjustment.  (a)  Within 30 days after 
the Closing, Seller shall prepare and deliver to Purchaser a 
statement (each, an "Adjustment Statement") which reflects (i) 
the net book value, as reflected on the books of Seller as of 
the Closing of all fuel inventory (FERC account no. 151) and 
stores inventory (FERC account no. 154) used at or in connection 
with the Thermal Units or the Hydro Units, as the case may be 
(the "Inventory Adjustment Amount"), and (ii) the Maintenance 
and Capital Expenditures Amount applicable to the Thermal Units 
or the Hydro Units, as the case may be.  The Inventory 
Adjustment Amount and the Maintenance and Capital Expenditures 
Amount for the Closing is referred to collectively as the 
"Adjustment Amount."  The Inventory Adjustment Amount will be 
based on an inventory survey conducted by Seller within five 
days prior to the Closing consistent with Seller's current 
inventory procedures (the "Inventory Survey").  Seller will 
permit an employee, or representative, of Purchaser to observe 
the Inventory Survey.  Each Adjustment Statement shall be 
prepared using the same generally accepted accounting 
principles, policies and methods as Seller has historically used 
in connection with the calculation of the items reflected on 
such Adjustment Statement.  Purchaser agrees to cooperate with 
Seller in connection with the preparation of each Adjustment 
Statement and related information, and shall provide to Seller 
such books, records and information as may be reasonably 
requested from time to time.

	(b)  Purchaser may dispute an Inventory Adjustment Amount 
or a Maintenance and Capital Expenditures Amount; provided, 
however, that Purchaser shall notify Seller in writing of the 
disputed amount, and the basis of such dispute, within ten (10) 
Business Days of Purchaser's receipt of the applicable 
Adjustment Statement.  In the event of a dispute with respect to 
any part of an Adjustment Amount, Purchaser and Seller shall 
attempt to reconcile their differences and any resolution by 
them as to any disputed amounts shall be final, binding and 
conclusive on the parties.  If Purchaser and Seller are unable 
to reach a resolution of such differences within 30 days of 
receipt of Purchaser's written notice of dispute to Seller, 
Purchaser and Seller shall submit the amounts remaining in 
dispute for determination and resolution to the Independent 
Accounting Firm, which shall be instructed to determine and 
report to the parties, within 30 days after such submission, 
upon such remaining disputed amounts, and such report shall be 
final, binding and conclusive on the parties hereto with respect 
to the amounts disputed.  The fees and disbursements of the 
Independent Accounting Firm shall be shared equally by Purchaser 
and Seller.

	(c)  Within ten (10) Business Days after Purchaser's 
receipt of an Adjustment Statement, Purchaser shall pay all 
undisputed amounts, or if there is a dispute with respect to any 
amount of such Adjustment Statement within five (5) Business 
Days after the final determination of any amounts on such 
Adjustment Statement, Purchaser shall pay to Seller an amount 
equal to the disputed Adjustment Amount as finally determined to 
be payable with respect to such Adjustment Statement.  All 
Adjustment Statement payments shall be less the Estimated 
Adjustment Amount; provided, however, that if such amount shall 
be less than zero, then within five (5) Business Days after the 
final determination of such amount Seller will pay to Purchaser 
the amount by which such amount is less than zero.  Any amount 
paid under this Section 1.04 shall be paid with interest for the 
period commencing on the date of Closing through the date of 
payment, calculated at the prime rate for domestic banks as 
published in The Wall Street Journal (Northeast Edition) in the 
"Money Rates" section on the date of Closing, and in immediately 
available United States funds.

	1.05  Closing; Additional Purchase Price Payments.

	(a)  Closing.  The Closing will take place at the offices 
of Milbank, Tweed, Hadley & McCloy, One Chase Manhattan Plaza, 
New York, New York 10005, or at such other place as Purchaser 
and Seller mutually agree, at 10:00 A.M. local time, on the 
Closing Date.  At the Closing, Purchaser will pay an amount (the 
"Estimated Purchase Price") in United States dollars equal to 
the sum of (a) the Base Purchase Price as the same may be 
adjusted pursuant to Section 1.10, and, if applicable, the 
Colstrip 4 Transmission Amount, and (b) the Estimated Adjustment 
Amount for the Closing, by wire transfer of immediately 
available United States funds to such account as Seller may 
reasonably direct by written notice delivered to Purchaser by 
Seller at least two (2) Business Days before the Closing.  
Simultaneously, (A) Seller will assign and transfer to Purchaser 
good and valid title in and to the Assets (free and clear of all 
Liens, other than Permitted Liens as such term is defined with 
respect to periods after the Closing) by delivery of (i) a 
General Assignment and Bill of Sale substantially in the form of 
Exhibit A hereto (the "General Assignment"), duly executed by 
Seller, covering the Personal Property comprising Assets except 
for the Intellectual Property, (ii) an assignment of the 
Intellectual Property in form and substance reasonably 
satisfactory to Purchaser, (iii) (x) special warranty deeds in 
proper statutory form for recording and otherwise in form and 
substance reasonably satisfactory to Purchaser conveying good 
and marketable title to the Real Property in which Seller has a 
fee or easement interest (subject only to Permitted Liens), 
(y) an assignment in form and substance reasonably satisfactory 
to Purchaser conveying valid and subsisting title to the Real 
Property in which Seller has a permit interest or other interest 
(neither fee nor easement) (subject only to Permitted Liens) and 
(z) all necessary documentation to transfer and convey to 
Purchaser the water rights listed in Section 1.01(a)(vi) of the 
Disclosure Schedule including water rights transfer certificates 
executed in proper form to be filed with the appropriate 
Governmental or Regulatory Authority and (iv) such other good 
and sufficient instruments of conveyance, assignment and 
transfer, in form and substance reasonably acceptable to 
Purchaser's counsel, as shall be effective to vest in Purchaser 
good and valid title to the Assets, good and marketable title to 
the Real Property in which Seller has a fee or easement interest 
and valid and subsisting title to the Real Property in which 
Seller has a permit interest or other interest (neither fee nor 
easement), in each case subject only to Permitted Liens (the 
General Assignment and the other instruments referred to in 
clauses (A) (ii), (iii) and (iv) being collectively referred to 
herein as the "Assignment Instruments"), and (B) Purchaser will 
assume from Seller the due payment, performance and discharge of 
the Assumed Liabilities by delivery of (i) an Assumption 
Agreement substantially in the form of Exhibit B hereto (the 
"Assumption Agreement"), duly executed by Purchaser, and (ii) 
such other good and sufficient instruments of assumption, in 
form and substance reasonably acceptable to Seller's counsel, as 
shall be effective to cause Purchaser to assume the Assumed 
Liabilities as and to the extent provided in Section 1.02(a) 
(the Assumption Agreement and such other instruments referred to 
in clause (B)(ii) being collectively referred to herein as the 
"Assumption Instruments").  At the Closing, there shall also be 
delivered to Seller and Purchaser the opinions, certificates and 
other contracts, documents and instruments required to be 
delivered under Articles VI and VII.

	(b)  Additional Purchase Price Payments.  If the Closing 
hereunder has occurred, then:

	(i)  In the event that the Puget Closing Date occurs prior 
to the Portland Closing Date, on the Puget Closing Date 
Purchaser shall pay to Seller the Puget Payment Amount;

	(ii)  In the event that the Portland Closing Date occurs 
prior to the Puget Closing Date, on the Portland Closing Date 
Purchaser shall pay to Seller the Portland Payment Amount; and

	(iii)  On the Final Closing Date, Purchaser shall pay to 
Seller the Combined Payment Amount.

	All payments made pursuant to this Section 1.05(b) shall be 
paid by wire transfer of immediately available United States 
funds to such account as Seller may reasonably direct by written 
notice delivered to Purchaser by Seller at least two (2) 
Business Days before the applicable closing date.

	1.06  Prorations.  The following items relating to the 
Assets and the ownership and operation of the Generating Assets 
will be allocated pro rata per diem for the tax year that 
includes the date of Closing, with Seller liable for such items 
to the extent they are allocable to the period prior to the date 
of the Closing and Purchaser liable for such items to the extent 
they are allocable to periods beginning with and subsequent to 
the Closing:

	(a)  Property Taxes on or with respect to the Assets.

	(b)  Rents, additional rents, Taxes, to the extent normally 
adjusted in connection with similar transactions, and other 
items payable by Seller under the Real Property Leases and the 
Business Contracts.

	(c)  The amount of rents, Taxes and charges for sewer, 
water, telephone, electricity and other utilities relating to 
the Real Property and the real property subject to the Real 
Property Leases.

	(d)  All other items (excluding other Taxes) normally 
adjusted in connection with similar transactions.

Except as otherwise agreed by the parties, the net amount of all 
such prorations will be settled and paid as of date of the 
Closing.  At least ninety (90) days prior to date of the 
Closing, Seller will provide Purchaser with a reasonably 
detailed schedule showing a calculation of the estimated 
prorations as if the Closing were occurring on such date.  If 
the Closing shall occur before a real estate Tax rate is fixed, 
the apportionment of Taxes shall be based upon the Tax rate for 
the preceding year applied to the latest assessed valuation and 
such Taxes shall be reprorated upon the request of Seller, on 
the one hand, or Purchaser, on the other hand, made within sixty 
(60) days after the date that the actual amounts become 
available.  Seller and Purchaser agree to furnish each other 
with such documents and other records as may be reasonably 
requested in order to confirm all adjustment and proration 
calculations made pursuant to this Section 1.06.

	To the extent required by any approval of the transfer of 
the FERC project licenses related to the Hydro Units, Seller 
agrees to pay all annual charges accrued under such licenses as 
of the Closing.

	1.07  Further Assurances; Post-Closing Cooperation.  

	(a) Subject to the terms and conditions of this Agreement, 
at any time or from time to time after the Closing, at 
Purchaser's request and without further consideration, Seller 
shall execute and deliver to Purchaser such other instruments of 
sale, transfer, conveyance, assignment and confirmation, provide 
such materials and information and take such other actions as 
Purchaser may reasonably deem necessary or desirable in order 
more effectively to transfer, convey and assign to Purchaser, 
and to confirm Purchaser's title to, all of the Assets, and, to 
the full extent permitted by Law, to put Purchaser in actual 
possession and control of the Assets and to assist Purchaser in 
exercising all rights with respect thereto, and otherwise to 
cause Seller to fulfill its obligations under this Agreement and 
the Operative Agreements.  From time to time after the Closing, 
at Purchaser's request and expense, Seller will reasonably 
cooperate with Purchaser in its efforts to maximize any Tax 
benefits associated with the Assets with respect to periods 
following the Closing and to minimize the Tax costs associated 
with the transactions contemplated hereby; provided such 
cooperation does not adversely affect Seller's Tax position. 
From time to time after the Closing, at Seller's request and 
expense, Purchaser will reasonably cooperate with Seller in its 
efforts to maximize any Tax benefits associated with the Assets 
with respect to periods prior to the Closing and to minimize the 
Tax costs associated with the transactions contemplated hereby; 
provided such cooperation does not adversely affect Purchaser's 
Tax position.

	(b)  Following the Closing, each party will afford the 
other party, its counsel and its accountants, during normal 
business hours, reasonable access to the books, records and 
other data relating to the operation of the Generating Assets in 
its possession with respect to periods prior to the Closing and 
the right to make copies and extracts therefrom, to the extent 
that such access may be reasonably required by the requesting 
party in connection with (i) the preparation of Tax Returns, 
(ii) the determination or enforcement of rights and obligations 
under this Agreement, (iii) compliance with the requirements of 
any Governmental or Regulatory Authority, (iv) the determination 
or enforcement of the rights and obligations of any Indemnified 
Party or (v) in connection with any actual or threatened Action 
or Proceeding.  Further each party agrees for a period extending 
six (6) years after the Closing not to destroy or otherwise 
dispose of any such books, records and other data unless such 
party shall first offer in writing to surrender such books, 
records and other data to the other party and such other party 
shall not agree in writing to take possession thereof during the 
thirty (30) day period after such offer is made.

	(c)  If, in order properly to prepare its Tax Returns, 
other documents or reports required to be filed with 
Governmental or Regulatory Authorities or its financial 
statements or to fulfill its obligations hereunder, it is 
necessary that a party be furnished with additional information, 
documents or records relating to the operation of the Generating 
Assets not referred to in paragraph (b) above, and such 
information, documents or records are in the possession or 
control of the other party, such other party shall use its best 
efforts to furnish or make available such information, documents 
or records (or copies thereof) at the recipient's request, cost 
and expense.  Any information obtained by such party in 
accordance with this paragraph shall be held confidential by 
such party in accordance with Section 13.06.

	(d)  Notwithstanding anything to the contrary contained in 
this Section 1.07, if the parties are in an adversarial 
relationship in litigation or arbitration, the furnishing of 
information, documents or records in accordance with paragraph 
(c) of this Section 1.07 shall be subject to applicable rules 
relating to discovery.

	1.08  Third Party Consents.  To the extent that any 
Business Contract, Transferable Permit, Fuel Contract, Colstrip 
Contract or Power Purchase/Exchange Agreement is not assignable 
without the consent of another party, this Agreement shall not 
constitute an assignment or an attempted assignment thereof if 
such assignment or attempted assignment would constitute a 
breach thereof.  Seller and Purchaser shall use their reasonable 
efforts to obtain the consent of such other party to the 
assignment of any such Business Contract, Transferable Permit, 
Fuel Contract, Colstrip Contract or Power Purchase/Exchange 
Agreement to Purchaser in all cases in which such consent is or 
may be required for such assignment.  If any such consent shall 
not be obtained, or if any attempted assignment would be 
ineffective or would impair Purchaser's rights and obligations 
so that Purchaser would not in effect acquire the benefit of 
substantially all of such rights and obligations, Seller shall 
cooperate with Purchaser in any reasonable arrangement, to the 
extent legally permissible, designed to provide for Purchaser 
the benefits intended to be assigned to Purchaser under the 
relevant Business Contract, Transferable Permit, Fuel Contract, 
Colstrip Contract or Power Purchase/Exchange Agreement, 
including enforcement at the cost and for the account of 
Purchaser of any and all rights of Seller against the other 
party thereto arising out of the breach or cancellation thereof 
by such other party or otherwise.  If and to the extent that 
such arrangement is not made in a manner reasonably satisfactory 
to Purchaser, Purchaser shall have no obligation pursuant to 
Section 1.02 or otherwise only with respect to any such Business 
Contract, Transferable Permit, Fuel Contract, Colstrip Contract 
or Power Purchase/Exchange Agreement.  The provisions of this 
Section 1.08 shall not affect the right of Purchaser not to 
consummate the transactions contemplated by this Agreement as 
provided in Section 1.10(e) or if the conditions to its 
obligations hereunder contained in Sections 6.05, 6.06 and 6.07 
have not been fulfilled.

	1.09  Insurance Proceeds.  If any of the Assets (other than 
an Asset excluded under Section 1.10) is destroyed, damaged or 
taken in condemnation, the insurance proceeds or condemnation 
award with respect thereto shall be an Asset; provided, however, 
Seller agrees not to settle or compromise any amounts concerning 
such Assets during negotiations with Seller's insurance company 
without Purchaser's prior consent.  At the Closing, Seller shall 
pay or credit to Purchaser any such insurance proceeds or 
condemnation awards received by it on or prior to the Closing 
and shall assign to or assert for the benefit of Purchaser all 
of its rights against any insurance companies, Governmental or 
Regulatory Authorities and others with respect to such damage, 
destruction or condemnation.  As and to the extent that there is 
available insurance under policies maintained by Seller and its 
Affiliates, predecessors and successors in respect of any 
Assumed Liability, except for any such insurance proceeds with 
respect to which the insured is directly or indirectly self-
insured or has agreed to indemnify the insurer, Seller shall 
cause such insurance to be applied toward the payment of such 
Assumed Liability.  The provisions of this Section 1.09 shall 
not affect the right of Purchaser not to consummate the 
transactions contemplated by this Agreement if the condition to 
its obligations hereunder contained in Sections 6.01 or 6.08 has 
not been fulfilled.

	1.10  Inclusion/Exclusion of Certain Assets.  

	(a)  Purchaser agrees to use its reasonable best efforts to 
obtain the approval described in clause (iii) of the definition 
of Purchaser Required Regulatory Approvals in a manner 
reasonably satisfactory to Purchaser that will allow Purchaser 
to purchase and own, operate and maintain after the Closing the 
Colstrip 4 Transmission Assets, and to consult with Seller prior 
to abandoning its efforts to do so.  If, notwithstanding 
Purchaser's compliance with the preceding sentence and with 
Section 5.01, such Purchaser Required Regulatory Approval is not 
obtained from FERC with respect to the proposed purchase, 
ownership and operation of the Colstrip 4 Transmission Assets, 
or is finally denied by FERC, within seven (7) months of the 
date of execution of this Agreement, or in the event that the 
condition set forth in Section 6.12 has not been satisfied on or 
prior to the Closing, then subject to Section 1.10(b),(i) at the 
Closing Seller and Purchaser shall enter into a transmission 
service agreement for firm transmission service pursuant to 
Seller's open access transmission tariff (the "Colstrip 4 
Transmission Service Agreement"), (ii) the Colstrip 4 
Transmission Assets shall be Excluded Assets hereunder, 
(iii) Purchaser shall not be obligated to pay the Colstrip 4 
Transmission Amount at the Closing, and (iv) the condition to 
Closing described in Sections 6.05  and 7.05 shall be deemed 
satisfied with respect to such Purchaser Required Regulatory 
Approval solely with respect to the Colstrip 4 Transmission 
Assets but shall not be deemed satisfied with respect to any 
other Assets, provided, that Seller shall have the right, in its 
sole discretion, to waive such seven (7) month period, and 
require Purchaser to continue to pursue such approval, 
consistent with Purchaser's obligations under Section 5.01 
hereof, for such time period(s) as Seller may determine, not to 
exceed the time period provided for in Section 11.01(d) hereof.  
Purchaser acknowledges that, in any event, Seller shall remain 
the operator of the Colstrip 4 Transmission Assets pursuant to 
the Colstrip Project Transmission Agreement dated May 6, 1981, 
as amended February 14, 1990, December 30, 1996, and July 13, 
1998, between Seller, Puget, PGE, WWP and Pacific.

	(b)  In the event that, notwithstanding Seller's compliance 
with Section 4.01, Seller has been unable to obtain all consents 
or approvals required in connection with the transfer of the 
Colstrip 4 Generation Assets, Seller may elect to exclude from 
the Assets being sold to Purchaser hereunder, all of Seller's 
rights, title and interest in, to and under the Colstrip 4 
Generation Assets.  In such event (i) the Colstrip 4 Generation 
Assets shall be Excluded Assets hereunder, (ii) the Base 
Purchase Price shall be reduced by an amount equal to 
$40,000,000, (iii) the conditions to Closing described in 
Sections 6.05, 6.06, 6.07, 7.05, and 7.06, as and only to the 
extent that they relate to consents and approvals required in 
respect of or pursuant to any Colstrip 4 Generation Assets, 
shall be deemed satisfied, and (iv) the Colstrip 4 Transmission 
Assets shall become Excluded Assets and all of the provisions of 
Section 1.10(a)(i)through (iv) shall become operative with 
respect to the Colstrip 4 Transmission Assets.

	(c)  In the event that, notwithstanding Seller's and 
Purchaser's compliance with Sections 4.01 and 5.01, an Asset 
Group identified on Schedule I hereto cannot be conveyed at the 
Closing due to a failure to obtain a Seller Required Regulatory 
Approval and/or a Purchaser Required Regulatory Approval with 
respect to such Asset Group on terms and conditions reasonably 
satisfactory to Purchaser, or the Closing conditions in Sections 
6.05 and 6.06 and, if applicable, Section 6.07 are not satisfied 
with respect to such Asset Group, then such Asset Group shall be 
excluded from the Assets being sold to Purchaser hereunder.  In 
such event (i) such Asset Group shall be Excluded Assets 
hereunder, (ii) the Base Purchase Price shall be reduced by the 
amount relating to such Asset Group identified on Schedule I 
hereto, and (iii) the conditions to Closing described in 
Sections 6.05, 6.06,7.05 and 7.06 and, if applicable, Section 
6.07 as and only to the extent that they relate to consents and 
approvals required in respect of or pursuant to such Asset 
Group, shall be deemed satisfied;

	(d)  Purchaser has been provided copies of title insurance 
commitments covering certain of the Assets and intends to obtain 
at its expense additional title commitments and title policies.  
Seller agrees to use reasonable efforts to cure title objections 
of which Seller is notified by Purchaser, to the extent title 
would not otherwise satisfy Seller's obligations with respect to 
the title to be delivered by Seller in compliance with Section 
1.05(a) of this Agreement. From and after the date hereof and 
through the Closing, Seller shall use reasonable efforts to cure 
and remove exceptions to title to the Real Property (other than 
those exceptions referred to in the preceding sentences)of which 
Seller is notified by Purchaser in writing; provided, however, 
that in no event shall Seller be obligated to incur expenses or 
make payments of any nature in excess of $1,100,000 in 
discharging its obligations set forth in this sentence.  Nothing 
in the two preceding sentences shall change or otherwise affect 
the nature of the title to the Real Property that Seller is 
obligated to transfer to Purchaser in compliance with this 
Agreement.  In the event that (i)Seller is unable to deliver, at 
the Closing, title in compliance with this Agreement with 
respect to an Asset Group, (ii) an Asset Group is the subject of 
a material condemnation proceeding, or (iii) an Asset Group is 
damaged or destroyed in any material respect and such damage or 
destruction is not remedied by Seller prior to the Closing, then 
the affected Asset Group shall be Excluded Assets hereunder and 
the Base Purchase Price shall be adjusted by the amount relating 
to such Asset Group identified on Schedule I hereto.  If any 
such Asset Group is treated as an Excluded Asset as provided 
above in this Section 1.10(d), the conditions to Closing set 
forth in Articles VI and VII shall be deemed satisfied as and 
only to the extent that they relate to the title, condemnation 
or damage and destruction, as the case may be, with respect to 
such Asset Group.

	(e)  In the event that the Generating Assets to be 
transferred to Purchaser hereunder at the Closing do not include 
at a minimum (i) Corette, (ii) Seller's undivided interests in 
Colstrip 1, 2 and 3 Generating Assets, and (iii) 
Missouri/Madison Hydro Units with Basin/Idaho/BPA Power 
Contracts, then Purchaser may elect to terminate the Agreement 
under Section 11.01(e).

	(f)	In the event the closings under the PGE Asset Purchase 
Agreement and the Puget Asset Purchase Agreement do not occur by 
the respective "Termination Dates" thereunder, either 
(i) Purchaser shall acquire the Colstrip 1, 2 and 3 Transmission 
Assets owned by Seller for a purchase price of $97,100,000 (the 
"Colstrip 1, 2 and 3 Transmission Amount") or (ii) in the event 
Purchaser has not received the Purchaser Required Regulatory 
Approval described in clause (iii) of the definition of 
Purchaser Required Regulatory Approvals reasonably satisfactory 
to Purchaser with respect to the proposed purchase of the 
Colstrip 1, 2 and 3 Transmission Assets, Purchaser shall not 
acquire the Colstrip 1, 2 and 3 Transmission Assets and such 
Assets shall be Excluded Assets.  Purchaser acknowledges that, 
in any event, Seller shall remain the operator of the Colstrip 
1, 2 and 3 Transmission Assets pursuant to the Colstrip Project 
Transmission Agreement dated May 6, 1981, as amended February 
14, 1990, December 30, 1996, and July 13, 1998, between Seller, 
Puget, PGE, WWP and Pacific.


                          ARTICLE II

            REPRESENTATIONS AND WARRANTIES OF SELLER

	Seller hereby represents and warrants to Purchaser as 
follows:

	2.01  Corporate Existence of Seller.  Seller is a 
corporation duly incorporated, validly existing and in good 
standing under the Laws of the State of Montana, and has full 
corporate power and authority to own, operate and maintain the 
Generating Assets as and to the extent now conducted and to own, 
use, lease and operate the Assets.  Seller is duly qualified or 
licensed to do business as a foreign corporation and is in good 
standing in each jurisdiction in which the Assets make such 
qualification necessary, except in each case in those 
jurisdictions where the failure to be so duly qualified or 
licensed and in good standing would not create a Seller Material 
Adverse Effect.  Seller has heretofore made available to 
Purchaser complete and correct copies of its articles of 
incorporation and by-laws (or other comparable corporate charter 
documents), as currently in effect.

	2.02  Authority.  Seller has full corporate power and 
authority to execute and deliver this Agreement and the 
Operative Agreements to which it is a party, to perform its 
obligations hereunder and thereunder and to consummate the 
transactions contemplated hereby and thereby, including to sell 
and transfer (pursuant to this Agreement) the Assets.  The 
execution and delivery by Seller of this Agreement and the 
Operative Agreements to which it is a party, and the performance 
by Seller of its obligations hereunder and thereunder, have been 
duly and validly authorized by the Board of Directors of Seller, 
no other corporate action on the part of Seller or its 
stockholders being necessary.  This Agreement has been duly and 
validly executed and delivered by Seller and, subject to receipt 
of Seller Required Regulatory Approvals and Purchaser Required 
Regulatory Approvals, constitutes, and upon the execution and 
delivery by Seller of the Operative Agreements to which it is a 
party, such Operative Agreements will constitute, legal, valid 
and binding obligations of Seller enforceable against Seller in 
accordance with their terms except as the same may be limited by 
bankruptcy, insolvency, reorganization, arrangement, moratorium 
or other similar Laws relating to or affecting the rights of 
creditors generally, or by general equitable principles. 

	2.03  No Conflicts.  (a)  Except as set forth in Section 
2.03 of the Disclosure Schedule, and other than obtaining Seller 
Required Regulatory Approvals and Purchaser Required Regulatory 
Approvals, the execution and delivery by Seller of this 
Agreement do not, and the execution and delivery by Seller of 
the Operative Agreements to which it is a party, the performance 
by Seller of its obligations under this Agreement and such 
Operative Agreements and the consummation of the transactions 
contemplated hereby and thereby will not:

	(i)  conflict with or result in a violation or breach of 
any of the terms, conditions or provisions of the restated 
articles of incorporation, as amended, or by-laws, as amended 
(or other comparable corporate charter documents) of Seller;

	(ii)  require any consent, approval, authorization or 
permit, or filing with or notification to, any Governmental or 
Regulatory Authority, except (x) for Seller Required Regulatory 
Approvals and Purchaser Required Regulatory Approvals, or (y) 
for those requirements which become applicable to Seller as a 
result of the specific regulatory status of Purchaser (or any of 
its Affiliates) or as a result of any other facts that 
specifically relate to the business or activities in which 
Purchaser (or any of its Affiliates) is or proposes to be 
engaged;

	(iii)  result in a default (or give rise to any right of 
termination, cancellation or acceleration or require any consent 
or approval) under any of the terms, conditions or provisions of 
any note, bond, mortgage, indenture, license, agreement or other 
instrument or obligation to which Seller is a party or by which 
Seller, or any of the Assets may be bound, except for such 
defaults (or rights of termination, cancellation or acceleration 
or any consent or approval) as to which requisite waivers or 
consents have been obtained; or

	(iv)  conflict with or result in a violation or breach of 
any term or provision of any Law or Order applicable to Seller 
or any of its Assets and Properties.

	2.04  Governmental Approvals and Filings.  Except for 
Seller Required Regulatory Approvals, no consent, approval or 
action of, filing with or notice to any Governmental or 
Regulatory Authority on the part of Seller is required in 
connection with the execution, delivery and performance of this 
Agreement or any of the Operative Agreements to which it is a 
party or the consummation of the transactions contemplated 
hereby or thereby, except those as would be required solely as a 
result of the identity or the legal or regulatory status of 
Purchaser or any of its Affiliates.

	2.05  Reports.  Since December 31, 1995, Seller has filed 
or caused to be filed with the SEC, the applicable state or 
local utility commissions or regulatory bodies and FERC, all 
material forms, statements, reports and documents (including all 
exhibits, amendments and supplements thereto) required to be 
filed by it with respect to the operation of the Generating 
Assets under each of the Securities Act, the Exchange Act, the 
applicable state public utility Laws, the Federal Power Act, the 
Holding Company Act and the respective rules and regulations 
thereunder, all of which complied in all material respects with 
all applicable requirements of the appropriate act and the rules 
and regulations thereunder in effect on the date each such 
report was filed, and there are no material misstatements or 
omissions in respect of such reports.

	2.06  Taxes.  Seller has timely filed or will timely file 
all Tax Returns required to be filed with respect to the 
ownership, operation and maintenance of the Assets and has paid 
or will pay all Taxes shown to be due on such returns with 
respect to all tax periods ending prior to the Closing.  Except 
for the properties financed with the Pollution Control Bonds, no 
other Assets have been financed using tax exempt financing.  The 
owners of Colstrip Units 1, 2, 3, and 4 have jointly made a 
timely and effective affirmative election pursuant to Section 
761(a) of the Code and Treasury Regulation Section 1.761-2(b) to 
be excluded from all of subchapter K of the Code, and such 
election has not been modified, revoked or otherwise altered, 
and remains in effect.  Seller has not taken and has not been 
notified that any of such owners has taken any action 
inconsistent with such election.

	2.07  Legal Proceedings.  Except as disclosed in 
Section 2.07 of the Disclosure Schedule (with paragraph 
references corresponding to those set forth below):

	(a)  there are no Actions or Proceedings pending or, to the 
Knowledge of Seller, threatened against, relating to or 
affecting Seller with respect to the ownership, operation and 
maintenance of the Assets which could reasonably be expected (i) 
to result in the issuance of an Order restraining, enjoining or 
otherwise prohibiting or making illegal the consummation of any 
of the transactions contemplated by this Agreement or any of the 
Operative Agreements, or (ii) individually or in the aggregate 
with other such Actions or Proceedings, to create a Seller 
Material Adverse Effect; and

	(b)  there are no Orders outstanding against Seller with 
respect to the ownership, operation and maintenance of the 
Assets which, individually or in the aggregate with other such 
Orders, would have a Seller Material Adverse Effect.

	2.08  Compliance with Laws and Orders.  Except as disclosed 
in Section 2.08 of the Disclosure Schedule, Seller is not in 
material violation of or in material default under any Law or 
Order applicable to Seller or the ownership, operation and 
maintenance of the Assets.

	2.09  Benefit Plans; ERISA.  (a)  Section 2.09(a) of the 
Disclosure Schedule  contains a true and complete list and 
description of each of the Benefit Plans and identifies each of 
the Benefit Plans that is a Qualified Plan and relates to 
Employees.

	(b)  Except as disclosed in Section 2.09(b) of the 
Disclosure Schedule, Seller does not maintain nor is it 
obligated to provide benefits under any life, medical or health 
plan which provides benefits to retired or other terminated 
Employees other than (i) benefit continuation rights under the 
Consolidated Omnibus Budget Reconciliation of 1985, as amended, 
and (ii) incidental benefits under any Qualified Plan.  

	(c)  Neither Seller, any ERISA Affiliate nor any other 
corporation or organization controlled by or under common 
control with any of the foregoing within the meaning of 
Section 4001 of ERISA has at any time contributed to, on behalf 
of any Employee, any "multiemployer plan," as that term is 
defined in Section 4001 of ERISA.

	(d)  Each of the Benefit Plans relating to the Employees 
is, and its administration is and has been since inception, in 
compliance with ERISA and the Code in all material respects.

	(e)  All contributions and other payments required to be 
made by Seller to any Benefit Plan relating to the Employees 
with respect to any period ending before or at or including the 
Closing have been made or reserves adequate for such 
contributions or other payments have been or will be set aside 
therefor.

	(f)  (i) No transaction contemplated by this Agreement will 
result in liability to the PBGC under Section 302(c)(ii), 4062, 
4063, 4064 or 4069 of ERISA, or otherwise, with respect to 
Purchaser or any corporation or organization controlled by or 
under common control with Purchaser within the meaning of 
Section 4001 of ERISA, (ii) neither Seller nor any ERISA 
Affiliate has incurred any liability under Title IV of ERISA 
(other than for the payment of PBGC insurance premiums in the 
ordinary course), (iii) the Assets are not subject to Lien under 
Title IV of ERISA or Section 412 of the Code, and (iv) there 
does not exist any proceeding, fact or circumstance that might 
reasonably be expected to result in Seller or any ERISA 
Affiliate incurring liability under Title IV of ERISA (other 
than for the payment of PBGC insurance premiums in the ordinary 
course) or the imposition of a Lien on the Assets under Title IV 
of ERISA or Section 412 of the Code.

	(g)  There are no pending or, to the Knowledge of Seller, 
threatened claims by or on behalf of any Benefit Plan, by any 
Person covered thereby, or otherwise, which allege violations of 
Law.

	(h)  Complete and correct copies of the following documents 
have been made available to Purchaser prior to the execution of 
this Agreement:

    	(i)  the Benefit Plans and any related trust agreements and 
insurance contracts;

    (ii)  current summary Plan descriptions of each Benefit Plan 
subject to ERISA;

   (iii)  the most recent Form 5500 and Schedules thereto for 
each Benefit Plan subject to ERISA reporting requirements;

    (iv) the most recent determination letter issued by the IRS 
with respect to the qualified status of each Qualified Plan;

	(v)  the most recent accountings with respect to any 
Benefit Plan funded through a trust; and

    (vi)  the most recent actuarial report of the qualified 
actuary of any Subject Defined Benefit Plan or any other Benefit 
Plan with respect to which actuarial valuations are conducted.

	2.10  Real Property.  (a)  Section 1.01(a)(i) of the 
Disclosure Schedule contains a description of, and exhibits 
indicating the location of the Real Property owned by Seller and 
included in the Assets, and Section 1.01(a)(ii) of the 
Disclosure Schedule contains a description of, and exhibits 
indicating the location of each parcel of real property leased 
by Seller (as lessor, sublessor, lessee or sublessee), or as to 
which Seller holds easements or other rights, and included in 
the Assets.

	(b)  Seller has good and marketable title to the Real 
Property in which Seller holds a fee or easement interest and 
valid and subsisting title to the Real Property in which Seller 
holds a permit interest or other interest, in each case, free 
and clear of all Liens other than Permitted Liens.  Except for 
the Permitted Liens and the Real Property subject to Real 
Property Leases described in Section 1.01(a)(ii)(A) of the 
Disclosure Schedule, Seller is in possession of the Real 
Property and there are no third party licenses or tenants at the 
sites of the Real Property or Real Property Leases.

	(c)  Seller has a valid and subsisting leasehold estate in 
and the right to quiet enjoyment of the real properties subject 
to the Real Property Leases described in Section 1.01(a)(ii)(B) 
of the Disclosure Schedule for the full term thereof.  Each Real 
Property Lease is a legal, valid and binding agreement, 
enforceable in accordance with its terms, of Seller and of each 
other Person that is a party thereto, and except as set forth in 
Section 2.10(c) of the Disclosure Schedule, there is no default 
(or any condition or event which, after notice or lapse of time 
or both, would constitute a default) thereunder.

	(d)  Seller has made available to Purchaser prior to the 
execution of this Agreement true and complete copies of (i) any 
current surveys in Seller's possession or any policies of title 
insurance currently in force and in the possession of Seller 
with respect to the Real Property, and (ii) all Real Property 
Leases (including any amendments and renewal letters) and, to 
the extent reasonably available, all other documents referred to 
in clause (i) of this paragraph (d) with respect to the real 
property subject to the Real Property Leases described in 
Section 1.01(a)(ii)(B) of the Disclosure Schedule.

	(e)  Except as set forth in Section 12.01(h) of the 
Disclosure Schedule, all Real Properties have access to a public 
road and are zoned for their current uses.  No fee ownership, 
lease, right of way, easement, license or other right in real 
property, other than the Real Property and the Real Property 
Leases and the transmission, distribution, communication and 
software assets described in Section 1.01(b)(ix) of the 
Disclosure Schedule (which are Excluded Assets), is necessary 
for the Purchaser to own, operate or maintain the Assets 
substantially as currently owned, operated and maintained by 
Seller.  Seller has not received any written notice that any of 
the improvements on any of the Real Property or Real Property 
Leases, including without limitation the Easements, or any 
appurtenances thereto or equipment therein or the operation or 
maintenance thereof, violate any restrictive covenant or the 
terms, conditions or restrictions of any easement.

	2.11  Tangible Personal Property.  Seller is in possession 
of and has good and valid title to, or has valid leasehold 
interests in or valid rights under Contract to use, all the 
Tangible Personal Property used in and individually or in the 
aggregate with other such property material to the ownership, 
operation and maintenance of the Assets.  All the Tangible 
Personal Property is free and clear of all Liens, other than 
Permitted Liens and Liens disclosed in Section 2.11 of the 
Disclosure Schedule, and is in all material respects in good 
working order and condition, ordinary wear and tear excepted.  
The Assets are, and as of the Closing will be, inclusive of all 
facilities and equipment in such condition as will be sufficient 
for Purchaser to comply with its obligations under the 
Interconnection Agreement after giving effect to the Separation 
Document.

	2.12  Intellectual Property Rights.  Section 1.01(a)(vii) 
of the Disclosure Schedule discloses all Intellectual Property 
used or held for use or necessary in connection with, and 
individually or in the aggregate with other such Intellectual 
Property, material to the ownership, operation and maintenance 
of the Assets, each of which Seller either has all right, title 
and interest in or valid and binding rights under Contract to 
use without limitation or royalty burdens that are not otherwise 
disclosed in Section 2.12 of the Disclosure Schedule.  Except as 
disclosed in Section 2.12 of the Disclosure Schedule, (i) all 
registrations with and applications to Governmental or 
Regulatory Authorities in respect of Intellectual Property owned 
by Seller and disclosed in Section 1.01(a)(vii) of the 
Disclosure Schedule are valid and in full force and effect, (ii) 
there are no restrictions on the direct or indirect transfer of 
such Intellectual Property or any Contract, or any interest 
therein, held by Seller in respect of such Intellectual 
Property, (iii) Seller is not, nor has it received any notice 
that it is, in default (or with the giving of notice or lapse of 
time or both, would be in default) in any material respect under 
any Contract to use such Intellectual Property and (iv) to the 
Knowledge of Seller, such Intellectual Property is not being 
infringed by any other Person.  Seller has not received notice 
that Seller is infringing any Intellectual Property of any other 
Person in connection with the Assets or the operation of the 
Generating Assets, no claim is pending or has been made to such 
effect that has not been resolved and, to its Knowledge, Seller 
is not infringing any Intellectual Property of any other Person.

	2.13  Contracts.  (a)  Section 2.13(a) of the Disclosure 
Schedule (with paragraph references corresponding to those set 
forth below) contains a true and complete list of each of the 
following Contracts (true and complete copies of which, together 
with all amendments and supplements thereto, have been made 
available to Purchaser prior to the execution of this Agreement) 
to which Seller is a party and relate to the operation of the 
Generating Assets or by which any of the Assets is bound:

	(i)  all Contracts (excluding Benefit Plans) providing for 
a commitment of employment or consultation services for a 
specified or unspecified term to, or otherwise relating to 
employment or the termination of employment of, any Employee, 
the name, position and rate of compensation of each Employee 
party to such a Contract and the expiration date of each such 
Contract;

    (ii)  all Contracts with any Person containing any provision 
or covenant prohibiting or limiting the ability of Seller to 
engage in any activity relating to the operation of the 
Generating Assets or compete with any Person in connection with 
the operation of the Generating Assets or prohibiting or 
limiting the ability of any Person to compete with Seller in 
connection with the operation of the Generating Assets;

   (iii)  all partnership, joint venture, shareholders' or other 
similar Contracts with any Person in connection with the 
operation of the Generating Assets;

    (iv)  all Contracts with distributors, dealers, 
manufacturer's representatives, sales agencies or franchises 
with whom Seller deals in connection with the operation of the 
Generating Assets which in any case involve the payment or 
potential payment, pursuant to the terms of any such Contract, 
by or to Seller of more than $250,000 annually;

    	(v)  all Contracts relating to the future disposition or 
acquisition of any Assets, other than dispositions or 
acquisitions of Inventory in the ordinary course of business; 
and

    (vi)  all other Contracts (other than Benefit Plans, the 
Real Property Leases and the collective bargaining agreements 
delivered to Purchaser pursuant to Section 2.16) not described 
above that constitute Assumed Liabilities with respect to the 
operation of the Generating Assets that (A) involve the payment 
or potential payment, pursuant to the terms of any such 
Contract, by or to Seller of more than $250,000 annually and (B) 
cannot be terminated within sixty (60) days after giving notice 
of termination without resulting in any material cost or penalty 
to Seller (or, after the Closing, to Purchaser).

	(b)  Each Contract required to be disclosed in 
Section 2.13(a) of the Disclosure Schedule and each of the 
Colstrip Contracts, the Fuel Contracts and the Power 
Purchase/Exchange Agreements and each of the Business Contracts 
which involves the payment or potential payment by or to Seller 
of more than $250,000 annually is in full force and effect and 
constitutes a legal, valid and binding agreement, enforceable in 
accordance with its terms, of Seller and of each other party 
thereto; and except as disclosed in Section 2.13(b) of the 
Disclosure Schedule neither Seller nor, to the Knowledge of 
Seller, any other party to such Contract is in violation or 
breach of or default under any such Contract (or with notice or 
lapse of time or both, would be in violation or breach of or 
default under any such Contract).

	2.14  Licenses.  (a)  Seller has been, and is in material 
compliance with, all Licenses necessary in connection with the 
ownership, operation and maintenance of the Assets as currently 
conducted.  Except as disclosed in Section 2.14(a) of the 
Disclosure Schedule, Seller has not received any written 
notification that it is in violation, nor does Seller know of 
any violations, of any of such Licenses, or any Law or Order of 
any Governmental or Regulatory Authority applicable to it.

	(b)  Section 2.14(b) of the Disclosure Schedule sets forth 
all material Licenses and Environmental Permits relating to the 
ownership, operation and maintenance of the Assets, copies of 
which have been made available to Purchaser prior to the 
execution of this Agreement.  Such section of the Disclosure 
Schedule designates those Licenses and Environmental Permits 
which are Transferable Permits and those which are not 
Transferable Permits and also designates those Licenses and 
Environmental Permits which are not Transferable Permits but 
which, if not held or maintained (individually or in the 
aggregate) could reasonably be expected to impair the ownership, 
operation and maintenance of the Assets.

	2.15  Insurance.  Except as set forth in Section 2.15 of 
the Disclosure Schedule, all material policies of fire, 
liability, worker's compensation and other forms of insurance 
owned or held by Seller and insuring the Assets are in full 
force and effect, all premiums with respect thereto covering all 
periods up to and including the date as of which this 
representation is being made have been paid (other than 
retroactive premiums which may be payable with respect to 
comprehensive general liability and worker's compensation 
insurance policies), and no notice of cancellation or 
termination has been received with respect to any such policy 
which was not replaced on substantially similar terms prior to 
the date of such cancellation.  Except as set forth in Section 
2.15 of the Disclosure Schedule, Seller has not been refused any 
insurance with respect to the Assets nor has its coverage been 
limited by any insurance carrier to which it has applied for any 
such insurance or with which it has carried insurance during the 
last twelve months.

	2.16  Labor Relations.  Seller has previously delivered to 
Purchaser copies of all collective bargaining agreements to 
which Seller is a party or is subject and which relate to the 
ownership, operation and maintenance of the Generating Assets, 
all of which agreements are listed in Section 2.16 of the 
Disclosure Schedule (the "Collective Bargaining Agreements".)  
Solely with respect to the operation of the Generating Assets, 
except as disclosed in Section 2.16 of the Disclosure Schedule:

	(a)  To Seller's Knowledge, Seller is in compliance with 
all applicable Laws respecting employment and employment 
practices, terms and conditions of employment, collective 
bargaining and wages and hours;

	(b)  Seller has not received written notice (or otherwise 
has Knowledge) of any unfair labor practice complaint against 
Seller pending before the National Labor Relations Board;

	(c)  There is no labor strike, slowdown or stoppage 
actually pending or, to the Knowledge of Seller, threatened 
against or affecting Seller;

	(d)  Seller has not received notice (or otherwise has 
Knowledge) that any representation petition respecting the 
Employees has been filed with the National Labor Relations 
Board;

	(e)  No arbitration proceeding arising out of or under 
collective bargaining agreements is pending against Seller; and

	(f)  Seller has not experienced any primary work stoppage 
since 1963.  

	2.17  Environmental Matters.  Except as disclosed in 
Section 2.17 of the Disclosure Schedule:

	(a)  Seller holds, and is in substantial compliance with, 
all Licenses which are required for Seller to own, operate and 
maintain the Assets under applicable Environmental Laws 
("Environmental Permits"), and Seller has not received any 
written notice of any violation of any Environmental Law that 
has not heretofore been resolved and Seller is otherwise in 
substantial compliance with applicable Environmental Laws with 
respect to the ownership, operation and maintenance of the 
Assets.

	(b)  Seller has not received any written request for 
information, or been notified that it is a potentially 
responsible party, under any Environmental Law with respect to 
any on-site location relating to the ownership, operation and 
maintenance of the Assets.

	(c)  Seller has not entered into or agreed to any consent 
decree or order, and is not subject to any outstanding judgment, 
decree, or judicial order relating to compliance with any 
Environmental Law or to investigation or cleanup of Hazardous 
Materials under any Environmental Law relating to the ownership, 
operation and maintenance of the Assets.

	(d)  There are no claims, actions, proceedings or 
investigations pending or, to the Knowledge of Seller, 
threatened against Seller before any court, Governmental or 
Regulatory Authority relating to any Environmental Law with 
respect to the ownership, operation and maintenance of the 
Assets.

	(e)  To its Knowledge, Seller has made available to 
Purchaser: (i) a list of all material environmental reports 
and/or audits prepared by or for Seller within the past five (5) 
years which discuss the environmental conditions of the Assets; 
and (ii) a list of all underground storage tanks and/or surface 
impoundments located on the Assets which contain or have 
contained Hazardous Materials.

The representations and warranties made in this Section 2.17 are 
Seller's exclusive representations and warranties relating to 
environmental matters.

	2.18  Absence of Condemnation Proceedings.  Neither the 
whole nor any portion of the Assets is subject to any pending 
or, to Seller's Knowledge, threatened suit or order for 
condemnation or other taking by any public authority.

	2.19  Regulation as a Utility.  Seller is a public utility 
company within the meaning of the Holding Company Act.  Except 
as set forth in Section 2.19 of the Disclosure Schedule, Seller 
is not subject to regulation as a public utility or public 
service company (or similar designation) by the United States, 
any state of the United States, any foreign country or any 
municipality or any political subdivision of the foregoing.

	2.20  Brokers.  Except for Goldman, Sachs & Co., whose 
fees, commissions and expenses are the sole responsibility of 
Seller, Morgan Stanley Dean Witter, whose fees and expenses are 
the sole responsibility of Puget and Merrill Lynch & Co., whose 
fees, commissions and expenses are the sole responsibility of 
PGE, all negotiations relative to this Agreement and the 
transactions contemplated hereby have been carried out by Seller 
directly with Purchaser without the intervention of any Person 
on behalf of Seller in such manner as to give rise to any valid 
claim by any Person against Purchaser for a finder's fee, 
brokerage commission or similar payment.

	2.21  Year 2000.  Seller has put into effect practices and 
programs which Seller reasonably believes will enable all system 
critical software, hardware and equipment (including 
microprocessors) that is owned or utilized by Seller in 
connection with the ownership, operation and maintenance of the 
Assets to be capable, by December 31, 1999, of accounting for 
all calculations using a century and date sensitive algorithm 
for the year 2000 and the fact that the year 2000 is a leap 
year.  Section 2.21 of the Disclosure Schedule identifies 
(a) each material "Year 2000" audit, report or investigation 
that has been performed by or on behalf of Seller with respect 
to the Assets or the ownership, operation and maintenance of the 
Assets, and (b) the plans, schedules, and other actions 
contemplated for the remediation of any problems identified in 
such audits, reports and investigations and the testing of the 
Assets in advance of December 31, 1999, for "Year 2000" 
compliance, copies of which have been made available to 
Purchaser.

	2.22  Disclaimers Regarding Assets.  EXCEPT AS OTHERWISE 
EXPRESSLY PROVIDED HEREIN, THE ASSETS ARE BEING TRANSFERRED "AS 
IS, WHERE IS" AND SELLER EXPRESSLY DISCLAIMS ANY REPRESENTATIONS 
OR WARRANTIES OF ANY KIND OR NATURE, EXPRESS OR IMPLIED, AS TO 
THE CONDITION, VALUE OR QUALITY OF THE ASSETS OR THE PROSPECTS 
(FINANCIAL AND OTHERWISE), RISKS AND OTHER INCIDENTS OF THE 
ASSETS AND SELLER SPECIFICALLY DISCLAIMS ANY REPRESENTATION OR 
WARRANTY OF MERCHANTABILITY, USAGE, SUITABILITY OR FITNESS FOR 
ANY PARTICULAR PURPOSE WITH RESPECT TO THE ASSETS, OR ANY PART 
THEREOF.


                          ARTICLE III

          REPRESENTATIONS AND WARRANTIES OF PURCHASER


	Purchaser hereby represents and warrants to Seller as 
follows:

	3.01  Corporate Existence.  Purchaser is a corporation duly 
incorporated, validly existing and in good standing under the 
Laws of the Commonwealth of Pennsylvania and has full corporate 
power and authority to conduct its business as it is now being 
conducted and to own, lease and operate its Assets and 
Properties.  Purchaser has full corporate power and authority to 
enter into this Agreement and the Operative Agreements to which 
it is a party, to perform its obligations hereunder and 
thereunder and to consummate the transactions contemplated 
hereby and thereby.  Purchaser has heretofore made available to 
Seller complete and correct copies of its articles of 
incorporation and by-laws (or other comparable corporate charter 
documents), as currently in effect.

	3.02  Authority.  The execution and delivery by Purchaser 
of this Agreement and the Operative Agreements to which it is a 
party, and the performance by Purchaser of its obligations 
hereunder and thereunder, have been duly and validly authorized 
by the Board of Directors of Purchaser, no other corporate 
action on the part of Purchaser or its stockholders being 
necessary.  This Agreement has been duly and validly executed 
and delivered by Purchaser and, subject to receipt of Seller 
Required Regulatory Approvals and Purchaser Required Regulatory 
Approvals, constitutes, and upon the execution and delivery by 
Purchaser of the Operative Agreements to which it is a party, 
such Operative Agreements will constitute, legal, valid and 
binding obligations of Purchaser enforceable against Purchaser 
in accordance with their terms except as the same may be limited 
by bankruptcy, insolvency, reorganization, arrangement, 
moratorium or other similar Laws relating to or affecting the 
rights of creditors generally, or by general equitable 
principles. 

	3.03  No Conflicts.  (a)  Except as set forth in Section 
3.03 of the Disclosure Schedule, and other than obtaining Seller 
Required Regulatory Approvals and Purchaser Required Regulatory 
Approvals, the execution and delivery by Purchaser of this 
Agreement do not, and the execution and delivery by Purchaser of 
the Operative Agreements to which it is a party, the performance 
by Purchaser of its obligations under this Agreement and such 
Operative Agreements and the consummation of the transactions 
contemplated hereby and thereby will not:

    	(i)  conflict with or result in a violation or breach of 
any of the terms, conditions or provisions of the articles of 
incorporation or by-laws (or other comparable corporate charter 
documents) of Purchaser;

    (ii)  require any consent, approval, authorization or 
permit, or filing with or notification to, any Governmental or 
Regulatory Authority except for Seller Required Regulatory 
Approvals and Purchaser Required Regulatory Approvals;

   (iii)  result in a default (or give rise to any right of 
termination, cancellation or acceleration) under any of the 
terms, conditions or provisions of any note, bond, mortgage, 
indenture, license, agreement or other instrument or obligation 
to which Purchaser is a party or by which any of its Assets and 
Properties may be bound, except for such defaults (or rights of 
termination, cancellation or acceleration) as to which requisite 
waivers or consents have been obtained; or

    (iv)  conflict with or result in a violation or breach of 
any term or provision of any Law or Order applicable to 
Purchaser or any of its respective Assets and Properties.

	3.04  Governmental Approvals and Filings.  Except for 
Purchaser Required Regulatory Approvals, no consent, approval or 
action of, filing with or notice to any Governmental or 
Regulatory Authority on the part of Purchaser is required in 
connection with the execution, delivery and performance of this 
Agreement or any of the Operative Agreements to which it is a 
party or the consummation of the transactions contemplated 
hereby or thereby.

	3.05  Legal Proceedings.  Except as disclosed in 
Section 3.05 of the Disclosure Schedule (with paragraph 
references corresponding to those set forth below):

	(a)  there are no Actions or Proceedings pending or, to the 
Knowledge of Purchaser, threatened against, relating to or 
affecting Purchaser or any of its Assets and Properties which 
could reasonably be expected (i) to result in the issuance of an 
Order restraining, enjoining or otherwise prohibiting or making 
illegal the consummation of any of the transactions contemplated 
by this Agreement or any of the Operative Agreements, or (ii) 
individually or in the aggregate with other such Actions or 
Proceedings, to create a Purchaser Material Adverse Effect; and

	(b)  there are no Orders outstanding against Purchaser 
which, individually or in the aggregate with other such Orders, 
would have a Purchaser Material Adverse Effect.

	3.06  Compliance with Laws and Orders.  Except as disclosed 
in Section 3.06 of the Disclosure Schedule, Purchaser is not in 
violation of or in default under any Law or Order applicable to 
Purchaser or its Assets and Properties.

	3.07  Regulation as a Utility.  Purchaser is not a public 
utility company within the meaning of the Holding Company Act.  
As of the Closing, Purchaser will be subject to regulation as a 
public utility under the Federal Power Act.  Purchaser is not 
otherwise subject to regulation as a public utility or public 
service company (or similar designation) by the United States, 
any state of the United States, any foreign country or any 
municipality or any political subdivision of the foregoing.

	3.08  Brokers.  Except for Chase Securities Inc., whose 
fees, commissions and expenses are the sole responsibility of 
Purchaser, all negotiations relative to this Agreement and the 
transactions contemplated hereby have been carried out by 
Purchaser directly with Seller without the intervention of any 
Person on behalf of Purchaser in such manner as to give rise to 
any valid claim by any Person against Purchaser for a finder's 
fee, brokerage commission or similar payment.

	3.09  Financing.  Purchaser has cash and/or commitments for 
equity contributions or credit facilities sufficient (and has 
provided Seller with evidence thereof) to pay the Base Purchase 
Price and the Combined Payment Amount and to make all other 
necessary payments of fees and expenses in connection with the 
transactions contemplated by this Agreement and the Operative 
Agreements.

	3.10  Financial Statements.  Purchaser has delivered to 
Seller the financial statements of Purchaser listed on Section 
3.10 of the Disclosure Schedule, and such financial statements 
and notes fairly present the financial condition and the results 
of operations, changes in stockholders' equity, and cash flow of 
Purchaser as of the respective dates of and for the periods 
referred to therein, all in accordance with GAAP, subject, in 
the case of interim financial statements, to normal recurring 
year-end adjustments (the effect of which will not, individually 
or in the aggregate, be materially adverse) and the absence of 
notes and schedules.

	3.11  Opportunity to Inspect Assets.  Prior to its 
execution of this Agreement, Purchaser has conducted an 
independent investigation of the Assets.  In making its decision 
to execute this Agreement, and to purchase the Assets, Purchaser 
has relied upon the terms and provisions of this Agreement and 
the results of such independent investigation.


                           ARTICLE IV

                      COVENANTS OF SELLER 

	Seller covenants and agrees with Purchaser that, at all 
times from and after the date hereof until the Closing, and, 
with respect to Sections 4.06 and 4.09, thereafter Seller will 
comply with all covenants and provisions of this Article IV, 
except to the extent Purchaser may otherwise consent in writing.

	4.01  Regulatory and Other Approvals.  Seller will 
(a) (i) take all reasonable steps necessary or desirable, and 
proceed diligently and in good faith and use all reasonable 
efforts, as promptly as practicable to obtain all consents, 
approvals or actions of, to make all filings with and to give 
all notices to Governmental or Regulatory Authorities, and 
(ii) take all commercially reasonable steps necessary or 
desirable to obtain all consents, approvals or actions, and give 
all notices to, any other Person required of Seller, in each 
case, to consummate the transactions contemplated hereby and by 
the Operative Agreements, including those described in 
Section 2.03 of the Disclosure Schedule and Seller Required 
Regulatory Approvals, or for Purchaser to own, operate or 
maintain, on and after the Closing, the Assets substantially as 
such assets are currently owned, operated and maintained by 
Seller, (b) provide such other information and communications to 
such Governmental or Regulatory Authorities or other Persons as 
such Governmental or Regulatory Authorities or other Persons may 
reasonably request in connection therewith and (c) provide 
reasonable cooperation (i) to Purchaser in obtaining all 
Purchaser Required Regulatory Approvals and other consents, 
approvals or actions of, making all filings with and giving all 
notices to Governmental or Regulatory Authorities or other 
Persons required of Purchaser to consummate the transactions 
contemplated hereby and by the Operative Agreements and (ii) to 
Purchaser, and Purchaser's potential lenders in connection with 
Purchaser Financing for the transactions contemplated by this 
Agreement.  Prior to making any filings with a Governmental or 
Regulatory Authority pursuant to this Section 4.01, Seller 
agrees to provide copies of such filings to Purchaser.  Nothing 
in this Agreement shall require Seller to institute litigation 
or to pay or agree to pay any sum of money or make financial 
accommodations (other than the payment or incurrence of 
customary expenses and filing or other fees) in order to obtain 
any necessary consent, approval or authorization including, 
without limitation, the Seller Required Regulatory Approvals.  
Seller will provide prompt notification to Purchaser when any 
such consent, approval, action, filing or notice referred to in 
clause (a) above is obtained, taken, made or given, as 
applicable, and will advise Purchaser of any communications 
(and, unless precluded by Law or Order, provide copies of any 
such communications that are in writing) with any Governmental 
or Regulatory Authority or other Person regarding any of the 
transactions contemplated by this Agreement or any of the 
Operative Agreements.

	4.02  HSR Filings.  In addition to and not in limitation of 
Seller's covenants contained in Section 4.01, Seller will 
(a) consult with Purchaser as to appropriate timing of filings 
and take promptly all actions necessary to make the filings 
required of Seller or its Affiliates under the HSR Act, 
(b) comply at the earliest practicable date with any request for 
additional information received by Seller or its Affiliates from 
the Federal Trade Commission or the Antitrust Division of the 
Department of Justice pursuant to the HSR Act and (c) cooperate 
with Purchaser in connection with Purchaser's filing under the 
HSR Act and in connection with resolving any investigation or 
other inquiry concerning the transactions contemplated by this 
Agreement commenced by either the Federal Trade Commission or 
the Antitrust Division of the Department of Justice or state 
attorneys general.

	4.03  Investigation by Purchaser.  Seller will (a) provide 
Purchaser and its officers, employees, counsel, accountants, 
financial advisors, potential lenders, Purchaser's and potential 
lenders' consultants and other representatives (collectively, 
"Representatives") with full access, upon reasonable prior 
notice and during normal business hours, to the Employees and 
such other officers, employees and agents of Seller who have any 
responsibility for the operation of the Generating Assets, to 
Seller's accountants and to the Assets (including access to the 
Generating Assets sites), but only to the extent that such 
access does not unreasonably interfere with the operation of the 
Generating Assets and (b) make available to Purchaser and its 
Representatives, upon request a copy of each report, schedule or 
other document filed or received by Seller between the Bid Date 
and the Closing with or from the SEC, FERC, EPA, Montana Public 
Service Commission or any other relevant Governmental or 
Regulatory Authority and relating to the ownership, operation 
and maintenance of the Assets or the transactions contemplated 
by this Agreement, and all such information and data (including 
copies of Business Contracts, Transferable Permits, Fuel 
Contracts, Colstrip Contracts, Power Purchase/Exchange 
Agreements, Benefit Plans and other Business Books and Records) 
concerning the ownership, operation and maintenance of the 
Assets and the Assumed Liabilities as Purchaser or its 
Representatives reasonably may request in connection with such 
investigation, except to the extent that furnishing any such 
report, schedule, other document, information or data would 
violate any Law, Order (including any protective order or 
similar confidentiality obligation), Contract or License 
applicable to Seller or by which any of its Assets and 
Properties is bound.  In furtherance of the foregoing, Seller 
agrees to cooperate with Purchaser in connection with 
Purchaser's efforts to obtain Purchaser Financing, as defined in 
Section 5.08.  Seller's cooperation shall include the 
negotiation and execution of a consent with the lenders with 
respect to the Operative Agreements, which consent shall include 
providing such lenders with rights to cure a Purchaser default 
under the Operative Agreements; provided, however, that Seller 
shall not be obligated, in connection with such cooperation or 
consent, to take any action or enter into any agreement that 
would have any adverse effect on Seller or any of its rights or 
benefits under this Agreement or the Operative Agreements.

	4.04  No Solicitations.  Subject to the duties imposed by 
applicable Law, Seller will not take, nor will it permit any 
Affiliate of Seller (or authorize or permit any investment 
banker, financial advisor, attorney, accountant or other Person 
retained by or acting for or on behalf of Seller or any such 
Affiliate) to take, directly or indirectly, any action to 
solicit, encourage, receive, negotiate, assist or otherwise 
facilitate (including by furnishing confidential information 
with respect to the operation of the Generating Assets or 
permitting access to the Assets and Properties and Books and 
Records of Seller) any offer or inquiry from any Person 
concerning the acquisition of any of the Assets other than 
Purchaser or its Affiliates or any of their Representatives.

	4.05  Conduct of Business.  (a)  From the Bid Date to the 
Closing, Seller has operated and maintained and will operate and 
maintain the Generating Assets only in the ordinary course 
consistent with Good Utility Practice.  Without limiting the 
generality of the foregoing, Seller will use commercially 
reasonable efforts, to (i) maintain good relations with and keep 
available (subject to dismissals and retirements in the ordinary 
course of business) the services of key Employees, (ii) maintain 
the Assets in good working order and condition, ordinary wear 
and tear excepted, (iii) maintain the good will of lessors, 
customers, suppliers, lenders and other Persons with whom Seller 
otherwise has significant business relationships in connection 
with the operation of the Generating Assets, and (iv) materially 
comply with all Laws and Orders, including Environmental Laws 
applicable to the ownership, operation and maintenance of the 
Generating Assets.

(b)  Without limiting the generality of the foregoing, 
except with the prior written consent of Purchaser, Seller will, 
with respect to the ownership, operation and maintenance of the 
Assets keep in force at not less than their present limits all 
policies of insurance covering the Assets to the extent 
reasonably practicable in light of the prevailing market 
conditions in the insurance industry and promptly notify 
Purchaser of the cancellation of any such policy or any material 
modification thereto.

	4.06  Employee Matters.  Except as may be required by Law 
and except as disclosed in Section 4.06 of the Disclosure 
Schedule, Seller will refrain from directly or indirectly:

	(a)  making any representation or promise, oral or written, 
to any Employee concerning any Benefit Plan, except for 
statements as to the rights or accrued benefits of any Employee  
under the terms of any Benefit Plan or statements describing the  
employee related terms in this Agreement;

	(b)  making any increase in the salary, wages or other 
compensation or benefits of any Employee, other than in the 
ordinary course of business on such Employee's normal annual 
review date in an amount, if a Non-Union Employee, not exceeding 
5% of such Employee's salary, wages and other compensation, or 
declare, pay or set aside for payment any amounts in the nature 
of bonuses to any of its officers or Employees;

	(c)  adopting, entering into or becoming bound by any 
Benefit Plan, employment-related Contract or collective 
bargaining agreement with respect to the operation of the 
Generating Assets or any of the Employees, or amending, 
modifying or terminating (partially or completely) any such 
Benefit Plan, employment-related Contract or collective 
bargaining agreement, except to the extent required by 
applicable Law and, in the event compliance with legal 
requirements presents options, only to the extent that the 
option which Seller reasonably believes to be the least costly 
is chosen; 

	(d)  establishing or modifying any (i) targets, goals, 
pools or similar provisions in respect of any fiscal year under 
any Benefit Plan or any employment-related Contract or other 
compensation arrangement with or for Employees or (ii) salary 
ranges, increase guidelines or similar provisions in respect of 
any Benefit Plan or any employment-related Contract or other 
compensation arrangement with or for Employees;

	(e)  soliciting, recruiting, making any offer of employment 
or otherwise employing any of the Transferring Employees or 
taking any action which could reasonably be expected to 
encourage or persuade the Transferring Employees not to accept 
employment with Purchaser; or

	(f)  agreeing, whether in writing or otherwise, to take any 
action described in this Section 4.06.

	Seller will administer each Benefit Plan, or cause the same 
to be so administered, in all material respects in accordance 
with the applicable provisions of the Code, ERISA and all other 
applicable Laws and consistent with past practice.  Seller will 
promptly notify Purchaser in writing of each receipt by Seller 
(and furnish Purchaser with copies) of any notice of 
investigation or administrative proceeding by the IRS, 
Department of Labor, PBGC or other Person involving any Benefit 
Plan.  Seller will use its reasonable best efforts to assist 
Purchaser in the hiring and retention of the Transferring 
Employees.

	Seller agrees to timely perform and discharge all 
requirements under the WARN Act, if any, and under applicable 
state and local laws and regulations for the notification of its 
Employees arising from the sale of the Assets to Purchaser.  
Seller, and not Purchaser, shall be responsible for and shall 
retain any and all liability for all compensation, benefits, and 
perquisites of any kind due any Transferring Employee on account 
of employment by Seller before the Closing, or the termination 
of employment by Seller, including, but not limited to, 
continuation of health care coverage pursuant to the health 
continuation coverage provisions of COBRA and compliance with 
HIPAA.

	4.07  Certain Restrictions.  Except as set forth in 
Section 4.07 of the Disclosure Schedule, Seller will refrain 
from:

	(a)  creating any Lien (other than a Permitted Lien) on the 
Assets except in the ordinary course of Seller's business or as 
required under Seller's instruments of Indebtedness and, in each 
case, as will be removed on or prior to the Closing;

	(b)  selling, leasing (as lessor), transferring or 
otherwise disposing of, any of the Assets, other than assets 
used, consumed or replaced in the ordinary course of business 
consistent with Good Utility Practice;

	(c)  entering into, amending or modifying in any material 
way, terminating (partially or completely), granting any waiver 
of any material term under or giving any material consent with 
respect to any Business Contract, Transferable Permit, Fuel 
Contract, Colstrip Contract or Power Purchase/Exchange Agreement 
or other contract or agreement comprising a part of the Assets 
or that relates to the Assets, the Assumed Liabilities or is 
material to the operation of the Generating Assets;

	(d)  other than in the ordinary course of business, 
incurring, purchasing, canceling, prepaying or otherwise 
providing for a complete or partial discharge in advance of a 
scheduled payment date with respect to, or waiving any right 
under, any Liability of or owing to Seller in connection with 
the Assets, the Assumed Liabilities or the operation of the 
Generating Assets in an aggregate principal amount exceeding 
$500,000;

	(e)  engaging with any Person in any Business Combination, 
unless such Person agrees in a written instrument to adopt and 
comply with the terms and conditions of this Agreement as though 
such Person was an original signatory hereto;

	(f)  engaging in any transaction individually or in the 
aggregate with other such transactions material to the operation 
of the Generating Assets with any officer, director, Affiliate 
or Associate of Seller, or any Associate of any such officer, 
director or Affiliate, that would be an Assumed Liability and 
that would extend beyond the Closing other than in the ordinary 
course of business on terms no less favorable to Seller than 
could be obtained on an arm's-length basis with an unaffiliated 
third party;

	(g)  making any material change in the level of fuel 
inventory and stores inventory customarily maintained by Seller 
with respect to the Generating Assets, other than consistent 
with Good Utility Practice; or

	(h)  entering into any commitment for the purchase or sale 
of fuel having a term greater than six months and not terminable 
on or before the Closing either (i) automatically, or (ii) by 
option of Seller (or, after the Closing, by Purchaser) in its 
sole discretion, if the aggregate payment under such commitment 
and all other outstanding commitments not previously approved by 
Purchaser would be expected to exceed $500,000;

	(i)  making any tax election or entering into or amending 
any real or personal property Tax agreement, treaty or 
settlement that would have a negative effect on the Tax status 
of Purchaser with regard to the Assets;

	(j)  entering into any Contract to do or engage in any of 
the foregoing.

	The foregoing shall not preclude Seller from making (i) 
Maintenance Expenditures and Capital Expenditures, and (ii) at 
Seller's expense, such other maintenance and capital 
expenditures as Seller deems necessary.

	4.08  Security Deposits.  Seller will transfer to Purchaser 
at the Closing all of Seller's right, title and interest in and 
to the Tenant Security Deposits and the Landlord Security 
Deposits and any other deposits, prepayments or progress 
payments made or held by Seller in connection with the Assets or 
material to the ownership, operation and maintenance of the 
Generating Assets. 

	4.09  Delivery of Books and Records, etc.; Removal of 
Property.  (a)  At the Closing, Seller shall deliver or make 
available to Purchaser at the locations at which the Generating 
Assets are operated all of the Business Books and Records and 
such other Assets as are in Seller's possession at other 
locations, and if at any time after the Closing, Seller 
discovers in its possession or under its control any other 
Business Books and Records or other Assets, it will forthwith 
deliver such Business Books and Records or other Assets to 
Purchaser.

	(b)  Except as set forth in Section 4.09 of the Disclosure 
Schedule, within a reasonable time after the Closing, Seller 
shall take all commercially reasonable steps to remove all 
Assets and Properties not being sold to Purchaser hereunder from 
the Real Property except as contemplated by the Separation 
Document.  Such removal shall be at the sole cost and risk of 
Seller, including risk of loss and damage to such Assets and 
Properties and to the Assets conveyed to Purchaser hereby.

	4.10  Fulfillment of Conditions.  Seller will execute and 
deliver at the Closing each Operative Agreement that Seller is 
required hereby to execute and deliver as a condition to the 
Closing, will take all commercially reasonable steps necessary 
or desirable and proceed diligently and in good faith to satisfy 
each other condition to the obligations of Purchaser contained 
in this Agreement and will not take or fail to take any action 
that could reasonably be expected to result in the 
nonfulfillment of any such condition.

	4.11  Observation, Inspection and Participation.  Between 
the date of this Agreement and the Closing, Purchaser shall be 
entitled to have a reasonable number of representatives, all of 
whom shall be employees of Purchaser or its Affiliates unless 
otherwise approved by Seller in each instance, which approval 
shall not be unreasonably withheld ("Site Representatives") at 
any of the Assets, on a full or part time basis (whether on site 
or off-site), as determined by Purchaser; provided, however, 
that (a) the presence and activities of the Site Representatives 
shall be conducted in a manner as not to interfere unreasonably 
with the ownership, operation and maintenance of the Assets, or 
with the activities of Seller not related to the Assets and (b) 
the Site Representatives shall not have access to any 
information that is unavailable pursuant to Section 4.03. 
Reasonable office space and facilities will be made available by 
Seller to such Site Representatives. Each Site Representative 
shall have the right to review budgets and expenditures, audit 
records (except for personnel and medical records unless 
required by law), inspect equipment, advise on repairs required 
for equipment, review permits, review the progress of outages, 
review maintenance and operating practices and otherwise observe 
all activities at the above mentioned facilities in each case to 
the extent related to the operation of the Assets. Between the 
date hereof and the Closing, Seller shall exercise its 
reasonable efforts to invite Site Representatives to attend 
internal meetings in which Seller participates and which relate 
specifically to the physical operation or maintenance of the 
Assets; provided, however, that such obligation shall not extend 
to (i) meetings of the boards of directors, or any committees 
thereof, of  Seller or any of its Affiliates, (ii) meetings with 
counsel, or (iii) meetings the subject matter of which, in 
Seller's reasonable judgment, if disclosed to Purchaser, would 
likely be detrimental to Seller (including, without limitation, 
information relating to Seller's proposed business activities 
following the Closing or to contractual or other matters as to 
which the interests of Seller and Purchaser may diverge). Site 
Representatives shall also be entitled to consult with Seller 
and make recommendations as to all activities relating to the 
management, operation, maintenance, construction, renewal, 
addition, replacement, modification and disposal of the Assets, 
including, without limitation, applications for authorizations, 
permits and licenses, and fuel procurement and transportation.

	4.12  Notice of Breach.  Seller shall promptly give notice 
to Purchaser upon becoming aware of the occurrence of any event 
which would cause or constitute a breach of any of the 
representations, warranties or covenants of Seller contained in 
this Agreement.

	4.13  Bridge Financing Fees.  In the event that Purchaser 
obtains a written commitment for bridge financing in connection 
with the transactions contemplated hereby, Seller will pay 
55.88% of 50% of any financing fees payable by Purchaser in 
connection with such bridge financing at the same time Purchaser 
pays 50% of such financing fees; provided, however, Seller's 
obligation under this Section 4.13 shall not exceed $4,322,318 
in the aggregate.

	4.14  Special Maintenance and Capital Expenditures.  Within 
thirty (30) days after the date hereof, Seller and Purchaser 
shall mutually agree on a Schedule setting forth a month by 
month special maintenance and capital expenditure budget 
relating to the Assets for calendar years 1999 and 2000 (the 
"Budget".)  The Budget will be divided into two parts; Category 
A items and Category B items.  With respect to items listed 
under Category A, Seller agrees to use commercially reasonable 
efforts to conduct and complete such special maintenance and 
capital expenditures at the times set forth in the Budget.  With 
respect to items listed under Category B, Seller shall conduct 
and complete such special maintenance and capital expenditures 
at such times as Seller shall determine in its reasonable 
discretion after consultation with Purchasers.  With respect to 
emergency special maintenance and capital expenditure items not 
identified in the Budget that arise after the date hereof and 
prior to the Closing, Seller will consult with Purchaser and 
will conduct and complete any such emergency special maintenance 
and capital expenditure items in accordance with Good Utility 
Practice ("Emergency Expenditures").

                             ARTICLE V

                       COVENANTS OF PURCHASER

	Purchaser covenants and agrees with Seller that, at all 
times from and after the date hereof until the Closing and, in 
the case of Sections 5.03 and 5.07, thereafter, Purchaser will 
comply with all covenants and provisions of this Article V, 
except to the extent Seller may otherwise consent in writing.

	5.01  Regulatory and Other Approvals.  Purchaser will (a) 
take all reasonable steps necessary or desirable, and proceed 
diligently and in good faith and use all reasonable efforts, at 
the earliest commercially practicable dates to obtain all 
consents, approvals or actions of, to make all filings with and 
to give all notices to Governmental or Regulatory Authorities or 
any other Person required of Purchaser to consummate the 
transactions contemplated hereby and by the Operative 
Agreements, including those described in Section 3.03 of the 
Disclosure Schedule and Purchaser Required Regulatory Approvals 
or for Purchaser to own, operate or maintain, on and after the 
Closing , the Assets substantially as such assets are currently 
owned, operated and maintained by Seller, (b) provide such other 
information and communications to such Governmental or 
Regulatory Authorities or other Persons as such Governmental or 
Regulatory Authorities or other Persons may reasonably request 
in connection therewith and (c) provide reasonable cooperation 
to Seller in obtaining Seller Required Regulatory Approvals and 
all other consents, approvals or actions of, making all filings 
with and giving all notices to Governmental or Regulatory 
Authorities or other Persons required of Seller to consummate 
the transactions contemplated hereby and by the Operative 
Agreements.  Prior to making any filings with a Governmental or 
Regulatory Authority pursuant to Section 5.01, Purchaser agrees 
to provide copies of such filings to Seller.  Nothing in this 
Agreement shall require Purchaser to institute litigation or to 
pay or agree to pay any sum of money or make financial 
accommodations (other than the payment or incurrence of 
customary expenses and filing or other fees) in order to obtain 
any necessary consent, approval or authorization including, 
without limitation, the Purchaser Required Regulatory Approvals.  
Purchaser will provide prompt notification to Seller when any 
such consent, approval, action, filing or notice referred to in 
clause (a) above is obtained, taken, made or given, as 
applicable, and will advise Seller of any communications (and, 
unless precluded by Law, provide copies of any such 
communications that are in writing) with any Governmental or 
Regulatory Authority or other Person regarding any of the 
transactions contemplated by this Agreement or any of the 
Operative Agreements.

	5.02  HSR Filings.  In addition to and without limiting 
Purchaser's covenants contained in Section 5.01, Purchaser will 
(a) consult with Seller as to the appropriate timing of filings 
and take promptly all actions necessary to make the filings 
required of Purchaser or its Affiliates under the HSR Act, 
(b) comply at the earliest practicable date with any request for 
additional information received by Purchaser or its Affiliates 
from the Federal Trade Commission or the Antitrust Division of 
the Department of Justice pursuant to the HSR Act and 
(c) cooperate with Seller in connection with Seller's filing 
under the HSR Act and in connection with resolving any 
investigation or other inquiry concerning the transactions 
contemplated by this Agreement commenced by either the Federal 
Trade Commission or the Antitrust Division of the Department of 
Justice or state attorneys general.

	5.03  Employees.  (a)  Section 5.03 of the Disclosure 
Schedule sets forth a list of all Employees as of September 30, 
1998. Purchaser shall offer employment, effective as of the 
Closing, to all full-time and part-time Non-Union Employees, 
including Non-Union Employees who are on disability or worker's 
compensation leave or on an authorized leave of absence as of 
the Closing.  All such offers of employment shall be made in 
accordance with applicable Law, and such employment with 
Purchaser shall be subject to the following requirements for the 
entirety of the period commencing on the Closing and ending no 
less than 18 months thereafter or such other period as set forth 
in this Section 5.03:

	(i)  Terms of Employment.  Purchaser shall offer each Non-
Union Employee a position with Purchaser similar to his or her 
position immediately prior to the Closing and agrees to employ 
each Non-Union Employee who accepts such employment for 18 
months after the Closing (the "Employment Term") at a location 
in Montana and at a base pay at least equal to his or her base 
pay on the Closing; provided, however, that nothing herein shall 
prevent Purchaser from terminating any Transferring Non-Union 
Employee "for cause" as defined by Montana Law (a reduction in 
force, however, will not be considered "for cause".)  Purchaser 
shall afford all Transferring Non-Union Employees ten paid 
holidays per year and vacation and personal time under a paid 
time off program substantially similar in the aggregate to the 
paid time off program of Seller; provided, however, for the 
calendar year during which the Closing occurs, Purchaser shall 
assume all accrued vacation and personal time payable to 
Transferring Non-Union Employees as of the Closing.  Purchaser 
shall make incentive compensation awards for calendar year 
during which the Closing occurs to eligible Transferring Non-
Union Employees substantially in accordance with Seller's 
incentive compensation plan in effect on the Closing (except 
that Purchaser shall not be obligated to pay any incentive 
compensation based on the consummation of the transactions 
contemplated hereby).

    (ii)  Severance.  For the period commencing on the 
expiration of the Employment Term and ending on the date which 
is 6 months thereafter, Purchaser shall pay each Transferring 
Non-Union Employee who is terminated from employment during such 
period, other than "for cause," a severance benefit in an amount 
equal to $6,000 plus the greater of two weeks of base pay times 
such Employee's "year of service" up to a maximum of 52 weeks of 
base pay, or 12 weeks of base pay. Purchaser shall cause any 
subsequent purchaser(s) of the Assets to provide such severance 
benefits during such six-month period.  For purposes of the 
foregoing, a "for cause" termination shall be as otherwise 
defined by Montana Law, and "years of service" shall mean the 
Employee's aggregate whole years of service for Seller, 
Purchaser and any subsequent purchaser(s) of the Assets.

   (iii)  Welfare Benefits.  Purchaser shall provide all 
Transferring Non-Union Employees (other than those terminated 
"for cause" as defined above) with coverage under welfare 
benefit plans, programs and arrangements ("Purchaser's Welfare 
Plans") maintained or sponsored by Purchaser that provide 
medical, dental, vision, basic life insurance (including 
dependent life options), short term disability, long term 
disability, relocation benefits  and worker compensation 
benefits that are substantially similar in the aggregate to 
those available under welfare benefit plans maintained by Seller 
immediately prior to the Closing.  Purchaser shall cause all 
pre-existing condition exclusions and waiting periods, if any, 
under Purchaser's Welfare Plans to be waived for Transferring 
Non-Union Employees, and shall provide each such Employee with 
credit thereunder for deductible, out-of-pocket, co-payment and 
similar expenses incurred under similar plans of Seller.  
Purchaser shall assume under Purchaser's Welfare Plans all 
liabilities for continuation coverage for Transferring Non-Union 
Employees and their eligible dependents pursuant to Section 
4980B of the Code and Section 601 through 609 of ERISA and any 
similar state coverage, for the required duration of such 
coverage, provided that such Employee's qualifying event occurs 
after the Closing.

	(iv)  401(k) Plan.  Purchaser shall establish and maintain 
for Transferring Non-Union Employees a plan pursuant to Section 
401(k) of the Code ("Purchaser's 401(k) Plan") which shall 
provide for the same or substantially similar elective deferral, 
after-tax, and employer matching contribution levels, and loan 
entitlements, that are available under the Montana Power Company 
Retirement Savings Plan (401(k)) ("MPC 401(k) Plan"), and which 
shall further provide for the acceptance of rollover 
distributions from the MPC 401(k) Plan and/or conduit individual 
retirement accounts established by any such employees.  
Purchaser shall take all actions required to obtain, and shall 
obtain, a favorable determination letter from the IRS on the tax 
qualified status of Purchaser's 401(k) Plan.

	(v)  Retirement Plan.  Purchaser shall establish and 
maintain for Transferring Non-Union Employees a retirement plan 
pursuant to Section 401(a) of the Code ("Purchaser's Retirement 
Plan") which shall contain either a defined benefit or cash 
balance formula that provides a retirement benefit that is of 
substantially similar in the aggregate to the retirement benefit 
provided under Seller's Cash Balance Retirement Plan ("Seller's 
Retirement Plan").  As soon as practicable after the Closing, 
but no later than sixty (60) days after the Closing, Seller 
shall cause to be transferred from Seller's Retirement Plan, and 
Purchaser shall cause Purchaser's Retirement Plan to accept such 
transfer,  assets from Seller's Retirement Plan in respect of 
the accrued benefit of each Transferring Non-Union Employee who 
participates in Seller's Retirement Plan and Purchaser shall 
assume Liability for such accrued benefit as of the Closing.  
The assets transferred to the Purchaser's Retirement Plan shall 
equal the aggregate present value of the accrued benefits of 
Transferring Non-Union Employees under Seller's Retirement Plan 
on a termination basis as of the Closing (within the meaning of 
Treasury Regulation Section 1.414(l)-1(b)(5)), as certified by 
Seller's actuary.  After such transfer, Purchaser's Retirement 
Plan shall provide a benefit for each Transferring Non-Union 
Employee that is substantially similar in the aggregate to such 
Employee's accrued benefit under Seller's Retirement Plan 
immediately prior to the Closing.  Purchaser shall take all 
actions required to obtain, and shall obtain, a favorable 
determination letter from the IRS on the tax qualified status of 
Purchaser's Retirement Plan.

    (vi)  Service.  Any and all plans of Purchaser described in 
paragraphs (i) through (v) above that determine a participant's 
eligibility to participate, waiting period for benefits, vesting 
or benefit accruals based on his or her length of service with 
Purchaser shall credit each Transferring Non-Union Employee's 
service with Seller and its Affiliates as service with Purchaser 
for such purposes.

	(b)  Purchaser shall, effective on the Closing, assume and 
fulfill all of Seller's obligations under the Collective 
Bargaining Agreements to the extent related to Transferring 
Union Employees, including, without limitation the Letter of 
Agreement between Seller and IBEW Local 44 dated July 9, 1998 
and the drafts (substantially in the form provided heretofore) 
of the Letter of Agreements (which have been ratified by the 
unions) between Seller and IBEW Local 1638 and Teamsters Union 
Local No. 190 dated July 2, 1998 and July 9, 1998 respectively 
(copies of which have been made available to Purchaser prior to 
the date hereof).  Purchaser shall offer employment, effective 
as of the Closing, to all Union Employees, including Union 
Employees who are on disability or worker's compensation leave 
or on an authorized leave of absence as of the Closing.  All 
such offers of employment shall be made in accordance with 
applicable Law and all relevant Collective Bargaining 
Agreements.  Without limiting the generality of the foregoing, 
the Purchaser's 401(k) Plan shall provide for the acceptance of 
rollover distributions from or in respect of any Transferring 
Union Employees from the MPC 401(k) Plan and/or any conduit 
individual retirement accounts established by any such 
employees.  Purchaser shall establish and maintain for 
Transferring Union Employees a retirement plan pursuant to 
Section 401(a) of the Code ("Purchaser's Retirement Plan") which 
shall contain either a defined benefit or cash balance formula 
that provides a retirement benefit that is of no less value in 
the aggregate to the retirement benefit provided under the 
Seller's Defined Benefit Retirement Plan ("Seller's DB Plan").  
To the extent permitted by the Collective Bargaining Agreements, 
as soon as practicable after the Closing, but no later than 
sixty (60) days after the Closing, Seller shall cause to be 
transferred from the Seller's DB Plan, and Purchaser shall cause 
the Purchaser's Retirement Plan to accept such transfer,  assets 
from the Seller's DB Plan in respect of the accrued benefit of 
each Transferring Union Employee who participates in the 
Seller's DB Plan and the Purchaser shall assume liability for 
such accrued benefits as of the Closing.  The assets transferred 
to the Purchaser's Retirement Plan shall equal the aggregate 
present value of the accrued benefits of Transferring Union 
Employees under the Seller's Retirement Plan on a termination 
basis (within the meaning of Treasury Regulation Section 
1.414(l)-1(b)(5)), as certified by Seller's actuary.  After such 
transfer, but subject to the terms of any applicable collective 
bargaining agreement, Purchaser's Retirement Plan shall provide 
a benefit for each Transferring Union Employee that is of no 
less value in the aggregate to such Employee's accrued benefit 
under the Seller's Retirement Plan immediately prior to the 
Closing.  Any and all plans of Purchaser that determine a 
participant's eligibility to participate, waiting period for 
benefits, vesting or benefit accruals based on his or her length 
of service with Purchaser shall credit each Transferring Union 
Employee's service with Seller and its Affiliates as service 
with Purchaser for such purposes.

	(c)  Purchaser shall be responsible and shall assume any 
and all Liabilities for all compensation, benefits, and 
perquisites of any kind due any Transferring Employee on account 
of employment by Purchaser after the Closing, or the termination 
of employment by Purchaser, including, but not limited to, 
continuation of health care coverage pursuant to COBRA and 
compliance with HIPAA.

	(d)  Seller will remain responsible (i) for all short-term 
disability, long-term disability and workers compensation 
benefits payable to Transferring Non-Union Employees who, as of 
the close of business on the day immediately preceding the 
Closing, were determined to be disabled in accordance with the 
applicable provisions of the Seller's short-term or long-term 
disability benefits plans or programs and (ii) for all workers 
compensation claims relating to a pre-closing injury (provided 
such workers compensation claims are made on or before the date 
that is one year after the Closing).


	5.04  PPUC Approval for Holding Company.  From the date 
hereof through the Closing, Purchaser agrees not to enter into 
any Contract or take any action which, when taken together with 
the consummation of the transactions contemplated by this 
Agreement, would violate any condition imposed by the PPUC that 
limits PP&L Resources, Inc.'s investment in diversified 
businesses without prior PPUC approval.  Purchaser further 
agrees that, in seeking the approval described in clause (v) of 
the definition of Purchaser Required Regulatory Approvals, 
Purchaser shall use commercially reasonable efforts to seek any 
reasonable PPUC approval that would allow Purchaser to 
consummate the transactions contemplated hereby and to own, 
operate and maintain the Assets in substantially the same manner 
as currently owned, operated and maintained by Seller.

	5.05  Notice of Breach.  Purchaser shall promptly give 
notice to Seller upon becoming aware of the occurrence of any 
event which would cause or constitute a breach of any of the 
representations, warranties or covenants of Purchaser contained 
in this Agreement.

	5.06  Fulfillment of Conditions.  Purchaser will execute 
and deliver at the Closing each Operative Agreement that 
Purchaser is hereby required to execute and deliver as a 
condition to the Closing, will take all commercially reasonable 
steps necessary or desirable and proceed diligently and in good 
faith to satisfy each other condition to the obligations of 
Seller contained in this Agreement and will not take or fail to 
take any action that could reasonably be expected to result in 
the nonfulfillment of any such condition.

	5.07  Tax-Exempt Bond Financed Pollution Control 
Facilities.  (a)  Following the Closing until the maturity or 
redemption date of the Pollution Control Bonds

	(i)  	Except as otherwise permitted in (ii), Purchaser will 
not materially change or permit to be changed the character or 
nature of the use of those facilities listed in Exhibit C hereto 
(the "Pollution Control Facilities") from the manner Seller has 
used said facilities prior to the sale of the Assets, unless 
such changed use would constitute a use or purpose of said 
facilities for which tax-exempt bonds could be issued pursuant 
to section 1313 of the Tax Reform Act of 1986 (P.L. 99-514 or, 
hereinafter, the "1986 Tax Act,") to refund bonds described in 
section 1312(a) of the 1986 Tax Act which, for purposes hereof, 
are assumed to have been issued to finance facilities of the 
same character and use or purpose as said facilities;

	(ii)  	Purchaser will not sell or otherwise transfer any 
portion of such Pollution Control Facilities unless (A) the 
transferee covenants to satisfy the conditions of section 
5.07(a)(i) with respect to its ownership and use of said 
facilities following the date of any such purchase or (B) the 
transfer relates to personal property and is exclusively for 
cash the proceeds of which will be expended within six months of 
the date of receipt on facilities for which tax-exempt bonds 
could be issued pursuant to section 1313 of the 1986 Tax Act, to 
refund bonds described in section 1312(a) of said act which, for 
purposes hereof, are assumed to have been issued to finance 
facilities of the same character and use or purpose as said 
facilities; and

	(iii)	  Purchaser will cooperate with Seller and use 
commercially reasonable efforts to permit Seller to have access 
to Colstrip Units 1,2,3 and 4, as the case may be, at reasonable 
times to examine the Pollution Control Facilities.
	Nothing herein shall be construed to prevent Purchaser from 
ceasing to use any facilities or equipment that, in Purchaser's 
reasonable judgment, have become obsolescent or otherwise 
uneconomical to continue to use.  Seller will notify Purchaser 
when the Pollution Control Bonds have matured or been redeemed.  

	5.08  Purchaser Financing.  Purchaser will proceed in good 
faith and use all reasonable efforts to obtain financing on 
commercially reasonable terms in amounts and structure 
reasonably consistent with Purchaser's financing plan as set 
forth in Purchaser's written proposal to Seller dated September 
25, 1998 (the "Purchaser Financing".)


                            ARTICLE VI

             CONDITIONS TO OBLIGATIONS OF PURCHASER

	The obligations of Purchaser hereunder to purchase the 
Assets and to assume and pay, perform and discharge the Assumed 
Liabilities are subject to the fulfillment, at or before the 
Closing, of each of the following conditions (all or any of 
which may be waived in whole or in part by Purchaser in its sole 
discretion):

	6.01  Representations and Warranties.  The representations 
and warranties made by Seller in this Agreement and the 
Operative Agreements, taken as a whole, shall be true and 
correct, in all material respects, on and as of the Closing as 
though repeated on and as of the Closing or, in the case of 
representations and warranties made as of a specified date 
earlier than the Closing, on and as of such earlier date.

	6.02  Performance.  Seller shall have performed and 
complied with, in all material respects, the agreements, 
covenants and obligations required by this Agreement to be so 
performed or complied with by Seller at or before the Closing.

	6.03  Officers' Certificates.  Seller shall have delivered 
to Purchaser a certificate, dated as of the Closing and executed 
by the Chairman of the Board, the President or any Vice 
President of Seller, substantially in the form and to the effect 
of Exhibit D hereto, and a certificate, dated as of the Closing 
and executed by the Secretary or any Assistant Secretary of 
Seller, substantially in the form and to the effect of Exhibit E 
hereto.

	6.04  Orders and Laws.  There shall not be in effect on the 
date of the Closing any Order or Law restraining, enjoining or 
otherwise prohibiting or making illegal the consummation of any 
of the transactions contemplated by this Agreement or any of the 
Operative Agreements.

	6.05  Regulatory Consents and Approvals.  Subject to 
Section 1.10, all Seller Required Regulatory Approvals and 
Purchaser Required Regulatory Approvals shall have been duly 
obtained, made or given and shall be in full force and effect 
and shall be a Final Order reasonably satisfactory to Purchaser, 
and all terminations or expirations of waiting periods imposed 
by any Governmental or Regulatory Authority necessary for the 
consummation of the transactions contemplated by this Agreement 
and the Operative Agreements, including under the HSR Act, shall 
have occurred.

	6.06  Third Party Consents.  The consents (or in lieu 
thereof waivers) listed in Section 6.06 of the Disclosure 
Schedule shall have been obtained and shall be in full force and 
effect and shall be reasonably satisfactory to Purchaser. 

	6.07  Colstrip Rights of First Refusal.  Seller shall have 
either received the consents required under each of the Colstrip 
Rights of First Refusal or the exercise periods of such Colstrip 
Rights of First Refusal shall have expired.

	6.08  No Seller Material Adverse Effect.  There shall not 
have occurred and be continuing a Seller Material Adverse 
Effect.

	6.09 Proceedings.  All corporate and other proceedings to 
be taken by Seller in connection with the transactions 
contemplated hereby and all documents incident thereto shall be 
reasonably satisfactory in form and substance to Purchaser and 
its counsel, and Purchaser and its counsel shall have received 
all such certified or other copies of such documents as it or 
they may reasonably request.

	6.10  Deliveries.  Seller shall have executed and delivered 
to Purchaser (i) the General Assignment, (ii) the other 
Assignment Instruments, (iii) subject to Section 1.10, the 
Colstrip Unit Number 3 Wholesale Transition Service Agreement, 
dated as of the Closing, substantially in the form and to the 
effect of Exhibit F-1 hereto (the "Colstrip Transition Service 
Agreement"),  (iv) subject to Section 1.10, the Non-Colstrip 
Unit Number 3 Wholesale Transition Service Agreement, dated as 
of the Closing, substantially in the form and to the effect of 
Exhibit F-2 hereto (the "Non-Colstrip Transition Service 
Agreement"), (v) the Interconnection Agreement, dated as of the 
Closing, substantially in the form and to the effect of Exhibit 
G hereto, including the Separation Document (the 
"Interconnection Agreement") and (vi) if the Colstrip 4 
Transmission Assets are not conveyed to Purchaser at the 
Closing, Seller and Purchaser shall have entered into the 
Colstrip 4 Transmission Service Agreement.

	6.11  Colstrip Operations Arrangements.  There shall be in 
effect (a) arrangements reasonably satisfactory to Purchaser 
pursuant to which Purchaser shall be the operator of the entire 
Colstrip generating facility for a period of at least ten (10) 
years after the Closing, subject only to removal for cause or 
(b) such other arrangements with respect to the operation of the 
Colstrip generating facility as are reasonably acceptable to 
Purchaser.

	6.12  Purchaser Financing.  Purchaser's obligation to 
purchase the Colstrip 4 Transmission Assets at the Closing is 
subject to the receipt by Purchaser, on or prior to the Closing, 
of the Purchaser Financing or other financing reasonably 
satisfactory to Purchaser.

	6.13  Opinion of Counsel.  Purchaser shall have received 
the opinions of (i) Milbank, Tweed, Hadley & McCloy, counsel to 
Seller, dated as of the Closing, substantially in the form and 
to the effect of Exhibit H-1 hereto,(ii) General Counsel of 
Seller, dated as of the Closing, substantially to the effect of 
Exhibit H-2 hereto, and (iii) outside Montana counsel to Seller, 
dated as of the Closing, substantially to the effect of Exhibit 
H-3 hereto.


                            ARTICLE VII

                CONDITIONS TO OBLIGATIONS OF SELLER

	The obligations of Seller hereunder to sell the Assets are 
subject to the fulfillment, at or before the Closing, of each of 
the following conditions (all or any of which may be waived in 
whole or in part by Seller in its sole discretion):

	7.01  Representations and Warranties.  The representations 
and warranties made by Purchaser in this Agreement and the 
Operative Agreements, taken as a whole, shall be true and 
correct, in all material respects on and as of the Closing as 
though repeated on and as of the Closing.

	7.02  Performance.  Purchaser shall have performed and 
complied with, in all material respects, the agreements, 
covenants and obligations required by this Agreement to be so 
performed or complied with by Purchaser at or before the 
Closing.

	7.03  Officers' Certificates.  Purchaser shall have 
delivered to Seller a certificate, dated as of the Closing and 
executed by the Chairman of the Board, the President or any 
Executive or Senior Vice President of Purchaser, substantially 
in the form and to the effect of Exhibit I hereto, and a 
certificate, dated as of  the Closing and executed by the 
Secretary or any Assistant Secretary of Purchaser, substantially 
in the form and to the effect of Exhibit J hereto. 

	7.04  Orders and Laws.  There shall not be in effect on the 
date of the Closing any Order or Law restraining, enjoining or 
otherwise prohibiting or making illegal the consummation of any 
of the transactions contemplated by this Agreement or any of the 
Operative Agreements.

	7.05  Regulatory Consents and Approvals.  Subject to 
Section 1.10, all Seller Required Regulatory Approvals and 
Purchaser Required Regulatory Approvals shall have been duly 
obtained, made or given and shall be in full force and effect 
and shall be a Final Order, and all terminations or expirations 
of waiting periods imposed by any Governmental or Regulatory 
Authority necessary for the consummation of the transactions 
contemplated by this Agreement and the Operative Agreements, 
including under the HSR Act, shall have occurred.

	7.06  Third Party Consents.  The consents (or in lieu 
thereof waivers) listed in Section 7.06 of the Disclosure 
Schedule shall have been obtained and shall be in full force and 
effect and shall be reasonably satisfactory to Seller.

	7.07  Collective Bargaining Agreements.  Purchaser shall 
have assumed, as set forth in Section 5.03, all of the 
applicable obligations under the Collective Bargaining 
Agreements as they relate to the Union Employees who are 
Transferring Employees.

	7.08  No Purchaser Material Adverse Effect.  There shall 
not have occurred and be a continuing Purchaser Material Adverse 
Effect.

	7.09  Proceedings.  All corporate and other proceedings to 
be taken by Purchaser in connection with the transactions 
contemplated hereby and all documents incident thereto shall be 
reasonably satisfactory in form and substance to Seller and its 
counsel and Seller and its counsel shall have received all such 
certified or other copies of such documents as it or they may 
reasonably request.

	7.10  Colstrip Rights of First Refusal.  Seller shall have 
either received the consents required under each of the Colstrip 
Rights of First Refusal or the exercise periods of such Colstrip 
Rights of First Refusal shall have expired.

	7.11  Opinion of Counsel.  Sellers shall have received an 
opinion of LeBoeuf, Lamb, Greene & MacRae L.L.P., counsel to 
Purchaser, dated as of the Closing, substantially to the effect 
of Exhibit K hereto.  Such counsel's opinion need not cover any 
matter contained in the opinions required by Exhibit K to the 
extent such matter (i) involves the Laws of Montana, Oregon, 
Washington, Pennsylvania or any other jurisdiction other than 
the federal Laws of the United States or the Laws of the State 
of New York or (ii) involves or is related to the Colstrip 
Contracts, the Colstrip 4 Generation Assets, the Colstrip 4 
Transmission Assets, the Colstrip 1, 2 and 3 Transmission Assets 
and any other Colstip-related matter, and, in lieu thereof, 
Seller shall have received the opinions of other counsel 
covering such matters (admitted in other jurisdictions to the 
extent covered in clause (i)).

	7.12  Deliveries.  Purchaser shall have executed and 
delivered to Seller (i) Assumption Agreement, (ii) the other 
Assumption Instruments, (iii) subject to Section 1.10, the 
Colstrip Transition Service Agreement, (iv) the Non-Colstrip 
Transition Service Agreement, (v) subject to Section 1.10, the 
Interconnection Agreement, and (vi) the Confirmation of the 
Reciprocal Sharing Agreement, dated as of the Closing, 
substantially in the form and to effect of Exhibit L hereto.


                          ARTICLE VIII

               TAX MATTERS AND POST-CLOSING TAXES

	8.01  Transfer Taxes.  All Transfer Taxes incurred in 
connection with this Agreement and the transactions contemplated 
hereby shall be borne by Purchaser, and Purchaser, at its own 
expense, will file, to the extent required by applicable Law, 
all necessary Tax Returns and other documentation with respect 
to all such Transfer Taxes, and, if required by applicable Law, 
Seller will join in the execution of any such Tax Returns or 
other documentation and will take such positions therein as are 
reasonably requested by Purchaser.  Nothing in the foregoing 
sentence shall require Seller to take a position adverse to its 
own posture with regard to Taxes.  Prior to the Closing, 
Purchaser will provide to Seller, to the extent possible, an 
appropriate certificate from each applicable taxing authority to 
the effect that no Transfer Tax will be incurred in connection 
with this Agreement and the transactions contemplated hereby.

	8.02  Returns with respect to Prorated Taxes.  With respect 
to those Taxes to be prorated in accordance with Section 1.06 of 
this Agreement, Purchaser shall prepare and timely file all Tax 
Returns required to be filed after the Closing with respect the 
Assets and shall duly and timely pay all such Taxes shown to be 
due on such Tax Returns.  Purchaser's preparation of any such 
Tax Return shall be subject to Seller's approval, which approval 
shall not be unreasonably withheld.  Purchaser shall make such 
Tax Returns available for Seller's review and approval no later 
than twenty (20) Business Days prior to the due date for filing 
such Tax Return.  Within fifteen (15) Business Days after 
receipt of such Tax Return, Seller shall pay to Purchaser its 
proportionate share of the amount shown as due on such Tax 
Return determined in accordance with Section 1.06 of this 
Agreement.


                            ARTICLE IX

               SURVIVAL; NO OTHER REPRESENTATIONS

	9.01  Survival of Representations, Warranties, Covenants 
and Agreements.

	(a)  Subject to Section 11.02, the representations and 
warranties of Purchaser and Seller (other than the 
representations and warranties (x) contained in Section 2.06 
(the "Tax Representation") and 2.09 (the "ERISA 
Representation"), which shall survive for the applicable period 
of the applicable statute of limitation, and (y) contained in 
Section 2.10(b) (the "Title Representation"), which shall 
survive the Closing indefinitely) (all of the representations 
and warranties of Purchaser and Seller, excluding the Tax 
Representation, the ERISA Representation and the Title 
Representation, are hereinafter referred to as the "General 
Representations"), shall survive the Closing for a period of 
twelve (12) months; provided, however, if Purchaser (or any 
successor or assign of Purchaser) procures title insurance with 
respect to the Real Property, to the extent that Purchaser (or 
any successor or assign of Purchaser) actually receives proceeds 
from the title insurer in respect of any matters addressed by 
any of the representations and warranties contained in Section 
2.10, then, only with respect to such matters, and only to such 
extent, such representations and warranties shall be deemed not 
to have been made.

	(b)  Subject to Section 11.02, the covenants and agreements 
of Seller and Purchaser contained in this Agreement (other than 
the covenants and agreements contained in Articles IV (excluding 
Sections 4.06 and 4.09) and V (excluding Sections 5.03 and 5.07) 
(the "Pre-Closing Covenants"), which covenants and agreements 
shall survive the Closing for a period of twelve (12) months) 
(all of the covenants and agreements of Purchaser and Seller, 
excluding the Pre-Closing Covenants, are hereinafter referred to 
as the "Post-Closing Covenants"), shall survive the Closing 
indefinitely; and

	(c)  Any due diligence or other investigation or 
examination by any party with respect to the transactions 
contemplated by this Agreement shall not in any way affect or 
lessen the representations and warranties of the other party 
contained herein or the indemnifications with respect thereto.

	9.02  No Other Representations.  Notwithstanding anything 
to the contrary contained in this Agreement, it is the explicit 
intent of each party hereto that Seller is making no 
representation or warranty whatsoever, express or implied, 
including but not limited to any implied representation or 
warranty as to condition, merchantability or suitability as to 
any of the Assets, except those representations and warranties 
contained in this Agreement and the exhibits, schedules, 
documents, certificates and instruments delivered in connection 
with the Closing.  In particular, Seller makes no representation 
or warranty to Purchaser with respect to (i) the information set 
forth in the Confidential Information Memorandum dated March, 
1998 and the supplements thereto, or (ii) any financial 
projection or forecast relating to the operation of the 
Generating Assets.  With respect to any such projection or 
forecast delivered by or on behalf of Seller to Purchaser, 
Purchaser acknowledges that (i) there are uncertainties inherent 
in attempting to make such projections and forecasts, (ii) it is 
familiar with such uncertainties, (iii) it is taking full 
responsibility for making its own evaluation of the adequacy and 
accuracy of all such projections and forecasts furnished to it 
and (iv) it shall have no claim against Seller with respect to 
such projections and forecasts.



                            ARTICLE X

                         INDEMNIFICATION

	10.01  Other Indemnification.

	(a)  Subject to the other Sections of this Article X, 
Seller shall indemnify Purchaser and its Affiliates and their 
respective directors, officers, employees, agents and 
representatives ("Purchaser Group") in respect of, and hold it 
harmless from and against, any and all Losses suffered, incurred 
or sustained by Purchaser Group or to which Purchaser Group 
becomes subject, resulting from, arising out of or relating to:

	(i)  any breach by Seller of any representation or warranty 
of Seller contained in this Agreement (determined in all cases 
as if the terms "material" or "materially" (or the capitalized 
versions thereof) were not included therein);

    (ii)  any breach by Seller of any covenant or agreement of 
Seller contained in this Agreement (determined in all cases as 
if the terms "material" or "materially" (or the capitalized 
versions thereof) were not included therein);

   (iii)  a Retained Liability; or 

    (iv)  any Change of Control Liabilities;

provided, however, that Seller shall have no liability for 
Losses under clause (i) arising from a breach of a General 
Representation, a Tax Representation or an ERISA Representation 
unless and until the aggregate amount of all Losses arising from 
such breaches asserted by Purchaser equals or exceeds $5.0 
million in which event Seller shall be liable for all such 
Losses; and provided, further, that, except with respect to 
Losses arising from a breach of the Title Representation, such 
indemnification shall be effective only with respect to claims 
written notice of which is received by Seller with respect to 
Losses arising under clause (i) above relating to General 
Representations (or, with respect to the Tax Representation or 
ERISA Representation, the date upon which the applicable statute 
of limitations expires) or clause (ii) above relating to Pre-
Closing Covenants, no later than the date that is twelve (12) 
months from the Closing.  Except as set forth in paragraph (b) 
below, in no event shall the Liability of Seller for Losses 
under clause (i) of this Section 10.01(a) arising out of 
breaches of the General Representations exceed, in the 
aggregate, fifty percent (50%) of the Purchase Price (or, with 
respect to breaches of the Title Representation and the 
covenants contained in Sections 1.01(a)(i) and 1.05 exceed, in 
the aggregate, the Purchase Price).

	(b)  In addition to the indemnities contained in clause (a) 
above, Seller shall indemnify Purchaser Group in respect of, and 
hold it harmless from and against, all Losses suffered, incurred 
or sustained by Purchaser Group arising from any Pre-Closing 
Environmental Liability; provided, however, that (1) 
indemnification for Pre-Closing Unknown Remedial Liabilities 
shall be effective only with respect to Losses arising out of a 
matter described in a Claim Notice received by Seller no later 
than the date that is two years from the Closing, (2) Seller's 
Liabilities under this paragraph for (x) Non-Colstrip Pre-
Closing Known and Unknown Remedial Liabilities shall be limited 
in each case to 50% of any such Loss suffered, incurred or 
sustained by Purchaser Group and (y) Colstrip Pre-Closing Known 
and Unknown Remedial Liabilities shall be limited in each case 
to Seller's pro-rata share (calculated pursuant to the Colstrip 
Contracts) of 50% of any such Loss suffered, incurred or 
sustained by Purchaser Group, and such Liabilities referred to 
in clauses (x) and (y) shall not, in any event, exceed, in the 
aggregate, an amount equal to 10% of the Purchase Price (each 
such Liability of Seller shall be paid by it at the same time 
that Purchaser Group has paid its fifty percent (50%) share 
thereof); provided, further, that this indemnity shall only 
extend to such Pre-Closing Environmental Liabilities 
attributable to conditions existing at or prior to the Closing, 
and Seller shall not be required to indemnify Purchaser for 
Losses to the extent attributable to acts or omissions of 
Purchaser resulting in an increase in or aggravation of such 
Environmental Liabilities, whether arising from a change in use 
of the Assets or otherwise.  In the event that Seller disputes 
the pro rata share of any Losses attributable by Purchaser to 
Seller under Section 10.01(b)(2)(y) in the Claim Notice, Seller 
will nevertheless pay Purchaser the amount requested by 
Purchaser in the Claim Notice and Seller shall proceed to 
resolve any dispute with PGE and Puget concerning allocations of 
pro rata shares. If Purchaser fails to make a claim against a 
Potentially Responsible Party with respect to Pre-Closing 
Environmental Liabilities, then upon making an indemnity payment 
pursuant to this paragraph (b), Seller shall, to the extent of 
such indemnity payment, be subrogated to all rights of Purchaser 
against any Potentially Responsible Party in respect of the 
Losses to which the indemnity payment relates.  If Purchaser 
makes a claim against, and recovers from, a Potentially 
Responsible Party with respect to Pre-Closing Environmental 
Liabilities and Seller has made an indemnity payment with 
respect to such Loss, then Purchaser shall reimburse Seller 50% 
of such amounts recovered, net of any third party costs of 
collection.

	(c)  Subject to the other Sections of this Article X, 
Purchaser shall indemnify Seller and its Affiliates and their 
respective directors, officers, employees, agents and 
representatives ("Seller Group") in respect of, and hold it 
harmless from and against, any and all Losses suffered, incurred 
or sustained by Seller Group or to which Seller Group becomes 
subject, resulting from, arising out of or relating to:

	(i)  any breach by Purchaser of any representation or 
warranty of Purchaser contained in this Agreement (determined in 
all cases as if the terms "material" or "materially" (or the 
capitalized versions thereof) were not included therein),

    (ii)  any breach by Purchaser of any covenant or agreement 
of Purchaser contained in this Agreement (determined in all 
cases as if the terms "material" or "materially" (or the 
capitalized versions thereof) were included therein); or 

   (iii)  an Assumed Liability;

provided, however, that Purchaser shall have no liability for 
Losses under clause (i) arising from a breach of a General 
Representation unless and until the aggregate amount of all such 
Losses arising from such breaches asserted by Seller equals or 
exceeds $5.0 million in which event Purchaser shall be liable 
for all Losses; and provided, further, that such indemnification 
shall be effective only with respect to claims written notice of 
which is received by Purchaser with respect to Losses arising 
under clause (i) above relating to General Representations or 
clause (ii) above relating to Pre-Closing Covenants, no later 
than the date that is twelve (12) months from the Closing.  In 
no event shall the Liability of Purchaser for Losses under this 
Article X arising out of breaches of the General Representations 
exceed, in the aggregate, fifty (50%) of the Purchase Price.

	(d)  To the extent that an Indemnified Party has received 
insurance proceeds prior to the payment of an indemnity payment 
on an indemnifiable Loss, such indemnifiable Loss shall be 
reduced by an amount equal to such proceeds received by the 
Indemnified Party.  If the amount of any indemnifiable Loss, at 
any time subsequent to the making of an indemnity payment in 
respect thereof, is reduced by recovery, settlement or otherwise 
under or pursuant to any insurance coverage or pursuant to any 
claim, recovery, settlement or payment by or against any other 
entity, the amount of such reduction, less any costs, expenses 
or premiums incurred in connection therewith (together with 
interest thereon from the date of payment thereof at the prime 
rate then in effect for domestic banks as published in the Wall 
Street Journal (Northeast Edition) in the "Money Rates" 
section), shall promptly be repaid by the Indemnified Party to 
the Indemnifying Party.  Nothing in this Section 10.01(d) shall 
be construed to require any party hereto to obtain or maintain 
any insurance coverage or make any claim under its insurance 
coverage. 

	(e)  Seller shall not be liable on account of any 
obligations of any co-owners of the Colstrip Units 1, 2, 3 and 4 
to Purchaser.

	(f)  The Indemnifying Party hereby expressly waives all 
rights of subrogation in respect of any payments made by it 
under this Article X.

	10.02  Method of Asserting Claims.  All claims for 
indemnification by any Indemnified Party under Section 10.01 
will be asserted and resolved as follows:

	(a)  In the event any claim or demand in respect of which 
an Indemnified Party might seek indemnity under Section 10.01 is 
asserted against or sought to be collected from such Indemnified 
Party by a Person other than Seller, Purchaser or any Affiliate 
of Seller or Purchaser (a "Third Party Claim"), the Indemnified 
Party shall deliver a Claim Notice with reasonable promptness to 
the Indemnifying Party.  The Indemnifying Party will notify the 
Indemnified Party as soon as practicable within the Dispute 
Period whether the Indemnifying Party disputes its liability to 
the Indemnified Party under Section 10.01 and whether the 
Indemnifying Party desires, at its sole cost and expense, to 
defend the Indemnified Party against such Third Party Claim.

	(i)  If the Indemnifying Party notifies the Indemnified 
Party within the Dispute Period that the Indemnifying Party 
desires to defend the Indemnified Party with respect to the 
Third Party Claim pursuant to this Section 10.02(a), then the 
Indemnifying Party will have the right to defend, at the sole 
cost and expense of the Indemnifying Party, such Third Party 
Claim by all appropriate proceedings, which proceedings will be 
vigorously and diligently prosecuted by the Indemnifying Party 
to a final conclusion or will be settled at the discretion of 
the Indemnifying Party (with the consent of the Indemnified 
Party, which consent will not be unreasonably withheld).  The 
Indemnifying Party will have full control of such defense and 
proceedings, including any settlement thereof; provided, 
however, that the Indemnified Party may, at the sole cost and 
expense of the Indemnified Party, at any time prior to the 
Indemnifying Party's delivery of the notice referred to in the 
first sentence of this Section 10.02(a)(i), file any motion, 
answer or other pleadings or take any other action that the 
Indemnified Party reasonably believes to be necessary or 
appropriate to protect its interests and not prejudicial to the 
Indemnifying Party (it being understood and agreed that, except 
as provided in clause (ii) below, if an Indemnified Party takes 
any such action that is prejudicial and causes a final 
adjudication that is adverse to the Indemnifying Party, the 
Indemnifying Party will be relieved of its obligations hereunder 
with respect to the portion of such Third Party Claim prejudiced 
by the Indemnified Party's action); and provided further, that 
if requested by the Indemnifying Party, the Indemnified Party 
will, at the sole cost and expense of the Indemnifying Party, 
cooperate with the Indemnifying Party and its counsel in 
contesting any Third Party Claim that the Indemnifying Party 
elects to contest, or, if appropriate and related to the Third 
Party Claim in question, in making any counterclaim against the 
Person asserting the Third Party Claim, or any cross-complaint 
against any Person (other than the Indemnified Party or any of 
its Affiliates). Notwithstanding the foregoing, the Indemnified 
Party may take over the control of the defense or settlement of 
a Third Party Claim at any time if it irrevocably waives its 
right to indemnity under Section 10.01 with respect to such 
Third Party Claim.

    (ii)  If the Indemnifying Party fails to notify the 
Indemnified Party within the Dispute Period that the 
Indemnifying Party desires to defend the Third Party Claim 
pursuant to Section 10.02(a), or if the Indemnifying Party gives 
such notice but fails to prosecute vigorously and diligently or 
settle the Third Party Claim, or if the Indemnifying Party fails 
to give any notice whatsoever within the Dispute Period, then 
the Indemnified Party will have the right to defend, at the sole 
cost and expense of the Indemnifying Party, the Third Party 
Claim by all appropriate proceedings, which proceedings will be 
vigorously and diligently prosecuted by the Indemnified Party to 
a final conclusion or will be settled at the discretion of the 
Indemnified Party (with the consent of the Indemnifying Party, 
which consent will not be unreasonably withheld).  The 
Indemnified Party will have full control of such defense and 
proceedings, including (except as provided in the immediately 
preceding sentence) any settlement thereof; provided, however, 
that if requested by the Indemnified Party, the Indemnifying 
Party will, at the sole cost and expense of the Indemnifying 
Party, cooperate with the Indemnified Party and its counsel in 
contesting any Third Party Claim which the Indemnified Party is 
contesting, or, if appropriate and related to the Third Party 
Claim in question, in making any counterclaim against the Person 
asserting the Third Party Claim, or any cross-complaint against 
any Person (other than the Indemnified Party or any of its 
Affiliates).  Notwithstanding the foregoing provisions of this 
Section 10.02(a)(ii), if the Indemnifying Party has notified the 
Indemnified Party within the Dispute Period that the 
Indemnifying Party disputes its liability hereunder to the 
Indemnified Party with respect to such Third Party Claim and if 
such dispute is resolved in favor of the Indemnifying Party in 
the manner provided in clause (iii) below, the Indemnifying 
Party will not be required to bear the costs and expenses of the 
Indemnified Party's defense pursuant to this Section 
10.02(a)(ii) or of the Indemnifying Party's participation 
therein at the Indemnified Party's request, and the Indemnified 
Party will reimburse the Indemnifying Party in full for all 
reasonable costs and expenses incurred by the Indemnifying Party 
in connection with such litigation.  The Indemnifying Party may 
participate in, but not control, any defense or settlement 
controlled by the Indemnified Party pursuant to this Section 
10.02(a)(ii), and the Indemnifying Party will bear its own costs 
and expenses with respect to such participation.

   (iii)  If the Indemnifying Party notifies the Indemnified 
Party that it does not dispute its liability to the Indemnified 
Party with respect to the Third Party Claim under Section 10.01 
or fails to notify the Indemnified Party within the Dispute 
Period whether the Indemnifying Party disputes its liability to 
the Indemnified Party with respect to such Third Party Claim, 
the Loss in the amount specified in the Claim Notice will be 
conclusively deemed a liability of the Indemnifying Party under 
Section 10.01 and the Indemnifying Party shall pay the amount of 
such Loss to the Indemnified Party on demand.  If the 
Indemnifying Party has timely disputed its liability with 
respect to such claim, the Indemnifying Party and the 
Indemnified Party will proceed in good faith to negotiate a 
resolution of such dispute, and if not resolved through 
negotiations within the Resolution Period, such dispute shall be 
resolved by litigation in a court of competent jurisdiction.

	(b)  In the event any Indemnified Party should have a claim 
under Section 10.01 against any Indemnifying Party that does not 
involve a Third Party Claim, the Indemnified Party shall deliver 
an Indemnity Notice with reasonable promptness to the 
Indemnifying Party prior to the expiration of the 
indemnification notice period described in this Section 10.02.  
If the Indemnifying Party notifies the Indemnified Party that it 
does not dispute the claim described in such Indemnity Notice or 
fails to notify the Indemnified Party within the Dispute Period 
whether the Indemnifying Party disputes the claim described in 
such Indemnity Notice, the Loss in the amount specified in the 
Indemnity Notice will be conclusively deemed a liability of the 
Indemnifying Party under Section 10.01 and the Indemnifying 
Party shall pay the amount of such Loss to the Indemnified Party 
on demand.  If the Indemnifying Party disputes all or any 
portion of its liability with respect to such claim, it shall 
notify the Indemnified Party thereof in writing during the 
Dispute Period, specifying the portion of the claim that is 
disputed and the basis for such position.  If the Indemnifying 
Party has timely disputed its liability with respect to such 
claim, the Indemnifying Party will be deemed to have accepted 
and be liable for payment of the undisputed portion of such 
claim on demand and the Indemnifying Party and the Indemnified 
Party will proceed in good faith to negotiate a resolution of 
such dispute, and if not resolved through negotiations within 
the Resolution Period, such dispute shall be resolved by 
litigation in a court of competent jurisdiction.

	(c)  In the event of any Loss resulting from a 
misrepresentation, breach of warranty or nonfulfillment or 
failure to be performed of any covenant or agreement contained 
in this Agreement as to which an Indemnified Party would be 
entitled to claim indemnity under Section 10.01 but for the Loss 
limitation provisions of Section 10.01(a) and (c), such 
Indemnified Party may nevertheless deliver a written notice to 
the Indemnifying Party containing the information that would be 
required in a Claim Notice or an Indemnity Notice, as 
applicable, with respect to such Loss.  In the case of a Claim 
Notice, the provisions of Section 10.02(a)(i) will be 
applicable.  If the Indemnifying Party notifies the Indemnified 
Party that it does not dispute the claim described therein or 
fails to notify the Indemnified Party within the Dispute Period 
whether the Indemnifying Party disputes the claim described in 
such Claim Notice or Indemnity Notice, as the case may be, the 
Loss specified in the notice will be conclusively deemed to have 
been incurred by the Indemnified Party for purposes of making 
the determination of the Loss limitations set forth in 
Section 10.01.  If the Indemnifying Party has timely disputed 
the claim described in such Claim Notice or Indemnity Notice, as 
the case may be, the Indemnifying Party and the Indemnified 
Party will proceed in good faith to negotiate a resolution of 
such dispute, and if not resolved through negotiations within 
the Resolution Period, such dispute shall be resolved by 
litigation in a court of competent jurisdiction.

	(d)  In the event of any claim for indemnity under Section 
10.01(a), Purchaser agrees to give Seller and its 
Representatives reasonable access to the Business Books and 
Records and Employees in connection with the matters for which 
indemnification is sought to the extent Seller reasonably deems 
necessary in connection with its rights and obligations under 
this Article X.

	(e)  All payments made pursuant to this Article X shall be 
treated as an adjustment to the Purchase Price.

	(f)  In the event an action, dispute, claim, counterclaim 
or controversy ("Dispute") arises between the parties arising 
out of or relating to this Agreement, the aggrieved party shall 
promptly notify the other party of the Dispute within ten 
Business Days after such Dispute arises.  If the parties have 
failed to resolve the Dispute within ten Business Days after 
delivery of such notice, each party shall, within five Business 
Days thereafter, nominate a senior officer of its management to 
meet to attempt to resolve the Dispute.  The senior officers 
shall meet within twenty Business Days after their nomination.  
Should the senior officers be unable to resolve the Dispute, 
either party may pursue any and all available legal remedies, 
unless the parties mutually agree in writing to an alternative 
dispute resolution procedure.

	10.03  Exclusivity.  After the Closing, to the extent 
permitted by Law, the indemnities set forth in this Article X 
shall be the exclusive remedies of Purchaser Group and Seller 
Group for any misrepresentation, breach of warranty or 
nonfulfillment or failure to be performed of any covenant or 
agreement contained in this Agreement, any schedule hereto, or 
any certificate delivered by or on behalf of Seller or Purchaser 
in connection herewith, and the parties shall not be entitled to 
a rescission of this Agreement or to any further indemnification 
rights or claims of any nature whatsoever in respect thereof, 
all of which the parties hereto hereby waive. 

	10.04  Purchaser's Release of Seller under the Colstrip 
Contracts.  From and after the Closing, Purchaser, for itself 
and on behalf of its Affiliates, does hereby release, hold 
harmless and forever discharge Seller from any and all claims, 
demands, liabilities (including fines and civil penalties) or 
causes of action at Law or in equity, whether known or unknown, 
resulting from any Claim that Seller is not released from its 
obligations under the Colstrip Contracts by virtue of Section 
1.01(a)(xi) and 1.02(a)(vi), provided, however, that nothing in 
this Section 10.04 shall be deemed to affect Seller's Retained 
Liabilities, Purchaser's Assumed Liabilities or the parties' 
indemnification obligations hereunder.

                          ARTICLE XI

                         TERMINATION

	11.01  Termination.  This Agreement may be terminated, and 
the transactions contemplated hereby may be abandoned:

	(a)  at any time before the Closing, by mutual written 
agreement of Seller and Purchaser;

	(b)  at any time before the Closing, by Seller or 
Purchaser, in the event that any Final Order or Law becomes 
effective restraining, enjoining, or otherwise prohibiting or 
making illegal the consummation of any of the transactions 
contemplated by this Agreement or any of the Operative 
Agreements, upon notification of the non-terminating party by 
the terminating party; or

	(c)  at any time before the Closing, by Seller or 
Purchaser, in the event (i) of a breach hereof by the non-
terminating party which gives rise to, as applicable, either a 
Seller Material Adverse Effect (if Seller is the breaching 
party) or a Purchaser Material Adverse Effect (if Purchaser is 
the breaching party) if such non-terminating party fails to cure 
such breach within forty-five (45) days following notification 
thereof by the terminating party, provided that if, at the end 
of such forty-five (45) day period, the non-terminating party is 
endeavoring in good faith, and proceeding diligently, to cure 
such breach, the non-terminating party shall have an additional 
forty-five (45) days in which to effect such cure or (ii) upon 
notification of the non-terminating party by the terminating 
party that the satisfaction of any condition to the terminating 
party's obligations under this Agreement becomes impossible or 
impracticable with the use of commercially reasonable efforts if 
the failure of such condition to be satisfied by the terminating 
party is not caused by a breach hereof by the terminating party, 
provided that if it is reasonably possible that the 
circumstances giving rise to the impossibility or 
impracticability may be removed prior to the expiration of the 
time periods provided in the following subsection (d), then such 
notification may not be given until  such time as the removal of 
such circumstances is no longer reasonably possible within such 
time periods; or

	(d)  at any time after the date which is twelve (12) months 
after the date of this Agreement, by Seller or Purchaser upon 
notification of the non-terminating party by the terminating 
party if the Closing shall not have occurred on or before such 
date and such failure to consummate is not caused by a breach of 
this Agreement by the terminating party; provided, however, that 
if on such date Purchaser and Seller have not received all 
Purchaser Required Regulatory Approvals and all Seller Required 
Regulatory Approvals but all other conditions to the Closing 
shall be fulfilled or shall be capable of being fulfilled, then 
neither party may terminate this Agreement until the expiration 
of such date which is eighteen (18) months after the date of 
this Agreement; provided, further, that if on such date 
Purchaser or Seller has not received all Purchaser Required 
Regulatory Approvals or all Seller Required Regulatory Approvals 
related to the Hydro Units but all other conditions to the 
Closing shall be fulfilled or shall be capable of being 
fulfilled, then neither party may terminate this Agreement until 
the expiration of such date which is twenty-four (24) months 
after the date of this Agreement.

	(e) in accordance with Section 1.10(e), by Purchaser.

	11.02  Effect of Termination.  If this Agreement is validly 
terminated pursuant to Section 11.01, this Agreement will 
forthwith become null and void, and there will be no liability 
or obligation on the part of Seller or Purchaser (or any of 
their respective officers, directors, employees, agents or other 
representatives or Affiliates), except as provided in the next 
succeeding sentence and except that the provisions with respect 
to expenses in Section 13.04 and confidentiality in Section 
13.06 will continue to apply following any such termination.  
Notwithstanding any other provision in this Agreement to the 
contrary, upon termination of this Agreement pursuant to Section 
11.01(c) or (d), Seller will remain liable to Purchaser for any 
willful breach of Section 4.10 of this Agreement by Seller 
existing at the time of such termination, and Purchaser will 
remain liable to Seller for any willful breach of Section 5.06 
of this Agreement by Purchaser existing at the time of such 
termination, and Seller or Purchaser may seek such remedies, 
including damages and fees of attorneys, against the other with 
respect to any such breach as are provided in this Agreement or 
as are otherwise available at Law or in equity.


                        ARTICLE XII

                        DEFINITIONS

	12.01  Definitions.  (a)  Defined Terms.  As used in this 
Agreement, the following defined terms have the meanings 
indicated below:

	"Actions or Proceedings" means any action, suit, 
proceeding, arbitration or Governmental or Regulatory Authority 
investigation.

	"Adjustment Amount" has the meaning ascribed to it in 
Section 1.04.

	"Adjustment Statement" has the meaning ascribed to it in 
Section 1.04.

	"Affiliate" means any Person that directly, or indirectly 
through one of more intermediaries, controls or is controlled by 
or is under common control with the Person specified.  For 
purposes of this definition, control of a Person means the 
power, direct or indirect, to direct or cause the direction of 
the management and policies of such Person whether by Contract 
or otherwise and, in any event and without limitation of the 
previous sentence, any Person owning ten percent (10%) or more 
of the voting securities of another Person shall be deemed to 
control that Person.

	"Agreement" means this Asset Purchase Agreement and the 
Exhibits, the Disclosure Schedule and the Schedules hereto and 
the certificates delivered in accordance with Sections 6.03 and 
7.03, as the same shall be amended from time to time.  

	"Asset Group" means one or more of the categories of Assets 
set forth on Schedule I hereto.

	"Assets" has the meaning ascribed to it in Section 1.01(a).

	"Assets and Properties" of any Person means all assets and 
properties of every kind, nature, character and description 
(whether real, personal or mixed, whether tangible or intangible 
and wherever situated), including the goodwill related thereto, 
operated, owned or leased by such Person.

	"Assignment Instruments" has the meaning ascribed to it in 
Section 1.05.

	"Associate" means, with respect to any Person, any 
corporation or other business organization of which such Person 
is an officer or partner or is the beneficial owner, directly or 
indirectly, of ten percent (10%) or more of any class of equity 
securities, any trust or estate in which such Person has a 
substantial beneficial interest or as to which such Person 
serves as a trustee or in a similar capacity and any relative or 
spouse of such Person, or any relative of such spouse, who has 
the same home as such Person.

	"Assumed Liabilities" has the meaning ascribed to it in 
Section 1.02(a).

	"Assumption Agreement" has the meaning ascribed to it in 
Section 1.05.

	"Assumption Instruments" has the meaning ascribed to it in 
Section 1.05.

	"Base Purchase Price" means $780,000,000.

	"Benefit Plan" means any Plan established by Seller, or any 
predecessor or Affiliate of Seller, existing at the Closing or 
at any time within the five (5) year period prior thereto, to 
which Seller contributes or has contributed on behalf of any 
Employee, former Employee or director, or under which any 
Employee, former Employee or director of Seller or any 
beneficiary thereof is covered, is eligible for coverage or has 
benefit rights.

	"Bid Date" means September 28, 1998.

	"Books and Records" of any Person means all files, 
documents, instruments, papers, books and records relating to 
the business, operations, condition of (financial or other), 
results of operations and Assets and Properties of such Person, 
including financial statements, Tax Returns and related work 
papers and letters from accountants, budgets, pricing 
guidelines, ledgers, journals, deeds, title policies, minute 
books, stock certificates and books, stock transfer ledgers, 
Contracts, Licenses, customer lists, computer files and 
programs, retrieval programs, operating data and plans and 
environmental studies and plans.

	"Business Books and Records" has the meaning ascribed to it 
in Section 1.01(a)(xvii).

	"Business Combination" means with respect to any Person, 
any merger, consolidation or combination to which such Person is 
a party, any sale, dividend, split or other disposition of 
capital stock or other equity interests of such Person or any 
sale, dividend or other disposition of all or substantially all 
of the Assets and Properties of such Person, provided, however, 
that no activities or transactions of any Affiliate of Seller 
(so long as not involving Seller) shall be considered a Business 
Combination hereunder.

	"Business Contracts" has the meaning ascribed to it in 
Section 1.01(a)(v).

	"Business Day" means a day other than Saturday, Sunday or 
any day on which banks located in the State of Montana and the 
Commonwealth of Pennsylvania are authorized or obligated to 
close.

	"Capital Expenditures" means those capital expenditures 
which are identified in the Budget referred to in Section 4.14, 
and such other emergency, non-budgeted capital expenditures made 
by Seller in accordance with the provisions of Section 4.14.

	"CERCLA" means the Comprehensive Environmental Response, 
Compensation and Liability Act of 1980, as amended, and the 
rules and regulations promulgated thereunder.

	"Change of Control Liabilities" has the meaning ascribed to 
it in Section 1.02(a)(ix).

	"Claim Notice" means written notification pursuant to 
Section 10.02(a) of a Third Party Claim as to which indemnity 
under Section 10.01 is sought by an Indemnified Party, enclosing 
a copy of all papers served, if any, and specifying the nature 
of and basis for such Third Party Claim and for the Indemnified 
Party's claim against the Indemnifying Party under 
Section 10.01, together with the amount or, if not then 
reasonably ascertainable, the estimated amount, determined in 
good faith, of such Third Party Claim.

	"Closing" means the closing of the transactions 
contemplated by Section 1.05.

	"Closing Date" means (a) the later of (x) July 1, 1999, and 
(y) the date thirty (30) days after the day on which the last of 
the consents, approvals, actions, filings, notices or waiting 
periods described in or related to the filings described in 
Sections 6.04 through 6.07 and Sections 7.04 through 7.06 has 
been obtained, made or given or has expired, as applicable; 
provided, that Purchaser agrees to use reasonable efforts to be 
prepared to close prior to July 1, 1999, and shall give notice 
to Seller in the event Purchaser determines that it is able to 
do so, or (b) such other date as Purchaser and Seller mutually 
agree upon in writing.

	"COBRA" means the Consolidated Omnibus Budget 
Reconciliation Act of 1985, as amended, and the rules and 
regulations promulgated thereunder.

	"Code" means the Internal Revenue Code of 1986, as amended, 
and the rules and regulations promulgated thereunder.

	"Collective Bargaining Agreements" has the meaning ascribed 
to in Section 2.16.

	"Colstrip Contracts" has the meaning ascribed to it in 
Section 1.01(a)(xi).

	"Colstrip 1, 2 and 3 Transmission Amount" has the meaning 
ascribed to it in Section 1.10(f).

	"Colstrip 1, 2 and 3 Transmission Assets" has the meaning 
ascribed to it in Section 1.01(a)(xix).

	"Colstrip 4 Generation Assets" means all Assets relating to 
Seller's interest in Colstrip Unit 4 including, but not limited 
to, Real Property Leases, Business Contracts, Transferable 
Permits, Fuel Contracts, power sale or purchase agreements and 
allowances and/or emission reduction credits described in 
Section 12.01(b) of the Disclosure Schedule.

	"Colstrip 4 Transmission Amount" means an amount equal to 
$55,918,674.

	"Colstrip 4 Transmission Assets" has the meaning ascribed 
to it in Section 1.01(a)(xviii).

	"Colstrip 4 Transmission Service Agreement" has the meaning 
ascribed to it in Section 1.10(a). 

	"Colstrip Pre-Closing Known and Unknown Remedial 
Liabilities" means all Pre-Closing Known Remedial Liabilities 
and Pre-Closing Unknown Remedial Liabilities arising from or 
relating to the ownership, operation and maintenance of the 
Colstrip Units 1, 2, 3 or 4 Generating Assets or the Colstrip 
Units 1, 2, 3 or 4 Transmission Assets, to the extent such 
Assets are acquired by Purchaser.

	"Colstrip Rights of First Refusal" means the rights 
described in the following agreements:  (i) Section 16(d) of the 
Construction and Ownership Agreement, dated as of July 30, 1971, 
by and between Seller and Puget;(ii) Sections 24(b) and 24(f) of 
the Ownership and Operation Agreement, dated as of May 6, 1981, 
as amended, by and among Seller, Puget, The Washington Water 
Power Company ("WWP"), Portland, and Pacific Power & Light 
Company ("Pacific"); and (iii) Section 28(f) of the Colstrip 
Project Transmission Agreement, dated as of May 6, 1981, as 
amended, by and among Seller, Puget, WWP, Portland and Pacific.

	"Colstrip Transition Service Agreement" has the 
meaning ascribed to it in Section 6.10.

	"Combined Payment Amount" means an amount equal to 
$932,000,000 minus (a) the amount of the Base Purchase Price 
(prior to any adjustment thereto pursuant to Section 1.10) and 
(b) any Puget Payment Amount or Portland Payment Amount paid to 
Seller prior to the Final Closing Date.

	"Communications Service Agreement" has the meaning ascribed 
to it in Section 1.01(b)(ix).

	"Contract" means any agreement, lease, license, evidence of 
Indebtedness, mortgage, indenture, security agreement or other 
contract.

	"Contribution Agreement" has the meaning ascribed to it in 
the forepart of this Agreement.

	"Defined Benefit Plan" means each Benefit Plan which is 
subject to Part 3 of Title I of ERISA, Section 412 of the Code 
or Title IV of ERISA.

	"Disclosure Schedule" means, as the context requires, (a) 
the record delivered to Purchaser by Seller herewith and dated 
as of the date hereof, containing all lists, descriptions, 
exceptions and other information and materials as are required 
to be included therein by Seller pursuant to this Agreement and 
(b) the record delivered to Seller by Purchaser herewith and 
dated as of the date hereof, containing all lists, descriptions, 
exceptions and other information and materials as are required 
to be included therein by Purchaser pursuant to this Agreement.

	"Dispute" has the meaning ascribed to it in Section 10.02.

	"Dispute Period" means the period ending thirty (30) days 
following receipt by an Indemnifying Party of either a Claim 
Notice or an Indemnity Notice.

	"Easements" means, with respect to the Assets, the 
reservations of easements in favor of Seller to be included in 
the deeds of conveyance with respect to such Assets, 
substantially as set forth in the Interconnection Agreement 
(including the Separation Document).

	"Employee" means each employee or officer of Seller or any 
of its Affiliates whose employment responsibilities primarily 
relate to the operation of the Generating Assets.

	"Employment Term" has the meaning ascribed to it in Section 
5.03.

	"Environmental Fines and Penalties" has the meaning 
ascribed to it in Section 1.02(a)(x).

	"Environmental Law" means all Federal, state, municipal and 
local laws (including common laws), regulations, rules, 
ordinances, codes, licenses, decrees, judgments, directives, or 
judicial or administrative orders relating to pollution, 
protection, preservation or restoration of human health, the 
environment or natural resources, including, without limitation, 
laws relating to Releases or threatened Releases of Hazardous 
Materials (including, without limitation, into or through 
ambient air, surface water, groundwater, land, wetlands, surface 
and subsurface strata) or otherwise relating to the manufacture, 
processing, distribution, use, treatment, storage, disposal, 
transport or handling of Hazardous Materials, including without 
limitation the Clean Water Act, the Clean Air Act, the Resource 
Conservation and Recovery Act, the Toxic Substances Control Act, 
and CERCLA, in each case as amended, and their local 
counterparts.

	"Environmental Liabilities" means any liabilities, 
obligations or responsibilities under or related to former, 
current or future Environmental Laws or the common law, whether 
such liability, obligation or responsibility is known or 
unknown, contingent or accrued, arising as a result of or in 
connection with (a) any violation or alleged violation of 
Environmental Laws relating to the Assets; (b) compliance with 
applicable Environmental Laws relating to the Assets; (c) loss 
of life, injury to persons or property or damage to natural 
resources (whether or not such loss, injury or damage was made 
manifest before or after the Closing) caused (or allegedly 
caused) by the presence or Release of Hazardous Materials at, 
on, in, under, adjacent to or migrating from the Assets; and 
(d) the reasonable investigation and/or remediation required by 
Law or constituting a reasonable response to a Governmental or 
Regulatory Authority having jurisdiction (whether or not such 
investigation or remediation commenced on or before the Closing) 
of Hazardous Materials that are present or have been Released 
at, on, in, under, adjacent to or migrating from the Assets, 
including, but not limited to, Hazardous Materials in the soil, 
surface water, sediments, groundwater, landfill cells, or in 
other environmental media at or adjacent to the Assets 
("Remedial Liabilities"); provided, further that the 
liabilities, obligations or responsibilities described in 
clauses (a), (b) and (c) shall not include those described in 
clause (d); provided further that Environmental Liabilities 
shall not include (x) Purchaser's internal costs or 
consequential damages (including the value of employees' time, 
loss of use, downtime or increased operating costs); (y) costs 
of capital improvements (including the replacement of equipment 
that has reached its useful life); nor (z) monitoring required 
by environmental permits or the design of the Assets, except, in 
the case of clauses (y) and (z), as covered in clause (d) above.

	"Environmental Permits" has the meaning ascribed to it in 
Section 2.17.

	"EPA" means the Environmental Protection Agency.

	"ERISA" means the Employee Retirement Income Security Act 
of 1974, as amended, and the rules and regulations promulgated 
thereunder.

	"ERISA Affiliate" means any Person who is in the same 
controlled group of corporations or who is under common control 
with Seller (within the meaning of Section 414 of the Code).

	"ERISA Affiliate Plan" has the meaning ascribed to it in 
Section 1.02(b)(ix).

	"ERISA Representation" has the meaning ascribed to it in 
Section 9.01(a).

	"Estimated Adjustment Amount" means Seller's good faith 
reasonable estimate of an Adjustment Amount for the Closing, 
which estimate shall be provided to Purchaser no later than five 
Business Days before the Closing.

	"Estimated Purchase Price" has the meaning ascribed to it 
in Section 1.05.

	"Exchange Act" means the Securities Exchange Act of 1934, 
as amended, and the rules and regulations promulgated 
thereunder.

	"Excluded Assets" has the meaning ascribed to it in 
Section 1.01(b).

	"Federal Power Act" means the Federal Power Act of 1935, as 
amended, and the rules and regulations promulgated thereunder.

	"FERC" means the Federal Energy Regulatory Commission.

	"Final Closing Date" means the date on which the latter  of 
the Puget Closing and the Portland Closing occurs.

	"Final Order" means a final Order after all opportunities 
for rehearing are exhausted (whether or not any appeal thereof 
is pending) that has not been further revised, stayed, enjoined, 
set aside, annulled or suspended, with respect to which any 
required waiting period has expired, and as to which all 
conditions to effectiveness prescribed therein or otherwise by 
Law, regulation or Order have been satisfied. 

	"Fuel Contracts" has the meaning ascribed to it in Section 
1.01(a)(x).

	"GAAP" means generally accepted accounting principles, 
consistently applied throughout the specified period and in the 
immediately prior comparable period.

	"General Assignment" has the meaning ascribed to it in 
Section 1.05.

	"General Representations" has the meaning ascribed to it in 
Section 9.01(a).

	"Generating Assets" has the meaning ascribed to it in the 
forepart of this Agreement.

	"Good Utility Practice" means any of the applicable 
practices, methods and acts:

	(i)  required of the party to whom Good Utility Practice is 
being applied under regulations of the National Electric Safety 
Code (as each of such terms is defined in the Interconnection 
Agreement), or its successor, whether or not the party whose 
conduct is at issue is a member thereof; or

    (ii)  otherwise engaged in or approved by a significant 
portion of the electric utility industry during the relevant 
time period; which, in the exercise of reasonable judgment in 
light of the facts known at the time the decision was made, 
could have been expected to accomplish the desired result at a 
reasonable cost to the party being expected to apply Good 
Utility Practice, consistent with law, regulation, good business 
practices, generation, transmission, and distribution 
reliability, safety, and expedition.  Good Utility Practice is 
intended to include practices, methods, or acts generally 
accepted in the region, and is not intended to be limited to 
optimum practices, methods, or acts to the exclusion of all 
others.  Good Utility Practice does not include intentional 
disregard of contractual commitments, even if those commitments 
are uneconomic under current market conditions.

	"Governmental or Regulatory Authority" means any court, 
tribunal, arbitrator, authority, agency, commission, official or 
other instrumentality of the United States, any foreign country 
or any domestic or foreign state, county, city or other 
political subdivision or any Native American tribal council or 
similar governing entity.

	"Hazardous Material" means (A) any petrochemical, petroleum 
or petroleum products, oil, flammable explosives, radioactive 
materials, radon gas, asbestos in any form that is or could 
become friable, urea formaldehyde foam insulation and 
transformers or other equipment that contain dielectric fluid 
which may contain levels of polychlorinated biphenyls (PCBs); 
(B) any chemicals or other materials or substances which are now 
or hereafter become defined under any Environmental Law as or 
included in the definition of "hazardous substances," "hazardous 
wastes", "hazardous chemicals," "hazardous materials," 
"extremely hazardous wastes," "restricted hazardous wastes," 
"toxic substances," "pollutants," "contaminants," "hazardous 
matter," "restricted hazardous materials" or words of similar 
import; and (C) any other chemical or other material or 
substance, the discharge, emission, Release or exposure to which 
is now or hereafter prohibited, limited or regulated by any 
Governmental or Regulatory Authority under any Environmental 
Law.

	"HIPAA" means the Health Insurance Portability and 
Accountability Act of 1996, as amended, and the rules and 
regulations promulgated thereunder.

	"Holding Company Act" means the Public Utility Holding 
Company Act of 1935, as amended, and the rules and regulations 
promulgated thereunder.

	"HSR Act" means Section 7A of the Clayton Act (Title II of 
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as 
amended) and the rules and regulations promulgated thereunder.

	"Hydro Units" means the hydroelectric generating stations 
owned by Seller and associated dams and reservoirs at such 
locations as set forth in Section 12.01(c) of the Disclosure 
Schedule.

	"Improvements" has the meaning ascribed to it in Section 
1.01(a)(iv).

	"Indebtedness" of any Person means all obligations of such 
Person (i) for borrowed money, (ii) evidenced by notes, bonds, 
debentures or similar instruments, (iii) for the deferred 
purchase price of goods or services (other than trade payables 
or accruals incurred in the ordinary course of business), (iv) 
under capital leases and (v) in the nature of guarantees of the 
obligations described in clauses (i) through (iv) above of any 
other Person.

	"Indemnified Party" means any Person claiming 
indemnification under any provision of Article X.

	"Indemnifying Party" means any Person against whom a claim 
for indemnification is being asserted under any provision of 
Article X.

	"Indemnity Notice" means written notification pursuant to 
Section 10.02(b) of a claim for indemnity under Article X by an 
Indemnified Party, specifying the nature of and basis for such 
claim, together with the amount or, if not then reasonably 
ascertainable, the estimated amount, determined in good faith, 
of such claim.

	"Indentures" means the Mortgage and Deed of Trust, dated as 
of October 1, 1945, as amended and supplemented, among Seller 
and Guaranty Trust Company of New York and Arthur E. Burke, as 
Trustees.

	"Independent Accounting Firm" means PricewaterhouseCoopers 
or such other independent accounting firm of national reputation 
mutually appointed by Seller and Purchaser.

	"Intangible Personal Property" has the meaning ascribed to 
it in Section 1.01(a)(vii).

	"Intellectual Property" means all patents and patent 
rights, trademarks and trademark rights, trade names and trade 
name rights, service marks and service mark rights, service 
names and service name rights, brand names, inventions, 
copyrights and copyright rights, trade secrets, know-how, 
techniques, computer programs and related documentation, and any 
and all other intangible assets or proprietary information or 
rights (whether registered or under common law) and all pending 
applications for and registrations of patents, trademarks, 
service marks and copyrights.

	"Interconnection Agreement" has the meaning ascribed to it 
in Section 6.10.

	"Inventory" has the meaning ascribed to it in 
Section 1.01(a)(iii).

	"Inventory Adjustment Amount" has the meaning ascribed to 
in Section 1.04.

	"Inventory Survey" has the meaning ascribed to in Section 
1.04.

	"IRS" means the United States Internal Revenue Service.

	"Knowledge" or similar phrases in this Agreement means: (i) 
in the case of Seller, the actual knowledge of Seller's officers 
and employees who are persons generally responsible for the 
subject matter to which knowledge is pertinent, such persons 
being listed in Section 12.01(d) of the Disclosure Schedule at 
the date as of which the representation, warranty or covenant is 
made or repeated, and (ii) in the case of Purchaser the actual 
knowledge of Purchaser's officers and employees who are persons 
generally responsible for the subject matter to which knowledge 
is pertinent, such persons being listed in Section 12.01(e) of 
the Disclosure Schedule at the date as of which the 
representation, warranty or covenant is made or repeated. 

	"Landlord Security Deposits" has the meaning ascribed to it 
in Section 1.02(a)(iv).

	"Laws" means all laws, statutes, rules, regulations, 
ordinances and other pronouncements having the effect of law of 
the United States, any foreign country or any domestic or for-
eign state, county, city or other political subdivision or of 
any Governmental or Regulatory Authority.

	"Liabilities" means all Indebtedness, obligations and other 
liabilities of a Person (whether absolute, accrued, contingent, 
fixed or otherwise, or whether due or to become due).

	"Licenses" means all licenses, permits, certificates of 
authority, authorizations, approvals, registrations, franchises 
and similar consents granted or issued by any Governmental or 
Regulatory Authority, other than Environmental Permits, 
including applications for any of the foregoing.

	"Liens" means any mortgage, pledge, assessment, security 
interest, lease, lien, adverse claim, levy, charge or other 
encumbrance of any kind or easement, or any conditional sale 
Contract, title retention Contract or other Contract to give any 
of the foregoing.

	"Loss" means any and all damages, fines, penalties, 
deficiencies, losses and expenses (including interest, court 
costs, reasonable fees of attorneys, accountants and other 
experts or other reasonable expenses of litigation or other 
proceedings or of any claim, default or assessment); provided, 
however, "Loss" shall not include any consequential, incidental 
or punitive damages for any reason.

	"Maintenance Expenditures" means those special maintenance 
expenditures which are identified in the Budget referred to in 
Section 4.14 and such other emergency, non-budgeted special 
maintenance expenditures made by Seller in accordance with the 
provisions of Section 4.14 and the exercise of Good Utility 
Practices.

	"Maintenance and Capital Expenditures Amount" means (i) the 
aggregate amount of all funds actually expended by Seller (and 
amounts due from Seller to third parties at the time of the 
Closing in respect of work actually performed by such third 
parties, to the extent such amounts are not Assumed Liabilities) 
with respect to Maintenance Expenditures and Capital 
Expenditures, in each case which are identified in the Budget, 
during the period beginning on the date one (1) year prior to 
the Closing and ending on the Closing (or such shorter period if 
the Closing occurs in less than one year from the date hereof) 
up to but not exceeding $23 million in the aggregate; and 
(ii) 85% of all Emergency Expenditures made by Seller in 
accordance with Section 4.14, if any, during such one (1) year 
(or shorter) period described above.  The Maintenance and 
Capital Expenditures Amount shall not include any Capital 
Expenditures or Maintenance Expenditures or Emergency 
Expenditures with respect to assets or properties that are not 
transferred to Purchaser under this Agreement.

	"MPC 401(k) Plan" has the meaning ascribed to it in Section 
5.03(a).

	"Non-Colstrip Pre-Closing Known and Unknown Remedial 
Liabilities" means all Pre-Closing Known Remedial Liabilities 
and Pre-Closing Unknown Remedial Liabilities that are not 
Colstrip Pre-Closing Known and Unknown Remedial Liabilities.

	"Non-Colstrip Transition Service Agreement" has the meaning 
ascribed to it in Section 6.10.

	"Non-Transferable Software" has the meaning ascribed to it 
in Section 1.01(a).

	"Non-Union Employees" means all Employees, other than Union 
Employees, who are employed as of the Closing in the production 
of electricity at the Thermal Units or the Hydro Units, or 
employed in Seller's corporate generation departments.  Seller's 
Non-Union Employees as of the date hereof are identified in 
Section 12.01(g) of the Disclosure Schedule.

	"Off-Site Environmental Liabilities" means any liabilities, 
obligations or responsibilities under or related to former, 
current or future Environmental Laws or the common law, whether 
such liability, obligation or responsibility is known or 
unknown, contingent or accrued, arising as a result of or in 
connection with Seller's storage, disposal, transportation, 
discharge, Release or recycling of Hazardous Materials prior to 
the Closing at or to locations other than the Real Property 
constituting the Assets or properties in the vicinity of Real 
Property constituting the Assets to which Hazardous Materials 
have migrated.

	"Operative Agreements" means, collectively, this Agreement, 
the General Assignment and the other Assignment Instruments, the 
Assumption Agreement and the other Assumption Instruments, the 
Colstrip Unit Number 3 Wholesale Transition Service Agreement, 
the Non-Colstrip Unit Number 3 Wholesale Transition Service 
Agreement, the Interconnection Agreement (including the 
Separation Document), the Contribution Agreement, the 
Communications Service Agreement and any support or other 
agreements to be entered into at the Closing in connection with 
the transaction.

	"Order" means any writ, judgment, decree, injunction or 
similar order of any Governmental or Regulatory Authority (in 
each such case whether preliminary or final). 

	"Parent" has the meaning ascribed to it in the forepart of 
this Agreement.

	"PBGC" means the Pension Benefit Guaranty Corporation 
established under ERISA.

	"Permitted Lien" means (i) those Liens and exceptions to 
title to the Assets (except Easements) set forth in Section 
12.01(h) of the Disclosure Schedule; (ii) the Easements; 
(iii) all exceptions, restrictions, easements, charges, rights 
of way and monetary and non-monetary encumbrances which are set 
forth in an applicable FERC project license, except for such 
encumbrances which secure Indebtedness; (iv)  when such term is 
used with respect to any date before the Closing, Liens created 
by the Indentures; (v) any Lien for Taxes not yet due or 
delinquent or being contested in good faith by appropriate 
proceedings for which adequate reserves have been established in 
accordance with GAAP; (vi) when such term is used with respect 
to any date prior to the Closing, any statutory Lien arising in 
the ordinary course of business by operation of Law with respect 
to a Liability that is not yet due or delinquent; (vii) zoning, 
entitlement, conservation restriction and other land use and 
environmental regulations by any Governmental or Regulatory 
Authority; and (viii) any minor imperfection of title or similar 
Lien, limited in the case of items (i) -(viii) (excluding clause 
(ii)) to only those matters which, individually or in the 
aggregate with other such Liens do not materially detract from 
the value of the Assets as currently used or materially 
interfere with the ownership, operation and maintenance of the 
Assets.

	"Person" means any natural person, corporation, general 
partnership, limited partnership, proprietorship, limited 
liability company other business organization, trust, union, 
association or Governmental or Regulatory Authority.

	"PGE" means Portland General Electric Company, an Oregon 
corporation.

	"PGE Asset Purchase Agreement" means the Asset Purchase 
Agreement dated the date hereof by and between PGE and 
Purchaser.

	"Plan" means any bonus, incentive compensation, deferred 
compensation, pension, profit sharing, retirement, stock 
purchase, stock option, stock ownership, stock appreciation 
rights, phantom stock, leave of absence, layoff, vacation, day 
or dependent care, legal services, cafeteria, life, health, 
accident, disability, workmen's compensation or other insurance, 
severance, separation or other employee benefit plan, practice, 
policy or arrangement of any kind, whether written or oral, 
including, but not limited to, any "employee benefit plan" 
within the meaning of Section 3(3) of ERISA.

	"Pollution Control Bonds" means those Pollution Control 
Revenue Refunding Bonds, Series 1993A, due May 1, 2023, City of 
Forsyth, Montana in the original principal amount of $90,205,000 
and Series 1993B, due December 1, 2023, City of Forsyth, Montana 
in the original principal amount of $80,000,000.

	"Pollution Control Facilities" means the facilities 
financed with the Pollution Control Bonds described in Exhibit C 
hereto.

	"Portland Closing Date" means the date on which the closing 
of the transactions contemplated by the Asset Purchase 
Agreement, dated as of the date hereof, by and between Purchaser 
and PGE (the "Portland Closing") occurs.

	"Post-Closing Covenants" has the meaning ascribed to it in 
Section 9.01(b).

	"Potentially Responsible Party" has the meaning ascribed to 
it in CERCLA.

	"Portland Payment Amount" means an amount equal to 
$897,000,000 minus the amount of the Base Purchase Price (prior 
to any adjustment thereto pursuant to Section 1.10).

	"Power Purchase/Exchange Agreements" means (i) the Power 
Purchase Agreement, effective as of May 13, 1994, between Seller 
and Basin Electric Power Cooperative; (ii) the BPA Peak/Energy 
Exchange, which is Exhibit L to the Power Sales Agreement, dated 
as of August 27, 1982, between Seller and the United States of 
America, Department of Energy, acting by and through the 
Bonneville Power Administration; and (iii) the Exchange 
Agreement, dated as of August 18, 1993, between Seller and Idaho 
Power Company.

	"PPUC Order" means the Opinion and Order adopted by PPUC on 
February 9, 1995 in Pennsylvania Power & Light Company's 
application for approval of certain transactions in connection 
with the utility's establishment of a holding company structure.

	"Pre-Closing Covenants" has the meaning ascribed to it in 
Section 9.01(b).
	"Pre-Closing Environmental Liabilities" means those 
Environmental Liabilities attributable to the period on or prior 
to the Closing.

	"Pre-Closing Known Remedial Liabilities" means the subset 
of Pre-Closing Environmental Liabilities that are described in 
paragraph (d) of the definition of Environmental Liabilities and 
that are attributable to the matters set forth in Schedule II 
hereto.

	"Pre-Closing Unknown Remedial Liabilities" means the subset 
of Pre-Closing Environmental Liabilities that are described in 
paragraph (d) of the definition of Environmental Liabilities and 
that are not attributable to the matters set forth in Schedule 
II hereto.

	"Puget" means Puget Sound Energy, Inc., a Washington 
corporation.

	"Puget Asset Purchase Agreement" means the Asset Purchase 
Agreement dated the date hereof by and between Puget and 
Purchaser.

	"Puget Closing Date" means the date on which the closing of 
the transactions contemplated by the Asset Purchase Agreement, 
dated as of the date hereof, by and between Purchaser and Puget 
(the "Puget Closing") occurs.  

	"Puget Payment Amount" means an amount equal to 
$897,000,000 minus the amount of the Base Purchase Price (prior 
to any adjustment thereto pursuant to Section 1.10).

	"Purchase Price" has the meaning ascribed to it in Section 
1.03(a).

	"Purchaser" has the meaning ascribed to it in the forepart 
of this Agreement.

	"Purchaser Financing" has the meaning ascribed to it in 
Section 5.08.

	"Purchaser Group" has the meaning ascribed to it in Section 
10.01(a).

	"Purchaser Material Adverse Effect" means any change or 
effect after the Bid Date that is, individually or in the 
aggregate, materially adverse to (a) the business, operations, 
property or condition (financial or otherwise) of Purchaser and 
its subsidiaries, taken as a whole, (b) the ability of Purchaser 
and each of its subsidiaries, taken as a whole, to perform their 
respective obligations under this Agreement or any of the other 
Operative Agreements or (c) the validity or enforceability of 
this Agreement or any of the other Operative Agreements, or the 
rights or remedies of Purchaser hereunder or thereunder. 

	"Purchaser Required Regulatory Approvals" means (i) 
pursuant to Part II of the Federal Power Act, acceptance for 
filing and effectiveness or authorization by Final Order of the 
FERC, as applicable, to allow Purchaser to (A) implement 
wholesale sales of electricity under the Wholesale Transition 
Service Agreements, the Power Purchase/Exchange Agreements, the 
Power Purchase Agreements, and any other jurisdictional 
agreements to be assigned to Purchaser, (B) acquire, own and 
operate the Assets, and (C) sell electricity at wholesale at 
market-based rates; (ii) approval by Final Order of the FERC 
under Part I of the Federal Power Act for the transfer of FERC 
project licenses related to, and necessary for Purchaser to 
acquire, own and operate the Hydro Units; (iii) a Final Order of 
the FERC certifying Purchaser as an exempt wholesale generator 
pursuant to Section 32 of the Holding Company Act; provided 
however, that in the event Purchaser does not obtain such 
certification with respect to the acquisition and ownership of 
either or both of the Colstrip 4 Transmission Assets and the 
Colstrip 1, 2, and 3 Transmission Assets, then the provisions of 
Section 1.10 shall apply with respect to such Assets; and 
provided, further, that in any case such certification will be a 
Purchaser Required Regulatory Approval with respect to all other 
Assets; (iv) a Final Order of the Montana Public Service 
Commission, the Oregon Public Utility Commission and the 
Washington Utilities and Transportation Commission, in each 
case, if required, including the determinations required by 
Section 32(c) of the Holding Company Act for the Assets to be 
eligible facilities of Purchaser as an exempt wholesale 
generator; (v) approval or authorization by Final Order of the 
Pennsylvania Public Utility Commission pursuant to the PPUC 
Order, if required; (vi) other Licenses, Environmental Permits 
and approvals or authorizations of any other Governmental or 
Regulatory Authority reasonably necessary pursuant to any Law 
for Purchaser to own and operate the Assets other than 
authorizations or approvals, the lack of which would not 
materially detract from the value of the Assets as currently 
used or materially interfere with the ownership, operation and 
maintenance of the Assets; (vii) acceptance for filing and 
effectiveness or approval by Final Order of the FERC of the 
Interconnection Agreement; and (viii) expiration or early 
termination of the HSR Act waiting period.

	"Purchaser's 401(k) Plan" has the meaning ascribed to it in 
Section 5.03(a).

	"Purchaser's Retirement Plan" has the meaning ascribed to 
it in Section 5.03(a).

	"Purchaser's Welfare Plans" has the meaning ascribed to it 
in Section 5.03(a).

	"Qualified Plan" means each Benefit Plan which is intended 
to qualify under Section 401 of the Code.

	"Qualified Transfer" means a sale or other disposition of 
the Pollution Control Facilities to a transferee who is 
reasonably expected to use the Pollution Control Facilities in 
such a way that they are treated as qualified pollution control 
facilities within the meaning of Section 103(b)(4)(F) of the 
Internal Revenue Code as in effect prior to the enactment of 
Public Law No. 99-514 (the "Tax Reform Act of 1986").

	"Real Property" has the meaning ascribed to it in 
Section 1.01(a)(i).

	"Real Property Leases" has the meaning ascribed to it in 
Section 1.01(a)(ii).

	"Release" means any release, spill, emission, pouring, 
leaking, pumping, injection, deposit, disposal, discharge, 
emptying, dispersal, dumping, leaching or migration into or 
through the indoor or outdoor environment, including the 
movement of Hazardous Materials through ambient air, soil, 
surface water, ground water, wetlands, land, surface or 
subsurface strata.

	"Representatives" has the meaning ascribed to it in Section 
4.03.

	"Resolution Period" means the period ending sixty (60) days 
following receipt by an Indemnified Party of a written notice 
from an Indemnifying Party stating that it disputes all or any 
portion of a claim set forth in a Claim Notice or an Indemnity 
Notice.

	"Retained Liabilities" has the meaning ascribed to it in 
Section 1.02(b).

	"SEC" means the Securities and Exchange Commission.

	"Securities Act" means the Securities Act of 1933, as 
amended, and the rules and regulations promulgated thereunder.

	"Seller" has the meaning ascribed to it in the forepart of 
this Agreement.

	"Seller Group" has the meaning ascribed to it in Section 
10.01(b).

	"Seller Material Adverse Effect" means any change in or 
effect on the Assets or the operation of the Assets after the 
Bid Date that is materially adverse to the ownership, business, 
assets, operations or condition (financial or otherwise) of the 
Assets, individually or taken as a whole, other than (i) any 
change resulting from changes in the international, national, 
regional or local wholesale or retail markets for electricity, 
(ii) any change resulting from changes in the international, 
national, regional or local markets for any fuel used at the 
Generating Assets, (iii) any change resulting from changes in 
the North American, national, regional or local electricity 
transmission systems, (iv) changes in Law that apply generally 
to similarly situated Persons, and (v) any materially adverse 
change in the Assets which is cured (including by payment of 
money) by Seller before the earlier of the Closing and the 
Termination Date.

	"Seller's DB Plan" has the meaning ascribed to it in 
Section 5.03(b).

	"Seller's Retirement Plan" has the meaning ascribed to it 
in Section 5.03(a).

	"Seller Required Regulatory Approvals" means (i) the 
approval required by FERC to transfer the FERC licenses 
associated with the Hydro Units, (ii) the approvals required by 
the appropriate regulatory agencies to transfer the Transferable 
Permits, other than any such approvals the failure of which 
would not materially detract from the value of the Assets as 
currently used or materially interfere with the ownership, use, 
operation or maintenance of the Assets, (iii) the approval, if 
required, of the SEC pursuant to the Holding Company Act, 
(iv) the filings by Seller and Purchaser required by the HSR Act 
and the expiration or earlier termination of all waiting periods 
under the HSR Act, and (v) the approval by FERC pursuant to 
Section 203 and 205, respectively, of the Federal Power Act 
relating to the transfer of the Assets and the Interconnection 
Agreement.

	"Separation Document" means the separation document to be 
prepared under the terms of the Interconnection Agreement.

	"Site Representatives" has the meaning ascribed to it in 
Section 4.11.

	"Subject Defined Benefit Plan" means each Defined Benefit 
Plan listed and described in Section 2.09(a) of the Disclosure 
Schedule.

	"Tangible Personal Property" has the meaning ascribed to it 
in Section 1.01(a)(iv).

	"Tax Representation" has the meaning ascribed to it in 
Section 9.01(a).

	"Tax Returns" means any return, report, information return 
or other document (including any related or supporting 
information) required to be supplied to any taxing authority 
with respect to Taxes.

	"Taxes" means all taxes, charges, fees, levies, penalties 
or other assessments imposed by any United States Federal, state 
or local or foreign taxing authority, including but not limited 
to, income, excise, property, sales, transfer, franchise, 
payroll, withholding, social security or other taxes, including 
any interest, penalties or additions attributable thereto. 

	"Tenant Security Deposits" has the meaning ascribed to it 
in Section 1.01(a)(viii).

	"Thermal Units" means Seller's undivided interests in and 
including the thermal generating stations owned by Seller at 
such locations as set forth in Section 12.01(i) of the 
Disclosure Schedule. 

	"Third Party Claim" has the meaning ascribed to it in 
Section 10.02(a).

	"Thompson Falls Environmental Status" means that Thompson 
Falls Reservoir has been identified as a Low Priority Site by 
Montana Department of Environmental Quality ("DEQ") under the 
Montana Comprehensive Environmental Cleanup and Responsibility 
Act because elevated levels of copper, zinc, and possibly 
arsenic were found in the bottom sediments of Thompson Falls 
Reservoir.

	"Thompson Falls Liabilities" has the meaning ascribed to it 
in Section 1.02(a)(x).

	"Title Representation" has the meaning ascribed to it in 
Section 9.01(a).

	"Transferable Insurance Policies" has the meaning ascribed 
to it in Section 1.01(a)(xvi).

	"Transferable Permits" has the meaning ascribed to it in 
Section 1.01(a)(vi).

	"Transferring Employee" means any Union or Non-Union 
Employee who accepts Purchaser's offer of employment.

	"Transferring Non-Union Employee" means a Non-Union 
Employee who is a Transferring Employee.

	"Transferring Union Employee" means a Union Employee who is 
a Transferring Employee.

	"Transfer Taxes" means all Taxes in the nature of sales, 
use, transfer, recording, value added or forms of conveyance 
taxes.

	"Union Employees" means all bargaining-unit Employees as of 
the Closing represented by the International Brotherhood of 
Electrical Workers ("IBEW") Local No. 1638, IBEW Local No. 44 or 
the International Brotherhood of Teamsters Local 190.

	"WARN Act" means the Federal Worker Adjustment Retraining 
and Notification Act of 1988, as amended, and the rules and 
regulations promulgated thereunder.

	(b)  Construction of Certain Terms and Phrases.  Unless the 
context of this Agreement otherwise requires, (i) words of any 
gender include each other gender; (ii) words using the singular 
or plural number also include the plural or singular number, 
respectively; (iii) the terms "hereof," "herein," "hereby" and 
derivative or similar words refer to this entire Agreement; 
(iv) the terms "Article" or "Section" refer to the specified 
Article or Section of this Agreement; (v) "include" or 
"including" means including without limiting the generality of 
any description preceding such term; and (vi) the phrase 
"ordinary course of business" refers to the business of Seller 
in connection with the operation of the Generating Assets.  
Whenever this Agreement refers to a number of days, such number 
shall refer to calendar days unless Business Days are specified.  
All accounting terms used herein and not expressly defined 
herein shall have the meanings given to them under GAAP.  Any 
representation or warranty contained herein as to the 
enforceability of a Contract shall be subject to the effect of 
any bankruptcy, insolvency, reorganization, moratorium or other 
similar law affecting the enforcement of creditors' rights 
generally and to general equitable principles (regardless of 
whether such enforceability is considered in a proceeding in 
equity or at Law).


                          ARTICLE XIII

                         MISCELLANEOUS

	13.01  Notices.  All notices, requests and other 
communications hereunder must be in writing and will be deemed 
to have been duly given only if delivered personally or by 
facsimile transmission or mailed (first class postage prepaid) 
to the parties at the following addresses or facsimile numbers:

	If to Purchaser, to:

	PP&L Global, Inc.
	11350 Random Hills Rd, Suite 400
	Fairfax, Virginia 22030
	Facsimile No.:   (703) 293-2659
	Attn:  Chief Counsel

	with a copy to:

	LeBoeuf, Lamb, Greene & MacRae, L.L.P.
	125 West 55th Street
	New York, New York 10019-5389
	Facsimile No.:  (212) 424-8500
	Attn:  Jeffrey Meyers

	If to Seller, to:

	The Montana Power Company
	40 East Broadway
	Butte, Montana 59701-9394
	Facsimile No.:  406-497-2451
	Attn:  General Counsel

	with a copy to:

	Milbank, Tweed, Hadley & McCloy
	One Chase Manhattan Plaza
	New York, NY 10005
	Facsimile No.:  212-530-5219
	Attn:  John T. O'Connor

All such notices, requests and other communications will (i) if 
delivered personally to the address as provided in this Section, 
be deemed given upon delivery, (ii) if delivered by facsimile 
transmission to the facsimile number as provided in this 
Section, be deemed given upon receipt, and (iii) if delivered by 
mail in the manner described above to the address as provided in 
this Section, be deemed given upon receipt (in each case 
regardless of whether such notice, request or other 
communication is received by any other Person to whom a copy of 
such notice, request or other communication is to be delivered 
pursuant to this Section).  Any party from time to time may 
change its address, facsimile number or other information for 
the purpose of notices to that party by giving notice specifying 
such change to the other party hereto.

	13.02  Bulk Sales Act.  The parties hereby waive compliance 
with the bulk sales act or comparable statutory provisions of 
each applicable jurisdiction.  Seller shall indemnify Purchaser 
and its officers, directors, employees, agents and Affiliates in 
respect of, and hold each of them harmless from and against, any 
and all Losses suffered, occurred or sustained by any of them or 
to which any of them becomes subject, resulting from, arising 
out of or relating to the failure of Seller to comply with the 
terms of any such provisions applicable to the transactions 
contemplated by this Agreement.

	13.03  Entire Agreement.  This Agreement and the Operative 
Agreements and the other exhibits, schedules, documents, 
certificates and instruments executed and delivered pursuant to 
this Agreement supersede all prior discussions and agreements 
between the parties with respect to the subject matter hereof 
and thereof, including that certain confidentiality agreement 
between the parties dated April 8, 1998, and contain the sole 
and entire agreement between the parties hereto with respect to 
the subject matter hereof and thereof.

	13.04  Expenses.  Except as otherwise expressly provided in 
this Agreement (including as provided in Section 11.02), whether 
or not the transactions contemplated hereby are consummated, 
each party will pay its own costs and expenses incurred in 
connection with the negotiation, execution and closing of this 
Agreement and the Operative Agreements and the transactions 
contemplated hereby and thereby.

	13.05  Public Announcements.  At all times at or before the 
Closing, Seller and Purchaser will not issue or make any 
reports, statements or releases to the public or generally to 
the employees, customers, suppliers or other Persons with whom 
Seller has significant business relationships in connection with 
the operation of the Generating Assets with respect to this 
Agreement or the transactions contemplated hereby without the 
consent of the other, which consent shall not be unreasonably 
withheld.  If either party is unable to obtain the approval of 
its public report, statement or release from the other party and 
such report, statement or release is, in the opinion of legal 
counsel to such party, required by Law in order to discharge 
such party's disclosure obligations, then such party may make or 
issue the legally required report, statement or release and 
promptly furnish the other party with a copy thereof.  Seller 
and Purchaser will also obtain the other party's prior approval 
of any press release to be issued immediately following the 
Closing announcing the consummation of the transactions 
contemplated by this Agreement.

	13.06  Confidentiality.  Each party hereto will hold, and 
will use its best efforts to cause its Affiliates, and their 
respective Representatives to hold, in strict confidence from 
any Person (other than any such Affiliate or Representative), 
unless (i) compelled to disclose by judicial or administrative 
process (including in connection with obtaining the necessary 
approvals of this Agreement and the transactions contemplated 
hereby of Governmental or Regulatory Authorities) or by other 
requirements of Law or (ii) disclosed in an Action or Proceeding 
brought by a party hereto in pursuit of its rights or in the 
exercise of its remedies hereunder, all documents and 
information concerning the other party or any of its Affiliates 
furnished to it by the other party or such other party's 
Representatives in connection with this Agreement or the trans-
actions contemplated hereby, except to the extent that such 
documents or information can be shown to have been (a) 
previously known by the party receiving such documents or 
information, (b) in the public domain (either prior to or after 
the furnishing of such documents or information hereunder) 
through no fault of such receiving party or (c) later acquired 
by the receiving party from another source if the receiving 
party is not aware that such source is under an obligation to 
another party hereto to keep such documents and information 
confidential; provided that following the Closing the foregoing 
restrictions will not apply to Purchaser's use of documents and 
information concerning the Assets or the Assumed Liabilities 
furnished by Seller hereunder.  Purchaser shall have the right 
to disclose information of Seller with respect to the Assets to 
potential lenders and their respective representatives in 
connection with financing the transactions contemplated by this 
Agreement and to third parties in connection with planning for 
operations of the Assets following the Closing, provided that 
any such disclosure is made pursuant to confidentiality 
obligations equivalent to those provided in this Section 13.06; 
provided, further, if such third parties are involved in the 
energy industry then Purchaser shall not disclose information of 
Seller to such Persons without the written consent of Seller 
which shall not be unreasonably withheld.  In the event the 
transactions contemplated hereby are not consummated, upon the 
request of the other party, each party hereto will, and will 
cause its Affiliates and their respective Representatives to, 
promptly (and in no event later than five (5) Business Days 
after such request) redeliver or cause to be redelivered all 
copies of confidential documents and information furnished by 
the other party in connection with this Agreement or the 
transactions contemplated hereby and destroy or cause to be 
destroyed all notes, memoranda, summaries, analyses, 
compilations and other writings related thereto or based thereon 
prepared by the party furnished such documents and information 
or its Representatives.

	13.07  Waiver.  Any term or condition of this Agreement may 
be waived at any time by the party that is entitled to the 
benefit thereof, but no such waiver shall be effective unless 
set forth in a written instrument duly executed by or on behalf 
of the party waiving such term or condition.  No waiver by any 
party of any term or condition of this Agreement, in any one or 
more instances, shall be deemed to be or construed as a waiver 
of the same or any other term or condition of this Agreement on 
any future occasion.  All remedies, either under this Agreement 
or by Law or otherwise afforded, will be cumulative and not 
alternative.

	13.08  Amendment.  This Agreement may be amended, 
supplemented or modified only by a written instrument duly 
executed by or on behalf of each party hereto.

	13.09  No Third Party Beneficiary.  The terms and 
provisions of this Agreement are intended solely for the benefit 
of each party hereto and their respective successors or 
permitted assigns, and it is not the intention of the parties to 
confer third party beneficiary rights upon any other Person 
other than any Person entitled to indemnity under Article X, 
provided, however, that the Transferring Employees are intended 
to be third party beneficiaries solely for the purpose of claims 
they may have against Purchaser under Section 5.03. 

	13.10  No Assignment; Binding Effect.  Neither this 
Agreement nor any right, interest or obligation hereunder may be 
assigned by any party hereto without the prior written consent 
of the other party hereto and any attempt to do so will be void, 
except (a) for assignments and transfers by operation of Law, 
(b) that Seller may assign its rights, interests or obligations 
hereunder, in whole or in part, to an Affiliate and (c) that 
Purchaser may assign any or all of its rights, interests and 
obligations hereunder (including its rights under Article X) to 
(i) a direct or indirect wholly-owned Subsidiary, provided that 
any such Subsidiary agrees in writing to be bound by all of the 
terms, conditions and provisions contained herein (in which 
event, from the date of such assignment and subject to the other 
provisions of this Section 13.10, such assignee shall be the 
Purchaser for the purposes of this Agreement), or (ii) any 
lender providing purchase money or other financing to Purchaser 
from time to time as collateral security for such financing, but 
no such assignment referred to in clauses (b) or (c) shall 
relieve the assigning party of its obligations hereunder; 
provided that no such assignment by Seller or Purchaser 
adversely affects the availability or timing of any Federal, 
state or local government consent or approval required for the 
consummation of the transactions contemplated hereby.  Subject 
to the preceding sentence, this Agreement is binding upon, 
inures to the benefit of and is enforceable by the parties 
hereto and their respective successors and assigns.

	13.11  Headings.  The headings used in this Agreement have 
been inserted for convenience of reference only and do not 
define or limit the provisions hereof. Neither party shall be 
deemed to have been the drafter of this Agreement, which is the 
product of detailed, arm's-length negotiations between the 
parties and their respective counsel.

	13.12  Invalid Provisions.  If any provision of this 
Agreement is held to be illegal, invalid or unenforceable under 
any present or future Law, and if the rights or obligations of 
any party hereto under this Agreement will not be materially and 
adversely affected thereby, (a) such provision will be fully 
severable, (b) this Agreement will be construed and enforced as 
if such illegal, invalid or unenforceable provision had never 
comprised a part hereof, (c) the remaining provisions of this 
Agreement will remain in full force and effect and will not be 
affected by the illegal, invalid or unenforceable provision or 
by its severance herefrom and (d) in lieu of such illegal, 
invalid or unenforceable provision, there will be added 
automatically as a part of this Agreement a legal, valid and 
enforceable provision as similar in terms to such illegal, 
invalid or unenforceable provision as may be possible.

	13.13  Governing Law.  This Agreement shall be governed by 
and construed in accordance with the Laws of the State of New 
York applicable to a contract executed and performed in such 
State, without giving effect to the conflicts of laws principles 
thereof.

	13.14  Counterparts.  This Agreement may be executed in any 
number of counterparts, each of which will be deemed an 
original, but all of which together will constitute one and the 
same instrument.

<PAGE>
		IN WITNESS WHEREOF, this Agreement has been duly 
executed and delivered by the duly authorized officer of each 
party as of the date first above written.

                             PP&L GLOBAL, INC.


                             By:_______________________________
                                Name:  
                                Title:  


                             THE MONTANA POWER COMPANY


                             By:________________________________
                                Name:  
                                Title: