<PAGE>

                                                                    EXHIBIT 4.3



                              AMENDED AND RESTATED


                              DECLARATION OF TRUST


                                       OF


                       NORTHWESTERN CAPITAL FINANCING III





                                JANUARY 31, 2002



<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                       PAGE
                                                                                                       ----
<S>      <C>            <C>                                                                            <C>
ARTICLE I INTERPRETATION AND DEFINITIONS.................................................................1

         SECTION 1.1   Definitions.......................................................................1

ARTICLE II TRUST INDENTURE ACT...........................................................................7

         SECTION 2.1   Trust Indenture Act; Application..................................................7

         SECTION 2.2   Lists of Holders of Securities....................................................7

         SECTION 2.3   Reports by the Property Trustee...................................................8

         SECTION 2.4   Periodic Reports to Property Trustee..............................................8

         SECTION 2.5   Evidence of Compliance with Conditions Precedent..................................8

         SECTION 2.6   Events of Default; Waiver.........................................................8

         SECTION 2.7   Event of Default; Notice.........................................................10

ARTICLE III ORGANIZATION................................................................................10

         SECTION 3.1   Name.............................................................................10

         SECTION 3.2   Office...........................................................................10

         SECTION 3.3   Purpose..........................................................................11

         SECTION 3.4   Authority........................................................................11

         SECTION 3.5   Title to Property of the Trust...................................................11

         SECTION 3.6   Powers and Duties of the Regular Trustees........................................11

         SECTION 3.7   Prohibition of Actions by the Trust and the Trustees.............................14
</TABLE>


<PAGE>

                               TABLE OF CONTENTS
                                  (continued)
<TABLE>
<CAPTION>
                                                                                                       PAGE
                                                                                                       ----
<S>      <C>            <C>                                                                            <C>
         SECTION 3.8   Powers and Duties of the Property Trustee........................................14

         SECTION 3.9   Certain Duties and Responsibilities of the Property Trustee......................16

         SECTION 3.10  Certain Rights of Property Trustee...............................................18

         SECTION 3.11  Delaware Trustee.................................................................20

         SECTION 3.12  Execution of Documents...........................................................20

         SECTION 3.13  Not Responsible for Recitals or Issuance of Securities...........................20

         SECTION 3.14  Duration of Trust................................................................20

         SECTION 3.15  Mergers..........................................................................20

ARTICLE IV SPONSOR......................................................................................22

         SECTION 4.1   Sponsor's Purchase of Common Securities..........................................22

         SECTION 4.2   Responsibilities of the Sponsor..................................................22

         SECTION 4.3   Expenses.........................................................................23

ARTICLE V TRUSTEES......................................................................................23

         SECTION 5.1    Number of Trustees..............................................................23

         SECTION 5.2    Delaware Trustee; Eligibility...................................................23

         SECTION 5.3    Property Trustee; Eligibility...................................................24

         SECTION 5.4    Qualifications of Regular Trustees and Delaware Trustee Generally...............25

</TABLE>

<PAGE>

                               TABLE OF CONTENTS
                                  (continued)
<TABLE>
<CAPTION>
                                                                                                       PAGE
                                                                                                       ----
<S>      <C>            <C>                                                                            <C>
         SECTION 5.5    Initial Trustees................................................................25

         SECTION 5.6    Appointment, Removal and Resignation of Trustees................................25

         SECTION 5.7    Vacancies among Trustees........................................................27

         SECTION 5.8    Effect of Vacancies.............................................................27

         SECTION 5.9    Meetings........................................................................27

         SECTION 5.10   Delegation of Power.............................................................28

ARTICLE VI DISTRIBUTIONS................................................................................28

         SECTION 6.1    Distributions...................................................................28

ARTICLE VII ISSUANCE OF SECURITIES......................................................................28

         SECTION 7.1    General Provisions Regarding Securities.........................................28

         SECTION 7.2    Authentication..................................................................29

         SECTION 7.3    Rights of Holders...............................................................29

         SECTION 7.4    Subordination of Common Securities..............................................30

ARTICLE VIII TERMINATION OF TRUST.......................................................................30

         SECTION 8.1    Termination of Trust............................................................30

ARTICLE IX TRANSFER OF INTERESTS........................................................................31

         SECTION 9.1    Transfer of Securities..........................................................31

         SECTION 9.2    Transfer of Certificates........................................................32
</TABLE>

<PAGE>

                               TABLE OF CONTENTS
                                  (continued)
<TABLE>
<CAPTION>
                                                                                                       PAGE
                                                                                                       ----
<S>      <C>            <C>                                                                            <C>

         SECTION 9.3    Deemed Security Holders.........................................................32

         SECTION 9.4    Book Entry Interests............................................................32

         SECTION 9.5    Notices to Clearing Agency......................................................33

         SECTION 9.6    Appointment of Successor Clearing Agency........................................33

         SECTION 9.7    Definitive Preferred Security Certificates......................................33

         SECTION 9.8    Mutilated, Destroyed, Lost or Stolen Certificates...............................34

ARTICLE X LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, TRUSTEES AND OTHERS.........................35

         SECTION 10.1   Liability.......................................................................35

         SECTION 10.2   Exculpation.....................................................................35

         SECTION 10.3   Fiduciary Duty..................................................................36

         SECTION 10.4   Indemnification.................................................................37

         SECTION 10.5   Outside Businesses..............................................................37

ARTICLE XI ACCOUNTING...................................................................................38

         SECTION 11.1   Fiscal Year.....................................................................38

         SECTION 11.2   Certain Accounting Matters......................................................38

         SECTION 11.3   Banking.........................................................................38

         SECTION 11.4   Withholding.....................................................................39
</TABLE>

<PAGE>


                               TABLE OF CONTENTS
                                  (continued)
<TABLE>
<CAPTION>
                                                                                                       PAGE
                                                                                                       ----
<S>      <C>            <C>                                                                            <C>
ARTICLE XII AMENDMENTS AND MEETINGS.....................................................................39

         SECTION 12.1   Amendments......................................................................39

         SECTION 12.2   Meetings of the Holders of Securities; Action by Written Consent................40

ARTICLE XIII REPRESENTATIONS OF PROPERTY TRUSTEE........................................................42

         SECTION 13.1   Representations and Warranties of Property Trustee..............................42

ARTICLE XIV MISCELLANEOUS...............................................................................43

         SECTION 14.1   Notices.........................................................................43

         SECTION 14.2   Governing Law...................................................................44

         SECTION 14.3   Intention of the Parties........................................................44

         SECTION 14.4   Headings........................................................................44

         SECTION 14.5   Successors and Assigns..........................................................44

         SECTION 14.6   Partial Enforceability..........................................................44

         SECTION 14.7   Counterparts....................................................................44
</TABLE>



<PAGE>


                              LIST OF DEFINED TERMS

<TABLE>
<S>                                                                            <C>
10% in liquidation amount of the Securities......................................6
66-2/3% in liquidation amount of the Securities..................................6
Affiliate........................................................................2
Authorized Officer...............................................................2
Book Entry Interest..............................................................2
Business Day.....................................................................2
Business Trust Act...............................................................2
Certificate......................................................................2
Clearing Agency..................................................................2
Clearing Agency Participant......................................................2
Code.............................................................................2
Commission.......................................................................2
Common Securities Guarantee......................................................3
Common Security..................................................................2
Common Security Certificate......................................................3
Covered Person...................................................................3
Debenture Issuer.................................................................3
Debenture Trustee................................................................3
Debentures.......................................................................3
Definitive Preferred Security Certificates.......................................3
Delaware Trustee.................................................................3
Direction........................................................................3
Distribution.....................................................................3
DTC..............................................................................3
Event of Default.................................................................3
Exchange Act.....................................................................3
Global Certificate...............................................................3
HOLDER...........................................................................3
Indemnified Person...............................................................4
Indenture........................................................................4
Investment Company...............................................................4
Investment Company Act...........................................................4
Legal Action.....................................................................4
List of Holders..................................................................4
Majority in liquidation amount of the Securities.................................4
Officers' Certificate............................................................4
Over-allotment Option............................................................5
Paying Agent.....................................................................5
Person...........................................................................5
Preferred Securities Guarantee...................................................5
Preferred Security...............................................................5
</TABLE>

<PAGE>

                              LIST OF DEFINED TERMS
                                  (continued)

<TABLE>
<S>                                                                            <C>
Preferred Security Beneficial Owner..............................................5
Preferred Security Certificate...................................................5
Property Trustee.................................................................5
Property Trustee Account.........................................................5
Prospectus.......................................................................5
Quorum...........................................................................5
Regular Trustee..................................................................5
Related Party....................................................................5
Responsible Officer..............................................................5
Rule 3a-7........................................................................6
Securities.......................................................................6
Securities Act...................................................................6
Sponsor..........................................................................6
Successor Entity.................................................................6
Successor Securities.............................................................6
Super Majority...................................................................6
Treasury Regulations.............................................................6
Trust Indenture Act..............................................................7
Trustee..........................................................................6
Underwriting Agreement...........................................................7
</TABLE>


<PAGE>


                       NORTHWESTERN CAPITAL FINANCING III

                          CROSS REFERENCE TABLE FOR THE
                    AMENDED AND RESTATED DECLARATION OF TRUST

<TABLE>
<CAPTION>

SECTION OF TRUST INDENTURE                                                        SECTION OF AMENDED AND RESTATED
ACT OF 1939, AS AMENDED                                                                      DECLARATION OF TRUST

<S>                   <C>                                                         <C>
Section 310          (a)(1)...................................................................................5.3
                     (a)(2)...................................................................................5.3
                     (a)(3)...................................................................................5.6
                     (a)(4)........................................................................Not Applicable
                     (b)...................................................................................5.3(c)
                     (c)...........................................................................Not Applicable
Section 311          (a)...................................................................................2.2(b)
                     (b)...................................................................................2.2(b)
                     (c)...........................................................................Not Applicable
Section 312          (a)...................................................................................2.2(a)
                     (b)...................................................................................2.2(b)
                     (c)..........................................................................Not  Applicable
Section 313          (a)......................................................................................2.3
                     (b)......................................................................................2.3
                     (c)......................................................................................2.3
                     (d)......................................................................................2.3
Section 314          (a)..............................................................................2.4, 3.6(j)
                     (b)...........................................................................Not Applicable
                     (c)(1)..............................................................................2.4, 2.5
                     (c)(2)..............................................................................2.4, 2.5
                     (c)(3)..............................................................................2.4, 2.5
                     (d)......................................................................................2.4
                     (e)......................................................................................2.4
Section 315          (a)................................................................................3.9, 3.10
                     (b)...................................................................................2.7(a)
                     (c)...................................................................................3.9(a)
                     (d)...................................................................................3.9(b)
                     (e)...........................................................................Not Applicable
Section 316          (a).............................................................................Exhibit 5(b)
                     (a)(1)(A).......................................................................Exhibit 5(b)
                     (a)(1)(B).......................................................................Exhibit 5(b)
                     (a)(2)........................................................................Not Applicable
                     (b).............................................................................Exhibit 5(b)
                     (c)......................................................................................2.2
Section 317          (a)(1)........................................................................Not Applicable
                     (a)(2)........................................................................Not Applicable
                     (b)...................................................................................3.8(h)
Section 318          (a)...................................................................................2.1(c)

</TABLE>

-----------------
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be a
      part of the Amended and Restated Declaration of Trust.

<PAGE>


                              AMENDED AND RESTATED

                              DECLARATION OF TRUST

                                       OF

                       NORTHWESTERN CAPITAL FINANCING III


     AMENDED AND RESTATED DECLARATION OF TRUST ("DECLARATION") dated and
effective as of January 31, 2002, by the undersigned trustees (together with all
other Persons from time to time duly appointed and serving as trustees in
accordance with the provisions of this Declaration, the "TRUSTEES"),
NorthWestern Corporation, a Delaware corporation, as trust sponsor (the
"SPONSOR"), and the holders, from time to time, of undivided beneficial
interests in the assets of the Trust to be issued pursuant to this Declaration;

     WHEREAS, the Trustees and the Sponsor established a trust (the "TRUST")
under the Delaware Business Trust Act (the "BUSINESS TRUST ACT") pursuant to a
Declaration of Trust dated as of June 19, 1995 (as amended, the "ORIGINAL
DECLARATION"), and a Certificate of Trust filed with the Secretary of State of
the State of Delaware on June 19, 1995 for the sole purpose of issuing and
selling certain securities representing undivided beneficial interests in the
assets of the Trust and investing the proceeds thereof in certain Debentures (as
defined herein) of the Debenture Issuer (as defined herein);

     WHEREAS, the Original Declaration was amended pursuant to a First Amendment
to the Declaration of Trust of NWPS Capital Financing III dated June 30, 1998;
and

     WHEREAS, all of the Trustees and the Sponsor, by this Declaration, amend
and restate each and every term and provision of the Original Declaration as so
amended.

     NOW, THEREFORE, it being the intention of the parties hereto to continue
the Trust as a business trust under the Business Trust Act and that this
Declaration constitute the governing instrument of such business trust, the
Trustees declare that all assets contributed to the Trust will be held in trust
for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration.

                                   ARTICLE I
                         INTERPRETATION AND DEFINITIONS

SECTION 1.1 DEFINITIONS.

     In this Declaration, unless the context otherwise requires:

     (a)  capitalized terms used in this Declaration but not defined in the
          preamble above have the respective meanings assigned to them in this
          SECTION 1.1;

                                       1
<PAGE>


     (b)  a term defined anywhere in this Declaration has the same meaning
          throughout;

     (c)  all references to "the Declaration" or "this Declaration" are to this
          Declaration as modified, supplemented or amended from time to time;

     (d)  all references in this Declaration to Articles and Sections and
          Exhibits are to Articles and Sections of and Exhibits to this
          Declaration unless otherwise specified;

     (e)  a term defined in the Trust Indenture Act has the same meaning when
          used in this Declaration unless otherwise defined in this Declaration
          or unless the context otherwise requires; and

     (f)  a reference to the singular includes the plural and vice versa.

     "AFFILIATE" has the same meaning as given to that term in Rule 405
promulgated under the Securities Act or any successor rule thereunder.

     "AUTHORIZED OFFICER" of a Person means any Person that is authorized to
bind such Person.

     "BOOK ENTRY INTEREST" means a beneficial interest in a Global Certificate,
ownership and transfers of which shall be maintained and made through book
entries by a Clearing Agency as described in SECTION 9.4.

     "BUSINESS DAY" means any day other than Saturday, Sunday or any other day
on which banking institutions in New York, New York are authorized or required
by applicable law to close.

     "BUSINESS TRUST ACT" means Chapter 38 of Title 12 of the Delaware Code, 12
Del. Code Section 3801 ET SEQ., as it may be amended from time to time, or any
successor legislation.

     "CERTIFICATE" means a Common Security Certificate or a Preferred Security
Certificate.

     "CLEARING AGENCY" means an organization registered as a "Clearing Agency"
pursuant to Section 17A of the Exchange Act that is acting as depositary for the
Preferred Securities and in whose name or in whose nominee's name shall be
registered a Global Certificate and which shall undertake to effect book entry
transfers and pledges of the Preferred Securities.

     "CLEARING AGENCY PARTICIPANT" means a broker, dealer, bank, other financial
institution or other Person for whom from time to time the Clearing Agency
effects book entry transfers and pledges of securities deposited with the
Clearing Agency.

     "CODE" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor legislation.

     "COMMISSION" means the Securities and Exchange Commission.


                                       2
<PAGE>

     "COMMON SECURITY" has the meaning specified in SECTION 7.1.

     "COMMON SECURITIES GUARANTEE" means the guarantee agreement to be dated as
of January 31, 2002 of the Sponsor in respect of the Common Securities.

     "COMMON SECURITY CERTIFICATE" means a definitive certificate in fully
registered form representing a Common Security substantially in the form of
ANNEX II to EXHIBIT A.

     "COVERED PERSON" means: (a) any officer, director, shareholder, partner,
member, representative, employee or agent of (i) the Trust or (ii) the Trust's
Affiliates; and (b) any Holder of Securities.

     "DEBENTURE ISSUER" means NorthWestern Corporation in its capacity as issuer
of the Debentures.

     "DEBENTURE TRUSTEE" means JPMorgan Chase Bank (as successor to The Chase
Manhattan Bank, N.A.), as trustee under the Indenture, until a successor is
appointed thereunder, and thereafter means such successor trustee.

     "DEBENTURES" means the series of Debentures entitled "8.10% Junior
Subordinated Deferrable Interest Debentures due January 15, 2032" of the
Debenture Issuer to be issued to the Property Trustee by the Debenture Issuer
under the Indenture, a specimen certificate of which is attached as EXHIBIT B.

     "DEFINITIVE PREFERRED SECURITY CERTIFICATES" has the meaning set forth in
SECTION 9.4.

     "DELAWARE TRUSTEE" has the meaning set forth in SECTION 5.2.

     "DIRECTION" by a Person means a written direction signed: (a) if the Person
is a natural person, by that Person; or (b) in any other case, in the name of
such Person by one or more Authorized Officers of that Person.

     "DISTRIBUTION" means a distribution payable to Holders of Securities in
accordance with SECTION 6.1.

     "DTC" means The Depository Trust Company, the initial Clearing Agency.

     "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended from
time to time, or any successor legislation.

     "EVENT OF DEFAULT" in respect of the Securities means an Event of Default
(as defined in the Indenture) has occurred and is continuing in respect of the
Debentures.

     "GLOBAL CERTIFICATE" has the meaning set forth in SECTION 9.4.

     "HOLDER" means a Person in whose name a Certificate representing a Security
is registered, such Person being a beneficial owner within the meaning of the
Business Trust Act.


                                       3
<PAGE>

     "INDEMNIFIED PERSON" means any Trustee, any Affiliate of any Trustee, or
any officers, directors, shareholders, members, partners, employees,
representatives or agents of any Trustee, or any employee or agent of the Trust
or its Affiliates.

     "INDENTURE" means the Subordinated Debt Securities Indenture dated as of
August 1, 1995, between the Debenture Issuer and JPMorgan Chase Bank (as
successor to The Chase Manhattan Bank, (N.A.)), as trustee, as supplemented by
the First Supplemental Indenture, dated as of August 1, 1995, the Second
Supplemental Indenture, dated as of November 15, 1998, the Third Supplemental
Indenture, dated as of December 21, 2001 and the Fourth Supplemental Indenture,
dated as of January 31, 2002, pursuant to which the Debentures are to be issued
(the "FOURTH SUPPLEMENTAL INDENTURE").

     "INVESTMENT COMPANY" means an investment company as defined in the
Investment Company Act.

     "INVESTMENT COMPANY ACT" means the Investment Company Act of 1940, as
amended from time to time, or any successor legislation.

     "LEGAL ACTION" has the meaning set forth in SECTION 3.6(h).

     "LIST OF HOLDERS" has the meaning set forth in SECTION 2.2.

     "MAJORITY IN LIQUIDATION AMOUNT OF THE SECURITIES" means, except as
provided in the terms of the Securities and by the Trust Indenture Act, a vote
by the Holder(s) of Securities voting together as a single class or, as the
context may require, a vote by the Holder(s) of the Preferred Securities or the
Holder(s) of the Common Securities, each voting separately as a class,
representing a majority of the liquidation amount (including the stated amount
that would be paid on redemption, liquidation or otherwise, plus accumulated and
unpaid Distributions to the date upon which the voting percentages are
determined) of all Securities of such class.

     "OFFICERS' CERTIFICATE" means, with respect to any Person, a certificate
signed by two Authorized Officers of such Person. Any Officers' Certificate
delivered with respect to compliance with a condition or covenant provided for
in this Declaration shall include:

     (a)  a statement that each officer signing the Officers' Certificate has
          read the covenant or condition and the definition relating thereto;

     (b)  a brief statement of the nature and scope of the examination or
          investigation undertaken by each officer in rendering the Officers'
          Certificate;

     (c)  a statement that each such officer has made such examination or
          investigation as, in such officer's opinion, is necessary to enable
          such officer to express an informed opinion as to whether or not such
          covenant or condition has been complied with; and


                                       4
<PAGE>

     (d)  a statement as to whether, in the opinion of each such officer, such
          condition or covenant has been complied with.

     "OVERALLOTMENT OPTION" shall mean any overallotment option contained in the
Underwriting Agreement.

     "PAYING AGENT" has the meaning specified in SECTION 3.8(h).

     "PERSON" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.

     "PREFERRED SECURITIES GUARANTEE" means the guarantee agreement to be dated
as of January 31, 2002 of the Sponsor in respect of the Preferred Securities.

     "PREFERRED SECURITY" has the meaning specified in SECTION 7.1.

     "PREFERRED SECURITY BENEFICIAL OWNER" means, with respect to a Book Entry
Interest, a Person who is the beneficial owner of such Book Entry Interest, as
reflected on the books of the Clearing Agency, or on the books of a Person
maintaining an account with such Clearing Agency (directly as a Clearing Agency
Participant or as an indirect participant, in each case in accordance with the
rules of such Clearing Agency).

     "PREFERRED SECURITY CERTIFICATE" means a certificate representing a
Preferred Security substantially in the form of ANNEX I to EXHIBIT A.

     "PROPERTY TRUSTEE" means the Trustee meeting the eligibility requirements
set forth in SECTION 5.3.

     "PROPERTY TRUSTEE ACCOUNT" has the meaning set forth in SECTION 3.8(c).

     "PROSPECTUS" has the meaning set forth in the terms of the Securities set
forth in EXHIBIT A.

     "QUORUM" means a majority of the Regular Trustees or, if there are only two
Regular Trustees, both of them.

     "REGULAR TRUSTEE" means any Trustee other than the Property Trustee and the
Delaware Trustee.

     "RELATED PARTY" means, with respect to the Sponsor, any direct or indirect
wholly owned subsidiary of the Sponsor or any other Person that owns, directly
or indirectly, 100% of the outstanding voting securities of the Sponsor.

     "RESPONSIBLE OFFICER" means, with respect to the Property Trustee, any
vice-president, any assistant vice-president, the secretary, any assistant
secretary, the treasurer, any assistant

                                       5
<PAGE>


treasurer, any trust officer or assistant trust officer or any other officer in
the corporate trust department of the Property Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of that officer's knowledge of
and familiarity with the particular subject.

     "RULE 3a-7" means Rule 3a-7 promulgated under the Investment Company Act or
any successor rule thereunder.

     "SECURITIES" means the Common Securities and the Preferred Securities.

     "SECURITIES ACT" means the Securities Act of 1933, as amended from time to
time, or any successor legislation.

     "66-2/3% IN LIQUIDATION AMOUNT OF THE SECURITIES" means, except as provided
in the terms of the Preferred Securities and by the Trust Indenture Act, a vote
by the Holder(s) of the Securities voting together as a single class or, as the
context may require, a vote by the Holder(s) of the Preferred Securities or the
Holder(s) of the Common Securities, each voting separately as a class,
representing 66-2/3% of the liquidation amount (including the stated amount that
would be paid on redemption, liquidation or otherwise, plus accumulated and
unpaid Distributions to the date upon which the voting percentages are
determined) of all Securities of such class.

     "SPONSOR" means NorthWestern Corporation, a Delaware corporation, or any
successor entity in a merger, consolidation or amalgamation, in its capacity as
sponsor of the Trust.

     "SUCCESSOR ENTITY" has the meaning set forth in SECTION 3.15.

     "SUCCESSOR SECURITIES" has the meaning set forth in SECTION 3.15.

     "SUPER MAJORITY" means, with respect to a consent under the Indenture, the
consent of the Holders of greater than a majority in principal amount of
Debentures affected by such consent.

     "10% IN LIQUIDATION AMOUNT OF THE SECURITIES" means, except as provided in
the terms of the Preferred Securities and by the Trust Indenture Act, the vote
by the Holder(s) of the Securities voting together as a single class or, as the
context may require, the vote by the Holder(s) of the Preferred Securities or
the Holder(s) of the Common Securities, each voting separately as a class,
representing 10% of the liquidation amount (including the stated amount that
would be paid on redemption, liquidation or otherwise, plus accumulated and
unpaid Distributions to the date upon which the voting percentages are
determined) of all Securities of such class.

     "TREASURY REGULATIONS" means the income tax regulations, including
temporary and proposed regulations, promulgated under the Code by the United
States Treasury, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).


                                       6
<PAGE>

     "TRUSTEE" or "TRUSTEES" means each Person who has signed this Declaration
as a trustee, so long as such Person shall continue in office in accordance with
the terms hereof, and all other Persons who may from time to time be duly
appointed, qualified and serving as Trustees in accordance with the provisions
hereof, and references herein to a Trustee or the Trustees shall refer to such
Person or Persons solely in their capacity as trustees hereunder.

     "TRUST INDENTURE ACT" means the Trust Indenture Act of 1939, as amended
from time to time, or any successor legislation.

     "UNDERWRITING AGREEMENT" means the Underwriting Agreement for the offering
and sale of the Preferred Securities in the form of EXHIBIT C.

                                   ARTICLE II
                               TRUST INDENTURE ACT

SECTION 2.1 TRUST INDENTURE ACT; APPLICATION.

     (a)  This Declaration is subject to the provisions of the Trust Indenture
          Act that are required to be part of this Declaration and shall, to the
          extent applicable, be governed by such provisions.

     (b)  The Property Trustee shall be the only Trustee which is a Trustee for
          the purposes of the Trust Indenture Act.

     (c)  If and to the extent that any provision of this Declaration limits,
          qualifies or conflicts with the duties imposed by Sections 310 to 317,
          inclusive, of the Trust Indenture Act, such imposed duties shall
          control.

     (d)  The application of the Trust Indenture Act to this Declaration shall
          not affect the nature of the Securities as equity securities
          representing undivided beneficial interests in the assets of the
          Trust.

SECTION 2.2 LISTS OF HOLDERS OF SECURITIES.

     (a)  Each of the Sponsor, the Debenture Issuer and the Regular Trustees on
          behalf of the Trust shall provide the Property Trustee (i) within 14
          days after each record date for payment of Distributions, a list, in
          such form as the Property Trustee may reasonably require, of the names
          and addresses of the Holders of the Securities (a "LIST OF HOLDERS")
          as of such record date, provided that none of the Sponsor, the
          Debenture Issuer or the Regular Trustees on behalf of the Trust shall
          be obligated to provide such List of Holders at any time the List of
          Holders does not differ from the most recent List of Holders given to
          the Property Trustee by the Sponsor, the Debenture Issuer and the
          Regular Trustees on behalf of the Trust, and (ii) at any other time,
          within 30 days of receipt by the Trust of a written request for a List
          of Holders as of a date no more than 14 days before such List of
          Holders is given to the Property Trustee. The Property Trustee shall
          preserve, in as current a


                                       7
<PAGE>

          form as is reasonably practicable, all information contained in the
          Lists of Holders given to it or which it receives in the capacity as
          Paying Agent (if acting in such capacity) provided that the Property
          Trustee may destroy any List of Holders previously given to it on
          receipt of a new List of Holders.

     (b)  The Property Trustee shall comply with its obligations under Sections
          311(a), 311(b) and 312(b) of the Trust Indenture Act.

SECTION 2.3 REPORTS BY THE PROPERTY TRUSTEE.

     Within 60 days after May 15 of each year, the Property Trustee shall
provide to the Holders of the Preferred Securities such reports as are required
by Section 313 of the Trust Indenture Act, if any, in the form and in the manner
provided by Section 313 of the Trust Indenture Act. The Property Trustee shall
also comply with the requirements of Section 313(d) of the Trust Indenture Act.

SECTION 2.4 PERIODIC REPORTS TO PROPERTY TRUSTEE.

     Each of the Sponsor and the Regular Trustees on behalf of the Trust shall
provide to the Property Trustee such documents, reports and information as
required by Section 314 of the Trust Indenture Act (if any) and the compliance
certificate required by Section 314 of the Trust Indenture Act in the form, in
the manner and at the times required by Section 314 of the Trust Indenture Act.

SECTION 2.5 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT.

     Each of the Sponsor and the Regular Trustees on behalf of the Trust shall
provide to the Property Trustee such evidence of compliance with any conditions
precedent, if any, provided for in this Declaration that relate to any of the
matters set forth in Section 314(c) of the Trust Indenture Act. Any certificate
or opinion required to be given by an officer pursuant to Section 314(c)(1) may
be given in the form of an Officers' Certificate.

SECTION 2.6 EVENTS OF DEFAULT; WAIVER.

     (a)  The Holders of a Majority in liquidation amount of the Preferred
          Securities may, by vote, on behalf of the Holders of all of the
          Preferred Securities, waive any past Event of Default in respect of
          the Preferred Securities and its consequences, provided that, if the
          Event of Default arises out of an event of default under the
          Indenture:

          (i)  which is not waivable under the Indenture, the Event of Default
               under the Declaration shall also not be waivable; or

          (ii) which requires the consent or vote of all or a Super Majority of
               the holders of the Debentures to be waived under the Indenture,
               the Event of Default under the Declaration may only be waived by
               the vote of all of the Holders of the Preferred Securities or the
               Holders of at least the proportion in liquidation


                                       8
<PAGE>

               amount of the Preferred Securities as represents the relevant
               Super Majority of the aggregate principal amount of the
               Debentures outstanding.

          Upon such waiver, any such default shall cease to exist, and any Event
          of Default with respect to the Preferred Securities arising therefrom
          shall be deemed to have been cured, for every purpose of this
          Declaration, but no such waiver shall extend to any subsequent or
          other default or an Event of Default with respect to the Preferred
          Securities or impair any right consequent thereon. Any waiver by the
          Holders of the Preferred Securities of an Event of Default with
          respect to the Preferred Securities shall also be deemed to constitute
          a waiver by the Holders of the Common Securities of any such Event of
          Default with respect to the Common Securities for all purposes of this
          Declaration without any further act, vote or consent of the Holders of
          the Common Securities.

     (b)  The Holders of a Majority in liquidation amount of the Common
          Securities may, by vote, on behalf of the Holders of all of the Common
          Securities, waive any past Event of Default with respect to the Common
          Securities and its consequences, provided that, if the Event of
          Default arises out of an event of default under the Indenture:

          (i)  which is not waivable under the Indenture, except where the
               Holders of the Common Securities are deemed to have waived such
               Event of Default under the Declaration as provided below in this
               SECTION 2.6(b), the Event of Default under the Declaration shall
               also not be waivable; or

          (ii) which requires the consent or vote of all or a Super Majority of
               the Holders of the Debentures to be waived under the Indenture,
               except where the Holders of the Common Securities are deemed to
               have waived such Event of Default under the Declaration as
               provided below in this SECTION 2.6(b), the Event of Default under
               the Declaration may only be waived by the vote of all of the
               Holders of the Common Securities or the Holders of at least the
               proportion in liquidation amount of the Common Securities as
               represents the relevant Super Majority of the aggregate principal
               amount of the Debentures outstanding.

          Each Holder of Common Securities will be deemed to have waived any
          such Event of Default and all Events of Default with respect to the
          Common Securities and its consequences until all Events of Default
          with respect to the Preferred Securities have been cured, waived or
          otherwise eliminated, and until such Events of Default have been so
          cured, waived or otherwise eliminated, the Property Trustee will be
          deemed to be acting solely on behalf of the Holders of the Preferred
          Securities and only the Holders of the Preferred Securities will have
          the right to direct the Property Trustee in accordance with the terms
          of the Securities. Subject to the foregoing provisions of this SECTION
          2.6(b), upon such waiver, any such default shall cease to exist and
          any Event of Default with respect to the Common Securities arising
          therefrom shall be deemed to have been cured, for


                                       9
<PAGE>

          every purpose of this Declaration, but no such waiver shall extend to
          any subsequent or other default or Event of Default with respect to
          the Common Securities or impair any right consequent thereon.

     (c)  A waiver of an Event of Default under the Indenture by the Property
          Trustee at the direction of the Holders of the Preferred Securities
          constitutes a waiver of the corresponding Event of Default under this
          Declaration.

SECTION 2.7 EVENT OF DEFAULT; NOTICE.

     (a)  The Property Trustee shall, within 90 days after the occurrence of an
          Event of Default, transmit by mail, first class postage prepaid, to
          the Holders of the Securities, notices of all defaults with respect to
          the Securities known to the Property Trustee, unless such defaults
          have been cured before the giving of such notice (the term "defaults"
          for the purposes of this SECTION 2.7(a) being hereby defined to be an
          Event of Default as defined in the Indenture, not including any
          periods of grace provided for therein and irrespective of the giving
          of any notice provided therein; provided that, except for a default in
          the payment of principal of (or premium, if any) or interest on any of
          the Debentures or in the payment of any sinking fund installment
          established for the Debentures, the Property Trustee shall be
          protected in withholding such notice if and so long as the board of
          directors, the executive committee or a trust committee of directors
          and/or Responsible Officers of the Property Trustee in good faith
          determines that the withholding of such notice is in the interests of
          the Holders of the Securities.

     (b)  The Property Trustee shall not be deemed to have knowledge of any
          default except:

          (i)  a default under Sections 501(a)(1) and 501(a)(2) of the
               Indenture; or

          (ii) any default as to which the Property Trustee shall have received
               written notice or a Responsible Officer charged with the
               administration of the Declaration shall have obtained written
               notice of.

                                  ARTICLE III
                                  ORGANIZATION

SECTION 3.1 NAME.

     The Trust is named "NorthWestern Capital Financing III", as such name may
be modified from time to time by the Regular Trustees following written notice
to the Holders of the Securities. The Trust's activities may be conducted under
the name of the Trust or any other name deemed advisable by the Regular
Trustees.

SECTION 3.2 OFFICE.

     The address of the principal office of the Trust is c/o NorthWestern
Corporation, 125 S.


                                       10
<PAGE>

Dakota Avenue, Suite 1100, Sioux Falls, South Dakota 57104. On 10 Business Days
written notice to the Holders of the Securities, the Regular Trustees may
designate another principal office. The name and business address of the
Delaware Trustee in the State of Delaware is Wilmington Trust Company, Rodney
Square North, 1100 North Market Street, Wilmington, Delaware 19890, or such
other address in the State of Delaware as the Delaware Trustee may designate by
written notice to the Holders of the Securities, the Sponsor, the Property
Trustee and the Regular Trustees.

SECTION 3.3 PURPOSE.

     The exclusive purposes and functions of the Trust are (a) to issue and sell
the Securities and use the proceeds from such sales to acquire the Debentures,
and (b) except as otherwise limited herein, to engage in only those other
activities necessary, appropriate, convenient or incidental thereto. The Trust
shall not borrow money, issue debt or reinvest proceeds derived from
investments, pledge any of its assets or otherwise undertake (or permit to be
undertaken) any activity that would (i) cause the Trust not to be classified for
United States federal income tax purposes as a grantor trust or (ii) cause each
Holder of Securities not to be treated as owning an undivided beneficial
interest in the Debentures at any time the Securities are outstanding.

SECTION 3.4 AUTHORITY.

     Subject to the limitations provided in this Declaration and to the specific
duties of the Property Trustee, the Regular Trustees shall have exclusive and
complete authority to carry out the purposes of the Trust. An action taken by
the Regular Trustees in accordance with their powers shall constitute the act of
and serve to bind the Trust, and an action taken by the Property Trustee in
accordance with its powers shall constitute the act of and serve to bind the
Trust. In dealing with the Trustees acting on behalf of the Trust, no Person
shall be required to inquire into the authority of the Trustees to bind the
Trust. Persons dealing with the Trust are entitled to rely conclusively on the
power and authority of the Trustees as set forth in this Declaration.

SECTION 3.5 TITLE TO PROPERTY OF THE TRUST.

     Except as provided in SECTION 3.8 with respect to the Debentures and the
Property Trustee Account or as otherwise provided in this Declaration, legal
title to all assets of the Trust shall be vested in the Trust. The Holders shall
not have legal title to any part of the assets of the Trust, but shall have an
undivided beneficial interest in the assets of the Trust.

SECTION 3.6 POWERS AND DUTIES OF THE REGULAR TRUSTEES.

     Subject to SECTION 4.2, the Regular Trustees shall have the exclusive
power, duty and authority to cause the Trust to engage in the following
activities:

     (a)  to issue and sell the Preferred Securities and the Common Securities
          in accordance with this Declaration; PROVIDED, HOWEVER, that the Trust
          may issue no more than one series of Preferred Securities and no more
          than one series of Common Securities,


                                       11
<PAGE>

          and, provided further, that there shall be no interests in the Trust
          other than the Securities, and the issuance of the Securities shall be
          limited to a one-time, simultaneous issuance of both the Preferred
          Securities and the Common Securities, subject to the issuance of
          additional Securities pursuant to the exercise of any Overallotment
          Option;

     (b)  in connection with the issue and sale of the Preferred Securities, to
          execute and deliver any documents required by any Clearing Agency in
          connection with the issuance of a Global Certificate;

     (c)  to acquire the Debentures with the proceeds of the sale of the
          Preferred Securities and the Common Securities; PROVIDED, HOWEVER,
          that the Regular Trustees shall cause legal title to the Debentures to
          be held of record in the name of the Property Trustee for the benefit
          of the Holders of the Preferred Securities and the Holders or Common
          Securities;

     (d)  to give the Debenture Issuer, the Sponsor and the Property Trustee
          prompt written notice of the occurrence of a Tax Event or an
          Investment Company Event (each as defined in the Indenture); provided
          that the Regular Trustees shall consult with the Debenture Issuer, the
          Sponsor and the Property Trustee before taking or refraining from
          taking any action in relation to a Tax Event or an Investment Company
          Event;

     (e)  to establish a record date with respect to all actions to be taken
          hereunder that require a record date be established, including and
          with respect to, for the purposes of Section 316(c) of the Trust
          Indenture Act, Distributions, voting rights, redemptions and
          exchanges, and to issue relevant notices to the Holders of Preferred
          Securities and Holders of Common Securities as to such actions and
          applicable record dates;

     (f)  To cause the Trust to execute and deliver to DTC on behalf of the
          Trust the Letter of Representations dated January 31, 2002;

     (g)  to take all actions and perform such duties as may be required of the
          Regular Trustees pursuant to the terms of the Securities;

     (h)  to bring or defend, pay, collect, compromise, arbitrate, resort to
          legal action or otherwise adjust claims or demands of or against the
          Trust ("LEGAL ACTION"), unless pursuant to SECTION 3.8(e), the
          Property Trustee has the exclusive power to bring such Legal Action;

     (i)  to employ or otherwise engage employees and agents (who may be
          designated as officers with titles) and managers, contractors,
          advisors and consultants and pay reasonable compensation for such
          services;

     (j)  to cause the Trust to comply with the Trust's obligations under the
          Trust Indenture Act;


                                       12
<PAGE>

     (k)  to give the certificate required by Section 314(a)(4) of the Trust
          Indenture Act to the Property Trustee, which certificate may be
          executed by any Regular Trustee;

     (l)  to incur expenses which are necessary or incidental to carry out any
          of the purposes of the Trust;

     (m)  to act as, or appoint another Person to act as, registrar and transfer
          agent for the Securities;

     (n)  to give prompt written notice to the Holders of the Securities of any
          notice received from the Debenture Issuer of its election to defer
          payments of interest on the Debentures by extending the interest
          payment period under the Indenture;

     (o)  to execute all documents or instruments, perform all duties and
          powers, and do all things for and on behalf of the Trust in all
          matters necessary or incidental to the foregoing;

     (p)  to take all action that may be necessary or appropriate for the
          preservation and the continuation of the Trust's valid existence,
          rights, franchises and privileges as a statutory business trust under
          the laws of the State of Delaware and of each other jurisdiction in
          which such existence is necessary to protect the limited liability of
          the Holders of the Securities or to enable the Trust to effect the
          purposes for which the Trust was created;

     (q)  to take any action, not inconsistent with this Declaration or with
          applicable law, that the Regular Trustees determine in their
          discretion to be necessary or desirable in carrying out the activities
          of the Trust as set out in this SECTION 3.6; PROVIDED, HOWEVER, such
          action shall not:

          (i)  cause the Trust to be deemed to be an Investment Company required
               to be registered under the Investment Company Act;

          (ii) cause the Trust to be characterized for United States federal
               income tax purposes as an association taxable as a corporation or
               a partnership but for each Holder of Securities to be treated as
               owning an undivided beneficial interest in the Debentures; and

         (iii) cause the Debentures to be treated as indebtedness of the
               Debenture Issuer for United States federal income tax purposes,
               provided that such action does not adversely affect the
               interests of Holders; and

     (r)  to take all action necessary to cause all applicable tax returns and
          tax information reports that are required to be filed with respect to
          the Trust to be duly prepared and filed by the Regular Trustees, on
          behalf of the Trust.

     The Regular Trustees must exercise the powers set forth in this SECTION 3.6
in a manner


                                       13
<PAGE>


that is consistent with the purposes and functions of the Trust set out in
SECTION 3.3, and the Regular Trustees shall not take any action that is
inconsistent with the purposes and functions of the Trust set forth in SECTION
3.3. Subject to this SECTION 3.6, the Regular Trustees shall have none of the
powers or the authority of the Property Trustee set forth in SECTION 3.8.

SECTION 3.7 PROHIBITION OF ACTIONS BY THE TRUST AND THE TRUSTEES.

     The Trust shall not, and the Trustees (including the Property Trustee)
shall not engage in any activity other than as required or authorized by this
Declaration. In particular, the Trust shall not and the Trustees (including the
Property Trustee) shall not:

     (a)  invest any proceeds received by the Trust from holding the Debentures
          but shall distribute all such proceeds to the Holders of the
          Securities pursuant to the terms of this Declaration and of the
          Securities;

     (b)  acquire any assets other than as expressly provided herein;

     (c)  possess Trust property for other than a Trust purpose;

     (d)  make any loans or incur any indebtedness;

     (e)  unless otherwise provided in this Declaration, possess any power or
          otherwise act in such a way as to vary the Trust assets or the terms
          of the Securities in any way whatsoever;

     (f)  issue any securities or other evidences of beneficial ownership of, or
          beneficial interest in, the Trust other than the Securities; or

     (g)  (i) direct the time, method and place of exercising any trust or power
          conferred upon the Debenture Trustee with respect to the Debentures,
          (ii) waive any past default that is waivable under Section 513 of the
          Indenture, (iii) exercise any right to rescind or annul any
          declaration that the principal of all the Debentures shall be due and
          payable or (iv) consent to any amendment, modification or termination
          of the Indenture or the Debentures, where such consent shall be
          required, unless the Trust shall have received an opinion of counsel
          to the effect that such modification will not cause the Trust to fail
          to be classified as a grantor trust for United States federal income
          tax purposes.

SECTION 3.8 POWERS AND DUTIES OF THE PROPERTY TRUSTEE.

     (a)  The legal title to the Debentures shall be owned by and held of record
          in the name of the Property Trustee in trust for the benefit of the
          Holders of the Securities. The right, title and interest of the
          Property Trustee to the Debentures shall vest automatically in each
          Person who may hereafter be appointed as Property Trustee in
          accordance with SECTION 5.6. Such vesting and cessation of title shall
          be effective whether or not conveyancing documents with regard to the
          Debentures


                                       14
<PAGE>

          have been executed and delivered.

     (b)  The Property Trustee shall not transfer its right, title and interest
          in the Debentures to the Regular Trustees or to the Delaware Trustee
          (if the Property Trustee does not also act as Delaware Trustee).

     (c)  The Property Trustee shall:

          (i)  establish and maintain a segregated non-interest bearing trust
               account (the "PROPERTY TRUSTEE ACCOUNT") in the name of and under
               the exclusive control of the Property Trustee on behalf of the
               Holders of the Securities and, upon the receipt of payments of
               funds made in respect of the Debentures held by the Property
               Trustee, deposit such funds into the Property Trustee Account and
               make payments to the Holders of the Preferred Securities and the
               Holders of the Common Securities from the Property Trustee
               Account in accordance with SECTION 6.1. Funds in the Property
               Trustee Account shall be held uninvested until disbursed in
               accordance with this Declaration. The Property Trustee Account
               shall be an account that is maintained with a banking institution
               the rating on whose long term unsecured indebtedness is at least
               equal to the lowest investment grade rating assigned by a
               "nationally recognized statistical rating organization", as that
               term is defined for purposes of Rule 436(g)(2) under the
               Securities Act;

          (ii) engage in such ministerial activities as shall be necessary or
               appropriate to effect the redemption of the Preferred Securities
               and the Common Securities to the extent the Debentures are
               redeemed or mature; and

         (iii) upon notice of distribution issued by the Regular Trustees in
               accordance with the terms of the Preferred Securities and the
               Common Securities, engage in such ministerial activities as
               shall be necessary or appropriate to effect the distribution of
               the Debentures to Holders of Securities.

     (d)  The Property Trustee shall take all actions and perform such duties as
          may be specifically required of the Property Trustee pursuant to the
          terms of the Securities.

     (e)  The Property Trustee shall take any Legal Action which arises out of
          or in connection with an Event of Default or the Property Trustee's
          duties and obligations under this Declaration or the Trust Indenture
          Act.

     (f)  The Property Trustee shall not resign as a Trustee unless either:

          (i)  the Trust has been completely liquidated and the proceeds of the
               liquidation distributed to the Holders of the Securities pursuant
               to the terms of the Securities; or


                                       15
<PAGE>

          (ii) a successor Property Trustee has been appointed and has accepted
               that appointment in accordance with SECTION 5.6.

     (g)  The Property Trustee shall have the legal power to exercise all of the
          rights, powers and privileges of a holder of Debentures under the
          Indenture and, if an Event of Default occurs and is continuing, the
          Property Trustee shall, for the benefit of the Holders of the
          Securities, enforce its rights as holder of the Debentures subject to
          the rights of the Holders pursuant to the terms of the Securities.

     (h)  The Property Trustee may authorize one or more Persons (each, a
          "PAYING AGENT") to pay Distributions, redemption payments or
          liquidation payments on behalf of the Trust with respect to all
          Securities and may remove any Paying Agent at any time and appoint a
          successor Paying Agent or additional Paying Agents at any time. Any
          Paying Agent shall comply with Section 317(b) of the Trust Indenture
          Act.

     (i)  Subject to this SECTION 3.8, the Property Trustee shall have none of
          the duties, liabilities, powers or the authority of the Regular
          Trustees set forth in SECTION 3.6.

     The Property Trustee must exercise the powers set forth in this SECTION 3.8
in a manner which is consistent with the purposes and functions of the Trust set
out in SECTION 3.3, and the Property Trustee shall not take any action which is
inconsistent with the purposes and functions of the Trust set out in SECTION
3.3.

SECTION 3.9 CERTAIN DUTIES AND RESPONSIBILITIES OF THE PROPERTY TRUSTEE.

     (a)  The Property Trustee, before the occurrence of any Event of Default
          and after the curing or waiver of all Events of Default that may have
          occurred, shall undertake to perform only such duties as are
          specifically set forth in this Declaration and no implied covenants
          shall be read into this Declaration against the Property Trustee. In
          case an Event of Default has occurred (that has not been cured or
          waived pursuant to SECTION 2.6), the Property Trustee shall exercise
          such of the rights and powers vested in it by this Declaration, and
          use the same degree of care and skill in their exercise, as a prudent
          person would exercise or use under the circumstances in the conduct of
          his or her own affairs.

     (b)  No provision of this Declaration shall be construed to relieve the
          Property Trustee from liability for its own negligent action, its own
          negligent failure to act or its own willful misconduct, except that:

          (i)  prior to the occurrence of an Event of Default and after the
               curing or waiving of all such Events of Default that may have
               occurred:

               (A)  the duties and obligations of the Property Trustee shall be
                    determined solely by the express provisions of this
                    Declaration and the Property Trustee shall not be liable
                    except for the performance of such duties and obligations as
                    are specifically set forth in this


                                       16
<PAGE>

                    Declaration, and no implied covenants or obligations shall
                    be read into this Declaration against the Property Trustee;
                    and

               (B)  in the absence of bad faith on the part of the Property
                    Trustee, the Property Trustee may conclusively rely, as to
                    the truth of the statements and the correctness of the
                    opinions expressed therein, upon any certificates or
                    opinions furnished to the Property Trustee and conforming to
                    the requirements of this Declaration; but in the case of any
                    such certificates or opinions that by any provision hereof
                    are specifically required to be furnished to the Property
                    Trustee, the Property Trustee shall be under a duty to
                    examine the same to determine whether or not they conform to
                    the requirements of this Declaration;

          (ii) the Property Trustee shall not be liable for any error of
               judgment made in good faith by a Responsible Officer of the
               Property Trustee, unless it shall be proved that the Property
               Trustee was negligent in ascertaining the pertinent facts;

         (iii) the Property Trustee shall not be liable with respect to any
               action taken or omitted to be taken by it in good faith in
               accordance with the direction of the Holders of not less than a
               Majority in liquidation amount of the Securities at the time
               outstanding relating to the time, method and place of conducting
               any proceeding for any remedy available to the Property Trustee
               or exercising any trust or power conferred upon the Property
               Trustee under this Declaration;

          (iv) no provision of this Declaration shall require the Property
               Trustee to expend or risk its own funds or otherwise incur
               personal financial liability in the performance of any of its
               duties or in the exercise of any of its rights or powers, if it
               shall have reasonable grounds for believing that the repayment of
               such funds or liability is not reasonably assured to it under the
               terms of this Declaration or adequate indemnity against such risk
               or liability is not reasonably assured to it;

          (v)  the Property Trustee's sole duty with respect to the custody,
               safe keeping and physical preservation of the Debentures and the
               Property Trustee Account shall be to deal with such property in a
               similar manner as the Property Trustee deals with similar
               property for its own account, subject to the protections and
               limitations on liability afforded to the Property Trustee under
               this Declaration, the Trust Indenture Act and Rule 3a-7;

          (vi) the Property Trustee shall have no duty or liability for or with
               respect to the value, genuineness, existence or sufficiency of
               the Debentures or the payment of any taxes or assessments levied
               thereon or in connection therewith;


                                       17
<PAGE>

         (vii) the Property Trustee shall not be liable for any interest on any
               money received by it and shall not be required to segregate money
               held by the Property Trustee from other funds held by it except
               in relation to the Property Trustee Account maintained pursuant
               to SECTION 3.8(c)(i) or as otherwise required by law; and

        (viii) the Property Trustee shall not be responsible for monitoring
               the compliance by the Regular Trustees or the Sponsor with their
               respective duties under this Declaration, nor shall the Property
               Trustee be liable for the default or misconduct of the Regular
               Trustees or the Sponsor.

SECTION 3.10 CERTAIN RIGHTS OF PROPERTY TRUSTEE.

     (a)  Subject to the provisions of SECTION 3.9:

          (i)  the Property Trustee may rely and shall be fully protected in
               acting or refraining from acting upon any resolution,
               certificate, statement, instrument, opinion, report, notice,
               request, direction, consent, order, bond, debenture, note, other
               evidence of indebtedness or other paper or document believed by
               it to be genuine and to have been signed, sent or presented by
               the proper party or parties;

          (ii) any direction or act of the Sponsor or the Regular Trustees
               contemplated by this Declaration shall be sufficiently evidenced
               by a Direction or an Officers' Certificate;

         (iii) whenever in the administration of this Declaration, the Property
               Trustee shall deem it desirable that a matter be proved or
               established before taking, suffering or omitting any action
               hereunder, the Property Trustee (unless other evidence is herein
               specifically prescribed) may, in the absence of bad faith on its
               part and, if the Trust is excluded from the definition of an
               Investment Company solely by means of Rule 3a-7, subject to the
               requirements of Rule 3a-7, request and rely upon an Officers'
               Certificate which, upon receipt of such request, shall be
               promptly delivered by the Sponsor or the Regular Trustees;

          (iv) the Property Trustee shall have no duty to see to any recording,
               filing or registration of any instrument (including any financing
               or continuation statement or any tax or securities) (or any
               rerecording, refiling or re-registration thereof);

          (v)  the Property Trustee may consult with counsel (which counsel may
               be counsel to the Sponsor or any of its Affiliates and may
               include any of its employees), and the written advice or opinion
               of such counsel with respect to legal matters shall be full and
               complete authorization and protection in respect of any action
               taken, suffered or omitted by it hereunder in good faith and


                                       18
<PAGE>

               in accordance with such advice or opinion, and the Property
               Trustee shall have the right at any time to seek instructions
               concerning the administration of this Declaration from any court
               of competent jurisdiction;

          (vi) the Property Trustee shall be under no obligation to exercise any
               of the rights or powers vested in it by this Declaration at the
               request or direction of any Holder, unless such Holder shall have
               provided to the Property Trustee adequate security and indemnity,
               which would satisfy a reasonable person in the position of the
               Property Trustee, against the costs, expenses (including
               attorneys' fees and expenses) and liabilities that might be
               incurred by it in complying with such request or direction,
               including such reasonable advances as may be requested by the
               Property Trustee, provided that nothing contained in this SECTION
               3.10(a)(vi) shall be taken to relieve the Property Trustee, upon
               the occurrence of an Event of Default, of its obligation to
               exercise the rights and powers vested in it by this Declaration;

         (vii) the Property Trustee shall not be bound to make any
               investigation into the facts or matters stated in any resolution,
               certificate, statement, instrument, opinion, report, notice,
               request, direction, consent, order, bond, debenture, note, other
               evidence of indebtedness or other paper or document, but the
               Property Trustee, in its discretion, may make such further
               inquiry or investigation into such facts or matters as it may see
               fit;

        (viii) the Property Trustee may execute any of the trusts or powers
               hereunder or perform any duties hereunder either directly or by
               or through agents or attorneys, and the Property Trustee shall
               not be responsible for any misconduct or negligence on the part
               of any agent or attorney appointed with due care by it hereunder;

          (ix) any action taken by the Property Trustee or its agents hereunder
               shall bind the Trust and the Holders of the Securities, and the
               signature of the Property Trustee or its agents alone shall be
               sufficient and effective to perform any such action; and no third
               party shall be required to inquire as to the authority of the
               Property Trustee to so act, or as to its compliance with any of
               the terms and provisions of this Declaration, both of which shall
               be conclusively evidenced by the Property Trustee's or its
               agent's taking such action;

          (x)  whenever in the administration of this Declaration the Property
               Trustee shall deem it desirable to receive instructions with
               respect to enforcing any remedy or right or taking any other
               action hereunder the Property Trustee (i) may request
               instructions from the Holders of the Securities, which
               instructions may only be given by the Holders of the same
               proportion and


                                       19
<PAGE>

               liquidation amount of the Securities as would be entitled to
               direct the Property Trustee under the terms of the Securities in
               respect of such remedies, right or action, (ii) may refrain from
               enforcing such remedy or right or taking such other action until
               such instructions are received, and (iii) shall be protected in
               acting in accordance with such instructions; and

          (xi) except as otherwise expressly provided by this Declaration, the
               Property Trustee shall not be under any obligation to take any
               action that is discretionary under the provisions of this
               Declaration.

     (b)  No provision of this Declaration shall be deemed to impose any duty or
          obligation on the Property Trustee to perform any act or acts or
          exercise any right, power, duty or obligation conferred or imposed on
          it, in any jurisdiction in which it shall be illegal, or in which the
          Property Trustee shall be unqualified or incompetent, in accordance
          with applicable law, to perform any such act or acts, or to exercise
          any such right, power, duty or obligation. No permissive power or
          authority available to the Property Trustee shall be construed to be a
          duty.

SECTION 3.11 DELAWARE TRUSTEE.

     Notwithstanding any other provision of this Declaration other than SECTION
5.2, the Delaware Trustee shall not be entitled to exercise any powers, nor
shall the Delaware Trustee have any of the duties and responsibilities of the
Regular Trustees or the Property Trustee described in this Declaration. Except
as set forth in SECTION 5.2, the Delaware Trustee shall be a Trustee for the
sole and limited purpose of fulfilling the requirements of Section 3807 of the
Business Trust Act.

SECTION 3.12 EXECUTION OF DOCUMENTS.

     Unless otherwise determined by the Regular Trustees, any Regular Trustee is
authorized to execute on behalf of the Trust any documents which the Regular
Trustees have the power and authority to execute pursuant to SECTION 3.6.

SECTION 3.13 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.

     The recitals contained in this Declaration and the Securities shall be
taken as the statements of the Sponsor, and the Trustees do not assume any
responsibility for their correctness. The Trustees make no representations as to
the value or condition of the property of the Trust or any part thereof. The
Trustees make no representations as to the validity or sufficiency of this
Declaration or the Securities.

SECTION 3.14 DURATION OF TRUST.

     The Trust, unless dissolved pursuant to the provisions of Article Eight
hereof, shall dissolve on June 19, 2050.

                                       20
<PAGE>


SECTION 3.15 MERGERS.

     (a)  The Trust may not consolidate, amalgamate or merge with or into, or be
          replaced by, or convey, transfer or lease its properties and assets
          substantially as an entirety to, any corporation or other body, except
          as described in SECTION 3.15(b) and (c) of this Declaration or SECTION
          3 of EXHIBIT A.

     (b)  The Trust may, with the consent of the Regular Trustees and without
          the consent of the Holders of the Securities, the Delaware Trustee or
          the Property Trustee, consolidate, amalgamate or merge with or into,
          or be replaced by a trust organized as such under the laws of any
          State; provided, that:

          (i)  such successor entity (the "SUCCESSOR ENTITY") either:

               (A)  expressly assumes all of the obligations of the Trust under
                    the Securities; or

               (B)  substitutes for the Preferred Securities other securities
                    having substantially the same terms as the Securities (the
                    "SUCCESSOR SECURITIES") so long as the Successor Securities
                    rank the same as the Preferred Securities rank with respect
                    to Distributions and payments upon liquidation, redemption
                    and maturity;

          (ii) the Debenture Issuer expressly appoints a trustee of the
               Successor Entity which possesses the same powers and duties as
               the Property Trustee as the Holder of the Debentures;

         (iii) the Preferred Securities or any Successor Securities are listed,
               or any Successor Securities will be listed upon notification of
               issuance, on any national securities exchange or other
               organization on which the Preferred Securities are then listed;

          (iv) such merger, consolidation, amalgamation or replacement does not
               cause the Preferred Securities or any Successor Securities to be
               downgraded by any nationally recognized statistical rating
               organization;

          (v)  such merger, consolidation, amalgamation or replacement does not
               adversely affect the rights, preferences and privileges of the
               Holders of the Securities or any Successor Securities in any
               material respect under the documents governing the Securities or
               the Successor Securities (other than with respect to any dilution
               of such Holders' interests in the new entity);

          (vi) such Successor Entity has a purpose substantially identical to
               that of the Trust;

         (vii) prior to such merger, consolidation, amalgamation or
               replacement, the Sponsor has received an opinion of a nationally
               recognized independent counsel to


                                       21
<PAGE>

               the Trust experienced in such matters to the effect that:

               (A)  such merger, consolidation, amalgamation or replacement does
                    not adversely affect the rights, preferences and privileges
                    of the Holders of the Securities or any Successor Securities
                    in any material respect under the documents governing the
                    Securities or the Successor Securities (other than with
                    respect to any dilution of the Holders' interest in the new
                    entity); and

               (B)  following such merger, consolidation, amalgamation or
                    replacement, neither the Trust nor the Successor Entity will
                    be required to register as an Investment Company; and

        (viii) the Sponsor guarantees the obligations of such Successor Entity
               under the Successor Securities at least to the extent provided by
               the Preferred Securities Guarantee and the Common Securities
               Guarantee.

     (c)  Notwithstanding SECTION 3.15(b), the Trust shall not, except with the
          consent of the Holders of 100% in liquidation amount of the
          Securities, consolidate, amalgamate or merge with or into, or be
          replaced by, any other entity or permit any other entity to
          consolidate, amalgamate or merge with or into, or replace, it if such
          consolidation, amalgamation, merger or replacement would cause the
          Trust or Successor Entity to be classified as other than a grantor
          trust for United States federal income tax purposes.

                                   ARTICLE IV
                                     SPONSOR

SECTION 4.1 SPONSOR'S PURCHASE OF COMMON SECURITIES.

     The Sponsor will purchase all the Common Securities issued by the Trust, in
an amount at least equal to 3% of the capital of the Trust, at the same time as
the Preferred Securities are sold. If any additional Securities are issued
pursuant to the exercise of any Overallotment Option, then the Sponsor shall
purchase, on the date of such issuance, an additional number of Common
Securities such that the aggregate liquidation amount of the Common Securities
to be held by the Sponsor, upon such issuance and purchase, will equal at least
3% of the total capital of the Trust.

SECTION 4.2 RESPONSIBILITIES OF THE SPONSOR.

     In connection with the issue and sale of the Preferred Securities, the
Sponsor shall have the right and responsibility to engage in the following
activities and to execute on behalf of the Trust the documents referred to in
subsections (a) through (e) of this SECTION 4.2:

     (a)  to prepare, execute and file with the Commission a registration
          statement on Form S-3 in relation to the Preferred Securities,
          including any amendments thereto;



                                       22
<PAGE>

     (b)  to determine the States in which to take appropriate action to qualify
          or register for sale all or part of the Preferred Securities and to
          prepare, execute and file such documents as the Sponsor deems
          necessary or advisable in order to comply with the applicable laws of
          any such States;

     (c)  to prepare, execute and file an application to the New York Stock
          Exchange or any other national stock exchange or the Nasdaq National
          Market for listing upon notice of issuance of any Preferred
          Securities;

     (d)  to prepare, execute and file with the Commission a registration
          statement on Form 8-A relating to the registration of the Preferred
          Securities under Section 12(b) of the Exchange Act, including any
          amendments thereto; and

     (e)  to negotiate the terms of and execute and deliver the Underwriting
          Agreement providing for the sale of the Preferred Securities.

SECTION 4.3 EXPENSES.

     (a)  The Sponsor shall be directly responsible for and pay for all (and the
          Trust shall not be obligated to pay, directly or indirectly, for any)
          debts and obligations (other than with respect to the Securities) and
          all costs and expenses of the Trust, including, without limitation,
          the costs and expenses relating to the organization of the Trust, the
          issuance of the Preferred Securities, the fees and expenses of the
          Property Trustee and the Delaware Trustee, the costs and expenses
          related to the operation of the Trust, including, without limitation,
          the costs and expenses of accountants, attorneys, statistical or
          bookkeeping services, expenses of printing and engraving, Paying
          Agents(s), registrar(s), transfer agent(s), duplicating, travel,
          telephone and costs and expenses incurred in connection with the
          disposition of Trust assets.

     (b)  The Sponsor will pay any and all taxes and all liabilities, costs and
          expenses with respect to such taxes of the Trust.

                                   ARTICLE V
                                    TRUSTEES

SECTION 5.1 NUMBER OF TRUSTEES.

     The number of Trustees shall initially be three (3), and:

     (a)  at any time before the issuance of any Securities, the Sponsor may, by
          written instrument, increase or decrease the number of Trustees;

     (b)  after the issuance of any Securities the number of Trustees may be
          increased or decreased by vote of the Holders of a Majority in
          liquidation amount of the Common Securities voting as a class at a
          meeting of the Holders of the Common Securities, provided that at all
          times the number of Trustees shall be at least three (3) (the



                                       23
<PAGE>


          majority of which shall be Regular Trustees); and

     (c)  if there are only three Trustees, the Trustee that acts as Property
          Trustee shall also act as Delaware Trustee pursuant to SECTION 5.2.

SECTION 5.2 DELAWARE TRUSTEE; ELIGIBILITY.

     If required by the Business Trust Act, one Trustee (the "DELAWARE TRUSTEE")
shall be:

     (a)  a natural person who is a resident of the State of Delaware; or

     (b)  if not a natural person, an entity which has its principal place of
          business in the State of Delaware, and otherwise meets the
          requirements of applicable law; provided that if the Property Trustee
          has its principal place of business in the State of Delaware and
          otherwise meets the requirements of applicable law, then the Property
          Trustee shall also be the Delaware Trustee and SECTION 3.11 shall have
          no application.

SECTION 5.3 PROPERTY TRUSTEE; ELIGIBILITY.

     (a)  There shall at all times be one Trustee which shall act as Property
          Trustee which shall:

          (i)  not be an Affiliate of the Sponsor;

          (ii) be a corporation organized and doing business under the laws of
               the United States of America or any State or Territory thereof or
               of the District of Columbia, or a corporation or Person permitted
               by the Commission to act as an institutional trustee under the
               Trust Indenture Act, authorized under such laws to exercise
               corporate trust powers, having a combined capital and surplus of
               at least 50 million U.S. dollars ($50,000,000), and subject to
               supervision or examination by Federal, State, Territorial or
               District of Columbia authority. If such corporation publishes
               reports of condition at least annually, pursuant to law or to the
               requirements of the supervising or examining authority referred
               to above, then for the purposes of this SECTION 5.3(a)(ii), the
               combined capital and surplus of such corporation shall be deemed
               to be its combined capital and surplus as set forth in its most
               recent report of condition so published; and

         (iii) if the Trust is excluded from the definition of an Investment
               Company solely by means of Rule 3a-7 and, to the extent Rule 3a-7
               requires a trustee having certain qualifications to hold title to
               the "eligible assets" of the Trust, the Property Trustee shall
               possess those qualifications.

     (b)  If at any time the Property Trustee shall cease to be eligible to so
          act under SECTION 5.3(a), the Property Trustee shall immediately
          resign in the manner and with the effect set out in SECTION 5.6(c).

     (c)  If the Property Trustee has or shall acquire any "conflicting
          interest" within the meaning



                                       24
<PAGE>


          of Section 310(b) of the Trust Indenture Act, the Property Trustee and
          the Holders of the Common Securities (as if it were the obligor
          referred to in Section 310(b) of the Trust Indenture Act) shall in all
          respects comply with the provisions of Section 310(b) of the Trust
          Indenture Act.

     (d)  The Preferred Securities Guarantee shall be deemed to be specifically
          described in this Declaration for purposes of clause (i) of the first
          provision contained in Section 310(b) of the Trust Indenture Act.

SECTION 5.4 QUALIFICATIONS OF REGULAR TRUSTEES AND DELAWARE TRUSTEE GENERALLY.

     Each Regular Trustee and the Delaware Trustee (unless the Property Trustee
also acts as Delaware Trustee) shall be either a natural person who is at least
21 years of age or a legal entity that shall act through one or more Authorized
Officers.

SECTION 5.5 INITIAL TRUSTEES.

     The initial Regular Trustees shall be:

          Merle Lewis
          125 S. Dakota Avenue
          Suite 1100
          Sioux Falls, South Dakota  57104

          Richard Hylland
          125 S. Dakota Avenue
          Suite 1100
          Sioux Falls, South Dakota  57104

     The initial Delaware Trustee shall be:

          Wilmington Trust Company
          Rodney Square North
          1100 N. Market Street
          Wilmington, Delaware  19890-0001

     The initial Delaware Trustee shall also act as Property Trustee.

SECTION 5.6 APPOINTMENT, REMOVAL AND RESIGNATION OF TRUSTEES.

     (a)  Subject to SECTION 5.6(b), Trustees may be appointed or removed
          without cause at any time:

          (i)  until the issuance of any Securities, by written instrument
               executed by the Sponsor; and

          (ii) after the issuance of any Securities by vote of the Holders of a
               Majority in


                                       25
<PAGE>


               liquidation amount of the Common Securities voting as a class at
               a meeting of the Holders of the Common Securities; provided that
               if an Event of Default has occurred and is continuing, the
               Property Trustee and the Delaware Trustee may only be appointed
               or removed at such time by a vote of the Holders of a Majority in
               liquidation amount of the Preferred Securities voting as a class
               at a meeting of the Holders of the Preferred Securities.

     (b)  The Trustee that acts as Property Trustee shall not be removed in
          accordance with SECTION 5.6(a) until:

          (i)  a successor Property Trustee has been appointed and has accepted
               such appointment by written instrument executed by such successor
               Property Trustee and delivered to the Regular Trustees and the
               Sponsor; and

          (ii) unless such successor Property Trustee shall also serve as
               Delaware Trustee, a successor Trustee possessing the
               qualifications to act as Delaware Trustee under SECTIONS 5.2 and
               5.4 has been appointed and has accepted such appointment by
               written instrument executed by such successor Delaware Trustee
               and delivered to the Regular Trustees and the Sponsor.

     (c)  A Trustee appointed to office shall hold office until his successor
          shall have been appointed or until his death, retirement, removal,
          bankruptcy, dissolution, liquidation, resignation, incompetence or
          incapacity to perform the duties of a Trustee. Any Trustee may resign
          from office (without need for prior or subsequent accounting) by an
          instrument in writing signed by the Trustee and delivered to the
          Sponsor and the Trust, which resignation shall take effect upon such
          delivery or upon such later date as is specified therein; PROVIDED,
          HOWEVER, that:

          (i)  no such resignation of the Trustee that acts as the Property
               Trustee shall be effective:

               (A)  until a successor Property Trustee has been appointed and
                    has accepted such appointment by instrument executed by such
                    successor Property Trustee and delivered to the Trust, the
                    Sponsor and the resigning Property Trustee; or

               (B)  if the Trust is not deemed an Investment Company solely by
                    reason of Rule 3a-7, until the assets of the Trust have been
                    completely liquidated and the proceeds thereof distributed
                    to the Holders of the Securities; and

          (ii) no such resignation of the Trustee that acts as the Delaware
               Trustee shall be effective until a successor Delaware Trustee has
               been appointed and has accepted such appointment by instrument
               executed by such successor


                                       26
<PAGE>


               Delaware Trustee and delivered to the Trust, the Sponsor and the
               resigning Delaware Trustee.

     (d)  The Holders of the Common Securities shall use their best efforts to
          appoint promptly a successor Delaware Trustee or successor Property
          Trustee, as the case may be, if the Delaware Trustee or the Property
          Trustee delivers an instrument of resignation in accordance with this
          SECTION 5.6.

     (e)  If no successor Property Trustee or successor Delaware Trustee shall
          have been appointed and accepted appointment as provided in this
          SECTION 5.6 within 60 days after delivery to the Sponsor and the Trust
          of an instrument of resignation, the resigning Property Trustee or
          Delaware Trustee, as applicable, may petition any court of competent
          jurisdiction for appointment of a successor Property Trustee or
          successor Delaware Trustee. Such court may thereupon, after causing to
          be given such notice, if any, as it may deem proper and prescribe,
          appoint a successor Property Trustee or successor Delaware Trustee, as
          the case may be.

SECTION 5.7 VACANCIES AMONG TRUSTEES.

     If a Trustee ceases to hold office for any reason and the number of
Trustees is not reduced pursuant to SECTION 5.1, or if the number of Trustees is
increased pursuant to SECTION 5.1, a vacancy shall occur. A resolution
certifying the existence of such vacancy by a majority of the Regular Trustees
shall be conclusive evidence of the existence of such vacancy. The vacancy shall
be filled with a Trustee appointed in accordance with SECTION 5.6.

SECTION 5.8 EFFECT OF VACANCIES.

     The death, resignation, retirement, removal, bankruptcy, dissolution,
liquidation, incompetence or incapacity to perform the duties of a Trustee shall
not operate to dissolve, terminate or annul the Trust. Whenever a vacancy in the
number of Regular Trustees shall occur, until such vacancy is filled by the
appointment of a Regular Trustee in accordance with SECTION 5.6, the Regular
Trustees in office, regardless of their number, shall have all the powers
granted to the Regular Trustees and shall discharge all the duties imposed upon
the Regular Trustees by this Declaration.

SECTION 5.9 MEETINGS.

     Meetings of the Regular Trustees shall be held from time to time upon the
call of any Regular Trustee. Regular meetings of the Regular Trustees may be
held at a time and place fixed by resolution of the Regular Trustees. Notice of
any in-person meetings of the Regular Trustees shall be hand delivered or
otherwise delivered in writing (including by facsimile, with a hard copy by
overnight courier) not less than 48 hours before such meeting. Notice of any
telephonic meetings of the Regular Trustees or any committee thereof shall be
hand delivered or otherwise delivered in writing (including by facsimile, with a
hard copy by overnight courier) not less than 24 hours before a meeting. Notices
shall contain a brief statement of the time, place and anticipated purposes of
the meeting. The presence (whether in person or by telephone) of a


                                       27
<PAGE>


Regular Trustee at a meeting shall constitute a waiver of notice of such
meeting except where a Regular Trustee attends a meeting for the express purpose
of objecting to the transaction of any activity on the ground that the meeting
has not been lawfully called or convened. Unless provided otherwise in this
Declaration, any action of the Regular Trustees may be taken at a meeting by
vote of a majority of the Regular Trustees present (whether in person or by
telephone) and eligible to vote with respect to such matter, provided that a
Quorum is present, or without a meeting and without prior notice by the
unanimous written consent of the Regular Trustees.

SECTION 5.10 DELEGATION OF POWER.

     (a)  Any Regular Trustee may, by power of attorney consistent with
          applicable law, delegate to any other natural person over the age of
          21 his or her power for the purpose of executing any documents
          contemplated in SECTION 3.6, including any governmental filing; and

     (b)  the Regular Trustees shall have power to delegate from time to time to
          such of their number or to officers of the Trust the doing of such
          things and the execution of such instruments either in the name of the
          Trust or the names of the Regular Trustees or otherwise as the Regular
          Trustees may deem expedient, to the extent such delegation is not
          prohibited by applicable law or contrary to the provisions of the
          Trust, as set forth herein.

                                   ARTICLE VI
                                  DISTRIBUTIONS

SECTION 6.1 DISTRIBUTIONS.

     Holders shall receive Distributions in accordance with the applicable terms
of the Securities (a "DISTRIBUTION"). Distributions shall be made on the
Preferred Securities and the Common Securities in accordance with the
preferences set forth in their respective terms. If and to the extent that the
Debenture Issuer makes a payment of interest (including Compounded Interest and
Additional Sums (each as defined in the Indenture)), premium of and principal on
the Debentures held by the Property Trustee (the amount of any such payment
being a "PAYMENT AMOUNT"), the Property Trustee shall and is directed, to the
extent funds are legally available for that purpose, to make a Distribution of
the Payment Amount to Holders.

                                  ARTICLE VII
                             ISSUANCE OF SECURITIES

SECTION 7.1 GENERAL PROVISIONS REGARDING SECURITIES.

     (a)  The Trust shall issue one class of preferred securities representing
          undivided beneficial interests in the assets of the Trust having such
          terms as are set forth in EXHIBIT A and incorporated herein by
          reference (the "PREFERRED SECURITIES") and one class of common
          securities representing undivided beneficial interests in the assets
          of the


                                       28
<PAGE>


          Trust having such terms as are set forth in EXHIBIT A (the "COMMON
          SECURITIES"). The Trust shall issue no securities or other interests
          in the assets of the Trust other than the Preferred Securities and the
          Common Securities.

     (b)  The Certificates shall be signed on behalf of the Trust by any Regular
          Trustee. Such signatures may be by manual or facsimile signatures.
          Typographical and other minor errors or defects in the reproduction of
          any such signature shall not affect the validity of any Certificate.
          In case any Regular Trustee who shall have signed any Certificates
          shall cease to be a Regular Trustee before such Certificates shall be
          delivered by the Trust, such Certificates nevertheless may be
          delivered as though the Person who signed such Certificates had not
          ceased to be a Regular Trustee; and any Certificate may be signed on
          behalf of the Trust by such Persons who, at the actual date of
          execution of such Security, shall be the Regular Trustees of the
          Trust, even if such Person was not a Regular Trustee as of the date of
          this Declaration. Each Preferred Security shall be dated the date of
          its authentication. Certificates shall be printed, lithographed or
          engraved or may be produced in any other manner as is reasonably
          acceptable to the Regular Trustees, as evidenced by their execution
          thereof, and may have such letters, numbers or other marks of
          identification or designation and such legends or endorsements as the
          Regular Trustees may deem appropriate, or as may be required to comply
          with any law or with any rule or regulation of any stock exchange on
          which any Securities may be listed, or to conform to usage.

     (c)  The consideration received by the Trust for the issuance of the
          Securities shall constitute a contribution to the capital of the Trust
          and shall not constitute a loan to the Trust.

     (d)  Upon issuance of the Securities as provided in this Declaration, the
          Securities so issued shall be deemed to be validly issued, fully paid
          and non-assessable (except with respect to the Common Securities, as
          provided in SECTION 10.1(b)).

     (e)  Every Person, by virtue of having become a Holder or a Preferred
          Security Beneficial Owner in accordance with the terms of this
          Declaration, shall be deemed to have expressly assented and agreed to
          the terms of, and shall be bound, by this Declaration, the Preferred
          Securities Guarantee and the Indenture.

SECTION 7.2 AUTHENTICATION

     (a)  A Preferred Security or a Common Security shall not be valid until
          authenticated by the manual signature of an authorized signatory of
          the Property Trustee. The signature shall be conclusive evidence that
          the Preferred Security or the Common Security, respectively, has been
          authenticated under this Declaration.

     (b)  Upon a written order of the Trust signed by one Regular Trustee, the
          Property Trustee shall authenticate the Preferred Securities and the
          Common Securities for original issue. The aggregate number of
          Preferred Securities outstanding at any time shall


                                       29
<PAGE>


          not exceed the number set forth in the Terms of Exhibit A hereto.

     (c)  The Property Trustee may appoint an authenticating agent acceptable to
          the Trust to authenticate Preferred Securities and Common Securities.
          An authenticating agent may authenticate Preferred Securities and
          Common Securities whenever the Property Trustee may do so. Each
          reference in this Declaration to authentication by the Property
          Trustee includes authentication by such agent. An authenticating agent
          has the same rights as the Property Trustee to deal with the Sponsor
          or an Affiliate.

SECTION 7.3 RIGHTS OF HOLDERS.

     (a)  If the Property Trustee fails to enforce its rights under this
          Declaration or the Debentures, any Holder of Preferred Securities may,
          to the fullest extent permitted by law, institute a legal proceeding
          against the Debenture Issuer to enforce the Property Trustee's rights
          under the Declaration or the Debentures without first instituting any
          legal proceeding against the Property Trustee or any other Person.

     (b)  For as long as any Preferred Securities remain outstanding, to the
          fullest extent permitted by law and subject to the terms of this
          Declaration and the Indenture, upon an Event of Default, any Holder of
          Preferred Securities shall have the right to institute a proceeding
          directly against the Debenture Issuer, pursuant to Article X of the
          Fourth Supplemental Indenture, for enforcement of payment to such
          Holder of any amount payable in respect of Debentures having an
          aggregate principal amount equal to the aggregate liquidation amount
          of the Preferred Securities of such Holder.

SECTION 7.4 SUBORDINATION OF COMMON SECURITIES.

     Payment of Distributions on, and the Redemption Price of, the Preferred
Securities and Common Securities, as applicable, will be made pro rata based on
the liquidation amount of such Preferred Securities and Common Securities.
However, if on any date on which a Distribution is to be made, or any Redemption
Date, an Event of Default has occurred and is continuing, no payment of any
Distribution on, or Redemption Price of, any of the Common Securities, and no
other payment on account of the redemption, liquidation or other acquisition of
such Common Securities, shall be made unless payment in full in cash of all
accumulated and unpaid Distributions on all the outstanding Preferred Securities
for all Distribution periods terminating on or prior thereto, or in the case of
payment of the Redemption Price the full amount of such Redemption Price on all
the outstanding Preferred Securities then called for redemption, shall have been
made or provided for, and all funds available to the Property Trustee shall
first be applied to the payment in full in cash of all Distributions on, or the
Redemption Price of, the Preferred Securities then due and payable.

                                  ARTICLE VIII
                              TERMINATION OF TRUST



                                       30
<PAGE>


SECTION 8.1 TERMINATION OF TRUST.

     (a)  The Trust shall dissolve upon the first to occur of:

          (i)  the bankruptcy of the Holder of the Common Securities, the
               Sponsor or the Debenture Issuer;

          (ii) the filing of a certificate of dissolution or its equivalent with
               respect to the Holder of the Common Securities, the Sponsor or
               the Debenture Issuer, the revocation of the charter of the Holder
               of the Common Securities, the Sponsor or the Debenture Issuer and
               the expiration of 90 days after the date of revocation without a
               reinstatement thereof;

         (iii) the entry of a decree of judicial dissolution of the Holder of
               the Common Securities, the Sponsor, the Debenture Issuer or the
               Trust;

          (iv) the repayment of all of the Securities in connection with the
               redemption of all of the Debentures;

          (v)  the written direction to the Property Trustee from all of the
               Holders of the Common Securities at any time to dissolve the
               Trust and, subject to EXHIBIT A attached hereto, to distribute
               the Debentures to the Holders of the Securities in exchange for
               the Securities (which direction is optional and wholly within the
               discretion of the Holders of the Common Securities);

          (vi) before the issuance of any Securities, the written consent of all
               of the Regular Trustees and the Sponsor; or

         (vii) the expiration of the term of the Trust as provided in SECTION
               3.14.

     (b)  As soon as is practicable after the occurrence of an event referred to
          in SECTION 8.1(a) and after the completion of the winding up of the
          Trust, the Trustees shall file a certificate of cancellation with the
          Secretary of State of the State of Delaware.

     (c)  The provisions of SECTION 3.9 and Article Ten shall survive the
          termination of the Trust.

                                   ARTICLE IX
                              TRANSFER OF INTERESTS

SECTION 9.1 TRANSFER OF SECURITIES.

     (a)  Securities may only be transferred, in whole or in part, in accordance
          with the terms and conditions set forth in this Declaration and in the
          terms of the Securities. To the fullest extent permitted by applicable
          law, any transfer or purported transfer of any Security not made in
          accordance with this Declaration shall be null and void.



                                       31
<PAGE>


     (b)  Subject to this Article Nine, Preferred Securities shall be freely
          transferable.

     (c)  Subject to this Article Nine, the Sponsor and any Related Party may
          only transfer Common Securities to (i) the Sponsor or a Related Party
          of the Sponsor; PROVIDED THAT, any such transfer is subject to the
          condition precedent that the transferor obtain the written opinion of
          nationally recognized independent counsel experienced in such matters
          that such transfer would not cause more than an insubstantial risk
          that:

               (A)  the Trust would be classified for United States federal
                    income tax purposes as an association taxable as a
                    corporation or a partnership and each Holder of Securities
                    would not be treated as owning an undivided beneficial
                    interest in the Debentures; and

               (B)  the Trust or the transferee would be an Investment Company
                    or would be controlled by an Investment Company; or

          (ii) any successor to the Sponsor pursuant to Section 802 of the
          Indenture.

SECTION 9.2 TRANSFER OF CERTIFICATES.

     The Regular Trustees shall provide for the registration of Certificates and
of transfers of Certificates, which will be effected without charge but only
upon payment (with such indemnity as the Regular Trustees may require) in
respect of any tax or other government charges which may be imposed in relation
to it. Upon surrender for registration of transfer of any Certificate, the
Property Trustee shall authenticate and the Regular Trustees shall cause one or
more new Certificates to be issued in the name of the designated transferee or
transferees. Every Certificate surrendered for registration of transfer shall be
accompanied by a written instrument of transfer in form satisfactory to the
Regular Trustees duly executed by the Holder or such Holder's attorney duly
authorized in writing. Each Certificate surrendered for registration of transfer
shall be canceled by the Regular Trustees. A transferee of a Certificate shall
be entitled to the rights and subject to the obligations of a Holder hereunder
upon the receipt by such transferee of a Certificate. By acceptance of a
Certificate, each transferee shall be deemed to have agreed to be bound by this
Declaration and the documents incorporated by reference herein.

SECTION 9.3 DEEMED SECURITY HOLDERS.

     The Trustees may treat the Person in whose name any Certificate shall be
registered on the books and records of the Trust as the sole holder of such
Certificate and of the Securities represented by such Certificate for purposes
of receiving Distributions and for all other purposes whatsoever and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such Certificate or in the Securities represented by such
Certificate on the part of any Person, whether or not the Trust shall have
actual or other notice thereof.

SECTION 9.4 BOOK ENTRY INTERESTS.



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<PAGE>


     Unless otherwise specified in the terms of the Preferred Securities, the
Preferred Securities Certificates, on original issuance, will be issued in the
form of one or more, fully registered, global Preferred Security Certificates
(each a "GLOBAL CERTIFICATE"), to be delivered to DTC, the initial Clearing
Agency, by, or on behalf of, the Trust. Such Global Certificates shall initially
be registered on the books and records of the Trust in the name of Cede & Co.,
the nominee of DTC, and no Preferred Security Beneficial Owner will receive a
definitive Preferred Security Certificate representing such Preferred Security
Beneficial Owner's interests in such Global Certificates, except as provided in
SECTION 9.7. Unless and until definitive, fully registered Preferred Security
Certificates (the "DEFINITIVE PREFERRED SECURITY CERTIFICATES") have been issued
to the Preferred Security Beneficial Owners pursuant to SECTION 9.7:

     (a)  the provisions of this SECTION 9.4 shall be in full force and effect;

     (b)  the Trust and the Trustees shall be entitled to deal with the Clearing
          Agency for all purposes of this Declaration (including the payment of
          Distributions on the Global Certificates and receiving approvals,
          votes or consents hereunder) as the Holder of the Preferred Securities
          and the sole holder of the Global Certificates and shall have no
          obligation to the Preferred Security Beneficial Owners;

     (c)  to the extent that the provisions of this SECTION 9.4 conflict with
          any other provisions of this Declaration, the provisions of this
          SECTION 9.4 shall control; and

     (d)  the rights of the Preferred Security Beneficial Owners shall be
          exercised only through the Clearing Agency and shall be limited to
          those established by law and agreements between such Preferred
          Security Beneficial Owners and the Clearing Agency and/or the Clearing
          Agency Participants to receive and transmit payments of Distributions
          on the Global Certificates to such Clearing Agency Participants. DTC
          will make book entry transfers among the Clearing Agency Participants.

SECTION 9.5 NOTICES TO CLEARING AGENCY.

     Whenever a notice or other communication to the Preferred Security Holders
is required under this Declaration, unless and until Definitive Preferred
Security Certificates shall have been issued to the Preferred Security
Beneficial Owners pursuant to SECTION 9.7, the Regular Trustees shall give all
such notices and communications specified herein to be given to the Preferred
Security Holders to the Clearing Agency, and shall have no notice obligations to
the Preferred Security Beneficial Owners.

SECTION 9.6 APPOINTMENT OF SUCCESSOR CLEARING AGENCY.

     If any Clearing Agency elects to discontinue its services as securities
depositary with respect to the Preferred Securities, the Regular Trustees may,
in their sole discretion, appoint a successor Clearing Agency with respect to
such Preferred Securities.

SECTION 9.7 DEFINITIVE PREFERRED SECURITY CERTIFICATES.



                                       33
<PAGE>


     (a)  If:

          (i)  a Clearing Agency notifies the Sponsor that it is unwilling or
               unable to continue its services as securities depositary with
               respect to the Preferred Securities and a successor Clearing
               Agency is not appointed pursuant to SECTION 9.6 within 90 days
               after such discontinuance;

          (ii) a Clearing Agency ceases to be registered under the Exchange Act
               at a time the Clearing Agency is required to be so registered to
               act as such depository and a successor Clearing Agency is not
               appointed pursuant to SECTION 9.6 within 90 days after notice of
               such cessation; or

         (iii) the Regular Trustees elect, with the consent of the Sponsor, to
               terminate the book entry system through the Clearing Agency with
               respect to the Preferred Securities;

     then:

          (iv) Definitive Preferred Security Certificates shall be prepared by
               the Regular Trustees on behalf of the Trust with respect to such
               Preferred Securities and be duly executed by the Trust and
               authenticated by the Property Trustee as herein provided; and

          (v)  upon surrender of the Global Certificates by the Clearing Agency,
               accompanied by registration instructions, the Regular Trustees
               shall cause Definitive Preferred Security Certificates to be
               delivered to Preferred Security Beneficial Owners in accordance
               with the instructions of the Clearing Agency. Neither the
               Trustees nor the Trust shall be liable for any delay in delivery
               of such instructions and each of them may conclusively rely on
               and shall be protected in relying on, said instructions of the
               Clearing Agency.

     (b)  The Definitive Preferred Security Certificates shall be printed,
          lithographed or engraved or may be produced in any other manner as is
          reasonably acceptable to the Regular Trustees, as evidenced by their
          execution thereof, and may have such letters, numbers or other marks
          of identification or designation and such legends or endorsements as
          the Regular Trustees may deem appropriate, or as may be required to
          comply with any law or with any rule or regulation made pursuant
          thereto or with any rule or regulation of any stock exchange on which
          Preferred Securities may be listed, or to conform to usage.

SECTION 9.8 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.

     If:

     (a)  any mutilated Certificates should be surrendered to the Regular
          Trustees, or if the Regular


                                       34
<PAGE>


          Trustees shall receive evidence to their satisfaction of the
          destruction, loss or theft of any Certificate; and

     (b)  there shall be delivered to the Regular Trustees such security or
          indemnity as may be required by them to keep each of the Trustees, the
          Sponsor or any authenticating agent harmless,

then, in the absence of notice that such Certificate shall have been acquired by
a bona fide purchaser, any Regular Trustee on behalf of the Trust shall execute
and deliver, and the Property Trustee shall authenticate, in exchange for or in
lieu of any such mutilated, destroyed, lost or stolen Certificate, a new
Certificate of like denomination, if the Property Trustee's and the Trust's
requirements, as the case may be, are met. In connection with the issuance of
any new Certificate under this SECTION 9.8, the Regular Trustees may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection therewith. Any duplicate Certificate issued
pursuant to this Section shall constitute conclusive evidence of an ownership
interest in the relevant Securities, as if originally issued, whether or not the
lost, stolen or destroyed Certificate shall be found at any time.

                                   ARTICLE X
                      LIMITATION OF LIABILITY OF HOLDERS OF
                         SECURITIES, TRUSTEES AND OTHERS

SECTION 10.1 LIABILITY.

     (a)  Except as expressly set forth in this Declaration, the Preferred
          Securities Guarantee, the Common Securities Guarantee and the terms of
          the Securities, the Sponsor shall not be:

          (i)  personally liable for the return of any portion of the capital
               contributions (or any return thereon) of the Holders of the
               Securities, which shall be made solely from assets of the Trust;
               or

          (ii) required to pay to the Trust or to any Holder of Securities any
               deficit upon dissolution of the Trust or otherwise.

     (b)  Pursuant to Section 3803(a) of the Business Trust Act, the Holder of
          the Common Securities shall be liable for all of the debts and
          obligations of the Trust (other than with respect to the Securities)
          to the extent not satisfied out of the Trust's assets.

     (c)  Pursuant to Section 3803(a) of the Business Trust Act, the Holders of
          the Preferred Securities shall be entitled to the same limitation of
          personal liability extended to stockholders of private corporations
          for profit organized under the General Corporation Law of the State of
          Delaware.

SECTION 10.2 EXCULPATION.



                                       35
<PAGE>


     (a)  No Indemnified Person shall be liable, responsible or accountable in
          damages or otherwise to the Trust or any Covered Person for any loss,
          damage or claim incurred by reason of any act or omission performed or
          omitted by such Indemnified Person in good faith on behalf of the
          Trust and in a manner such Indemnified Person reasonably believed to
          be within the scope of the authority conferred on such Indemnified
          Person by this Declaration or by law, except that an Indemnified
          Person shall be liable for any such loss, damage or claim incurred by
          reason of such Indemnified Person's gross negligence (or, in the case
          of the Property Trustee, except as otherwise set forth in SECTION 3.9)
          or willful misconduct with respect to such acts or omissions.

     (b)  An Indemnified Person shall be fully protected in relying in good
          faith upon the records of the Trust and upon such information,
          opinions, reports or statements presented to the Trust by any Person
          as to matters the Indemnified Person reasonably believes are within
          such other Person's professional or expert competence and who has been
          selected with reasonable care by or on behalf of the Trust, including
          information, opinions, reports or statements as to the value and
          amount of the assets, liabilities, profits, losses, or any other facts
          pertinent to the existence and amount of assets from which
          Distributions to Holders of Securities might properly be paid.

SECTION 10.3 FIDUCIARY DUTY.

     (a)  To the extent that, at law or in equity, an Indemnified Person has
          duties (including fiduciary duties) and liabilities relating thereto
          to the Trust or to any other Covered Person, an Indemnified Person
          acting under this Declaration shall not be liable to the Trust or to
          any other Covered Person for its good faith reliance on the provisions
          of this Declaration. The provisions of this Declaration, to the extent
          that they restrict the duties and liabilities of an Indemnified Person
          otherwise existing at law or in equity (other than the duties imposed
          on the Property Trustee under the Trust Indenture Act), are agreed by
          the parties hereto to replace such other duties and liabilities of
          such Indemnified Person.

     (b)  Unless otherwise expressly provided herein:

          (i)  whenever a conflict of interest exists or arises between an
               Indemnified Person and any Covered Person; or

          (ii) whenever this Declaration or any other agreement contemplated
               herein or therein provides that an Indemnified Person shall act
               in a manner that is, or provides terms that are, fair and
               reasonable to the Trust or any Holder of Securities,

          the Indemnified Person shall resolve such conflict of interest,
take such action or provide such terms, considering in each case the
relative interest of each party (including its own interest) to such conflict,
agreement, transaction or situation and the benefits and burdens relating



                                       36
<PAGE>


to such interests, any customary or accepted industry practices and any
applicable generally accepted accounting practices or principles. In the absence
of bad faith by the Indemnified Person, the resolution, action or term so made,
taken or provided by the Indemnified Person shall not constitute a breach of
this Declaration or any other agreement contemplated herein or of any duty or
obligation of the Indemnified Person at law or in equity or otherwise.

     (c)  Whenever in this Declaration an Indemnified Person is permitted or
          required to make a decision

          (i)  in its "discretion" or under a grant of similar authority, the
               Indemnified Person shall be entitled to consider such interests
               and factors as it desires, including its own interests, and shall
               have no duty or obligation to give any consideration to any
               interest of or factors affecting the Trust or any other Person;
               or

          (ii) in its "good faith" or under another express standard, the
               Indemnified Person shall act under such express standard and
               shall not be subject to any other or different standard imposed
               by this Declaration or by applicable law.

SECTION 10.4 INDEMNIFICATION.

     (a)  To the fullest extent permitted by applicable law, the Sponsor shall
          indemnify and hold harmless each Indemnified Person from and against
          any loss, damage, liability, tax, penalty, expense or claim of any
          kind or nature whatsoever incurred by such Indemnified Person by
          reason of the creation, operation, dissolution or termination of the
          Trust or any act or omission performed or omitted by such Indemnified
          Person in good faith on behalf of the Trust and in a manner such
          Indemnified Person reasonably believed to be within the scope of
          authority conferred on such Indemnified Person by this Declaration,
          except that no Indemnified Person shall be entitled to be indemnified
          in respect of any loss, damage or claim incurred by such Indemnified
          Person by reason of gross negligence (or, in the case of the Property
          Trustee, except as otherwise set forth in SECTION 3.9) or willful
          misconduct with respect to such acts or omissions.

     (b)  To the fullest extent permitted by applicable law, expenses (including
          legal fees) incurred by an Indemnified Person in defending any claim,
          demand, action, suit or proceeding shall, from time to time, be
          advanced by the Sponsor prior to the final disposition of such claim,
          demand, action, suit or proceeding upon receipt by the Sponsor of an
          undertaking by or on behalf of the Indemnified Person to repay such
          amount if it shall be determined that the Indemnified Person is not
          entitled to be indemnified as authorized in SECTION 10.4(a). This
          Section shall survive the termination of this Declaration or the
          earlier removal or resignation of any of the Trustees.

SECTION 10.5 OUTSIDE BUSINESSES.



                                       37
<PAGE>


     Any Covered Person, the Sponsor, the Debenture Issuer, the Delaware Trustee
and, subject to SECTION 5.3(c), the Property Trustee may engage in or possess an
interest in other business ventures of any nature or description, independently
or with others, similar or dissimilar to the business of the Trust, and the
Trust and the Holders of Securities shall have no rights by virtue of this
Declaration in and to such independent ventures or the income or profits derived
therefrom, and the pursuit of any such venture, even if competitive with the
business of the Trust, shall not be deemed wrongful or improper. No Covered
Person, the Sponsor, the Debenture Issuer, the Delaware Trustee or the Property
Trustee shall be obligated to present any particular investment or other
opportunity to the Trust even if such opportunity is of a character that, if
presented to the Trust, could be taken by the Trust, and any Covered Person, the
Sponsor, the Debenture Issuer, the Delaware Trustee and the Property Trustee
shall have the right to take for its own account (individually or as a partner
or fiduciary) or to recommend to others any such particular investment or other
opportunity. Any Covered Person, the Delaware Trustee and the Property Trustee
may engage or be interested in any financial or other transaction with the
Sponsor or any Affiliate of the Sponsor, or may act as depositary for, trustee
or agent for, or act on any committee or body of holders of, securities or other
obligations of the Sponsor or its Affiliates.

                                   ARTICLE XI
                                   ACCOUNTING

SECTION 11.1 FISCAL YEAR.

     The fiscal year of the Trust shall be the calendar year, or such other year
as is required by the Code.

SECTION 11.2 CERTAIN ACCOUNTING MATTERS.

     (a)  At all times during the existence of the Trust, the Regular Trustees
          shall keep, or cause to be kept, full books of account, records and
          supporting documents, which shall reflect in reasonable detail each
          transaction of the Trust. The books of account shall be maintained on
          the accrual method of accounting, in accordance with generally
          accepted accounting principles, consistently applied. The Trust shall
          use the accrual method of accounting for United States federal income
          tax purposes. The books of account and the records of the Trust shall
          be examined by and reported upon as of the end of each fiscal year by
          a firm of independent certified public accountants selected by the
          Regular Trustees.

     (b)  The Regular Trustees shall cause to be prepared and delivered to each
          Holder of Securities, within 90 days after the end of each fiscal year
          of the Trust, annual financial statements of the Trust, including a
          balance sheet of the Trust as of the end of such fiscal year, and the
          related statements of income or loss.

     (c)  The Regular Trustees shall cause to be duly prepared and delivered to
          each Holder of Securities any United States federal income tax
          information statement required by the Code, containing such
          information with regard to the Securities held by such


                                       38
<PAGE>


          Holder as is required by the Code and the Treasury Regulations.
          Notwithstanding any right under the Code to deliver any such statement
          at a later date, the Regular Trustees shall endeavor to deliver all
          such statements within 30 days after the end of each fiscal year of
          the Trust.

     (d)  The Regular Trustees shall cause to be duly prepared and filed with
          the appropriate taxing authority an annual United States federal
          income tax return on such form as is required by United States federal
          income tax law and any other annual income tax returns required to be
          filed by the Regular Trustees on behalf of the Trust with any state or
          local taxing authority.

SECTION 11.3 BANKING.

     The Trust shall maintain one or more bank accounts in the name and for the
sole benefit of the Trust; PROVIDED, HOWEVER, that all payments of funds in
respect of the Debentures held by the Property Trustee shall be made directly to
the Property Trustee Account, and no other funds of the Trust shall be deposited
in the Property Trustee Account. The sole signatories for such accounts shall be
designated by the Regular Trustees; PROVIDED, HOWEVER, that the Property Trustee
shall designate the sole signatories for the Property Trustee Account.

SECTION 11.4 WITHHOLDING.

     The Trust and the Regular Trustees shall comply with all withholding
requirements under United States federal, state and local law. The Trust shall
request, and the Holders shall provide to the Trust, such forms or certificates
as are necessary to establish an exemption from withholding with respect to each
Holder and any representations and forms as shall reasonably be requested by the
Trust to assist it in determining the extent of, and in fulfilling, its
withholding obligations. The Regular Trustees shall file required forms with
applicable jurisdictions and, unless an exemption from withholding is properly
established by a Holder, shall remit amounts withheld with respect to the Holder
to applicable jurisdictions. To the extent that the Trust is required to
withhold and pay over any amounts to any authority with respect to distributions
or allocations to any Holder, the amount withheld shall be deemed to be a
distribution in the amount of the withholding to the Holder. In the event of any
claimed over-withholding, to the fullest extent permitted by law, Holders shall
be limited to an action against the applicable jurisdiction. If the amount
required to be withheld was not withheld from actual Distributions made, the
Trust may reduce subsequent Distributions by the amount of such withholding.

                                  ARTICLE XII
                             AMENDMENTS AND MEETINGS

SECTION 12.1 AMENDMENTS.

     (a)  Except as otherwise provided in this Declaration or by any applicable
          terms of the Securities, this Declaration may be amended by, and only
          by, a written instrument approved and executed by the Regular Trustees
          (or, if there are more than two Regular Trustees, by a majority of the
          Regular Trustees); PROVIDED, HOWEVER, that:



                                       39
<PAGE>


          (i)  no amendment or modification shall be made, and any such
               purported amendment or modification shall be void and
               ineffective, to the extent the result thereof would be to

               (A)  cause the Trust to be classified as other than a grantor
                    trust for purposes of United States federal income taxation
                    as confirmed by an opinion of counsel;

               (B)  affect the powers, rights, duties, obligations or immunities
                    of the Property Trustee or the Delaware Trustee (unless such
                    amendment is consented to in writing by the Property Trustee
                    or the Delaware Trustee, as the case may be); or

               (C)  cause the Trust to be deemed an Investment Company that is
                    required to be registered under the Investment Company Act;

          (ii) at such time after the Trust has issued any Securities that
               remain outstanding, any amendment that would (A) materially
               adversely affect the rights, privileges or preferences of any
               Holder of Securities or (B) provide for the dissolution or
               winding-up of the Trust other than pursuant to this Declaration
               may be effected only with such additional requirements as may be
               set forth in the terms of such Securities shall require the
               approval of 66 2/3% in liquidation amount of the Preferred
               Securities affected thereby, voting together as a single class;

         (iii) Article Four shall not be amended without the consent of the
               Holders of a Majority in liquidation amount of the Common
               Securities; and

          (iv) the rights of the holders of the Common Securities under Article
               Five to increase or decrease the number of, and appoint and
               remove Trustees shall not be amended without the consent of the
               Holders of a Majority in liquidation amount of the Common
               Securities (except to the extent such amendment relates to the
               rights of the Holders of the Preferred Securities with respect to
               the Property Trustee, in which case such amendment may only be
               made in accordance with the terms of the Preferred Securities).

     (b)  Subject to SECTION 12.1(a)(ii), this Declaration may be amended
          without the consent of the Holders of the Securities to:

          (i)  cure any ambiguity;

          (ii) correct or supplement any provision in this Declaration that may
               be defective or inconsistent with any other provision of this
               Declaration;

         (iii) add to the covenants, restrictions or obligations of the
               Sponsor; and



                                       40
<PAGE>


          (iv) conform to any change in Rule 3a-7 or written change in
               interpretation or application of Rule 3a-7 by any legislative
               body, court, government agency or regulatory authority, which
               amendment does not have a material adverse effect on the right,
               preferences or privileges of the Holders of the Securities.

SECTION 12.2 MEETINGS OF THE HOLDERS OF SECURITIES; ACTION BY WRITTEN CONSENT.

     (a)  Meetings of the Holders of any class of Securities may be called at
          any time by the Regular Trustees (or as provided in the terms of the
          Securities) to consider and act on any matter on which the Holders of
          such class of Securities are entitled to act under the terms of this
          Declaration, the terms of the Securities or the rules of any stock
          exchange on which any Securities are listed or admitted for trading.
          The Regular Trustees shall call a meeting of the Holders of any class
          of Securities, if directed to do so by the Holders of at least 10% in
          liquidation amount of such class of Securities. Such direction shall
          be given by delivering to the Regular Trustees one or more written
          notices stating that the signing Holders of Securities wish to call a
          meeting and indicating the general or specific purpose for which the
          meeting is to be called. Any Holders of Securities directing the
          Regular Trustees to call a meeting shall specify in writing the
          Certificates held by the Holders of Securities exercising the right to
          call a meeting, and only those specified shall be counted for purposes
          of determining whether the required percentage set forth in the second
          sentence of this paragraph has been met.

     (b)  Except to the extent otherwise provided in the terms of the
          Securities, the following provisions shall apply to meetings of
          Holders of Securities:

          (i)  Whenever a vote, consent or approval of the Holders of Securities
               is permitted or required under this Declaration or the rules of
               any stock exchange on which any Securities are listed or admitted
               for trading, such vote, consent or approval may be given at a
               meeting of the Holders of Securities. Notice of any such meeting
               shall be given to all the Holders of Securities having a right to
               vote thereat at least 7 days and not more than 60 days before the
               date of such meeting. Each such notice will include a statement
               setting forth the following information (i) the date of such
               meeting or the date by which such action is to be taken; (ii) a
               description of any resolution proposed for adoption at such
               meeting on which such holders are entitled to vote or of such
               matter upon which written consent is sought; and (iii)
               instructions for the delivery of proxies or consents. Any action
               that may be taken at a meeting of the Holders of Securities may
               be taken without a meeting and without prior notice if a consent
               in writing setting forth the action so taken is signed by the
               Holders of Securities owning not less than the minimum amount of
               Securities in liquidation amount that would be necessary to
               authorize or take such action at a meeting at which all Holders
               of Securities having a right to vote thereon were present and



                                       41
<PAGE>


               voting. Prompt notice of the taking of action without a meeting
               shall be given to the Holders of Securities entitled to vote who
               have not consented in writing. The Regular Trustees may specify
               that any written ballot submitted to the Holder for the purpose
               of taking any action without a meeting shall be returned to the
               Trust within the time specified by the Regular Trustees.

          (ii) Each Holder of a Security may authorize any Person to act for it
               by proxy on all matters in which a Holder of Securities is
               entitled to participate, including waiving notice of any meeting,
               or voting or participating at a meeting. No proxy shall be valid
               after the expiration of 11 months from the date thereof unless
               otherwise provided in the proxy. Every proxy shall be revocable
               at the pleasure of the Holder of Securities executing it. Except
               as otherwise provided herein, all matters relating to the giving,
               voting or validity of proxies shall be governed by the General
               Corporation Law of the State of Delaware relating to proxies, and
               judicial interpretations thereunder, as if the Trust were a
               Delaware corporation and the Holders of the Securities were
               stockholders of a Delaware corporation.

         (iii) Each meeting of the Holders of the Securities shall be conducted
               by the Regular Trustees or by such other Person that the Regular
               Trustees may designate.

          (iv) Unless the Business Trust Act, this Declaration, the terms of the
               Securities or the listing rules of any stock exchange on which
               any Securities are then listed or trading otherwise provides, the
               Regular Trustees, in their sole discretion, shall establish all
               other provisions relating to meetings of the Holders of
               Securities, including notice of the time, place or purpose of any
               meeting at which any matter is to be voted on by any Holders of
               Securities, waiver of any such notice, action by consent without
               a meeting, the establishment of a record date, quorum
               requirements, voting in person or by proxy or any other matter
               with respect to the exercise of any such right to vote.

          (v)  Any Preferred Securities that are owned by the Debenture Issuer
               or any of its Affiliates shall not be entitled to vote or consent
               and shall, for purposes of any vote or consent, be treated as if
               such Preferred Securities were not issued and outstanding.

                                  ARTICLE XIII
                       REPRESENTATIONS OF PROPERTY TRUSTEE

SECTION 13.1 REPRESENTATIONS AND WARRANTIES OF PROPERTY TRUSTEE.

     The Trustee which acts as initial Property Trustee represents and warrants
to the Trust and to the Sponsor at the date of this Declaration, and each
successor Property Trustee represents and warrants to the Trust and the Sponsor
at the time of the successor Property Trustee's


                                       42
<PAGE>


acceptance of its appointment as Property Trustee that:

     (a)  The Property Trustee is a Delaware banking corporation with trust
          powers, duly organized, validly existing and in good standing under
          the laws of the State of Delaware with trust power and authority to
          execute and deliver, and to carry out and perform its obligations
          under the terms of, the Declaration.

     (b)  The execution, delivery and performance by the Property Trustee of the
          Declaration has been duly authorized by all necessary corporate action
          on the part of the Property Trustee. The Declaration has been duly
          executed and delivered by the Property Trustee, and it constitutes a
          legal, valid and binding obligation of the Property Trustee,
          enforceable against it in accordance with its terms, subject to
          applicable bankruptcy, reorganization, moratorium, insolvency, and
          other similar laws affecting creditors' rights generally and to
          general principles of equity and the discretion of the court
          (regardless of whether the enforcement of such remedies is considered
          in a proceeding in equity or at law).

     (c)  The execution, delivery and performance of the Declaration by the
          Property Trustee does not conflict with or constitute a breach of the
          Articles of Organization or By-laws of the Property Trustee.

     (d)  No consent, approval or authorization of, or registration with or
          notice to, any state or federal banking authority is required for the
          execution, delivery or performance by the Property Trustee, of the
          Declaration.

                                  ARTICLE XIV
                                  MISCELLANEOUS

SECTION 14.1 NOTICES.

     All notices provided for in this Declaration shall be in writing, duly
signed by the party giving such notice, and shall be delivered, telecopied or
mailed by registered or certified mail, as follows:

     (a)  if given to the Trust, in care of the Regular Trustees at the Trust's
          mailing address set forth below (or such other address as the Trust
          may give notice of to the Holders of the Securities):

                      NORTHWESTERN CAPITAL FINANCING III
                      c/o NorthWestern Corporation
                      125 S. Dakota Avenue
                      Suite 1100
                      Sioux Falls, South Dakota  57104
                      Attention: Richard R. Hylland

     (b)  if given to the Property Trustee or the Delaware Trustee, at the
          mailing address set forth


                                       43
<PAGE>


          below (or such other address as the Property Trustee or the Delaware
          Trustee may give notice of to the Holders of the Securities):

                      WILMINGTON TRUST COMPANY
                      Rodney Square North
                      1100 N. Market Street
                      Wilmington, Delaware  19890-0001
                      Attention: Corporate Trust Administration

     (c)  if given to the Holder of the Common Securities, at the mailing
          address of the Sponsor set forth below (or such other address as the
          Holder of the Common Securities may give notice to the Trust):

                      NORTHWESTERN CORPORATION
                      125 S. Dakota Avenue
                      Suite 1100
                      Sioux Falls, South Dakota  57104
                      Attention: General Counsel

     (d)  if given to any other Holder, at the address set forth on the books
          and records of the Trust.

     All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.

SECTION 14.2 GOVERNING LAW.

     This Declaration and the rights of the parties hereunder shall be governed
by and interpreted in accordance with the laws of the State of Delaware and all
rights and remedies shall be governed by such laws without regard to principles
of conflict of laws.

SECTION 14.3 INTENTION OF THE PARTIES.

     It is the intention of the parties hereto that the Trust not be
characterized for United States federal income tax purposes as an association
taxable as a corporation or a partnership but rather as a grantor trust or
otherwise in a manner that each Holder of Securities be treated as owning an
undivided beneficial interest in the Debentures. The provisions of this
Declaration shall be interpreted to further this intention of the parties.

SECTION 14.4 HEADINGS.

     Headings contained in this Declaration are inserted for convenience of
reference only and do not affect the interpretation of this Declaration or any
provision hereof.

SECTION 14.5 SUCCESSORS AND ASSIGNS.



                                       44
<PAGE>


     Whenever in this Declaration any of the parties hereto is named or referred
to, the successors and assigns of such party shall be deemed to be included, and
all covenants and agreements in this Declaration by the Sponsor and the Trustees
shall bind and inure to the benefit of their respective successors and assigns,
whether so expressed.

SECTION 14.6 PARTIAL ENFORCEABILITY.

     If any provision of this Declaration, or the application of such provision
to any Person or circumstance, shall be held invalid, the remainder of this
Declaration, or the application of such provision to Persons or circumstances
other than those to which it is held invalid, shall not be affected thereby.

SECTION 14.7 COUNTERPARTS.

     This Declaration may contain more than one counterpart of the signature
page, and this Declaration may be executed by the affixing of the signature of
each of the Trustees to one of such counterpart signature pages. All of such
counterpart signature pages shall be read as though one, and they shall have the
same force and effect as though all of the signers had signed a single signature
page.



                            [SIGNATURE PAGE FOLLOWS]




                                       45
<PAGE>



     IN WITNESS WHEREOF, the undersigned has caused these presents to be
executed as of the day and year first above written.


                                   NORTHWESTERN CORPORATION
                                   as Sponsor and Debenture Issuer


                                   By: /s/ Kipp D. Orme
                                       -------------------------------
                                       Name:  Kipp D. Orme
                                       Title: Vice President - Finance and Chief
                                              Financial Officer


                                   NORTHWESTERN CAPITAL FINANCING III


                                   By: /s/ Merle Lewis
                                       -------------------------------
                                       Name:  Merle Lewis
                                       Title: Regular Trustee


                                   By: /s/ Richard Hylland
                                       -------------------------------
                                       Name:  Richard Hylland
                                       Title: Regular Trustee


                                   WILMINGTON TRUST COMPANY
                                   as Delaware Trustee and Property Trustee

                                   By: /s/ Anita Dallago
                                       -------------------------------
                                       Name:  Anita Dallago
                                       Title: Financial Services Officer




                                       46
<PAGE>



                                    EXHIBIT A

                               TERMS OF SECURITIES

                                    TERMS OF
                        8.10% TRUST PREFERRED SECURITIES
                          8.10% TRUST COMMON SECURITIES

     Pursuant to SECTION 7.1 of the Amended and Restated Declaration of Trust,
dated as of January 31, 2002 (as amended from time to time, the "DECLARATION"),
the designation, rights, privileges, restrictions, preferences and other terms
and provisions of the Preferred Securities and the Common Securities are set out
below (each capitalized term used but not defined herein has the meaning set
forth in the Declaration or, if not defined in such Declaration, as defined in
the Prospectus referred to below):

DESIGNATION AND NUMBER.

"Preferred Securities." 4,000,000 Preferred Securities of the Trust with an
aggregate liquidation amount with respect to the assets of the Trust of
$100,000,000 and a liquidation amount with respect to the assets of the Trust of
$25 per Preferred Security, are hereby designated for the purposes of
identification only as "8.10% Trust Preferred Securities" (the "PREFERRED
SECURITIES"). Pursuant to the Overallotment Option, the Trust may within 30 days
of the date of the initial issuance, issue up to 600,000 Preferred Securities
with an aggregate liquidation amount of up to $15,000,000. The Preferred
Security Certificates evidencing the Preferred Securities and the Property
Trustee's certificate of authentication, shall be substantially in the form
attached hereto as ANNEX I, with such changes and additions thereto or deletions
therefrom as may be required by ordinary usage, custom or practice or to conform
to the rules of any stock exchange on which the Preferred Securities are listed.

"Common Securities." 123,712 Common Securities of the Trust with an
aggregate liquidation amount with respect to the assets of the Trust of
$3,092,800 and a liquidation amount with respect to the assets of the Trust of
$25 per Common Security, are hereby designated for the purposes of
identification only as "8.10% Trust Common Securities" (the "COMMON
SECURITIES"). Pursuant to the Overallotment Option, the Trust may within 30 days
of the date of the initial issuance, issue up to 18,557 Common Securities with
an aggregate liquidation amount of up to $463,925. The Common Security
Certificates evidencing the Common Securities shall be substantially in the form
attached hereto as Annex II, with such changes and additions thereto or
deletions therefrom as may be required by ordinary usage, custom or practice.

DISTRIBUTIONS.

Distributions payable on each Security will be fixed at a rate per annum of
8.10% (the "COUPON RATE") of the stated liquidation amount of $25 per Security,
such rate being the rate of interest payable on the Debentures to be held by the
Property Trustee. Distributions in arrears for more than one quarter will
accumulate additional distributions thereon compounded quarterly at the Coupon
Rate (to the extent permitted by applicable law). The term "Distributions" as
used

<PAGE>

herein includes such periodic cash distributions and any such additional
distributions payable unless otherwise stated. A Distribution is payable only to
the extent that payments are made in respect of the Debentures held by the
Property Trustee. The amount of Distributions payable for any period will be
computed for any full quarterly Distribution period on the basis of a 360-day
year of twelve 30-day months, and for any period shorter than a full quarterly
Distribution period on the basis of the actual number of days elapsed in such a
90-day quarterly period.

Distributions on the Securities will be cumulative, will accumulate from
their original date of issuance and will be payable quarterly in arrears, on
January 15, April 15, July 15, and October 15 of each year, commencing on April
15, 2002, except as otherwise described below. So long as no Event of Default
has occurred and is continuing, the Debenture Issuer has the right under the
Indenture to defer payments of interest by extending the interest payment period
from time to time on the Debentures for a period not exceeding 20 consecutive
quarters, but not beyond the stated maturity of the Debentures (each an
"EXTENSION PERIOD"), and, as a consequence of such extension, Distributions will
also be deferred. Prior to the termination of any such Extension Period, the
Debenture Issuer may further extend such Extension Period; provided that such
Extension Period together with all such previous and further extensions thereof
may not exceed 20 consecutive quarters or extend beyond the stated maturity of
the Debentures. If Distributions are deferred, the deferred Distributions,
including additional accumulated Distributions thereon at the Coupon Rate
compounded quarterly to the extent permitted by law, shall be paid to Holders as
they appear on the books and records of the Trust on the first record date after
the end of the Extension Period. Upon the termination of any Extension Period
and the payment of all amounts then due, the Debenture Issuer may commence a new
Extension Period, subject to the above requirements.

Distributions on the Securities will be payable to the Holders thereof as
they appear on the books and records of the Trust on the relevant record dates.
While the Preferred Securities remain in book-entry only form, the relevant
record dates shall be one Business Day prior to the relevant payment dates which
payment dates correspond to the interest payment dates on the Debentures.
Subject to any applicable laws and regulations and the provisions of the
Declaration, each such payment in respect of the Trust Preferred Securities will
be made as described under the heading "Description of the Trust Preferred
Securities -- Book-Entry Only Issuance -- The Depository Trust Company" in the
Prospectus Supplement dated January 24, 2002, to the Prospectus dated July 27,
1999 (together, the "PROSPECTUS") included in the Registration Statement on Form
S-3 of the Sponsor, the Debenture Issuer and the Trust. The relevant record
dates for the Common Securities, and, if the Preferred Securities shall not
continue to remain in book-entry only form, the relevant record dates for the
Preferred Securities, shall conform to the rules of any securities exchange on
which the securities are listed and, if none, shall be 15 Business Days before
the relevant payment dates, which payment dates correspond to the interest
payment dates on the Debentures, even if such record date is not a Business Day.
Distributions payable on any Securities that are not punctually paid on any
Distribution payment date, as a result of the Debenture Issuer having failed to
make a payment under the Debentures, will cease to be payable to the Person in
whose name such Securities are registered on the relevant record date, and such
defaulted Distribution will instead be payable to the Person in whose name such
Securities are registered on the special record date or other specified date
determined in accordance with the




                                      A-2
<PAGE>

Indenture. If any date on which Distributions are payable on the Securities
is not a Business Day, then payment of the Distribution payable on such date
will be made on the next succeeding day that is a Business Day (and without any
interest or other payment in respect of any such delay), except that if such
Business Day is in the next succeeding calendar year, such payment shall be made
on the immediately preceding Business Day, in each case with the same force and
effect as if made on such date.

In the event that there is any money or other property held by or for the
Trust that is not accounted for hereunder, such property shall be distributed
Pro Rata (as defined herein) among the Holders of the Securities.

LIQUIDATION DISTRIBUTION UPON DISSOLUTION.

If dissolution of the Trust occurs for any reason other than the repayment
of all of the Securities in connection with the redemption of the Debentures,
the Regular Trustees shall, after satisfaction of liabilities to creditors of
the Trust and obtaining any required Federal Energy Regulatory Commission or
state public utility commission approval, cause Debentures held by the Property
Trustee, having an aggregate principal amount equal to the aggregate stated
liquidation amount of the Securities, with an interest rate equal to the Coupon
Rate of, and bearing accrued and unpaid interest in an amount equal to the
accumulated and unpaid Distributions on, the Securities, to be distributed to
the Holders of the Securities in liquidation of such Holders' interests in the
Trust on a Pro Rata basis, as expeditiously as the Property Trustee determines
to be possible; provided that, if the foregoing distribution is not practical,
Holders will be entitled to receive out of the assets of the Trust available for
distribution to Holders, after satisfaction of liabilities to creditors of the
Trust as provided by applicable law, an amount equal to the aggregate stated
liquidation amount of $25 per Security plus accumulated and unpaid Distributions
thereon to the date of payment (the "LIQUIDATION DISTRIBUTION").

If, upon any such dissolution or winding-up of the Trust, the Liquidation
Distribution can be paid only in part because the Trust has insufficient assets
available to pay in full the aggregate Liquidation Distribution, then the
amounts payable directly by the Trust on the Securities shall be paid on a Pro
Rata basis. The Holder of Common Securities will be entitled to receive such
Liquidation Distribution on a Pro Rata basis, except that if an Event of Default
has occurred and is continuing, the Holders of Preferred Securities shall have a
priority over the Holder of Common Securities.

On and from the date fixed by the Regular Trustees for any distribution of
Debentures and dissolution of the Trust: (i) the Securities will no longer be
deemed to be outstanding, (ii) The Depository Trust Company ("DTC") or its
nominee (or any successor Clearing Agency or its nominee), as the record Holder
of the Preferred Securities, will receive a registered global certificate or
certificates representing the Debentures to be delivered upon such distribution
with respect to the Preferred Securities held by DTC or its nominee, and (iii)
any certificates representing the Securities, except for certificates
representing Preferred Securities held by DTC or its nominee (or any successor
Clearing Agency or its nominee), will be deemed to represent the Debentures
having an aggregate principal amount equal to the aggregate stated liquidation



                                      A-3
<PAGE>

amount of the Securities, with an interest rate equal to the Coupon Rate of, and
bearing accrued and unpaid interest in an amount equal to the accumulated and
unpaid Distributions on, such Securities until such certificates are presented
to the Debenture Issuer or its agent for transfer or reissue.

If the Debentures are distributed to the Holders of the Securities,
pursuant to the terms of the Indenture, the Debenture Issuer will use its best
efforts to have the Debentures listed on the New York Stock Exchange or on such
other exchange as the Preferred Securities were listed on immediately prior to
the distribution of the Debentures.

REDEMPTION.

Upon the repayment of the Debentures in whole or in part, whether at
maturity or upon earlier redemption, the proceeds from such repayment or
redemption shall be thereupon applied to redeem Securities having an aggregate
liquidation amount equal to the aggregate principal amount of the Debentures so
repaid or redeemed at a redemption price of $25 per Security plus an amount
equal to accumulated and unpaid Distributions thereon at the date of the
redemption, payable in cash (the "REDEMPTION PRICE"). Redemptions of the
Securities shall be made, and the Redemption Price shall be payable, on each
redemption date only to the extent that the Trust has funds then on hand and
legally available for the payment at such Redemption Price. Holders will be
given not less than 30 nor more than 60 days notice of such redemption.

If fewer than all the outstanding Securities are to be so redeemed, the
Common Securities and the Preferred Securities will be redeemed Pro Rata and the
Preferred Securities to be redeemed will be as described in PARAGRAPH 4(d)
below.

The Trust may not redeem fewer than all the outstanding Securities unless
all accumulated and unpaid Distributions have been paid on all Securities for
all quarterly Distribution periods terminating on or before the date of
redemption.

Redemption Procedures.

          Notice of any redemption of the Securities (a "REDEMPTION NOTICE")
          will be given by the Property Trustee on behalf of the Trust by mail
          to each Holder of Securities to be redeemed not fewer than 30 nor more
          than 60 days before the date fixed for redemption thereof, which will
          be the date fixed for redemption of the Debentures. For purposes of
          the calculation of the date of redemption and the dates on which
          notices are given pursuant to this PARAGRAPH 4(d), a Redemption Notice
          shall be deemed to be given on the day such notice is first mailed by
          first-class mail, postage prepaid, to Holders of Securities. Each
          Redemption Notice shall be addressed to the Holders of Securities at
          the address of each such Holder appearing in the books and records of
          the Trust. No defect in the Redemption Notice or in the mailing of
          either thereof with respect to any Holder shall affect the validity of
          the redemption proceedings with respect to any other Holder.

In the event that fewer than all the outstanding Securities are to be redeemed,
then the aggregate


                                      A-4
<PAGE>

liquidation amount of the Securities to be redeemed shall be redeemed Pro
Rata from each Holder of Securities, it being understood that, in respect of
Preferred Securities registered in the name of and held of record by DTC (or any
successor Clearing Agency) or any nominee, the distribution of the proceeds of
such redemption will be made to such Clearing Agency Participant (or Person on
whose behalf such nominee holds such Securities) in accordance with the
procedures applied by such Clearing Agency; provided that, if, as a result of
such Pro Rata redemption, such Clearing Agency Participants will hold fractional
interests in the Preferred Securities, the Clearing Agency will adjust the
amount of the interest of each Participant to be redeemed to avoid such
fractional interest.

If Securities are to be redeemed and the Trust gives a Redemption Notice,
which notice may only be issued if the Debentures are redeemed as set out in
this PARAGRAPH 4 (which notice will be irrevocable), then (A) while the
Preferred Securities are in book-entry only form, with respect to the Preferred
Securities, by 12:00 noon, New York City time, on the redemption date, provided
that the Debenture Issuer has paid to the Property Trustee a sufficient amount
of cash in connection with the related redemption or maturity of the Debentures,
the Property Trustee will deposit irrevocably with DTC (or successor Clearing
Agency) funds sufficient to pay the applicable Redemption Price with respect to
the Preferred Securities and will give DTC irrevocable instructions and
authority to pay the Redemption Price to the Holders of the Preferred
Securities, and (B) with respect to Preferred Securities issued in definitive
form and Common Securities, provided that the Debenture Issuer has paid the
Property Trustee a sufficient amount of cash in connection with the related
redemption or maturity of the Debentures, the Property Trustee will pay the
relevant Redemption Price to the Holders of such Securities by check mailed to
the address of the relevant Holder appearing on the books and records of the
Trust on the redemption date. If a Redemption Notice shall have been given and
funds deposited as required, then immediately prior to the close of business on
the date of such deposit, or on the redemption date, as applicable,
Distributions will cease to accumulate on the Securities so called for
redemption and all rights of the Holders of such Securities so called for
redemption will cease, except the right of the Holders of such Securities to
receive the Redemption Price, but without interest on such Redemption Price.
Neither the Regular Trustees nor the Trust shall be required to register or
cause to be registered the transfer of any Securities that have been so called
for redemption. If any date fixed for redemption of Securities is not a Business
Day, then payment of the Redemption Price payable on such date will be made on
the next succeeding day that is a Business Day (and without any interest or
other payment in respect of any such delay) except that, if such Business Day
falls in the next calendar year, such payment will be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date fixed for redemption. If payment of the Redemption Price in respect
of any Securities is improperly withheld or refused and not paid either by the
Property Trustee or by the Sponsor as guarantor pursuant to the relevant
Preferred Securities Guarantee or Common Securities Guarantee, Distributions on
such Securities will continue to accumulate from the original redemption date to
the actual date of payment, in which case the actual payment date will be
considered the date fixed for redemption for purposes of calculating the
Redemption Price.

Redemption Notices shall be sent by the Regular Trustees on behalf of the Trust
(A) in respect of the Preferred Securities, to DTC or its nominee (or any
successor Clearing Agency or its


                                      A-5
<PAGE>

nominee) if the Global Certificates have been issued or, if Definitive
Preferred Security Certificates have been issued, to the Holders thereof, and
(B) in respect of the Common Securities, to the Holders thereof.

Subject to the foregoing and applicable law (including, without limitation,
United States federal securities laws), the Sponsor or any of its Affiliates may
at any time and from time to time purchase outstanding Preferred Securities by
tender, in the open market or by private agreement, and may resell such
Preferred Securities.

VOTING RIGHTS -- PREFERRED SECURITIES.

Except as provided under PARAGRAPHS 5(b) and 7 and as otherwise required by
law, the Preferred Securities Guarantee and the Declaration, the Holders of the
Preferred Securities will have no voting rights.

If an Event of Default occurs and is continuing, then the Holders of the
Preferred Securities, acting as a single class, will have the exclusive right to
appoint, remove or replace the Property Trustee during the continuance of any
Event of Default in accordance with SECTION 5.6(a)(ii) of the Declaration. Not
later than 30 days after such right to appoint, remove or replace the Property
Trustee arises, the Regular Trustees will convene a meeting for the purpose of
appointing, removing or replacing the Property Trustee. Subject to the
requirements set forth in this paragraph, the Holders of a Majority in
liquidation amount of the Preferred Securities, voting separately as a class,
may direct the time, method, and place of conducting any proceeding for any
remedy available to the Property Trustee, or exercising any trust or power
conferred upon the Property Trustee under the Declaration, including (i)
directing the time, method, place of conducting any proceeding for any remedy
available to the Property Trustee, or exercising any trust or power conferred on
the Property Trustee with respect to the Debentures, (ii) waive any past event
of default under the Indenture that is waivable under Section 513 of the
Indenture, (iii) exercise any right to rescind or annul a declaration that the
principal of all the Debentures shall be due and payable, (iv) or consent to
any, amendment, modification or termination of the Indenture or the Debentures,
where such consent is required; PROVIDED, HOWEVER, that where a consent under
the Indenture would require the consent or act of the Holders of greater than a
majority in principal amount of the Debentures affected thereby, the Property
Trustee may only give such consent or take such action at the direction of the
Holders of at least the proportion in liquidation amount of the Preferred
Securities that the relevant super majority represents of the total principal
amount of the Debentures outstanding. The Property Trustee shall not revoke any
action previously authorized or approved by a vote of the Holders of the
Preferred Securities. Other than with respect to directing the time, method and
place of conducting any remedy available to the Property Trustee as set forth
above, the Property Trustee shall not take any action in accordance with the
directions of the Holders of the Preferred Securities under this paragraph
unless the Property Trustee has obtained an opinion of tax counsel to the effect
that for the purposes of United States federal income tax the Trust will not
fail to be classified as a grantor trust. If the Property Trustee fails to
enforce its rights under the Declaration or the Debentures, to the fullest
extent permitted by law, any Holder of Preferred Securities may, after a period
of 30 days has elapsed from such Holder's written request to the Property
Trustee to enforce such


                                      A-6
<PAGE>

rights, institute a legal proceeding directly against the Debenture Issuer
to enforce the Property Trustee's rights under the Declaration or the
Debentures, to the fullest extent permitted by law without first instituting a
legal proceeding against the Property Trustee or any other Person.
Notwithstanding the foregoing, if an Event of Default has occurred and is
continuing and such event is attributable to the failure of the Debenture Issuer
to pay interest or principal on the Debentures on the date such interest or
principal is otherwise payable (or in the case of redemption, on the redemption
date), then a Holder of Preferred Securities may directly institute a proceeding
against the Debenture Issuer for enforcement of payment to such holder of the
principal of or interest on the Debentures having a principal amount equal to
the aggregate liquidation amount of the Preferred Securities of such Holder on
or after the respective due dates specified in the Debentures. In connection
with such direct action, the Debenture Issuer will be subrogated to the rights
of such Holder of Preferred Securities under the Declaration to the extent of
any payment made by the Debenture Issuer to such Holder of Preferred Securities
in connection with such direct action.

          The Property Trustee shall notify all Holders of the Preferred
          Securities of any notice of default received from the trustee
          under the Indenture with respect to the Debentures. Such
          notice shall state that such event of default also constitutes
          an Event of Default under the Declaration. Until any Event of
          Default has been cured, waived or eliminated, the Property
          Trustee will act solely on behalf of the holders of the
          Preferred Securities.

    Any approval or direction of Holders of Preferred Securities may be
given at a separate meeting of the Holders of the Preferred Securities convened
for such purpose, at a meeting of all of the Holders of the Securities or
pursuant to written consent. The Regular Trustees will cause a notice of any
meeting at which the Holders of the Preferred Securities are entitled to vote to
be mailed to each Holder of record of Preferred Securities. Each such notice
will include a statement setting forth (i) the date of such meeting, (ii) a
description of any resolution proposed for adoption at such meeting on which
such Holders are entitled to vote and (iii) instructions for the delivery of
proxies or consents.

          No vote or consent of the Holders of the Preferred Securities
          will be required for the Trust to redeem and cancel the
          Preferred Securities or to distribute the Debentures in
          accordance with the Declaration and the terms of the
          Securities.

          Notwithstanding that Holders of the Preferred Securities are
          entitled to vote or consent under any of the circumstances
          described above, any of the Preferred Securities that are
          owned by the Sponsor or any Affiliate of the Sponsor shall not
          be entitled to vote or consent and shall, for purposes of such
          vote or consent, be treated as if they were not outstanding.

VOTING RIGHTS -- COMMON SECURITIES.

Except as provided under PARAGRAPHS 6(b), 6(c) and 7, and as otherwise
required by law and the Declaration, the Holders of the Common Securities will
have no voting rights.



                                      A-7
<PAGE>

The Holders of the Common Securities are entitled, in accordance with
Article Five of the Declaration, to vote to appoint, remove or replace any
Trustee or to increase or decrease the number of Trustees, subject to the
exclusive right of the Holders of the Preferred Securities to appoint, remove or
replace the Property Trustee as provided in PARAGRAPH 5(b).

Subject to SECTION 2.6 of the Declaration and to the rights of the Holders
of the Preferred Securities and only after any Event of Default with respect to
the Preferred Securities has been cured, waived or otherwise eliminated, and
subject to the requirements of the second to last sentence of this paragraph,
the Holders of a Majority in liquidation amount of the Common Securities, voting
separately as a class, may direct the time, method and place of conducting any
proceeding for any remedy available to the Property Trustee, or exercising any
trust or power conferred upon the Property Trustee under the Declaration,
including (i) directing the time, method and place of conducting any proceeding
for any remedy available to the Debenture Trustee, or exercising any trust or
power conferred on the Debenture Trustee with respect to the Debentures, (ii)
waiving any past default and its consequences that is waivable under SECTION 513
of the Indenture, or (iii) exercising any right to rescind or annul a
declaration that the principal of all the Debentures shall be due and payable,
PROVIDED, HOWEVER, that, where a consent or action under the Indenture would
require the consent or act of the Holders of all of the outstanding Common
Securities, the Property Trustee may only give such consent or take such action
at the direction of the Holders of all Common Securities. If an Event of Default
has occurred and is continuing, the Holder of Common Securities will be deemed
to have waived any right to take any action with respect to the Event of Default
until the Event of Default has been cured, waived or eliminated. Pursuant to
this PARAGRAPH 6(c), the Property Trustee shall not revoke any action previously
authorized or approved by a vote of the Holders of the Preferred Securities.
Other than with respect to directing the time, method and place of conducting
any remedy available to the Property Trustee or the Debenture Trustee as set
forth above, the Property Trustee shall not take any action in accordance with
the directions of the Holders of the Common Securities under this paragraph
unless the Property Trustee has obtained an opinion of tax counsel to the effect
that for the purposes of United States federal income tax the Trust will not
fail to be classified as a grantor trust. If the Property Trustee fails to
enforce its rights under the Declaration, to the fullest extent permitted by
law, any Holder of Common Securities may, after a period of 30 days has elapsed
from such Holder's written request to the Property Trustee to enforce such
rights, institute a legal proceeding directly against any Person to enforce the
Property Trustee's rights under the Declaration, without first instituting a
legal proceeding against the Property Trustee or any other Person.

          Any approval or direction of the Holders of the Common
          Securities may be given at a separate meeting of the Holders
          of the Common Securities convened for such purpose, at a
          meeting of all of the Holders of the Securities or pursuant to
          written consent. The Regular Trustees will cause a notice of
          any meeting at which the Holders of Common Securities are
          entitled to vote to be mailed to each Holder of record of the
          Common Securities. Each such notice will include a statement
          setting forth (i) the date of such meeting to be taken, (ii) a
          description of any resolution proposed for adoption at such
          meeting on which such Holders are entitled to vote and (iii)
          instructions for the delivery of proxies or consents.

                                      A-8
<PAGE>

          No vote or consent of the Holders of the Common Securities
          will be required for the Trust to redeem and cancel Common
          Securities or to distribute the Debentures in accordance with
          the Declaration and the terms of the Securities.

AMENDMENTS TO DECLARATION AND INDENTURE.

In addition to any requirements under SECTION 12.1 of the Declaration
(including, without limitation, those specified in SECTION 12.1(a)(i)), if any
proposed amendment to the Declaration provides for, or the Regular Trustees
otherwise propose to effect, (i) any action that would materially adversely
affect the powers, preferences or special rights of the Preferred Securities,
whether by way of amendment to the Declaration or otherwise, or (ii) the
dissolution, winding-up or termination of the Trust, other than as described in
SECTION 8.1 of the Declaration, then the Holders of the Preferred Securities
voting together as a single class, will be entitled to vote on such amendment or
proposal (but not on any other amendment or proposal) and such amendment or
proposal shall not be effective except with the approval of the Holders of at
least 66-2/3% in liquidation amount of the Preferred Securities, voting together
as a single class, provided (x) if any amendment or proposal referred to in
clause (i) above would materially adversely affect only the Preferred Securities
or the Common Securities, then only the affected class will be entitled to vote
on such amendment or proposal and such amendment or proposal shall not be
effective except with the approval of 66-2/3% in liquidation amount of such
class of Securities and (y) a reduction of the aggregate liquidation amount or
Distribution rate, a change in the payment dates or maturities of the Preferred
Securities or a reduction in the percentage in the liquidation amount of
outstanding Preferred Securities, the consent of the Holders of which is
required for an amendment to the Declaration shall not be permitted without the
consent of each Holder of Preferred Securities.

In the event the consent of the Property Trustee, as the holder of the
Debentures is required under the Indenture with respect to any amendment,
modification or termination of the Indenture or the Debentures, the Property
Trustee shall request the direction of the Holders of the Preferred Securities
with respect to such amendment, modification or termination and shall vote with
respect to such amendment, modification or termination as directed by a Majority
in liquidation amount of the Preferred Securities, voting together as a single
class; PROVIDED, HOWEVER, that where a consent or action under the Indenture
would require the consent or act of Holders of greater than a majority in
principal amount of Debentures affected thereby, the Property Trustee may only
give such consent or take such action at the written direction of at least the
proportion in liquidation amount of Holders of Preferred Securities that the
relevant super majority represents of the total principal amount of Debentures
outstanding; provided, further, that the Property Trustee shall not take any
action in accordance with the directions of the Holders of the Securities under
this PARAGRAPH 7(b) unless the Property Trustee has obtained an opinion of tax
counsel to the effect that for the purposes of United States federal income tax
the Trust will not be classified as other than a grantor trust A waiver of an
Event of Default under the Indenture shall constitute a waiver of the
corresponding Event of Default under this Declaration.

PRO RATA.



                                      A-9
<PAGE>

     A reference in these terms of the Securities to any payment, distribution
or treatment as being "Pro Rata" shall mean pro rata to each Holder of
Securities according to the aggregate liquidation amount of the Securities held
by the relevant Holder in relation to the aggregate liquidation amount of all
Securities outstanding unless, in relation to a payment, an Event of Default has
occurred and is continuing, in which case any funds available to make such
payment shall be paid first to each Holder of the Preferred Securities pro rata
according to the aggregate liquidation amount of Preferred Securities held by
the relevant Holder relative to the aggregate liquidation amount of all
Preferred Securities outstanding, and only after satisfaction of all amounts
owed to the Holders of the Preferred Securities, to each Holder of Common
Securities pro rata according to the aggregate liquidation amount of Common
Securities held by the relevant Holder relative to the aggregate liquidation
amount of all Common Securities outstanding.

RANKING.

     The Preferred Securities rank pari passu, and payment thereon shall be made
Pro Rata, with the Common Securities except that, where an Event of Default
occurs and is continuing, the rights of Holders of the Common Securities to
payment in respect of Distributions and payments upon liquidation, redemption
and otherwise are subordinated to the rights to payment of the Holders of the
Preferred Securities.

LISTING.

     The Regular Trustees shall use their best efforts to cause the Preferred
Securities to be listed on the New York Stock Exchange, Inc.

ACCEPTANCE OF SECURITIES GUARANTEE AND INDENTURE.

     Each Holder of the Preferred Securities and the Common Securities, by the
acceptance thereof, agrees to the provisions of the Preferred Securities
Guarantee and the Common Securities Guarantee, respectively, including the
subordination provisions therein and to the provisions of the Indenture.

NO PREEMPTIVE RIGHTS.

     The Holders of the Securities shall have no preemptive or similar rights to
subscribe for any additional securities.

MISCELLANEOUS.

     These terms constitute a part of the Declaration.

     The Sponsor will provide a copy of the Declaration and the Preferred
Securities Guarantee and the Indenture to any Holder without charge on written
request to the Trust at its principal place of business. These terms and the
rights of the parties hereunder shall be governed by and interpreted in
accordance with the laws of the State of Delaware, and all rights and


                                      A-10
<PAGE>

remedies shall be governed by such laws without regard to principles of
conflict of laws.









                                      A-11
<PAGE>


                                     ANNEX I

     This Preferred Security is a Global Certificate within the meaning of the
Declaration hereinafter referred to and is registered in the name of The
Depository Trust Company (the "DTC") or a nominee of DTC. This Preferred
Security is exchangeable for Preferred Securities registered in the name of a
person other than DTC or its nominee only in the limited circumstances described
in the Declaration, and no transfer of this Preferred Security (other than a
transfer of this Preferred Security as a whole by DTC to a nominee of DTC or by
a nominee of DTC to DTC or another nominee of DTC) may be registered except in
limited circumstances.

     Unless this Preferred Security is presented by an authorized representative
of The Depository Trust Company (55 Water Street, New York) to the Trust or its
agent for registration of transfer, exchange or payment, and any Preferred
Security issued is registered in the name of Cede & Co. or such other name as
requested by an authorized representative of The Depository Trust Company and
any payment hereon is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL since the registered owner
hereof, Cede & Co., has an interest herein.


CERTIFICATE NUMBER                                NUMBER OF PREFERRED SECURITIES

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

                                                             CUSIP NO. 668034200

                   Certificate Evidencing Preferred Securities
                                       of
                       NORTHWESTERN CAPITAL FINANCING III
                        8.10% Trust Preferred Securities
                 (liquidation amount $25 per Preferred Security)

     NORTHWESTERN CAPITAL FINANCING III, a business trust formed under the laws
of the State of Delaware (the "TRUST"), hereby certifies that ___________ (the
"HOLDER") is the registered owner of _____________ preferred securities of the
Trust representing undivided beneficial interests in the assets of the Trust
designated the 8.10% Trust Preferred Securities (liquidation amount $25 per
Preferred Security) (the "PREFERRED SECURITIES"). The Preferred Securities are
transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer. The designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Preferred Securities
represented hereby are issued and shall in all respects be subject to the
provisions of the Amended and Restated Declaration of Trust of the Trust, dated
as of January 31, 2002, as the same may be amended from time to time (the
"DECLARATION"), including the designation of the terms of the Securities as set
forth in EXHIBIT A to the Declaration. Capitalized terms used herein but not
defined shall have the meanings given them in the Declaration.

     The Holder is entitled to the benefits of the Preferred Securities
Guarantee to the extent



                                      A-12
<PAGE>

provided therein. The Sponsor will provide a copy of the Declaration, the
Preferred Securities Guarantee and the Indenture to any Holder without charge
upon written request to the Trust at its principal place of business.

     Upon receipt of this certificate, the Holder is bound by the Declaration
and is entitled to the benefits thereunder.

     By acceptance, the Holder agrees to treat, for United States federal income
tax purposes, the Debentures as indebtedness and the Preferred Securities as
evidence of undivided beneficial ownership in the Debentures.

     Unless the Property Trustee's Certificate of Authentication hereon has been
properly executed, these Preferred Securities shall not be entitled to any
benefit under the Declaration or be valid or obligatory for any purpose.

     IN WITNESS WHEREOF, the Trust has executed this certificate this _____ day
of _________, 2002.


                                    NORTHWESTERN CAPITAL FINANCING III


                                    By:
                                        ------------------------------
                                        as Regular Trustee


                PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION

     This is one of the Preferred Securities referred to in the within-mentioned
Declaration.


Dated:             ,     2002                  as Property Trustee
       ------------  ---


                                               By:
                                                   -----------------------
                                                   Authorized Signatory



                                      A-13
<PAGE>


                                   ASSIGNMENT

FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
Security Certificate to:



(Insert assignee's social security or tax identification number)



(Insert address and zip code of assignee) and irrevocably appoints _____________

agent to transfer this  Preferred  Security  Certificate on the books of the
Trust.  The agent may  substitute  another to act for him or her.

Date: __________________________

Signature: ______________________
(Sign exactly as your name appears on the other side of this Preferred
Security Certificate)




                                      A-14
<PAGE>

                                    ANNEX II

     THIS SECURITY IS NOT TRANSFERABLE EXCEPT AS PROVIDED IN THE DECLARATION (AS
DEFINED BELOW)


CERTIFICATE NUMBER                                   NUMBER OF COMMON SECURITIES

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


                    Certificate Evidencing Common Securities
                                       of
                       NORTHWESTERN CAPITAL FINANCING III
                          8.10% Trust Common Securities
                  (liquidation amount $25 per Common Security)


     NORTHWESTERN CAPITAL FINANCING III, a business trust formed under the laws
of the State of Delaware (the "TRUST"), hereby certifies that
__________________________ (the "HOLDER"), is the registered owner of
_______________________________ common securities of the Trust representing
undivided beneficial interests in the assets of the Trust designated the 8.10%
Trust Common Securities (liquidation amount $25 per Common Security) (the
"COMMON SECURITIES"). The designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Common Securities represented
hereby are issued and shall in all respects be subject to the provisions of the
Amended and Restated Declaration of Trust of the Trust, dated as of January 31,
2002, as the same may be amended from time to time (the "DECLARATION"),
including the designation of the terms of the Securities as set forth in EXHIBIT
A to the Declaration. Capitalized terms used herein but not defined shall have
the meanings given them in the Declaration.

     The Holder is entitled to the benefits of the Common Securities Guarantee
to the extent provided therein. The Sponsor will provide a copy of the
Declaration, the Common Securities Guarantee and the Indenture to any Holder
without charge upon written request to the Trust at its principal place of
business.

     Upon receipt of this certificate, the Holder is bound by the Declaration
and is entitled to the benefits thereunder.

     By acceptance, the Holder agrees to treat for United States federal income
tax purposes the Debentures as indebtedness and the Common Securities as
evidence of undivided beneficial ownership in the Debentures.




                                      A-15
<PAGE>

     IN WITNESS WHEREOF, the Trust has executed this certificate this _____ day
of _________, 2002.


                                    NORTHWESTERN CAPITAL FINANCING III


                                    By:
                                        ------------------------------
                                        as Regular Trustee


                PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION

     This is one of the Common Securities referred to in the within-mentioned
Declaration.



Dated:             ,     2002                  as Property Trustee
       ------------  ---


                                               By:
                                                   -----------------------
                                                   Authorized Signatory



                                      A-16
<PAGE>


                                   ASSIGNMENT

FOR VALUE RECEIVED, the undersigned assigns and transfers this Common Security
Certificate to:



(Insert assignee's social security or tax identification number)



(Insert address and zip code of assignee) and irrevocably appoints _____________

agent to transfer this Common Security Certificate on the books of the Trust.
The agent may substitute another to act for him or her.

Date: __________________________

Signature: ______________________
(Sign exactly as your name appears on the other side of this Common
Security Certificate)



                                      A-17
<PAGE>




                                    EXHIBIT B

                              SPECIMEN OF DEBENTURE



<PAGE>


                                    EXHIBIT C

                             UNDERWRITING AGREEMENT



<PAGE>


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




                       NORTHWESTERN CAPITAL FINANCING III
                      (a Delaware statutory business trust)





                            NORTHWESTERN CORPORATION
                            (a Delaware corporation)




                      4,000,000 TRUST PREFERRED SECURITIES





                              8.10% TRUST PREFERRED
                                   SECURITIES
              (Liquidation Amount $25 Per Trust Preferred Security)



                             UNDERWRITING AGREEMENT










Dated:  January 24, 2002



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

<Page>

                                Table of Contents

<Table>
<S>             <C>                                                                                               <C>
PURCHASE AGREEMENT

Section 1.        Representations and Warranties..................................................................3
         (a)    Representations and Warranties by the Company and the Trust.......................................3
                (i)      Compliance with Registration Requirements................................................4
                (ii)     Incorporated Documents...................................................................4
                (iii)    Independent Accountants..................................................................5
                (iv)     Financial Statements.....................................................................5
                (v)      No Material Adverse Change in Business...................................................5
                (vi)     Good Standing of the Company.............................................................5
                (vii)    Good Standing of Subsidiaries............................................................6
                (viii)   Existence of Trust.......................................................................6
                (ix)     Common Securities........................................................................6
                (x)      Authorization of Declaration.............................................................6
                (xi)     Guarantee Agreements.....................................................................7
                (xii)    Preferred Securities.....................................................................7
                (xiii)   Authorization of Indenture...............................................................7
                (xiv)    Authorization of Debentures..............................................................7
                (xv)     Authorization of Agreement...............................................................8
                (xvi)    Capitalization...........................................................................8
                (xvii)   Absence of Defaults and Conflicts........................................................8
                (xviii)  Absence of Labor Dispute.................................................................9
                (xix)    Absence of Proceedings...................................................................9
                (xx)     Accuracy of Exhibits.....................................................................9
                (xxi)    Possession of Intellectual Property......................................................9
                (xxii)   Absence of Further Requirements.........................................................10
                (xxiii)  Possession of Licenses and Permits......................................................10
                (xxiv)   Title to Property.......................................................................10
                (xxv)    Investment Company Act..................................................................10
                (xxvi)   Environmental Laws......................................................................11
                (xxvii)  FERC....................................................................................11
         (b)    Officers' Certificates...........................................................................11

Section 2.        Sale and Delivery to Underwriters; Closing.....................................................11
         (a)    Initial Preferred Securities.....................................................................11
         (b)    Option Preferred Securities......................................................................11
         (c)    Payment..........................................................................................12
         (d)    Denominations; Registration......................................................................13

Section 3.        Covenants of the Company and the Trust.........................................................13
         (a)    Compliance with Securities Regulations and Commission Requests...................................13
         (b)    Filing of Amendments.............................................................................13
         (c)    Delivery of Registration Statements..............................................................14
         (d)    Delivery of Prospectus...........................................................................14
</Table>


                                       i
<Page>

<Table>
<S>             <C>                                                                                              <C>
         (e)    Continued Compliance with Securities Laws........................................................14
         (f)    Blue Sky Qualifications..........................................................................14
         (g)    Rule 158.........................................................................................15
         (h)    Use of Proceeds..................................................................................15
         (i)    Listing..........................................................................................15
         (j)    Restriction on Sale of Securities................................................................15
         (k)    Reporting Requirements...........................................................................15

Section 4.        Payment of Expenses............................................................................15
         (a)    Expenses.........................................................................................15
         (b)    Termination of Agreement.........................................................................16

Section 5.        Conditions of Underwriters' Obligations........................................................16
         (a)    Effectiveness of Registration Statement..........................................................16
         (b)    Opinions of Counsel for Company..................................................................16
         (c)    Opinion of Special Delaware Counsel for the Trust and the Company................................17
         (d)    Opinions of Counsel for the Property Trustee, the Debenture Trustee and the Guarantee Trustee....17
         (e)    Opinion of Counsel for Underwriters..............................................................17
         (f)    Officers' Certificates...........................................................................17
         (g)    Accountants' Comfort Letters.....................................................................18
         (h)    Bring-down Comfort Letters.......................................................................18
         (i)    Approval of Listing..............................................................................18
         (j)    Maintenance of Rating............................................................................18
         (k)    Conditions to Purchase Option Preferred Securities...............................................18
         (l)    Additional Documents.............................................................................20
         (m)    Termination of Agreement.........................................................................20

Section 6.        Indemnification................................................................................20
         (a)    Indemnification of Underwriters..................................................................20
         (b)    Indemnification of Trust by Company..............................................................21
         (c)    Indemnification of Trust, Company, Directors and Officers........................................21
         (d)    Actions against Parties; Notification............................................................21
         (e)    Settlement without Consent if Failure to Reimburse...............................................22

Section 7.        Contribution...................................................................................22

Section 8.        Representations, Warranties and Agreements to Survive Delivery.................................24

Section 9.        Termination of Agreement.......................................................................24
         (a)    Termination; General.............................................................................24
         (b)    Liabilities......................................................................................24

Section 10.       Default by One or More of the Underwriters.....................................................25

Section 11.       Notices........................................................................................26

Section 12.       Parties........................................................................................26
</Table>


                                       ii
<Page>

<Table>
<S>             <C>                                                                                              <C>
Section 13.       GOVERNING LAW AND TIME.........................................................................26

Section 14.       Effect of Headings.............................................................................26
</Table>







                                      iii
<PAGE>


<Table>
<S>                                                                                                       <C>
SCHEDULES
         Schedule  A - List of Underwriters...............................................................Sch A-1
         Schedule  B - List of Subsidiaries...............................................................Sch B-1

EXHIBITS

         Exhibit  A - Forms of Opinions of Company's Special Counsel........................................A-1-1
         Exhibit  B - Form of Opinion of Company's Counsel....................................................B-1
         Exhibit  C - Form of Opinion of Special Delaware Counsel for the Trust...............................C-1
</Table>





                                       iv
<PAGE>




                       NORTHWESTERN CAPITAL FINANCING III
                      (a Delaware statutory business trust)



                            NORTHWESTERN CORPORATION
                            (a Delaware corporation)

                               4,000,000 shares of



                                      8.10%

                                 TRUST PREFERRED
                                   SECURITIES


                             UNDERWRITING AGREEMENT
                             ----------------------

                                                                January 24, 2002

Morgan Stanley & Co. Incorporated
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
         Incorporated
SALOMON SMITH BARNEY INC.,
as Representatives of the several Underwriters named in Schedule A hereto
c/o  Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York  10036

Ladies and Gentlemen:

         Northwestern Capital Financing III (the "Trust"), a statutory business
trust organized under the Business Trust Act (the "Delaware Act") of the State
of Delaware (Chapter 38, Title 12 of the Delaware Code, 12 Del. C. ss. 3801 et
seq.) confirms its agreement with Morgan Stanley & Co. Incorporated, Merrill
Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Salomon Smith
Barney Inc. and each of the Underwriters named in Schedule A hereto
(collectively the "Underwriters," which term shall also include any underwriter
substituted as hereinafter provided in Section 10 hereof), for whom Morgan
Stanley & Co. Incorporated, Merrill Lynch, Pierce, Fenner & Smith Incorporated
and Salomon Smith Barney Inc. are acting as Representatives (in such capacity,
the "Representatives") with respect to the issue and sale by the Trust and the
purchase by the Underwriters, acting severally and not jointly, of 8.10% Trust
Preferred Securities (liquidation amount $25 per preferred security) in the
respective numbers set forth in said Schedule A hereto (the "Initial Preferred
Securities"), and with respect to the grant by the Trust to the Underwriters,
acting severally and not jointly, of the option described in Section 2(b) hereof
to purchase all or any part of the additional Preferred Securities described
below to cover over-allotments, if any. The aforesaid 4,000,000 Initial



<PAGE>

Preferred Securities and all or part of the 600,000 Preferred Securities subject
to the option described in Section 2(b) hereof (the "Option Preferred
Securities") are hereinafter called, collectively, the "Preferred Securities."
The Preferred Securities are more fully described in the Prospectus (as defined
below).

         The Preferred Securities will be guaranteed by NorthWestern Corporation
(a Delaware corporation) (the "Company"), to the extent set forth in the
Prospectus, with respect to distributions and amounts payable upon liquidation
or redemption (the "Preferred Securities Guarantee") pursuant to the Preferred
Securities Guarantee Agreement (the "Preferred Securities Guarantee Agreement")
to be dated as of the Closing Time (as defined herein), executed and delivered
by the Company and Wilmington Trust Company (the "Guarantee Trustee"). The
Company and the Trust each understand that the Underwriters propose to make a
public offering of the Preferred Securities as soon as the Representatives deem
advisable after this Agreement has been executed and delivered, and the
Declaration (as defined herein), the Indenture (as defined herein), and the
Preferred Securities Guarantee Agreement have been qualified under the Trust
Indenture Act of 1939, as amended (the "1939 Act"). The entire proceeds from the
sale of the Preferred Securities will be combined with the entire proceeds from
the sale by the Trust to the Company of its common securities (the "Common
Securities") guaranteed by the Company, to the extent set forth in the
Prospectus, with respect to distributions and amounts payable upon liquidation
or redemption pursuant to the Common Securities Guarantee Agreement (the "Common
Securities Guarantee Agreement" and, together with the Preferred Securities
Guarantee Agreement, the "Guarantee Agreements"), to be dated as of the Closing
Time, executed and delivered by the Company for the benefit of the holders from
time to time of the Common Securities, and will be used by the Trust to purchase
$103,092,800 aggregate principal amount of 8.10% Junior Subordinated Deferrable
Interest Debentures due January 15, 2032 (the "Debentures") issued by the
Company and, if all or part of the Option Preferred Securities are purchased, up
to approximately an additional $15,463,925 aggregate principal amount of
Debentures (the "Option Debentures"). The aforesaid Initial Debentures and
Option Debentures are hereinafter called, collectively, the "Debentures." The
Preferred Securities and the Common Securities will be issued pursuant to the
Amended and Restated Declaration of Trust of the Trust, to be dated as of the
Closing Time (the "Declaration"), among the Company, as Sponsor, Wilmington
Trust Company, as property trustee (the "Property Trustee"), and Merle D. Lewis
and Richard R. Hylland, as administrative trustees (the "Administrative
Trustees" and together with the Property Trustee, the "Trustees"), and the
holders from time to time of undivided beneficial interests in the assets of the
Trust. The Debentures will be issued pursuant to an Indenture, dated as of
August 1, 1995 (the "Base Indenture"), between the Company and JPMorgan Chase
Bank (as successor to The Chase Manhattan Bank, N.A.), as trustee (the
"Debenture Trustee"), and a supplement to the Base Indenture, to be dated as of
the Closing Time (the "Supplemental Indenture," and together with the Base
Indenture as heretofore supplemented and amended, the "Indenture"), between the
Company and the Debenture Trustee. The Preferred Securities, the Preferred
Securities Guarantee and the Debentures are collectively referred to herein as
the "Securities." Capitalized terms used herein without definition have the
respective meanings specified in the Prospectus.

         The Company and the Trust have filed with the Securities and Exchange
Commission (the "Commission") registration statements on Form S-3 (Nos.
333-58491 and 333-82707), including a prospectus, relating to securities of the
Company and the Trust. Such registration



                                       2
<PAGE>

statements were filed under the Securities Act of 1933, as amended (the "1933
Act"), and have become effective. Promptly after execution and delivery of this
Agreement, the Company will prepare and file with the Commission a prospectus in
accordance with the provisions of paragraph (b) of Rule 424 ("Rule 424(b)") of
the rules and regulations of the Commission under the 1933 Act (the "1933 Act
Regulations"). The prospectus included in the registration statement No.
333-82707 at the time it became effective, as supplemented to reflect the terms
of the Securities and the terms of the offering of the Securities, as first
filed with the Commission pursuant to and in accordance with Rule 424(b) under
the 1933 Act Regulations, including all material incorporated by reference
therein pursuant to Item 12 of Form S-3 under the 1933 Act, is hereinafter
referred to as the "Prospectus." No document has been or will be prepared or
distributed in reliance on Rule 434 under the Act. "Preliminary prospectus"
shall be deemed to refer to (i) any prospectus used before the Registration
Statement (as defined herein) became effective and (ii) any prospectus that
omitted, as applicable, information pursuant to Rule 430A(b) of the 1933 Act
Regulations or other information to be included upon pricing in a prospectus
filed with the Commission pursuant to Rule 424(b) and was used after such
effectiveness and prior to the initial delivery of the Prospectus to the
underwriters by the Company. Such registration statements, including the
exhibits thereto (other than Form T-1), schedules thereto, if any, and the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the 1933 Act, at the time registration statement No. 333-82707 became
effective and including the prospectus included in such registration statement
at the time it became effective, as supplemented to reflect the terms of the
Securities and the terms of the offering of the Securities, as first filed with
the Commission pursuant to and in accordance with Rule 424(b) under the 1933 Act
Regulations, are collectively herein called the "Registration Statement",
provided that references to the Registration Statement at the time it became
effective shall not be deemed to include the information first filed pursuant to
and in accordance with Rule 424(b) under the 1933 Act Regulations. For purposes
of this Agreement, all references to the Registration Statement, any preliminary
prospectus, the Prospectus or any amendment or supplement to any of the
foregoing shall be deemed to include the copy filed with the Commission pursuant
to its Electronic Data Gathering, Analysis and Retrieval system ("EDGAR").

         All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" in the
Registration Statement, any preliminary prospectus or the Prospectus (or other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
by reference in the Registration Statement, any preliminary prospectus or the
Prospectus, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement, any preliminary
prospectus or the Prospectus shall be deemed to mean and include the filing of
any document under the Securities Exchange Act of 1934 (the "1934 Act") which is
incorporated by reference in the Registration Statement, any preliminary
prospectus or the Prospectus, as the case may be.

         SECTION 1. REPRESENTATIONS AND WARRANTIES.

         (a) REPRESENTATIONS AND WARRANTIES BY THE COMPANY AND THE TRUST. The
Company and the Trust jointly and severally represent and warrant to each
Underwriter as of the date



                                       3
<PAGE>

hereof, as of the Closing Time referred to in Section 2(c) hereof, and as of
each Date of Delivery (if any) referred to in Section 2(b) hereof, and agrees
with each Underwriter, as follows:

             (i) COMPLIANCE WITH REGISTRATION REQUIREMENTS. The Company meets
the requirements for use of Form S-3 under the 1933 Act. The Registration
Statement has become effective under the 1933 Act and no stop order suspending
the effectiveness of the Registration Statement has been issued under the 1933
Act and no proceedings for that purpose have been instituted or are pending or,
to the knowledge of the Company and the Trust, are contemplated by the
Commission, and any request on the part of the Commission for additional
information has been complied with.

         At the respective times the Registration Statement and any
post-effective amendments thereto became effective, at the time of the filing by
the Company of any annual report on Form 10-K, and at the Closing Time (and, if
any Option Securities are purchased, at the Date of Delivery), the Registration
Statement and any amendments and supplements thereto complied and will comply in
all material respects with the requirements of the 1933 Act and the 1933 Act
Regulations and the 1939 Act and the rules and regulations of the Commission
under the 1939 Act (the "1939 Act Regulations") and did not and will not contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading.
Neither the Prospectus nor any amendments or supplements thereto, at the time
the Prospectus or any such amendment or supplement was issued and at the Closing
Time (and, if any Option Securities are purchased, at the Date of Delivery),
included or will include an untrue statement of a material fact or omitted or
will omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The representations and warranties in this subsection shall not
apply (A) to statements in or omissions from the Registration Statement or
Prospectus made in reliance upon and in conformity with information furnished to
the Trust or the Company in writing by any Underwriter through Morgan Stanley &
Co. Incorporated expressly for use in the Registration Statement or Prospectus
or (B) to that part of the Registration Statement that constitutes the
Statements of Eligibility and Qualification on Form T-1 (the "Form T-1") under
the Trust Indenture Act of the Debenture Trustee, the Property Trustee and the
Guarantee Trustee.

         Each preliminary prospectus and the prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment thereto,
or filed pursuant to Rule 424 under the 1933 Act, complied when so filed in all
material respects with the 1933 Act Regulations and each preliminary prospectus
and the Prospectus delivered to the Underwriters for use in connection with this
offering was identical to the electronically transmitted copies thereof filed
with the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.

             (ii) INCORPORATED DOCUMENTS. The documents incorporated or deemed
to be incorporated by reference in the Registration Statement and the
Prospectus, when they were or hereafter are filed with the Commission, complied
and will comply in all material respects with the requirements of the 1933 Act
and the 1933 Act Regulations or the 1934 Act and the rules and regulations of
the Commission thereunder (the "1934 Act Regulations"), as applicable, and, when
read together with the other information in the Prospectus, at the time the
Registration


                                       4
<PAGE>

Statement became effective, at the time the Prospectus was issued and at the
Closing Time (and, if any Option Securities are purchased, at the Date of
Delivery), did not and will not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading.

             (iii) INDEPENDENT ACCOUNTANTS. The accountants who certified the
financial statements and supporting schedules included in the Registration
Statement and Prospectus are independent public accountants as required by the
1933 Act and the 1933 Act Regulations.

             (iv) FINANCIAL STATEMENTS. The financial statements included in the
Registration Statement and the Prospectus, together with the related schedules
and notes, present fairly the financial position of the Company and its
consolidated subsidiaries at the dates indicated and the statement of
operations, stockholders' equity and cash flows of the Company and its
consolidated subsidiaries for the periods specified; said financial statements
have been prepared in conformity with generally accepted accounting principles
("GAAP") applied on a consistent basis (except that the unaudited financial
statements may be subject to normal year-end adjustments) throughout the periods
involved. The supporting schedules, if any, included in the Registration
Statement present fairly in accordance with GAAP the information required to be
stated therein. The selected financial data and any summary financial
information included in the Prospectus present fairly the information shown
therein and have been compiled on a basis consistent with that of the audited
and unaudited financial statements included in the Registration Statement. In
addition, any pro forma financial statements and the related notes thereto
included in the Registration Statement and the Prospectus, have been prepared in
accordance with the Commission's rules and guidelines with respect to pro forma
financial statements and have been properly compiled on the bases described
therein, and the assumptions used in the preparation thereof are reasonable and
the adjustments used therein are appropriate to give effect to the transactions
and circumstances referred to therein.

             (v) NO MATERIAL ADVERSE CHANGE IN BUSINESS. Since the respective
dates as of which information is given in the Registration Statement and the
Prospectus, except as otherwise stated therein, (A) there has been no material
adverse change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company and its subsidiaries
considered as one enterprise, whether or not arising in the ordinary course of
business (a "Material Adverse Effect"), (B) there have been no transactions
entered into by the Company or any of its subsidiaries, other than those in the
ordinary course of business, which are material with respect to the Company and
its subsidiaries considered as one enterprise, and (C) except for dividends on
the 4-1/2% Series and the 6-1/2% Series of preferred stock and regular quarterly
dividends on the Common Stock in amounts per share that are consistent with past
practice, there has been no dividend or distribution of any kind declared, paid
or made by the Company on any class of its capital stock.

             (vi) GOOD STANDING OF THE COMPANY. The Company has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of the State of Delaware and has corporate power and authority and
franchises to own or lease and operate its properties and to conduct its
business as described in the Prospectus and to enter into and perform its
obligations under this Agreement; and the Company is authorized as a
domesticated



                                       5
<PAGE>

foreign corporation to transact business, and is in good standing, in the State
of Nebraska and is duly qualified as a foreign corporation to transact business
and is in good standing in each other jurisdiction in which such qualification
is required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure so to qualify or to be in good
standing would not result in a Material Adverse Effect.

             (vii) GOOD STANDING OF SUBSIDIARIES. Each "significant subsidiary"
(as such term is defined in Rule 1-02 of Regulation S-X) of the Company and each
of Expanets, Inc., Blue Dot Services Inc., NorthWestern Growth Corporation and
CornerStone Propane Partners, L.P. (each, a "Subsidiary" and, collectively, the
"Subsidiaries") has been duly organized or formed and is validly existing as a
corporation or a limited partnership, as the case may be, in good standing under
the laws of its jurisdiction of incorporation or organization, has corporate or
partnership power and authority to own, lease and operate its properties and to
conduct its business as described in the Prospectus and is duly qualified as a
foreign corporation or limited partnership to transact business and is in good
standing in each jurisdiction in which such qualification is required, whether
by reason of the ownership or leasing of property or the conduct of business,
except where the failure so to qualify or to be in good standing would not
result in a Material Adverse Effect; except as otherwise disclosed in the
Registration Statement, all of the issued and outstanding shares of capital
stock or partnership interests, as the case may be, of each such Subsidiary have
been duly authorized and validly issued, are fully paid and non-assessable and
all of the capital stock or limited partnership interests, as the case may be,
of each Subsidiary owned by the Company, directly or through subsidiaries, is
owned free and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity; and none of the outstanding shares of capital
stock or limited partnership interests of any Subsidiary was issued in violation
of the preemptive or similar rights of any security holder of such Subsidiary.
The only subsidiaries of the Company are the subsidiaries listed on Schedule B
hereto.

             (viii) EXISTENCE OF TRUST. The Trust has been duly created and is
validly existing in good standing as a business trust under the Delaware Act, is
and will be treated as a "grantor trust" for federal income tax purposes under
existing law, has the business trust power and authority to conduct its business
as presently conducted and as described in the Prospectus and is not required to
be authorized to do business in any other jurisdiction.

             (ix) COMMON SECURITIES. The Common Securities have been duly
authorized by the Declaration and, when duly executed by the Trustee and
authenticated in the manner provided in the Declaration and issued and delivered
by the Trust to the Company in accordance with the terms of the Declaration and
against payment therefor as described in the Prospectus, will be validly issued
and (subject to the terms of the Declaration) fully paid undivided beneficial
interests in the assets of the Trust; the issuance of the Common Securities is
not subject to preemptive or other similar rights; and at the Closing Time, all
of the issued and outstanding Common Securities of the Trust will be directly
owned by the Company free and clear of any security interest, mortgage, pledge,
lien, encumbrance, claim or equity.

             (x) AUTHORIZATION OF DECLARATION. The Declaration has been duly
authorized by the Company and duly qualified under the 1939 Act and, when
validly executed and delivered by the Company and the Administrative Trustees,
and assuming the due authorization, execution and delivery of the Declaration by
the Delaware Trustee and the Property Trustee, the



                                       6
<PAGE>

Declaration will constitute a valid and binding obligation of the Company and
the Administrative Trustees, enforceable against the Company and the
Administrative Trustees in accordance with its terms, except as enforcement
thereof may be limited by bankruptcy, insolvency (including, without limitation,
all laws relating to fraudulent transfers), reorganization, moratorium or
similar laws affecting enforcement of creditors' rights generally or by general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law) or an implied covenant of good faith and fair
dealing, and except that rights to indemnification and contribution thereunder
may be limited by federal or state securities laws or public policy relating
thereto.

             (xi) GUARANTEE AGREEMENTS. The Preferred Securities Guarantee
Agreement has been duly authorized by the Company and duly qualified under the
1939 Act, the Common Securities Guarantee Agreement has been duly authorized by
the Company and, when validly executed and delivered by the Company, and
assuming due authorization, execution and delivery of the Guarantee Agreements
by the Guarantee Trustee, will constitute valid and binding obligations of the
Company, enforceable against the Company in accordance with their terms, except
as enforcement thereof may be limited by bankruptcy, insolvency (including,
without limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or similar laws affecting enforcement of creditors' rights generally
or by general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law) or an implied covenant of good
faith and fair dealing, and except that rights to indemnification and
contribution thereunder may be limited by federal or state securities laws or
public policy relating thereto.

             (xii) PREFERRED SECURITIES. The Preferred Securities have been duly
authorized by the Declaration and, when duly executed by the Trustees and
authenticated in the manner provided for in the Declaration and issued and
delivered pursuant to this Agreement against payment of the consideration set
forth herein, will be validly issued and (subject to the terms of the
Declaration) fully paid and non-assessable undivided beneficial interests in the
assets of the Trust; the issuance of the Preferred Securities is not subject to
preemptive or other similar rights; and holders of Preferred Securities will be
entitled to the same limitation of personal liability extended to stockholders
of private corporations for profit incorporated under the General Corporation
Law of the State of Delaware.

             (xiii) AUTHORIZATION OF INDENTURE. The Indenture has been duly
authorized by the Company and duly qualified under the 1939 Act and, when duly
executed and delivered by the Company and assuming the due authorization,
execution and delivery of the Indenture by the Debenture Trustee, will
constitute a valid and binding agreement of the Company, enforceable against the
Company in accordance with its terms, except as enforcement thereof may be
limited by bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or similar laws
affecting enforcement of creditors' rights generally or by general principles of
equity (regardless of whether enforcement is considered in a proceeding in
equity or at law) or an implied covenant of good faith and fair dealing, and
except that rights to indemnification and contribution thereunder may be limited
by federal or state securities laws or public policy relating thereto.

             (xiv) AUTHORIZATION OF DEBENTURES. The Debentures have been duly
authorized by the Company, and when executed by the Company, authenticated and
delivered by the



                                       7
<PAGE>

Debenture Trustee and issued and delivered by the Company in the manner provided
for in the Indenture and sold and paid for as provided in this Agreement, the
Debentures will constitute valid and binding obligations of the Company entitled
to the benefits of the Indenture and enforceable against the Company in
accordance with their terms, except as enforcement thereof may be limited by
bankruptcy, insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws affecting
enforcement of creditors' rights generally or by general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law) or an implied covenant of good faith and fair dealing, and except that
rights to indemnification and contribution thereunder may be limited by federal
or state securities laws or public policy relating thereto.

             (xv) AUTHORIZATION OF AGREEMENT. This Agreement has been duly
authorized, executed and delivered by the Company and the Trust.

             (xvi) CAPITALIZATION. The authorized, issued and outstanding
capital stock of the Company is as set forth in the Prospectus in the column
entitled "Actual" under the caption "Capitalization" (except for the Company's
issuance of 3.68 million shares of common stock in October 2001 and subsequent
issuances, if any, pursuant to this Agreement, pursuant to reservations,
agreements or employee benefit plans referred to in the Prospectus or pursuant
to the exercise of convertible securities or options referred to in the
Prospectus). The shares of issued and outstanding capital stock of the Company
have been duly authorized and validly issued and are fully paid and
non-assessable; none of the outstanding shares of capital stock of the Company
was issued in violation of the preemptive or other similar rights of any
securityholder of the Company.

             (xvii) ABSENCE OF DEFAULTS AND CONFLICTS. Neither the Company, any
of its subsidiaries nor the Trust is in violation of its charter or by-laws or
other organizational documents or in default in the performance or observance of
any obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, deed of trust, loan or credit agreement, note, lease or
other agreement or instrument to which the Company, any of its subsidiaries or
the Trust is a party or by which it or any of them may be bound, or to which any
of the property or assets of the Company, any subsidiary or the Trust is subject
(collectively, "Agreements and Instruments") except for such defaults that would
not result in a Material Adverse Effect; and the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated herein and in the Registration Statement (including the issuance
and sale of the Securities and the use of the proceeds from the sale of the
Securities as described in the Prospectus under the caption "Use of Proceeds")
and compliance by the Company and the Trust with their obligations hereunder
have been duly authorized by all necessary corporate action and do not and will
not, whether with or without the giving of notice or passage of time or both,
conflict with or constitute a breach of, or default or Repayment Event (as
defined below) under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company, any subsidiary
or the Trust pursuant to, the Agreements and Instruments (except for Repayment
Events or such conflicts, breaches or defaults or liens, charges or encumbrances
that would not result in a Material Adverse Effect), nor will such action result
in any violation of (A) the provisions of the charter or by-laws or other
organizational documents of the Company, any subsidiary or the Trust or (B) any
applicable law, statute, rule, regulation, judgment, order, writ or decree of
any government, government



                                       8
<PAGE>

instrumentality or court, domestic or foreign, having jurisdiction over the
Company, any subsidiary or the Trust or any of their assets, properties or
operations, except, in the case of clause (B) hereof, for such violations that
would not result in a Material Adverse Effect. As used herein, a "Repayment
Event" means any event or condition which gives the holder of any note,
debenture or other evidence of indebtedness (or any person acting on such
holder's behalf) the right to require the repurchase, redemption or repayment of
all or a portion of such indebtedness by the Company, any subsidiary or the
Trust prior to the scheduled maturity thereof or any other scheduled payment
date.

             (xviii) ABSENCE OF LABOR DISPUTE. No labor dispute with the
employees of the Company or any subsidiary exists or, to the knowledge of the
Company, is imminent, which may reasonably be expected to result in a Material
Adverse Effect.

             (xix) ABSENCE OF PROCEEDINGS. Other than as disclosed in the
Registration Statement, there is no action, suit, proceeding, inquiry or
investigation before or brought by any court or governmental agency or body,
domestic or foreign, now pending, or, to the knowledge of the Company or the
Trust, threatened, against or affecting the Company or any subsidiary, which is
required to be disclosed in the Registration Statement, or which might
reasonably be expected to result in a Material Adverse Effect, or which might
reasonably be expected to materially and adversely affect the properties or
assets thereof or the consummation of the transactions contemplated in this
Agreement or the performance by the Company or the Trust of its obligations
hereunder; the aggregate of all pending legal or governmental proceedings to
which the Company or any subsidiary is a party or of which any of their
respective property or assets is the subject which are not described in the
Registration Statement, including ordinary routine litigation incidental to the
business, could not reasonably be expected to result in a Material Adverse
Effect.

             (xx) ACCURACY OF EXHIBITS. There are no contracts or documents
which are required to be described in the Registration Statement, the Prospectus
or the documents incorporated by reference therein or to be filed as exhibits
thereto which have not been so described and filed as required.

             (xxi) POSSESSION OF INTELLECTUAL PROPERTY. The Company and its
subsidiaries own or possess, or can acquire on reasonable terms, adequate
patents, patent rights, licenses, inventions, copyrights, know-how (including
trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service marks,
trade names or other intellectual property (collectively, "Intellectual
Property") necessary to carry on the business now operated by them except in
cases in which the failure to own or possess such Intellectual Property would
not have a Material Adverse Effect and neither the Company nor any of its
subsidiaries has received any notice or is otherwise aware of any infringement
of or conflict with asserted rights of others with respect to any Intellectual
Property or of any facts or circumstances which would render any Intellectual
Property invalid or inadequate to protect the interest of the Company or any of
its subsidiaries therein, and which infringement, conflict, invalidity or
inadequacy, singly or in the aggregate, might reasonably be expected to result
in a Material Adverse Effect.


                                       9
<PAGE>

             (xxii) ABSENCE OF FURTHER REQUIREMENTS. No filing with, or
authorization, approval, consent, license, order, registration, qualification or
decree of, any court or governmental authority or agency is necessary or
required for the performance by the Company or the Trust of its obligations
hereunder, in connection with the offering, issuance or sale of the Securities
hereunder or the consummation of the transactions contemplated by this
Agreement, except such as have been already obtained, except as may be required
under the 1933 Act or the 1933 Act Regulations or state securities or Blue Sky
laws, except for the FERC Order (as defined herein) and except for the
qualification of the Indenture, the Declaration and the Guarantee Agreements
under the 1939 Act.

             (xxiii) POSSESSION OF LICENSES AND PERMITS. The Company and its
subsidiaries possess such permits, licenses, approvals, consents and other
authorizations (collectively, "Governmental Licenses") issued by the appropriate
federal, state, local or foreign regulatory agencies or bodies necessary to
conduct the business now operated by them, except where the failure to have such
Governmental Licenses would not, singly or in the aggregate, have a Material
Adverse Effect; the Company and its subsidiaries are in compliance with the
terms and conditions of all such Governmental Licenses, except where the failure
so to comply would not, singly or in the aggregate, have a Material Adverse
Effect; all of the Governmental Licenses are valid and in full force and effect,
except when the invalidity of such Governmental Licenses or the failure of such
Governmental Licenses to be in full force and effect would not have a Material
Adverse Effect; and neither the Company nor any of its subsidiaries has received
any notice of proceedings relating to the revocation or modification of any such
Governmental Licenses which, singly or in the aggregate, would result in a
Material Adverse Effect.

             (xxiv) TITLE TO PROPERTY. The Company and its subsidiaries have
good and marketable title to all material real property owned by the Company and
its subsidiaries and good title to all other material properties owned by them,
in each case, free and clear of all mortgages, pledges, liens, security
interests, claims, restrictions or encumbrances of any kind (a) except such as
are described in the Prospectus, (b) except for liens and encumbrances granted
under debt agreements identified in the Prospectus and (c) except such as would
not have a Material Adverse Effect; and all of the leases and subleases material
to the business of the Company and its subsidiaries, considered as one
enterprise, and under which the Company or any of its subsidiaries holds
properties described in the Prospectus, are in full force and effect, and
neither the Company nor any subsidiary has any notice of any material claim of
any sort that has been asserted by anyone adverse to the rights of the Company
or any subsidiary under any of the leases or subleases mentioned above, or
affecting or questioning the rights of the Company or such subsidiary to the
continued possession of the leased or subleased premises under any such lease or
sublease.

             (xxv) INVESTMENT COMPANY ACT. Neither the Company nor the Trust is,
and upon the issuance and sale of the Preferred Securities as herein
contemplated and the application of the net proceeds therefrom as described in
the Prospectus neither will be, an "investment company" or an entity
"controlled" by an "investment company" as such terms are defined in the
Investment Company Act of 1940, as amended (the "1940 Act") required to register
under the 1940 Act.


                                       10
<PAGE>

             (xxvi) ENVIRONMENTAL LAWS. Except as described in the Registration
Statement and except as would not, singly or in the aggregate, result in a
Material Adverse Effect, (A) neither the Company nor any of its subsidiaries is
in violation of any federal, state, local or foreign statute, law, rule,
regulation, ordinance, code, policy or rule of common law or any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent, decree or judgment, relating to pollution or protection of human
health, the environment (including, without limitation, ambient air, surface
water, groundwater, land surface or subsurface strata) or wildlife, including,
without limitation, laws and regulations relating to the release or threatened
release of chemicals, pollutants, contaminants, wastes, toxic substances,
hazardous substances, petroleum or petroleum products (collectively, "Hazardous
Materials") or to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Materials (collectively,
"Environmental Laws"), (B) the Company and its subsidiaries have all permits,
authorizations and approvals required under any applicable Environmental Laws
and are each in compliance with their requirements, (C) there are no pending or,
to the knowledge of the Company, threatened administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigation or proceedings relating to any
Environmental Law against the Company or any of its subsidiaries and (D) there
are no events or circumstances that might reasonably be expected to form the
basis of an order for clean-up or remediation, or an action, suit or proceeding
by any private party or governmental body or agency, against or affecting the
Company or any of its subsidiaries relating to Hazardous Materials or any
Environmental Laws.

             (xxvii) FERC. The Federal Energy Regulatory Commission ("FERC") has
issued an appropriate order or orders with respect to the issuance and sale of
the Securities in accordance with this Agreement ("FERC Order"); the FERC Order
is in full force and effect; and the issuance and sale of the Securities are in
conformity with the terms of the FERC Order.

         (b) OFFICERS' CERTIFICATES. Any certificate signed by any officer of
the Company or any of its subsidiaries or the Trust delivered to the
Representatives or to counsel for the Underwriters shall be deemed a
representation and warranty by the Company or the Trust, respectively, to each
Underwriter as to the matters covered thereby.

         SECTION 2. SALE AND DELIVERY TO UNDERWRITERS; CLOSING.

         (a) INITIAL PREFERRED SECURITIES. On the basis of the representations
and warranties herein contained and subject to the terms and conditions herein
set forth, the Trust agrees to sell to each Underwriter, severally and not
jointly, and each Underwriter, severally and not jointly, agrees to purchase
from the Company, at the purchase price of $25 per Preferred Security, the
number of Initial Preferred Securities set forth in Schedule A opposite the name
of such Underwriter, plus any additional number of Initial Preferred Securities
which such Underwriter may become obligated to purchase pursuant to the
provisions of Section 10 hereof.

         (b) OPTION PREFERRED SECURITIES. In addition, on the basis of the
representations and warranties herein contained and subject to the terms and
conditions herein set forth, the Trust hereby grants an option to the
Underwriters, severally and not jointly, to purchase up to an additional 600,000
Preferred Securities (the "Option Preferred Securities") at a price per Option
Preferred Security equal to the price per Initial Preferred Security plus
accumulated distributions,


                                       11
<PAGE>

if any, from January 31, 2002 to the date of delivery and payment. Such option
will expire 30 days after the date of this Agreement and may be exercised in
whole or in part from time to time only for the purpose of covering
over-allotments which may be made in connection with the offering and
distribution of the Initial Preferred Securities upon notice by the
Representatives to the Trust and the Company setting forth the number of Option
Preferred Securities as to which the several Underwriters are then exercising
the option and the time, date and place of payment and delivery for such Option
Preferred Securities. Any such time and date of payment and delivery (each, a
"Date of Delivery") shall be determined by the Representatives, the Trust and
the Company, but shall not be sooner than four business days or later than seven
full business days after the exercise of said option, nor in any event prior to
the Closing Time, as hereinafter defined, unless agreed by the Representatives,
the Trust and the Company. If the option is exercised as to all or any portion
of the Option Preferred Securities, each of the Underwriters, acting severally
and not jointly, will purchase that proportion of the total number of Option
Preferred Securities then being purchased which the number of Initial Preferred
Securities set forth in Schedule A opposite the name of such Underwriter bears
to the total number of Initial Preferred Securities, subject in each case to
such adjustments as the Representatives in their discretion shall make to
eliminate any sales or purchases of fractional shares.

         (c) PAYMENT. As compensation to the Underwriters for their commitments
hereunder and in view of the fact that the proceeds of the sale of the Preferred
Securities will be used to purchase the Debentures, the Company hereby agrees to
pay at the Closing Time and at each Date of Delivery to the Underwriters a
commission of $0.7875 per Preferred Security. Payment of the purchase price for,
and delivery of certificates for, the Preferred Securities shall be made at the
offices of Paul, Hastings, Janofsky & Walker LLP, 399 Park Avenue, New York, New
York 10022, or at such other place as shall be agreed upon by the
Representatives, the Company and the Trust, at 9:00 A.M. (Eastern time) on the
third (fourth, if the pricing occurs after 4:30 p.m. (Eastern time) on any given
day) business day after the date hereof (unless postponed in accordance with the
provisions of Section 10), or such other time not later than ten business days
after such date as shall be agreed upon by the Representatives, the Company and
the Trust (such time and date of payment and delivery being herein called
"Closing Time").

         In addition, in the event that any or all of the Option Preferred
Securities are purchased by the Underwriters, payment of the purchase price for,
and delivery of such Option Preferred Securities, shall be made at the
above-mentioned offices, or at such other place as shall be agreed upon by the
Representatives, the Trust and the Company, on the relevant Date of Delivery as
specified in the notice from the Representatives to the Trust and the Company.

         Payment shall be made to the Trust by wire transfer of immediately
available funds to the order of the Trust, against delivery to Morgan Stanley &
Co. Incorporated for the respective accounts of the Underwriters of certificates
for the Preferred Securities to be purchased by them. It is understood that each
Underwriter has authorized Morgan Stanley & Co. Incorporated, for its account,
to accept delivery of, receipt for, and make payment of the purchase price for
the Initial Preferred Securities and the Option Preferred Securities, if any,
which it has agreed to purchase. Morgan Stanley & Co. Incorporated, individually
and not as representative of the Underwriters, may (but shall not be obligated
to) make payment of the purchase price for the Initial Preferred Securities or
the Option Preferred Securities, if any, to be purchased by any Underwriter
whose


                                       12
<PAGE>

funds have not been received by the Closing Time or the relevant Date of
Delivery, as the case may be, but such payment shall not relieve such
Underwriter from its obligations hereunder.

         At Closing Time, or the Date of Delivery, as the case may be, the
Company will pay, or cause to be paid, the commission payable at such time under
this Section 2 to Morgan Stanley & Co. Incorporated on behalf of the
Underwriters by wire transfer of immediately available funds.

         (d) DENOMINATIONS; REGISTRATION. Certificates for the Initial Preferred
Securities and the Option Preferred Securities, if any, shall be in such
denominations and registered in such names as the Representatives may request in
writing at least two full business days before the Closing Time or the relevant
Date of Delivery, as the case may be. The certificates for the Initial Preferred
Securities and the Option Preferred Securities, if any, will be made available
for examination and packaging by the Representatives in The City of New York not
later than 5:00 P.M. (Eastern time) on the business day prior to the Closing
Time or the relevant Date of Delivery, as the case may be.

         SECTION 3. COVENANTS OF THE COMPANY AND THE TRUST. The Company and the
Trust jointly and severally covenant with each Underwriter as follows:

         (a) COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION REQUESTS. The
Company and the Trust, subject to Section 3(b), will notify the Representatives
immediately, and confirm the notice in writing, (i) when any post-effective
amendment to the Registration Statement shall become effective, or any
supplement to the Prospectus or any amended Prospectus shall have been filed,
(ii) of the receipt of any comments from the Commission, (iii) of any request by
the Commission for any amendment to the Registration Statement or any amendment
or supplement to the Prospectus or for additional information and (iv) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or suspending the use of any
preliminary prospectus, the Prospectus, or of the suspension of the
qualification of the Preferred Securities for offering or sale in any
jurisdiction or of the initiation or threatening of any proceedings for any of
such purposes. The Company and the Trust will promptly effect the filings
necessary pursuant to Rule 424(b) and will take such steps as they deem
necessary to ascertain promptly whether the form of prospectus transmitted for
filing under Rule 424(b) was received for filing by the Commission and, in the
event that it was not, it will promptly file such prospectus. The Company and
the Trust will make every reasonable effort to prevent the issuance of any stop
order and, if any stop order is issued, to obtain the lifting thereof at the
earliest possible moment.

         (b) FILING OF AMENDMENTS. The Company and the Trust will give the
Representatives notice of their intention to file or prepare any amendment to
the Registration Statement or any amendment, supplement or revision to either
the prospectus included in the Registration Statement at the time it became
effective or to the Prospectus, whether pursuant to the 1933 Act, the 1934 Act
or otherwise, will furnish the Representatives with copies of any such documents
a reasonable amount of time prior to such proposed filing or use, as the case
may be, and will not file or use any such document to which the Representatives
or counsel for the Representatives shall reasonably object.


                                       13
<PAGE>

         (c) DELIVERY OF REGISTRATION STATEMENTS. The Company and the Trust have
furnished or will deliver to the Representatives and counsel for the
Underwriters, at their request and without charge, conformed copies of the
Registration Statement as originally filed and of each amendment thereto
(including exhibits filed therewith or incorporated by reference therein and
documents incorporated or deemed to be incorporated by reference therein), and
conformed copies of all consents and certificates of experts. The copies of the
Registration Statement and each amendment thereto furnished to the Underwriters
will be identical to the electronically transmitted copies thereof filed with
the Commission pursuant to EDGAR, except to the extent permitted by Regulation
S-T.

         (d) DELIVERY OF PROSPECTUS. The Company and the Trust have delivered to
each Underwriter, without charge, as many copies of each preliminary prospectus
as such Underwriter reasonably requested, and the Company hereby consents to the
use of such copies for purposes permitted by the 1933 Act. The Company will
furnish to each Underwriter, without charge, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act, such
number of copies of the Prospectus (as amended or supplemented) as such
Underwriter may reasonably request. The Prospectus and any amendments or
supplements thereto furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission pursuant to
EDGAR, except to the extent permitted by Regulation S-T.

         (e) CONTINUED COMPLIANCE WITH SECURITIES LAWS. The Company and the
Trust will comply with the 1933 Act and the 1933 Act Regulations and the 1934
Act and the 1934 Act Regulations so as to permit the completion of the
distribution of the Securities as contemplated in this Agreement and in the
Prospectus. If at any time when a prospectus is required by the 1933 Act to be
delivered in connection with sales of the Preferred Securities, any event shall
occur or condition shall exist as a result of which it is necessary, in the
reasonable opinion of counsel for the Underwriters or for the Company, to amend
the Registration Statement or amend or supplement the Prospectus in order that
the Prospectus will not include any untrue statements of a material fact or omit
to state a material fact necessary in order to make the statements therein not
misleading in the light of the circumstances existing at the time it is
delivered to a purchaser, or if it shall be necessary, in the reasonable opinion
of such counsel, at any such time to amend the Registration Statement or amend
or supplement the Prospectus in order to comply with the requirements of the
1933 Act or the 1933 Act Regulations, the Company and the Trust will promptly
prepare and file with the Commission, subject to Section 3(b), such amendment or
supplement as may be necessary to correct such statement or omission or to make
the Registration Statement or the Prospectus comply with such requirements, and
the Company will furnish to the Underwriters such number of copies of such
amendment or supplement as the Underwriters may reasonably request.

         (f) BLUE SKY QUALIFICATIONS. The Company and the Trust will each use
its reasonable best efforts, in cooperation with the Underwriters, to qualify
the Preferred Securities for offering and sale under the applicable securities
laws of such states and other jurisdictions (domestic or foreign) as the
Representatives may designate and to maintain such qualifications in effect for
a period of not less than one year from the effective date of the Registration
Statement; PROVIDED, HOWEVER, that neither the Company nor the Trust shall be
obligated to file any general consent to service of process or to qualify as a
foreign corporation or as a dealer in securities in any jurisdiction in which it
is not so qualified or to subject itself to taxation in respect of doing


                                       14
<PAGE>

business in any jurisdiction in which it is not otherwise so subject. In each
jurisdiction in which the Preferred Securities have been so qualified, the
Company and the Trust will file such statements and reports as may be required
by the laws of such jurisdiction to continue such qualification in effect for a
period of not less than one year from the effective date of the Registration
Statement.

         (g) RULE 158. The Company will timely file such reports pursuant to the
1934 Act as are necessary in order to make generally available to its
securityholders as soon as practicable an earnings statement for the purposes
of, and to provide the benefits contemplated by, the last paragraph of Section
11(a) of the 1933 Act.

         (h) USE OF PROCEEDS. The Trust and the Company will use the net
proceeds received by them from the sale of the Securities in the manner
specified in the Prospectus under "Use of Proceeds".

         (i) LISTING. The Company will use its best efforts to effect the
listing of the Securities on the New York Stock Exchange.

         (j) RESTRICTION ON SALE OF SECURITIES. During a period of 30 days from
the date hereof, neither the Company nor the Trust will, without the prior
written consent of Morgan Stanley & Co. Incorporated, (i) directly or
indirectly, offer, pledge, sell, contract to sell, sell any option or contract
to purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase or otherwise transfer or dispose of any Preferred Securities
or Debentures or any securities convertible into, or exercisable or exchangeable
for Preferred Securities or Debentures or file any registration statement under
the 1933 Act with respect to any of the foregoing or (ii) enter into any swap or
any other agreement or any transaction that transfers, in whole or in part,
directly or indirectly, the economic consequences of ownership of the Preferred
Securities or Debentures, whether any such swap or transaction described in
clause (i) or (ii) above is to be settled by delivery of Preferred Securities,
Debentures or such other securities referenced above, in cash or otherwise. The
foregoing sentence shall not apply to the Preferred Securities or Debentures to
be sold hereunder.

         (k) REPORTING REQUIREMENTS. The Company and the Trust, during the
period when the Prospectus is required to be delivered under the 1933 Act or the
1934 Act, will file all documents required to be filed with the Commission
pursuant to the 1934 Act within the time periods required by the 1934 Act and
the 1934 Act Regulations.

         Section 4. PAYMENT OF EXPENSES.

         (a) EXPENSES. The Company will pay all expenses incident to the
performance of its and the Trust's obligations under this Agreement, including
(i) the preparation, printing and filing of the Registration Statement
(including financial statements and exhibits) as originally filed and of each
amendment thereto, (ii) the printing and delivery to the Underwriters of this
Agreement, any Agreement among Underwriters and such other documents as may be
required in connection with the offering, purchase, sale, issuance or delivery
of the Preferred Securities, (iii) the preparation, issuance and delivery of the
certificates for the Preferred Securities to the Underwriters, including any
stock or other transfer taxes and any stamp or other duties payable


                                       15
<PAGE>

upon the sale, issuance or delivery of the Preferred Securities to the
Underwriters, (iv) the fees and disbursements of the Company's and the Trust's
counsel, accountants and other advisors, (v) the filing fees incident to any
necessary filings under state securities laws and the reasonable fees and
disbursements of counsel for the Underwriters in connection therewith and in
connection with the preparation of the Blue Sky Survey and any supplement
thereto, (vi) the printing and delivery to the Underwriters of copies of each
preliminary prospectus and of the Prospectus and any amendments or supplements
thereto, (vii) the fees and expenses of any transfer agent or registrar for the
Preferred Securities, (viii) the reasonable fees and expenses of the Debenture
Trustee, including the fees of the securities rating services and disbursements
of counsel for the Debenture Trustee in connection with the Indenture and the
Debentures, (ix) the reasonable fees and expenses of the Delaware Trustee, the
Property Trustee and the Guarantee Trustee, including the reasonable fees and
disbursements of counsel for the Delaware Trustee, the Property Trustee and the
Guarantee Trustee, (x) any reasonable fees payable in connection with the rating
of the Preferred Securities and the Debentures, (xi) the cost and charges
associated with the approval of the Preferred Securities by The Depository Trust
Company for "book-entry" transfer and (xii) the fees and expenses incurred in
connection with the listing of the Preferred Securities and, if applicable, the
Debentures on the New York Stock Exchange.

         (b) TERMINATION OF AGREEMENT. If this Agreement is terminated by the
Representatives in accordance with the provisions of Section 5 or Section
9(a)(i) hereof, the Company shall reimburse the Underwriters for all of their
reasonable out-of-pocket expenses, including the reasonable fees and
disbursements of counsel for the Underwriters.

         Section 5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of
the several Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Company and the Trust contained in Section
1 hereof or in certificates of any officer of the Company, any subsidiary of the
Company or any Trustee delivered pursuant to the provisions hereof, to the
performance by the Company and the Trust of their respective covenants and other
obligations hereunder, and to the following further conditions:

         (a) EFFECTIVENESS OF REGISTRATION STATEMENT. The Registration Statement
has become effective and at the Closing Time no stop order suspending the
effectiveness of the Registration Statement shall have been issued under the
1933 Act or proceedings therefor initiated or threatened by the Commission, and
any request on the part of the Commission for additional information shall have
been complied with to the reasonable satisfaction of counsel to the
Underwriters. A prospectus shall have been filed with the Commission in
accordance with Rule 424(b).

         (b) OPINIONS OF COUNSEL FOR COMPANY.

                    (i) OPINIONS OF SPECIAL COUNSEL FOR COMPANY. At Closing
          Time, the Representatives shall have received the opinions, dated as
          of Closing Time, of Paul, Hastings, Janofsky & Walker LLP, special
          counsel and special tax counsel for the Company, in form and substance
          satisfactory to counsel for the Underwriters, together with signed or
          reproduced copies of such letters for each of the other Underwriters
          to the effect set forth in Exhibit A-1 and Exhibit A-2


                                       16
<PAGE>

          hereto and to such further effect as counsel to the Underwriters may
          reasonably request.

                    (ii) OPINION OF COUNSEL FOR COMPANY. At Closing Time, the
          Representatives shall have received the opinion, dated as of Closing
          Time, of Alan D. Dietrich, Esq., Vice President Legal Administration
          of the Company, in form and substance satisfactory to counsel for the
          Underwriters, together with signed or reproduced copies of such letter
          for each of the other Underwriters to the effect set forth in Exhibit
          B hereto and such further effect as counsel to the Underwriters may
          reasonably request.

         (c) OPINION OF SPECIAL DELAWARE COUNSEL FOR THE TRUST AND THE COMPANY.
At Closing Time, the Representatives shall have received the opinion, dated as
of the Closing Time, of Richards, Layton & Finger, P.A., special Delaware
counsel to the Trust and the Company, in form and substance satisfactory to
counsel for the Underwriters together with signed or reproduced copies of such
letter for each of the Underwriters to the effect set forth in Exhibit C hereto
and to such further effect as counsel to the Underwriters may reasonably
request.

         (d) OPINIONS OF COUNSEL FOR THE PROPERTY TRUSTEE, THE DEBENTURE TRUSTEE
AND THE GUARANTEE TRUSTEE. At Closing Time, the Representatives shall have
received opinions, dated as of Closing Time, of Richards, Layton & Finger, P.A.,
counsel to the Property Trustee and Guarantee Trustee, and of Seward & Kissel
LLP, counsel to the Debenture Trustee, in form and substance satisfactory to the
Representatives.

         (e) OPINION OF COUNSEL FOR UNDERWRITERS. At Closing Time, the
Representatives shall have received the opinion, dated as of Closing Time, of
Dewey Ballantine LLP, counsel for the Underwriters, together with signed or
reproduced copies of such letter for each of the other Underwriters with respect
to the matters set forth in paragraph 1 of Exhibit B and paragraphs 1, 2, 3, 5,
6, 7, 9, 10, 11 and the penultimate paragraph of Exhibit A-1 hereto. In giving
such opinion such counsel may rely, as to all matters governed by the laws of
jurisdictions other than the law of the State of New York and the federal law of
the United States, upon the opinions of counsel satisfactory to the
Representatives. Such counsel may also state that, insofar as such opinion
involves factual matters, they have relied, to the extent they deem proper, upon
certificates of officers of the Company and its subsidiaries and certificates of
public officials.

         (f) OFFICERS' CERTIFICATES. At Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Prospectus, (A) any material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business, and the
Representatives shall have received a certificate of the President or a Vice
President of the Company and of the chief financial or chief accounting officer
of the Company, dated as of Closing Time, to the effect that (i) there has been
no such material adverse change, (ii) the representations and warranties in
Section 1(a) hereof are true and correct with the same force and effect as
though expressly made at and as of Closing Time, (iii) the Company has complied
with all agreements and satisfied all conditions on its part to be performed or
satisfied at or prior to Closing Time, and (iv) no stop order suspending the
effectiveness of the Registration Statement has been issued and, to the


                                       17
<PAGE>

Company's knowledge, no proceedings for that purpose have been instituted or are
pending or are contemplated by the Commission. At the Closing Time, the
Representatives shall have received a certificate of an Administrative Trustee
of the Trust, dated as of the Closing Time, also to that effect.

         (g) ACCOUNTANTS' COMFORT LETTERS. At the time of the execution of this
Agreement, the Representatives shall have received from each of Arthur Andersen
LLP and PricewaterhouseCoopers LLP a letter dated such date, in form and
substance satisfactory to the Representatives, together with signed or
reproduced copies of such letters for each of the Underwriters containing
statements and information of the type ordinarily included in accountants'
"comfort letters" to underwriters with respect to the financial statements,
certain financial information and the pro forma financial statements contained
in the Registration Statement and the Prospectus.

         (h) BRING-DOWN COMFORT LETTERS. At Closing Time, the Representatives
shall have received from each of Arthur Andersen LLP and PricewaterhouseCoopers
LLP a letter, dated as of the Closing Time, to the effect that they reaffirm the
statements made in the letters furnished pursuant to subsection (h) of this
Section 5, except that the specified date referred to shall be a date not more
than three business days prior to the Closing Time.

         (i) APPROVAL OF LISTING. At the Closing Time, the Preferred Securities
shall have been approved for listing on the New York Stock Exchange, subject
only to official notice of issuance.

         (j) MAINTENANCE OF RATING. At Closing Time and any relevant Date of
Delivery, the Preferred Securities shall be rated at least Baa3 (negative
outlook) by Moody's Investors Service, Inc. and BBB- by Standard & Poor's
Ratings Group, a division of McGraw-Hill, Inc., and the Company shall have
delivered to the Underwriters a letter dated the Closing Time, from each such
rating agency, or other evidence satisfactory to the Representatives, confirming
that the Preferred Securities have such ratings; and since the date of this
Agreement, there shall not have occurred a downgrading in the rating assigned to
the Preferred Securities or any of the Company's debt or preferred securities by
any "nationally recognized statistical rating agency," as that term is defined
by the Commission for purposes of Rule 436(g)(2) under the 1933 Act, and no such
organization shall have publicly announced that it has under surveillance or
review its rating of the Preferred Securities or any of the Company's debt or
preferred securities.

         (k) CONDITIONS TO PURCHASE OPTION PREFERRED SECURITIES. In the event
that the Underwriters exercise their option provided in Section 2(b) hereof to
purchase all or any portion of the Option Preferred Securities, the
representations and warranties of the Trust and the Company contained herein and
the statements in any certificates furnished by the Trust or the Company or any
of its subsidiaries hereunder shall be true and correct as of each Date of
Delivery, and, at the relevant Date of Delivery, the Representatives shall have
received:

                    (i) OFFICERS' CERTIFICATE. A certificate, dated such Date of
          Delivery, of the President or a Vice President of the Company and of
          the chief financial officer or chief accounting officer of the Company
          and of an Administrative Trustee of


                                       18
<PAGE>

          the Trust, confirming that the certificates delivered at the Closing
          Time pursuant to Section 5(f) hereof remain true and correct as of
          such Date of Delivery.

                    (ii) OPINIONS OF SPECIAL COUNSEL FOR COMPANY. The opinions
          of Paul, Hastings, Janofsky & Walker LLP, special counsel and special
          tax counsel for the Company, in form and substance satisfactory to
          counsel for the Underwriters, dated such Date of Delivery, relating to
          the Option Preferred Securities to be purchased on such Date of
          Delivery and otherwise to the same effect as the opinions required by
          Section 5(b)(i) hereof.

                    (iii) OPINION OF COUNSEL FOR COMPANY. The opinion of Alan D.
          Dietrich, Esq., Vice President Legal Administration of the Company, in
          form and substance satisfactory to counsel for the Underwriters, dated
          such Date of Delivery, relating to the Option Preferred Securities to
          be purchased on such Date of Delivery and otherwise to the same effect
          as the opinion required by Section 5(b)(ii) hereof.

                    (iv) OPINION OF SPECIAL DELAWARE COUNSEL FOR THE TRUST AND
          THE COMPANY. The opinion of Richards, Layton & Finger, P.A., special
          Delaware counsel to the Trust and the Company, in form and substance
          satisfactory to counsel for the Underwriters, dated such Date of
          Delivery, relating to the Option Preferred Securities to be purchased
          on such Date of Delivery and otherwise to the same effect as the
          opinion required by Section 5(c) hereof.

                    (v) OPINIONS OF COUNSEL FOR THE PROPERTY TRUSTEE, THE
          DEBENTURE TRUSTEE AND THE GUARANTEE TRUSTEE. The opinions of Richards,
          Layton & Finger, P.A., counsel to the Property Trustee and Guarantee
          Trustee, and of Seward & Kissel LLP, counsel to the Debenture Trustee,
          in form and substance satisfactory to counsel for the Underwriters,
          dated such Date of Delivery, relating to the Option Preferred
          Securities to be purchased on such Date of Delivery and otherwise to
          the same effect as the opinions required by Section 5(d) hereof.

                    (vii) OPINION OF COUNSEL FOR UNDERWRITERS. The opinion of
          Dewey Ballantine llp, counsel for the Underwriters, dated such Date of
          Delivery, relating to the Option Preferred Securities to be purchased
          on such Date of Delivery and otherwise to the same effect as the
          opinion required by Section 5(e) hereof.

                    (viii) Bring-down Comfort Letters. A letter from each of
          Arthur Andersen LLP and PricewaterhouseCoopers LLP, in form and
          substance satisfactory to the Representatives and dated such Date of
          Delivery, substantially in the same form and substance as the letters
          furnished to the Representatives pursuant to Section 5(h) hereof,
          except that the "specified date" in the letter furnished pursuant to
          this paragraph shall be a date not more than five days prior to such
          Date of Delivery.


                                       19
<PAGE>

         (l) ADDITIONAL DOCUMENTS. At Closing Time and at each Date of Delivery,
counsel for the Underwriters shall have been furnished with such documents and
opinions as they may require for the purpose of enabling them to pass upon the
issuance and sale of the Preferred Securities as herein contemplated, or in
order to evidence the accuracy of any of the representations or warranties, or
the fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Company and Trust in connection with the issuance and sale of the
Preferred Securities as herein contemplated shall be satisfactory in form and
substance to the Representatives and counsel for the Underwriters.

         (m) TERMINATION OF AGREEMENT. If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled, this
Agreement, or, in the case of any condition to the purchase of Option Preferred
Securities, on a Date of Delivery which is after the Closing Time, the
obligations of the several Underwriters to purchase the relevant Option
Preferred Securities, may be terminated by the Representatives by notice to the
Company at any time at or prior to Closing Time or such Date of Delivery, as the
case may be, and such termination shall be without liability of any party to any
other party except as provided in Section 4 and except that Sections 1, 6, 7 and
8 shall survive any such termination and remain in full force and effect.

         SECTION 6. INDEMNIFICATION.

         (a) INDEMNIFICATION OF UNDERWRITERS. Each of the Company and the Trust
jointly and severally agrees to indemnify and hold harmless each Underwriter and
each person, if any, who controls any Underwriter within the meaning of Section
15 of the 1933 Act or Section 20 of the 1934 Act as follows:

                    (i) against any and all loss, liability, claim, damage and
          expense whatsoever, as incurred, arising out of any untrue statement
          or alleged untrue statement of a material fact contained in the
          Registration Statement (or any amendment thereto) or the omission or
          alleged omission therefrom of a material fact required to be stated
          therein or necessary to make the statements therein not misleading or
          arising out of any untrue statement or alleged untrue statement of a
          material fact included in any preliminary prospectus or the Prospectus
          (or any amendment or supplement thereto), or the omission or alleged
          omission therefrom of a material fact necessary in order to make the
          statements therein, in the light of the circumstances under which they
          were made, not misleading;

                    (ii) against any and all loss, liability, claim, damage and
          expense whatsoever, as incurred, to the extent of the aggregate amount
          paid in settlement of any litigation, or any investigation or
          proceeding by any governmental agency or body, commenced or
          threatened, or of any claim whatsoever based upon any such untrue
          statement or omission, or any such alleged untrue statement or
          omission provided that (subject to Section 6(e) below) any such
          settlement is effected with the written consent of the Company; and

                    (iii) against any and all expense whatsoever, as incurred
          (including the fees and disbursements of counsel chosen by Morgan
          Stanley & Co. Incorporated), reasonably incurred in investigating,
          preparing or defending against any litigation, or any


                                       20
<PAGE>

          investigation or proceeding by any governmental agency or body,
          commenced or threatened, or any claim whatsoever based upon any such
          untrue statement or omission, or any such alleged untrue statement or
          omission, to the extent that any such expense is not paid under (i) or
          (ii) above;

PROVIDED, HOWEVER, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through Morgan Stanley & Co. Incorporated expressly for use in the
Registration Statement (or any amendment thereto) or any preliminary prospectus
or the Prospectus (or any amendment or supplement thereto); and PROVIDED,
FURTHER, that this indemnity shall not apply to any preliminary prospectus or
any amendment or supplement thereto to the extent that any such loss, claim,
damage or liability results from the fact that any Underwriter sold Preferred
Securities to a person as to whom it shall be established that there was not
sent or given, at or prior to the written confirmation of such sale, a copy of
the Prospectus as supplemented or amended and the loss, claim, damage or
liability of such Underwriter results from an untrue statement or omission of a
material fact contained in the preliminary prospectus or amendment or supplement
thereto which was corrected in the Prospectus or in the Prospectus as then
amended or supplemented and such correction would have cured the defect giving
rise to such loss, claim, damage or liability.

         (b) INDEMNIFICATION OF TRUST BY COMPANY. The Company agrees to
indemnify the Trust against all loss, liability, claim, damage and expense
whatsoever as due from the Trust under Section 6(a) hereunder.

         (c) INDEMNIFICATION OF TRUST, COMPANY, DIRECTORS AND OFFICERS. Each
Underwriter severally agrees to indemnify and hold harmless the Company and the
Trust, the Company's directors, each of the Company's officers and the Trustees
of the Trust who signed the Registration Statement, and each person, if any, who
controls the Company and the Trust within the meaning of Section 15 of the 1933
Act or Section 20 of the 1934 Act against any and all loss, liability, claim,
damage and expense described in the indemnity contained in subsection (a) of
this Section, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment thereto), or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by such Underwriter
through Morgan Stanley & Co. Incorporated expressly for use in the Registration
Statement (or any amendment thereto) or such preliminary prospectus or the
Prospectus (or any amendment or supplement thereto).

         (d) ACTIONS AGAINST PARTIES; NOTIFICATION. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified


                                       21
<PAGE>

pursuant to Section 6(a) above, counsel to the indemnified parties shall be
selected by Morgan Stanley & Co. Incorporated, and, in the case of parties
indemnified pursuant to Section 6(c) above, counsel to the indemnified parties
shall be selected by the Company. An indemnifying party may participate at its
own expense in the defense of any such action; PROVIDED, HOWEVER, that counsel
to the indemnifying party shall not (except with the consent of the indemnified
party) also be counsel to the indemnified party. In no event shall the
indemnifying parties be liable for fees and expenses of more than one counsel
(in addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances. No indemnifying party shall, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any litigation, or any investigation
or proceeding by any governmental agency or body, commenced or threatened, or
any claim whatsoever in respect of which indemnification or contribution could
be sought under this Section 6 or Section 7 hereof (whether or not the
indemnified parties are actual or potential parties thereto), unless such
settlement, compromise or consent (i) includes an unconditional release of each
indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act by or on behalf of any
indemnified party.

         (e) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE. If at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(ii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.

         SECTION 7. CONTRIBUTION. If the indemnification provided for in Section
6 hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein; then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Trust on the one hand and the Underwriters on the other hand from the offering
of the Preferred Securities pursuant to this Agreement or (ii) if the allocation
provided by clause (i) is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Company and the Trust on the one
hand and of the Underwriters on the other hand in connection with the statements
or omissions, which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.

         The relative benefits received by the Company and the Trust on the one
hand and the Underwriters on the other hand in connection with the offering of
the Preferred Securities pursuant to this Agreement shall be deemed to be in the
same respective proportions as the total net proceeds from the offering of the
Preferred Securities pursuant to this Agreement (before deducting expenses)
received by the Company and the total underwriting commission received


                                       22
<PAGE>

by the Underwriters, in each case as set forth on the cover of the Prospectus,
bear to the aggregate initial public offering price of the Securities as set
forth on such cover.

         The relative fault of the Company and the Trust on the one hand and the
Underwriters on the other hand shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.

         The Company, the Trust and the Underwriters agree that it would not be
just and equitable if contribution pursuant to this Section 7 were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to above in this Section 7. The
aggregate amount of losses, liabilities, claims, damages and expenses incurred
by an indemnified party and referred to above in this Section 7 shall be deemed
to include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.

         Notwithstanding the provisions of this Section 7, no Underwriter shall
be required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of any such untrue or
alleged untrue statement or omission or alleged omission.

         No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.

         For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each director of the Company, each officer of the Company and the Trustees of
the Trust who signed the Registration Statement, and each person, if any, who
controls the Company or the Trust within the meaning of Section 15 of the 1933
Act or Section 20 of the 1934 Act shall have the same rights to contribution as
the Company. The Underwriters' respective obligations to contribute pursuant to
this Section 7 are several in proportion to the number of Initial Preferred
Securities set forth opposite their respective names in Schedule A hereto and
not joint.


                                       23
<PAGE>

         SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company or the Trustees of the
Trust or any of its other subsidiaries submitted pursuant hereto, shall remain
operative and in full force and effect, regardless of any investigation made by
or on behalf of any Underwriter or controlling person, or by or on behalf of the
Company, and shall survive delivery of the Preferred Securities to the
Underwriters.

         SECTION 9. TERMINATION OF AGREEMENT.

         (a) TERMINATION; GENERAL. The Representatives may terminate this
Agreement, by notice to the Company and the Trust, at any time at or prior to
Closing Time or any relevant Date of Delivery (i) if there has been, since the
time of execution of this Agreement, any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, or (ii)
if there has occurred any material adverse change in the financial markets in
the United States or the international financial markets, any outbreak of
hostilities or escalation thereof or other calamity or crisis or any material
adverse change or development involving a prospective material adverse change in
national or international political, financial or economic conditions, in each
case of subclauses (i) and (ii) above the effect of which is such as to make it,
in the judgment of the Representatives, impracticable to market the Preferred
Securities or to enforce contracts for the sale of the Preferred Securities, or
(iii) if trading in any securities of the Company has been suspended or
materially limited by the Commission or the New York Stock Exchange, or if
trading generally on the American Stock Exchange or the New York Stock Exchange
or in the Nasdaq National Market has been suspended or materially limited, or
minimum or maximum prices for trading have been fixed, or maximum ranges for
prices have been required, by any of said exchanges or by such system or by
order of the Commission, the National Association of Securities Dealers, Inc. or
any other governmental authority, or (iv) if a banking moratorium has been
declared by either Federal or New York authorities, or (v) if a material
disruption has occurred in commercial banking or securities settlement or
clearance services in the United States or with respect to Clearstream or
Euroclear systems in Europe.

         (b) LIABILITIES. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 6, 7 and 8 shall survive such termination and remain in full force and
effect.


                                       24
<PAGE>

         SECTION 10. DEFAULT BY ONE OR MORE OF THE UNDERWRITERS. If one or more
of the Underwriters shall fail at Closing Time or the relevant Date of Delivery,
as the case may be, to purchase the Preferred Securities which it or they are
obligated to purchase under this Agreement (the "Defaulted Securities"), the
Representatives shall have the right, within 24 hours thereafter, to make
arrangements for one or more of the non-defaulting Underwriters, or any other
underwriters, to purchase all, but not less than all, of the Defaulted
Securities in such amounts as may be agreed upon and upon the terms herein set
forth; if, however, the Representatives shall not have completed such
arrangements within such 24-hour period, then:

         (a) if the number of Defaulted Securities does not exceed 10% of the
number of Preferred Securities to be purchased on such date, each of the
non-defaulting Underwriters shall be obligated, severally and not jointly, to
purchase the full amount thereof in the proportions that their respective
underwriting obligations hereunder bear to the underwriting obligations of all
non-defaulting Underwriters, or

         (b) if the number of Defaulted Securities exceeds 10% of the number of
Preferred Securities to be purchased on such date, this Agreement or, with
respect to any Date of Delivery which occurs after Closing Time, the obligation
of the Underwriters to purchase and of the Trust to sell the Option Preferred
Securities to be purchased and sold on such Date of Delivery shall terminate
without liability on the part of any non-defaulting Underwriter.

         No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.

         In the event of any such default which does not result in a termination
of this Agreement or, in the case of a Date of Delivery which is after the
Closing Time, which does not result in a termination of the obligation of the
Underwriters to purchase and the Trust to sell the relevant Option Preferred
Securities, as the case may be, either the non-defaulting Representative or the
Company shall have the right to postpone Closing Time or the relevant Date of
Delivery, as the case may be, for a period not exceeding seven days in order to
effect any required changes in the Registration Statement or Prospectus or in
any other documents or arrangements. As used herein, the term "Underwriter"
includes any person substituted for an Underwriter under this Section.


                                       25
<PAGE>

         SECTION 11. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Representatives at 1585 Broadway, New
York, New York 10036, attention of Debt Syndicate Desk; notices to the Trust
shall be directed to it c/o the Company at 125 S. Dakota Avenue, Sioux Falls,
South Dakota, 57104, attention of Eric R. Jacobsen, with a copy to Paul,
Hastings, Janofsky & Walker LLP at the following address through February 28,
2002: 345 California St, San Francisco, CA 94104 and at the following address
after February 28, 2002: 55 Second Street, 24th Floor, San Francisco, CA 94105,
Attn: Thomas R. Pollock and notices to the Company shall be directed to it at
125 S. Dakota Avenue, Sioux Falls, South Dakota 57104, attention of Eric R.
Jacobsen, with a copy to Paul, Hastings, Janofsky & Walker LLP, 345 California
St., San Francisco, CA 94104, Attn: Thomas R. Pollock.

         SECTION 12. PARTIES. This Agreement shall inure to the benefit of and
be binding upon the Underwriters, the Company and the Trust and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Underwriters, the Company and the Trust and their respective successors and the
controlling persons and officers and directors referred to in Sections 6 and 7
and their heirs and legal representatives, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the Underwriters, the Company and
the Trust and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Preferred
Securities from any Underwriter shall be deemed to be a successor by reason
merely of such purchase.

         SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. SPECIFIED
TIMES OF DAY REFER TO NEW YORK CITY TIME.

         SECTION 14. EFFECT OF HEADINGS. The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof.


                                       26
<PAGE>


         If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company and the Trust a counterpart
hereof, whereupon this instrument, along with all counterparts, will become a
binding agreement between the Underwriters, the Company and the Trust in
accordance with its terms.

                                    Very truly yours,

                                    NORTHWESTERN CORPORATION


                                    By:  /s/ Kipp D. Orme
                                       ----------------------------------
                                       Name:  Kipp D. Orme
                                       Title: Vice President - Finance & CFO



                                    NORTHWESTERN CAPITAL FINANCE III


                                    BY:  NORTHWESTERN CORPORATION,
                                              as Sponsor


                                    By:  /s/ Kipp D. Orme
                                        ---------------------------------
                                         Name:  Kipp D. Orme
                                         Title: Vice President - Finance & CFO






CONFIRMED AND ACCEPTED, as of the date first above written:
MORGAN STANLEY & CO. INCORPORATED
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
                      INCORPORATED
SALOMON SMITH BARNEY INC.

By: MORGAN STANLEY & CO. INCORPORATED

By  /s/ Harold J. Hendershot III
   -----------------------------------------
         Authorized Signatory

For themselves and as Representatives of the other Underwriters named in
Schedule A hereto.


                                       27
<PAGE>

                                   SCHEDULE A
<TABLE>
<CAPTION>

                                                                                              Number of
                                                                                              Preferred
Name of U.S. Underwriter                                                                     Securities
------------------------                                                                     ----------

<S>                                                                                            <C>
Morgan Stanley & Co. Incorporated.............................................                522,500
Merrill Lynch, Pierce, Fenner & Smith Incorporated............................                522,500
Salomon Smith Barney Inc......................................................                522,500
Credit Suisse First Boston Corporation........................................                522,500
Prudential Securities Incorporated............................................                522,500
UBS Warburg LLC...............................................................                522,500
ABN AMRO Incorporated.........................................................                 80,000
CIBC World Markets Corp. .....................................................                 80,000
Bear, Stearns & Co. Inc. .....................................................                 30,000
Deutsche Banc Alex. Brown Inc. ...............................................                 30,000
First Union Securities, Inc. .................................................                 30,000
H&R Block Financial Advisors, Inc. ...........................................                 30,000
HSBC Securities (USA) Inc. ...................................................                 30,000
Legg Mason Wood Walker, Inc. .................................................                 30,000
Quick and Reilly, Inc. .......................................................                 30,000
RBC Dain Rauscher Inc. .......................................................                 30,000
Charles Schwab & Co., Inc. ...................................................                 30,000
TD Waterhouse Investor Services, Inc. ........................................                 30,000
Tucker Anthony Incorporated...................................................                 30,000
U.S. Bancorp Piper Jaffray Inc. ..............................................                 30,000
Wells Fargo Van Kasper, LLC ..................................................                 30,000
Advest Inc. ..................................................................                 15,000
Robert W. Baird & Co. Incorporated............................................                 15,000
BB&T Capital Markets, a Division of Scott & Stringfellow, Inc.................                 15,000
William Blair & Company, L.L.C. ..............................................                 15,000
Davenport & Company LLC.......................................................                 15,000
D.A. Davidson & Co. ..........................................................                 15,000
Fahnestock & Co. Inc. ........................................................                 15,000
Fifth Third Securities, Inc. .................................................                 15,000
Gibraltar Securities Co. .....................................................                 15,000
Gruntal & Co., L.L.C. ........................................................                 15,000
J.J.B. Hilliard, W.L. Lyons, Inc. ............................................                 15,000
Janney Montgomery Scott LLC...................................................                 15,000
C.L. King & Associates, Inc. .................................................                 15,000
McDonald Investments Inc., a KeyCorp Company..................................                 15,000
McGinn, Smith & Co., Inc. ....................................................                 15,000
Mesirow Financial, Inc. ......................................................                 15,000
Parker/Hunter Incorporated ...................................................                 15,000
Pershing/ a Division of Donaldson, Lufkin & Jenrette..........................                 15,000
Ryan, Beck & Co. LLC..........................................................                 15,000
Southwest Securities, Inc. ...................................................                 15,000
Stifel, Nicolaus & Company Incorporated.......................................                 15,000
Total.........................................................................              4,000,000
                                                                                    =================
</Table>


                                    Sch A-1
<PAGE>


                                   SCHEDULE B

                              List of subsidiaries


         NorthWestern Growth Corporation
         NorthWestern Capital Corporation
         NorthWestern Services Group, Inc.
         NorthWestern Energy Corporation
         NorthWestern Services Corporation
         NorthWestern Networks, Inc.
         NorthWestern Systems, Inc.
         NorCom Advanced Technologies, Inc.
         Nekota Resources, Inc.
         Grant, Inc.
         LNSI, Inc.
         Coast Energy Capital Corporation
         Cornerstone Propane GP, Inc.
         SYN INC.
         Claremont Gas Corporation
         Expanets, Inc.
         Expanets of North America LLC
         Expanets of Hawaii, Inc.
         Expanets of Indiana, Inc.
         Expanets of Indiana, LLC
         Expanets of Arizona, Inc.
         Expanets of Atlanta, Inc.
         Expanets of California, Inc.
         Expanets of Lancaster, Inc.
         Expanets of Mississippi, Inc.
         Expanets of Nebraska, Inc.
         Expanets of New York, Inc.
         Eagle, An Expanets Company, Inc.
         Expanets of Oklahoma, Inc.
         Expanets of Pacific Northwest, Inc.
         Expanets of San Antonio, Inc.
         Expanets of Tennessee, Inc.
         Blue Dot Services Inc.
         A.J. Perri, Inc.
         A.S.I. Hastings, Inc.
         Air Assurance Co.
         Air Conditioning by Luquire, Inc.
         Air Design, Inc.
         Air Specialist Heating and Air Conditioning Company, Inc.
         Anytime Plumbing, Inc.
         ATM Acquisition Corp.
         Blue Dot Plumbing Services of New Jersey, LLC


                                     Sch B-1
<PAGE>

         Blue Dot Capital Corporation
         Blue Dot Capital Partners LLC
         Blue Dot Licensing, Inc.
         Blue Dot of Florida, Inc.
         Blue Dot Properties, Inc.
         Blue Dot Services Company of Florida
         Blue Dot Services Company of Georgia
         Blue Dot Services Company of Illinois
         Blue Dot Services Company of Kansas
         Blue Dot Services Company of Michigan
         Blue Dot Services Company of Ohio
         Blue Dot Services Company of Washington
         Blue Dot Services of West Trenton (NJ), Inc.
         Brody Heating, Air Conditioning & Electrical Contractors, Inc.
         Burton Plumbing Services, Inc.
         Calvert-Jones Co., Inc.
         CECS Acquisition Corp.
         Columbus/Worthington Heating and Air Conditioning Company, Inc.
         Comfort Air Systems, Inc.
         Conditioned Air Associates, Inc.
         Controlling Systems, Inc.
         Dauenhauer & Son Plumbing and Piping Co., Inc.
         Dependable Graham Air Conditioning, Inc.
         Donahue Heating & Air Conditioning, Inc.
         Enviro-Air, Inc.
         Environmental Conditioning, Inc.
         Environmental Services of Charlotte, Inc.
         Environmental Systems and Controls, Inc.
         Environmental Techniques Corporation
         Fast Water Heater Company
         AHAC Acquisition Corp.
         Haslett Heating & Cooling, Inc.
         Hill Heating & Air Conditioning, Inc.
         Horizon Home Services, Inc.
         Huck Heating and Air Conditioning, Inc.
         Ideal Service Company, Inc.
         John's Sewer & Pipe Cleaning, Inc.
         Lindstrom Air Conditioning, Inc.
         Master Controls & Service Company, Inc.
         Metro-Tech Service Co.
         NRS Acquisition Corp.
         PAL Acquisition Corp.
         Poudre Valley Air, Inc.
         Residential Services of Indiana, Inc.
         Ridge Heating, Air Conditioning & Plumbing, Inc.
         Standard Heating & Air Conditioning Co.


                                     Sch B-2
<PAGE>

         Tri-County Associates, Inc.
         Wagner Mechanical Inc.
         WSI Acquisition Corp.
         STO Acquisition Corp.
         Steve Stone Air Conditioning, Heating & Plumbing, Inc.
         NorthWestern Energy Development, LLC
         NorthWestern Generation I, LLC
         NorthWestern Montana First Megawatts, LLC
         NorthWestern Energy Marketing, LLC
         Montana Megawatts I, LLC
         NorthWestern Capital Partners, LLC
         NorthWestern Capital Ventures, LLC
         Cornerstone Propane Partners, LP
         Cornerstone Propane, LP
         Cornerstone Sales & Service Corporation
         Cornerstone Holding Corporation
         Coast Energy Global Services, Inc.
         Propane Continental, Inc.
         Flame, Inc.
         Coast Energy Canada, Inc.
         NSJV, LLC
         TankSat Solutions, Inc.

                                     Sch B-3

<PAGE>


                                                                     Exhibit A-1



               [Paul, Hastings, Janofsky & Walker LLP Letterhead]



January 31, 2002

Morgan Stanley & Co. Incorporated,
Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated and
Salomon Smith Barney Inc.
         as Representatives of the several Underwriters named in
         Schedule A to the Underwriting Agreement described herein,
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York  10036


Re:      NorthWestern Corporation - 8.10% Trust Preferred Securities of
         NorthWestern Capital Financing III

Ladies and Gentlemen:

We have acted as counsel to NorthWestern Corporation, a Delaware corporation
(the "COMPANY"), and NorthWestern Capital Financing III, a Delaware statutory
business trust (the "TRUST"), with respect to the preparation of, and the
consummation of the transactions contemplated by, the Underwriting Agreement
(the "UNDERWRITING AGREEMENT"), dated as of January 24, 2002, among the Company,
the Trust and Morgan Stanley & Co. Incorporated, Merrill Lynch & Co., Merrill
Lynch, Pierce, Fenner & Smith Incorporated and Salomon Smith Barney Inc., as
Representatives of the several Underwriters named in Schedule A thereto
(collectively, the "UNDERWRITERS"), with respect to the issue and sale by the
Trust and the purchase by the Underwriters of an aggregate of 4,000,000 shares
of the Trust's 8.10% Trust Preferred Securities (liquidation amount $25 per
trust preferred security) (the "PREFERRED SECURITIES"). In connection with the
issue and sale by the Trust of the Preferred Securities, the Company has entered
into an Amended and Restated Declaration of Trust of the Trust, dated as January
31, 2002 (including Annex I and Annex II thereto, the "DECLARATION"), among the
Company, as depositor, the trustees of the Trust named therein (the "TRUSTEES")
and the holders, from time to time, of beneficial interests in the assets of the
Trust, pursuant to which the Company has agreed to purchase an aggregate of
123,712 shares of the Trust's 8.10% Trust Common Securities (liquidation amount
$25 per trust common security) (the "COMMON SECURITIES"). In connection with the
issue and sale of the Preferred Securities and the Common Securities, the
Company has entered into a Preferred Securities Guarantee Agreement, dated as of
January 31, 2002 (the "PREFERRED SECURITIES GUARANTEE AGREEMENT"), between the
Company and Wilmington Trust Company for the benefit of the holders of the
Preferred Securities, and a Common Securities Guarantee Agreement, dated as of
January 31, 2002 (the "COMMON SECURITIES GUARANTEE AGREEMENT" and, together with
the Preferred Securities



                                     A-1-1
<Page>

Guarantee Agreement, the "GUARANTEE AGREEMENTS"), for the benefit of the holders
of the Common Securities. The Company has agreed to borrow the proceeds from the
issuance and sale of the Preferred Securities and the Common Securities and in
exchange therefor to issue and sell $103,092,800 aggregate principal amount (the
amount being the aggregate stated liquidation amount of the Preferred Securities
and the Common Securities) of the Company's 8.10% Junior Subordinated Deferrable
Interest Debentures due January 15, 2032 (the "DEBENTURES"). This opinion is
rendered at the request of the Company and the Trust pursuant to Section 5(b)(i)
of the Underwriting Agreement. Except as otherwise defined herein, capitalized
terms used in this opinion letter are defined as set forth in the Underwriting
Agreement.

In rendering this opinion, we have examined originals or copies of the
following:

(a)      the Restated Certificate of Incorporation of the Company filed November
         9, 2000, certified as of a recent date by the Secretary of State of the
         State of Delaware (the "CERTIFICATE OF INCORPORATION");

(b)      the By-Laws of the Company, as amended to February 7, 2001 (the
         "BY-LAWS"), certified to be effective on the date hereof by the
         Assistant Secretary of the Company in a Secretary's Certificate, dated
         the date hereof (the "SECRETARY'S CERTIFICATE");

(c)      a certificate with respect to the good standing of the Company in the
         State of Delaware, certified as of a recent date by the Secretary of
         State of the State of Delaware;

(d)      resolutions of the Board of Directors and the Offering Committee of the
         Board of Directors of the Company authorizing the execution, delivery
         and performance of the Underwriting Agreement and all other instruments
         and agreements entered into in connection with the transactions
         contemplated thereby, certified to be effective on the date hereof by
         the Assistant Secretary of the Company in the Secretary's Certificate;

(e)      the Restated Certificate of Trust of the Trust, dated as of June 30,
         1998, as filed in the office of the Secretary of State of the State of
         Delaware on July 1, 1998, certified as of a recent date by the
         Secretary of State of the State of Delaware (the "CERTIFICATE OF
         TRUST");

(f)      the Declaration, certified to be effective on the date hereof by a
         Regular Trustee of the Trust in a Trustee's Certificate, dated the date
         hereof (the "TRUSTEE'S CERTIFICATE");

(g)      a certificate with respect to the good standing of the Trust in the
         State of Delaware, certified as of a recent date by the Secretary of
         State of the State of Delaware;

(h)      (i)      the Underwriting Agreement;

         (ii)     the Preferred Securities Guarantee Agreement and the Common
                  Securities Guarantee Agreement;

         (iii)    the Indenture, dated as of August 1, 1995 (the "BASE
                  INDENTURE"), between the Company and JPMorgan Chase Bank, as
                  successor to The Chase Manhattan Bank, N.A., as trustee (the
                  "DEBENTURE TRUSTEE"), and the Fourth Supplemental



                                     A-1-2
<Page>

                  Indenture, dated as of January 31, 2002 (the "SUPPLEMENTAL
                  INDENTURE" and, together with the Base Indenture, the
                  "INDENTURE" and, collectively with the Underwriting Agreement,
                  the Guarantee Agreements, the Preferred Securities and the
                  Common Securities, the "FINANCING AGREEMENTS"), between the
                  Company and the Debenture Trustee; and

         (iv)     the form of the Preferred Securities, the form of the Common
                  Securities and the form of the Debentures;

(i)      the Registration Statements on Form S-3 (Nos. 333-58491 and 333-82707)
         filed by the Company and the Trust with the Securities and Exchange
         Commission (the "Commission") under the 1933 Act (together, the
         "REGISTRATION STATEMENT") and the prospectus included in the
         Registration Statement, as supplemented to reflect the terms of the
         Preferred Securities and the terms of the offering of the Preferred
         Securities pursuant to the Underwriting Agreement, as filed with the
         Commission (the "Prospectus");

(j)      (i)      the Secretary's Certificate;

         (ii)     the Trustee's Certificate;

         (iii)    an Officers' Certificate of Kipp D. Orme, Vice
                  President--Finance and Chief Financial Officer of the Company
                  and Eric R. Jacobsen, Vice President, General Counsel, Chief
                  Legal Officer and Assistant Secretary of the Company, dated
                  the date hereof (the "OFFICERS' CERTIFICATE"), delivered to
                  the Underwriters on the date hereof pursuant to Section 5(f)
                  of the Underwriting Agreement;

         (iv)     a Regular Trustee's Certificate of the Regular Trustee of the
                  Trust, dated the date hereof (the "REGULAR TRUSTEE'S
                  CERTIFICATE"), delivered to the Underwriters on the date
                  hereof pursuant to Section 5(f) of the Underwriting Agreement;

         (v)      an Incumbency Certificate of the Company, dated the date
                  hereof (the "COMPANY INCUMBENCY CERTIFICATE"), delivered to
                  the Underwriters on the date hereof; and

         (iv)     an Incumbency Certificate of the Trust, dated the date hereof
                  (the "TRUST INCUMBENCY CERTIFICATE" and, collectively with the
                  Secretary's Certificate, the Trustee's Certificate, the
                  Officers' Certificate, the Regular Trustee's Certificate and
                  the Company Incumbency Certificate, the "CERTIFICATES"),
                  delivered to the Underwriters on the date hereof;

(k)      the orders of the Federal Energy Regulatory Commission (the "FERC")
         issued on June 15, 2000 in Docket Nos. ES00-35-000 and ES00-35-001 and
         on May 7, 2001 in Docket No. ES01-28-000; and

(l)      such other documents and records as we have deemed necessary for
         purposes of this opinion.



                                     A-1-3
<Page>

In rendering this opinion we have made the following assumptions, each without
any investigation or independent verification, except as otherwise noted, and
our opinion is subject to the qualifications set forth below.

Insofar as the opinions expressed in paragraphs 1, 2 and 5 below relate to the
Trust or the Trustees or matters which are governed by the Delaware Business
Trust Act, we have relied with your permission solely upon the opinion of
Richards, Layton & Finger, P.A., a copy of which is attached hereto, without any
independent investigation by us in accordance with the Legal Opinion Accord of
the American Bar Association.

We have assumed the genuineness of all signatures, the authenticity and
completeness of all documents, certificates and instruments submitted to us as
originals, the conformity with the originals of all documents, certificates and
instruments submitted to us as copies, the authenticity and completeness of such
underlying originals and the legal capacity of all individuals executing such
documents, certificates and instruments.

We have assumed that there are no oral modifications or written agreements or
understandings which limit, modify or otherwise alter the terms, provisions, and
conditions of, or relate to, the transactions contemplated by the Financing
Agreements.

As to matters of fact relevant or material to this opinion, we have relied
without independent investigation on, and assumed the accuracy and completeness
of, the Certificates and the representations and warranties of each party made
in the Financing Agreements. We have not made an investigation as to, and have
not independently verified, the facts underlying the matters covered by the
Certificates or such representations and warranties.

The phrases "to our knowledge," "known to us" and the like mean to the current
actual knowledge of the attorneys of this Firm who have actively and directly
participated in the negotiation and closing of, and who devoted substantive
attention to, the transactions contemplated by the Financing Agreements. Where
matters are stated to be "to our knowledge," "known to us" or the like, our
investigations consisted only of an inquiry of the officers of the Company and
the Trustees of the Trust, the results of which are reflected in the
Certificates, and a review of the Financing Agreements, and known to us by
virtue of our representation of the Company and the Trust with respect to the
transactions contemplated by the Financing Agreements. We have not made any
investigation of other attorneys of this Firm, of our files or as to the facts
underlying the matters covered by the Certificates or the Financing Agreements.

We also have assumed (a) the due authorization, execution, acknowledgement as
indicated thereon and delivery of documents recited herein or delivered at the
closing (including the Financing Agreements) by each party thereto (other than
the Company and the Trust), that each party (other than the Company and the
Trust) has taken all other acts necessary for the performance of its obligations
under the Financing Agreements, and the validity, binding effect and
enforceability thereof, against each party thereto other than the Company and
the Trust, (b) that, with respect to all parties (other than the Company and the
Trust), each party is validly existing and has full power, authority and legal
right to execute and deliver the Financing Agreements to which it is a party and
to carry out the transactions contemplated thereunder, and that each is duly
qualified and in good standing in each jurisdiction where qualification is




                                     A-1-4
<Page>

required to the extent that any of the opinions expressed herein would be
affected by the failure to so qualify and (c) that each party (other than the
Company and the Trust), has complied with any order, rule, regulation or law
which may be applicable to such party with regard to any aspect of the
transactions contemplated by the Financing Agreements to the extent that any of
the opinions expressed herein would be affected by the failure to so comply.

Statements in this opinion as to the validity, binding effect and enforceability
are subject to the following qualifications (a) they are limited by applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance and transfer,
moratorium or other laws now or hereafter in effect relating to or affecting the
rights or remedies of creditors generally and by general principles of equity
(whether applied in a proceeding at law or in equity) including, without
limitation, standards of materiality, good faith and reasonableness in the
interpretation and enforcement of contracts, and the application of such
principles to limit the availability of equitable remedies such as specific
performance and (b) with reference to, but without limiting in any way,
qualification (a) above, provisions indemnifying a party against liability for
its own wrongful or negligent acts or otherwise in cases where indemnification
could be considered contrary to public policy (including, without limitation,
under federal and state securities laws and regulations as interpreted by
applicable governmental authorities), provisions waiving defenses or other
rights and provisions to the effect that terms of the documents may not be
waived or modified except in writing, are or may be unenforceable in whole or in
part under applicable law; however, subject to the other qualifications stated
herein, such unenforceability will not, in our opinion, make the remedies
afforded by the Underwriting Agreement, the Guarantee Agreements, the
Declaration, the Indenture and the Debentures, taken as a whole, inadequate for
the practical realization of remedies upon a default by the Company or the
Trust.

We are members of the Bar of the State of New York and our opinions herein are
limited to the laws of the State of New York, the General Corporation Law of the
State of Delaware (based solely on our review of a standard compilation of such
law) and the federal law of the United States, and we do not express any opinion
as to the laws of any other state or jurisdiction. No opinion is expressed as to
choice of law provisions contained in the Financing Agreements. No opinion is
expressed as to the effect that the law of any other jurisdiction might have
upon the subject matter of the opinions expressed herein under conflicts of laws
principles or otherwise. We express no opinion as to any county, municipal,
city, town or village ordinance, rule or regulation. Except for the opinions in
paragraphs 8, 10, 11 and 13 hereof, we express no opinion herein with respect to
the application of or compliance with any federal or state securities or blue
sky laws or regulations (including, without limitation, any filing or notice
requirements thereunder), and for purposes of this opinion have assumed
compliance by all parties with such laws and regulations.

We express no opinion except as expressly set forth in the numbered paragraphs
below and no opinions shall be implied. We express no opinion as to
environmental laws, antitrust or unfair competition laws or the law of fiduciary
duty, or the rules and regulations promulgated thereunder. We disclaim any
obligation to update any of the opinions expressed herein for events (including
changes of law or fact) occurring after the date hereof.

Based upon and subject to the assumptions, exceptions, qualifications and
limitations set forth herein, we are of the opinion that:



                                     A-1-5
<Page>

1.       The Preferred Securities have been duly authorized by the Declaration
         and, when issued, executed, authenticated, delivered and paid for in
         accordance with the Declaration and the Underwriting Agreement, will be
         validly issued, fully paid and, subject to the qualification set forth
         below, non-assessable undivided beneficial interests in the assets of
         the Trust. Under the Declaration and the Delaware Business Trust Act,
         each holder of Preferred Securities, in such capacity, will be entitled
         to the same limitation on personal liability extended to stockholders
         of private corporations for profit organized under the General
         Corporation Law of the State of Delaware; provided, however, we express
         no opinion with respect to the liability of any holder of Preferred
         Securities who is, was or may become a named Trustee of the Trust.
         Notwithstanding the foregoing, we note that, pursuant to the
         Declaration, holders of Preferred Securities may be obligated to make
         payments or provide indemnity or security under the circumstances set
         forth therein.

2.       Under the Declaration and the Delaware Business Trust Act, the
         execution and the delivery by the Trust of the Underwriting Agreement,
         have been duly authorized by all requisite trust action on the part of
         the Trust.

3.       The Underwriting Agreement has been duly authorized, executed and
         delivered by the Company.

4.       The Guarantee Agreements have been duly authorized, executed and
         delivered by the Company and are valid and binding obligations of the
         Company, enforceable against the Company in accordance with their
         terms.

5.       The Declaration has been duly authorized, executed and delivered by the
         Company and constitutes a legal valid and binding obligation of the
         Company and each of the Trustees, and is enforceable against the
         Company and each of the Trustees in accordance with its terms.

6.       The Indenture has been duly authorized, executed and delivered by the
         Company and constitutes a valid and binding obligation of the Company,
         enforceable against the Company in accordance with its terms.

7.       The Debentures have been duly authorized and executed by the Company
         and, when the Debentures have been duly authenticated by the Debenture
         Trustee in accordance with the provisions of the Indenture and
         delivered against payment of the purchase price as described in the
         Prospectus, the Debentures will constitute valid and binding
         obligations of the Company entitled to the benefits of the Indenture
         and enforceable against the Company in accordance with their terms.

8.       The Indenture, the Preferred Securities Guarantee Agreement and the
         Declaration have each been duly qualified under the 1939 Act.

9.       The execution, delivery and performance of the Underwriting Agreement,
         the Declaration, the Indenture and the Guarantee Agreements and
         compliance by the Company with its obligations thereunder do not and
         will not, whether with or without the giving of notice or lapse of time
         or both, (a) violate or result in the violation of the Certificate of
         Incorporation or By-Laws of the Company existing on the date hereof or


                                     A-1-6
<Page>

         (b) violate or result in the violation of any applicable law, statute,
         rule, regulation, judgment, writ, order or decree known to us of either
         the federal or New York government or any government instrumentality
         thereof existing on the date hereof and having jurisdiction over the
         Company or any of its properties or assets of which we are aware (other
         than state securities or blue sky laws, as to which we express no
         opinion and other than federal securities laws, as to which we express
         no opinion in this paragraph).

10.      Based upon the oral advice of the Commission, the Registration
         Statement has been declared effective under the 1933 Act; any required
         filing of the Prospectus pursuant to Rule 424(b) has been made in the
         manner and within the time period required by Rule 424(b); and we are
         not aware, after due inquiry, of any stop order suspending the
         effectiveness of the Registration Statement and, to our knowledge, no
         proceedings for that purpose have been initiated or are pending or
         overtly threatened by the Commission.

11.      The Registration Statement, the Prospectus, and each amendment or
         supplement to the Registration Statement and the Prospectus (excluding
         the documents incorporated by reference in each of the foregoing), as
         of their respective effective or issue dates (except for the financial
         statements, notes and schedules thereto, the other financial,
         accounting and statistical data derived from the internal financial
         records of the Company included or incorporated by reference therein or
         omitted therefrom and Exhibit 25 to the Registration Statement, as to
         which it is understood we express no opinion) comply as to form in all
         material respects with the requirements of the 1933 Act and the 1933
         Act Regulations.

12.      The statements set forth in the Prospectus under the captions
         "Description of the Trust Preferred Securities," "Description of the
         Subordinated Debentures," "Description of the Preferred Securities
         Guarantee," "Description of the Trusts' Preferred Securities,"
         "Description of the Guarantees" and "Relationship Among the Preferred
         Securities, the Subordinated Debt Securities and the Guarantees," the
         information relating to the Subordinated Debt Securities (as defined in
         the Prospectus) under the caption "Description of Debt Securities"
         (other than the information described under "Description of Debt
         Securities--Option to Accelerate Maturity Date") and the information
         contained under Item 15 in the Registration Statement insofar as they
         purport to constitute a summary of matters of law, legal matters or the
         By-Laws, are correct summaries in all material respects.

13.      Neither the Company nor the Trust is, and upon the issuance and sale of
         the Preferred Securities as herein contemplated and the application of
         the net proceeds therefrom as described in the Prospectus neither will
         be, required to be registered under the Investment Company Act of 1940,
         as amended.

14.      The FERC has issued appropriate authorizations with respect to the
         issuance of the Guarantees and the Debentures in accordance with the
         Indenture, the Preferred Securities Guarantee Agreement and the Common
         Securities Guarantee Agreement; to our knowledge, after due inquiry,
         such authorizations are in full force and effect and the issuance of
         the Guarantees and the Debentures are in conformity with the terms of
         such authorizations, and no other authorization, approval or consent,
         or other action by or



                                     A-1-7
<Page>

         filing with any New York or federal governmental authority or agency
         or, to our knowledge, any New York or federal court, not already
         obtained, is legally required for the issuance and sale of the
         Securities as contemplated by the Financing Agreements, except such as
         may have been obtained under the 1933 Act, the 1934 Act, the 1939 Act
         and such as may be required under state securities or blue sky laws (as
         to which we express no opinion).

We have participated in conferences with directors, officers and other
representatives of the Company, the Trustees and other representatives of the
Trust, representatives of the independent public accountants for the Company and
the Trust, representatives of the Underwriters and representatives of counsel
for the Underwriters, at which conferences the contents of the Registration
Statement and the Prospectus and related matters were discussed. Although we
have reviewed the documents incorporated by reference in the Registration
Statement and the Prospectus, we did not participate in their preparation. In
addition, we did not undertake to determine or verify independently and,
therefore, are not passing upon and do not assume any responsibility, explicitly
or implicitly, for the accuracy, completeness or fairness of the statements
contained in the Registration Statement or the Prospectus (except to the extent
specified in paragraph 12 above). Based upon and subject to the foregoing, no
facts have come to our attention that have caused us to believe that, the
Registration Statement, on the effective date thereof, contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements contained therein not
misleading or that the Prospectus, on the date thereof or on the date hereof,
contained or contains an untrue statement of a material fact or omitted or omits
to state a material fact required to be stated therein or necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading (it being understood that we express no view with
respect to the financial statements, notes and schedules thereto, the other
financial, accounting and statistical data derived from the internal financial
records of the Company included or incorporated by reference therein or omitted
therefrom and Exhibit 25 to the Registration Statement).

The opinions and views expressed herein are solely for the information of the
addressees in connection with the transactions contemplated by the Financing
Agreements, and may not be relied upon in any other context or by any other
person, firm or entity, or relied upon or quoted in whole or part or otherwise
referred to for any other purpose, nor is it to be delivered to, filed with, or
furnished or disclosed to any governmental agency or other person, firm or
entity without our prior express written consent.

Sincerely,





                                     A-1-8
<Page>


                                                                     Exhibit A-2


               [Paul, Hastings, Janofsky & Walker LLP Letterhead]


January 31, 2002

Morgan Stanley & Co. Incorporated,
Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated and
Salomon Smith Barney Inc.,
         as Representatives of the several Underwriters named in
         Schedule A to the Underwriting Agreement described herein,
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York  10036


Re:      NorthWestern Corporation - 8.10% Trust Preferred Securities of
         NorthWestern Capital Financing III

Ladies and Gentlemen:

We have acted as special tax counsel to NorthWestern Corporation, a Delaware
corporation (the "COMPANY"), and NorthWestern Capital Financing II, a Delaware
statutory business trust (the "TRUST"), with respect to the preparation of, and
the consummation of the transactions contemplated by, the Underwriting Agreement
(the "UNDERWRITING AGREEMENT"), dated as of January 24, 2002, among the Company,
the Trust and Morgan Stanley & Co. Incorporated, Merrill Lynch & Co., Merrill
Lynch, Pierce, Fenner & Smith Incorporated and Salomon Smith Barney Inc., as
Representatives of the several Underwriters named in Schedule A thereto
(collectively, the "UNDERWRITERS"), with respect to the issue and sale by the
Trust and the purchase by the Underwriters of an aggregate of 4,000,000 shares
of the Trust's 8.10% Trust Preferred Securities (liquidation amount $25 per
trust preferred security) (the "PREFERRED Securities"). In connection with the
issue and sale by the Trust of the Preferred Securities, the Company has entered
into an Amended and Restated Declaration of Trust of the Trust, dated as of
January 31, 2002 (including Annex I and Annex II thereto, the "DECLARATION"),
among the Company, as depositor, the trustees of the Trust named therein (the
"TRUSTEES") and the holders, from time to time, of beneficial interests in the
assets of the Trust, pursuant to which the Company has agreed to purchase an
aggregate of 123,712 shares of the Trust's 8.10% Trust Common Securities
(liquidation amount $25 per trust common security) (the "COMMON SECURITIES"). In
connection with the issue and sale of the Preferred Securities and the Common
Securities, the Company has entered into a Preferred Securities Guarantee
Agreement, dated as of January 31, 2002 (the "PREFERRED SECURITIES GUARANTEE
AGREEMENT"), between the Company and Wilmington Trust Company for the benefit of
the holders of the Preferred Securities, and a Common Securities Guarantee
Agreement, dated as of January 31, 2002 (the "COMMON SECURITIES GUARANTEE
AGREEMENT" and, together with the Preferred Securities Guarantee Agreement, the
"GUARANTEE AGREEMENTS"), for the benefit of the holders of the




                                     A-2-1
<Page>

Common Securities. The Company has agreed to borrow the proceeds from the
issuance and sale of the Preferred Securities and the Common Securities and in
exchange therefor to issue and sell $103,092,800 aggregate principal amount (the
amount being the aggregate stated liquidation amount of the Preferred Securities
and the Common Securities) of the Company's 8.10% Junior Subordinated Deferrable
Interest Debentures due January 15, 2032 (the "DEBENTURES"). This opinion is
rendered at the request of the Company and the Trust pursuant to Section 5(b)(i)
of the Underwriting Agreement. Except as otherwise defined herein, capitalized
terms used in this opinion letter are defined as set forth in the Underwriting
Agreement..

In rendering this opinion, we have examined originals or copies of the
following:

(a)      the Restated Certificate of Trust of the Trust, dated as of June 30,
         1998, as filed in the office of the Secretary of State of the State of
         Delaware on July 1, 1998, certified as of a recent date by the
         Secretary of State of the State of Delaware (the "CERTIFICATE OF
         TRUST");

(b)      the Declaration, certified to be effective on the date hereof by a
         Regular Trustee of the Trust in a Trustee's Certificate, dated the date
         hereof (the "TRUSTEE'S CERTIFICATE");

(c)      a certificate with respect to the good standing of the Trust in the
         State of Delaware, certified as of a recent date by the Secretary of
         State of the State of Delaware;

(d)      (i)      the Underwriting Agreement;

         (ii)     the Preferred Securities Guarantee Agreement and the Common
                  Securities Guarantee Agreement;

         (iii)    the Subordinated Debt Securities Indenture, dated as of August
                  1, 1995 (the "BASE INDENTURE"), between the Company and
                  JPMorgan Chase Bank, as successor to The Chase Manhattan Bank,
                  N.A., as trustee (the "DEBENTURE TRUSTEE"), and the Fourth
                  Supplemental Indenture, dated as of January 31, 2002 (the
                  "SUPPLEMENTAL INDENTURE" and, together with the Base
                  Indenture, the "Indenture" and, collectively with the
                  Underwriting Agreement, the Guarantee Agreements, the
                  Preferred Securities and the Common Securities, the "FINANCING
                  AGREEMENTS"), between the Company and the Debenture Trustee;
                  and

         (iv)     the form of the Preferred Securities, the form of the Common
                  Securities and the form of the Debentures;

(e)      the Registration Statements on Form S-3 (Nos. 333-58491 and 333-82707)
         filed by the Company and the Trust with the Securities and Exchange
         Commission (the "Commission") under the 1933 Act (together, the
         "REGISTRATION STATEMENT") and the prospectus included in the
         Registration Statement, as supplemented to reflect the terms of the
         Preferred Securities and the terms of the offering of the Preferred
         Securities pursuant to the Underwriting Agreement, as filed with the
         Commission (the "Prospectus"); and

(f)      such other documents and records as we have deemed necessary for
         purposes of this opinion;



                                     A-2-2
<Page>

         In our examination, we have assumed that (i) the statements concerning
the issuance of the Preferred Securities and Debentures referred to in the
Registration Statement and Prospectus are true, correct and complete, (ii) the
terms of the documents listed in the preceding paragraph will be complied with,
(iii) the factual representations made to us by the Company in its letter to us
dated as of the date hereof and delivered to us for purposes of this opinion
(the "Representation Letter") are true, correct and complete and (iv) any
factual representations made in the Registration Statements, Prospectus or the
Representation Letter "to the best knowledge of" or similarly qualified are
true, correct and complete without such qualification.

         Based solely upon the foregoing, we are of the opinion that under
current United States federal income tax law:

1.       The Debentures will be classified for United States federal income tax
         purposes as indebtedness of the Company.

2.       The Trust will be classified for United States federal income tax
         purposes as a grantor trust and not as an association subject to tax as
         a corporation.

3.       Although the discussion set forth in the Prospectus under the heading
         "Certain United States Federal Income Tax Consequences" does not
         purport to discuss all possible United States federal income tax
         consequences of the purchase, ownership, and disposition of Preferred
         Securities, such discussion constitutes, in all material respects, a
         fair and accurate summary of the United States federal income tax
         consequences of the purchase, ownership, and disposition of Preferred
         Securities under current law.

Our opinion is limited to the tax matters specifically covered hereby. Our
opinion is based upon current statutory, regulatory and judicial authority, any
of which may be changed at any time with retroactive effect. We disclaim any
undertaking to advise you of any subsequent changes of the matters stated,
represented or assumed herein or any subsequent changes in applicable law,
regulations or interpretations thereof. Without our prior written consent, this
opinion may not be furnished or quoted to, or relied upon by, any other persons
for any purpose.

Very truly yours,







                                     A-2-3
<Page>


                                                                       Exhibit B


                            [NorthWestern Letterhead]

January 31, 2002

Morgan Stanley & Co. Incorporated,
Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated and
Salomon Smith Barney Inc.,
         as Representatives of the several Underwriters named in
         Schedule A to the Underwriting Agreement described herein,
c/o Morgan Stanley & Co. Incorporated
1585 Broadway

New York, New York 10036


Re:      NorthWestern Corporation - 8.10% Trust Preferred Securities of
         NorthWestern Capital Financing III

Ladies and Gentlemen:

I am the Vice President - Legal Administration of NorthWestern Corporation, a
Delaware corporation (the "COMPANY"). In such capacity, I have acted as counsel
to the Company and NorthWestern Capital Financing III, a Delaware statutory
business trust (the "TRUST"), with respect to the preparation of, and the
consummation of the transactions contemplated by, the Underwriting Agreement
(the "UNDERWRITING AGREEMENT"), dated as of January 24, 2002, among the Company,
the Trust and Morgan Stanley & Co. Incorporated, Merrill Lynch & Co., Merrill
Lynch, Pierce, Fenner & Smith Incorporated and Salomon Smith Barney Inc., as
Representatives of the several Underwriters named in Schedule A thereto
(collectively, the "UNDERWRITERS"), with respect to the issue and sale by the
Trust and the purchase by the Underwriters of an aggregate of 4,000,000 shares
of the Trust's 8.10% Trust Preferred Securities (liquidation amount $25 per
trust preferred security) (the "PREFERRED SECURITIES"). In connection with the
issue and sale by the Trust of the Preferred Securities, the Company has entered
into an Amended and Restated Declaration of Trust of the Trust, dated as of
January 31, 2002 (including Annex I and Annex II thereto, the "DECLARATION"),
among the Company, as depositor, the trustees of the Trust named therein (the
"TRUSTEES") and the holders, from time to time, of beneficial interests in the
assets of the Trust, pursuant to which the Company has agreed to purchase an
aggregate of 123,712 shares of the Trust's 8.10% Trust Common Securities
(liquidation amount $25 per trust common security)(the "COMMON SECURITIES"). In
connection with the issue and sale of the Preferred Securities and the Common
Securities, the Company has entered into a Preferred Securities Guarantee
Agreement, dated as of January 31, 2002 (the "PREFERRED SECURITIES GUARANTEE
AGREEMENT"), between the Company and Wilmington Trust Company for the benefit of
the holders of the Preferred Securities, and a Common Securities Guarantee
Agreement, dated as of January 31, 2002 (the "COMMON SECURITIES GUARANTEE
AGREEMENT" and, together with the Preferred Securities Guarantee Agreement, the
"GUARANTEE



                                      B-1
<Page>

AGREEMENTS"), for the benefit of the holders of the Common Securities. The
Company has agreed to borrow the proceeds from the issue and sale of the
Preferred Securities and the Common Securities and in exchange therefor to issue
and sell $103,092,800 aggregate principal amount (the amount being the aggregate
stated liquidation amount of the Preferred Securities and the Common Securities)
of the Company's 8.10% Junior Subordinated Deferrable Interest Debentures due
January 15, 2032 (the "DEBENTURES"). This opinion is rendered at the request of
the Company and the Trust pursuant to Sections 5(b)(ii) of the Underwriting
Agreement. Except as otherwise defined herein, capitalized terms used in this
opinion letter are defined as set forth in the Underwriting Agreement.

In rendering this opinion, I have examined originals or copies of the following:

(a)      the Restated Certificate of Incorporation of the Company filed November
         9, 2000, certified as of a recent date by the Secretary of State of the
         State of Delaware (the "CERTIFICATE OF INCORPORATION");

(b)      the By-Laws of the Company, as amended to February 7, 2001 (the
         "BY-LAWS"), certified to be effective on the date hereof by the
         Assistant Secretary of the Company in a Secretary's Certificate, dated
         the date hereof (the "SECRETARY'S CERTIFICATE");

(c)      a certificate with respect to the good standing of the Company in the
         State of Delaware, certified as of a recent date by the Secretary of
         State of the State of Delaware;

(d)      resolutions of the Board of Directors and Offering Committee of the
         Board of Directors of the Company authorizing the execution, delivery
         and performance of the Underwriting Agreement and all other instruments
         and agreements entered into in connection with the transactions
         contemplated thereby, certified to be effective on the date hereof by
         the Assistant Secretary of the Company in the Secretary's Certificate;

(e)      the Restated Certificate of Trust of the Trust, dated as of June 30,
         1998, as filed in the office of the Secretary of State of the State of
         Delaware on July 1, 1998, certified as of a recent date by the
         Secretary of State of the State of Delaware (the "CERTIFICATE OF
         TRUST");

(f)      the Declaration, certified to be effective on the date hereof by a
         Regular Trustee of the Trust in a Trustee's Certificate, dated the date
         hereof (the "TRUSTEE'S CERTIFICATE");

(g)      a certificate with respect to the good standing of the Trust in the
         State of Delaware, certified as of a recent date by the Secretary of
         State of the State of Delaware;

(h)      (i)      the Underwriting Agreement;

         (ii)     the Preferred Securities Guarantee Agreement and the Common
                  Securities Guarantee Agreement;

         (iii)    the Indenture, dated as of August 1, 1995 (the "BASE
                  INDENTURE"), between the Company and JPMorgan Chase Bank, as
                  successor to The Chase Manhattan Bank, N.A., as trustee (the
                  "DEBENTURE TRUSTEE"), and the Fourth Supplemental



                                      B-2
<Page>

                  Indenture, dated as of January 31, 2002 (the "SUPPLEMENTAL
                  INDENTURE" and, together with the Base Indenture, the
                  "INDENTURE" and, collectively with the Underwriting Agreement,
                  the Guarantee Agreements, the Preferred Securities and the
                  Common Securities, the "FINANCING AGREEMENTS"), between the
                  Company and the Debenture Trustee; and

         (iv)     the form of the Preferred Securities, the form of the Common
                  Securities and the form of the Debentures;

(i)      the Registration Statements on Form S-3 (Nos. 333-58491 and 333-82707)
         filed by the Company and the Trust with the Commission under the 1933
         Act (together, the "REGISTRATION STATEMENT") and the prospectus
         included in the Registration Statement, as supplemented to reflect the
         terms of the Preferred Securities and the terms of the offering of the
         Preferred Securities pursuant to the Underwriting Agreement, as first
         filed with the SEC (the "PROSPECTUS");

(j)      (i)      the Secretary's Certificate;

         (ii)     the Trustee's Certificate;

         (iii)    an Officers' Certificate of Kipp D. Orme, Vice
                  President--Finance and Chief Financial Officer of the Company
                  and Eric R. Jacobsen, Vice President, General Counsel, Chief
                  Legal Officer and Assistant Secretary of the Company, dated
                  the date hereof (the "OFFICERS' CERTIFICATE"), delivered to
                  the Underwriters on the date hereof pursuant to Section 5(f)
                  of the Underwriting Agreement;

         (iv)     a Regular Trustee's Certificate of the Regular Trustee of the
                  Trust, dated the date hereof (the "REGULAR TRUSTEE'S
                  CERTIFICATE"), delivered to the Underwriters on the date
                  hereof pursuant to Section 5(f) of the Underwriting Agreement;

         (v)      an Incumbency Certificate of the Company, dated the date
                  hereof (the "COMPANY INCUMBENCY CERTIFICATE"), delivered to
                  the Underwriters on the date hereof; and

         (vi)     an Incumbency Certificate of the Trust, dated the date hereof
                  (the "TRUST INCUMBENCY CERTIFICATE" and, collectively with the
                  Secretary's Certificate, the Trustee's Certificate, the
                  Officers' Certificate, the Regular Trustee's Certificate and
                  the Company Incumbency Certificate, the "CERTIFICATES"),
                  delivered to the Underwriters on the date hereof;

(k)      the orders of the Federal Energy Regulatory Commission (the "FERC")
         issued on June 15, 2000 in Docket Nos. ES00-35-000 and ES00-35-001 and
         on May 7, 2001 in Docket No. ES01-28-000; and

(l)      such other documents and records as I have deemed necessary for
         purposes of this opinion.



                                      B-3
<Page>

In rendering this opinion I have made the following assumptions, each without
any investigation or independent verification, except as otherwise noted, and my
opinion is subject to the qualifications set forth below.

I have assumed the genuineness of all signatures, the authenticity and
completeness of all documents, certificates and instruments submitted to me as
originals, the conformity with the originals of all documents, certificates and
instruments submitted to me as copies, the authenticity and completeness of such
underlying originals and the legal capacity of all individuals executing such
documents, certificates and instruments.

I have assumed that there are no oral modifications or written agreements or
understandings which limit, modify or otherwise alter the terms, provisions, and
conditions of, or relate to, the transactions contemplated by the Financing
Agreements.

As to matters of fact relevant or material to this opinion, I have relied
without independent investigation on, and assumed the accuracy and completeness
of, the Certificates and the representations and warranties of each party made
in the Financing Agreements. I have not made an investigation as to, and have
not independently verified, the facts underlying the matters covered by the
Certificates or such representations and warranties.

The phrases "to my knowledge," "known to me" and the like mean to my current
actual knowledge and the current actual knowledge of members of my staff who
have actively and directly participated in the negotiation and closing of, and
who devoted substantive attention to, the transactions contemplated by the
Financing Agreements. Where matters are stated to be "to my knowledge," "known
to me" or the like, my investigations consisted only of an inquiry of the
officers of the Company and the Trustees of the Trust, the results of which are
reflected in the Certificates, and a review of the Financing Agreements, and
known to me in my capacity as Vice President - Legal Administration of the
Company and by virtue of my representation of the Company and the Trust with
respect to the transactions contemplated by the Financing Agreements. I have not
made any investigation of other employees of the Company or the Trustees of the
Trust, of the Company's or the Trust's files or as to the facts underlying the
matters covered by the Certificates or the Financing Agreements.

I am a member of the Bar of the States of South Dakota and Nebraska, and my
opinions herein are limited to the laws of those States, the General Corporation
Law of the State of Delaware (based solely on my review of a standard
compilation of such laws) and the federal law of the United States, and I do not
express any opinion as to the laws of any other state or jurisdiction. No
opinion is expressed as to the effect that the law of any other jurisdiction
might have upon the subject matter of the opinions expressed herein under
conflicts of laws principles or otherwise. I express no opinion as to any
county, municipal, city, town or village ordinance, rule or regulation. Except
for my opinion in paragraph 13 hereof, I express no opinion herein with respect
to the application of or compliance with any federal or state securities or blue
sky laws or regulations (including, without limitation, any filing or notice
requirements thereunder), and for purposes of this opinion have assumed
compliance by all parties with such laws and regulations.



                                      B-4
<Page>

I express no opinion except as expressly set forth in the numbered paragraphs
below and no opinions shall be implied. I express no opinion as to environmental
laws, antitrust or unfair competition laws or the law of fiduciary duty, or the
rules and regulations promulgated thereunder. I disclaim any obligation to
update any of the opinions expressed herein for events (including changes of law
or fact) occurring after the date hereof.

Based upon and subject to the assumptions, exceptions, qualifications and
limitations set forth herein, I am of the opinion that:

1.       The Company has been duly incorporated and is validly existing as a
         corporation in good standing under the laws of the state of Delaware.

2.       The Company has all requisite corporate power and authority to own,
         lease and operate its properties and to conduct its business as
         described in the Prospectus and to enter into and perform its
         obligations under the Underwriting Agreement, the Declaration, the
         Indenture and the Guarantee Agreements.

3.       The Company is authorized as a domesticated foreign corporation to
         transact business, and is in good standing, in the State of Nebraska
         and is duly qualified as a foreign corporation to transact business and
         is in good standing in each jurisdiction in which such qualification is
         required, whether by reason of the ownership or leasing of property or
         the conduct of business, except where the failure so to qualify or to
         be in good standing would not result in a Material Adverse Effect.

4.       The authorized, issued and outstanding capital stock of the Company is
         as set forth in the Prospectus in the column entitled "Actual" under
         the caption "Capitalization" (except for the Company's issuance of 3.68
         million shares of common stock in October 2001 and subsequent
         issuances, if any, pursuant to the Underwriting Agreement, pursuant to
         reservations, agreements or employee benefit plans referred to in the
         Prospectus or pursuant to the exercise of convertible securities or
         options referred to in the Prospectus).

5.       Each Subsidiary has been duly organized or formed and is validly
         existing as a corporation or a limited partnership, as the case may be,
         in good standing under the laws of its jurisdiction of incorporation or
         organization, has corporate or partnership power and authority to own,
         lease and operate its properties and to conduct its business as
         described in the Prospectus and is duly qualified as a foreign
         corporation or limited partnership to transact business and is in good
         standing in each jurisdiction in which such qualification is required,
         whether by reason of the ownership or leasing of property or the
         conduct of business, except where the failure so to qualify or to be in
         good standing would not result in a Material Adverse Effect.

6.       Except as otherwise disclosed in the Registration Statement, all of the
         issued and outstanding shares of capital stock or partnership
         interests, as the case may be, of each Subsidiary have been duly
         authorized and validly issued, are fully paid and non-assessable and,
         based solely on a review of the limited partnership agreement of
         CornerStone, the stock ledger of each of the other Subsidiaries and the
         Certificates, to my knowledge, all of the capital stock or limited
         partnership interests, as the case may be, of


                                      B-5
<Page>

         each Subsidiary owned by the Company, directly or through subsidiaries,
         is owned free and clear of any security interest, mortgage, pledge,
         lien, encumbrance, claim or equity. None of the outstanding shares of
         capital stock or partnership interests of any Subsidiary was issued in
         violation of the preemptive or similar rights of any security holder of
         such Subsidiary.

7.       To my knowledge, neither the Company nor any Subsidiary is in violation
         of its charter or by-laws and no default by the Company or any
         Subsidiary exists in the due performance or observance of any material
         obligation, agreement, covenant or condition contained in any contract,
         indenture, mortgage, loan agreement, note, lease or other agreement or
         instrument that is described or referred to in the Registration
         Statement or the Prospectus or filed or incorporated by reference as an
         exhibit to the Registration Statement.

8.       The execution, delivery and performance of the Underwriting Agreement,
         the Declaration of Trust, the Indenture and the Guarantee Agreements
         and the consummation of the transactions contemplated thereunder and in
         the Registration Statement (including the issuance and sale of the
         Securities and the use of the proceeds from the sale of the Securities
         as described in the Prospectus under the caption "Use Of Proceeds") and
         compliance by the Company with its obligations thereunder do not and
         will not, whether with or without the giving of notice or lapse of time
         or both, violate or constitute a breach of, or default or Repayment
         Event (as defined in Section 1(a)(xvii) of the Underwriting Agreement)
         under, or result in the creation or imposition of any lien, charge or
         encumbrance upon any property or assets of the Company or any
         Subsidiary pursuant to, any material contract, indenture, mortgage,
         deed of trust, loan or credit agreement, note, lease or any other
         agreement or instrument, known to me, to which the Company or any
         Subsidiary is a party or by which it or any of them may be bound, or to
         which any of the property or assets of the Company or any Subsidiary is
         subject (except for such violations, breaches or defaults or Repayment
         Events or liens, charges or encumbrances that would not have a Material
         Adverse Effect).

9.       The FERC has issued appropriate authorizations with respect to the
         issuance of the Guarantees and the Debentures in accordance with the
         Indenture, the Preferred Securities Guarantee Agreement and the Common
         Securities Guarantee Agreement; to my knowledge, after due inquiry,
         such authorizations are in full force and effect and the issuance of
         the Guarantees and the Debentures are in conformity with the terms of
         such authorizations; and no other authorization, approval or consent or
         other action by or filing with any South Dakota, Nebraska or federal
         governmental authority or agency or, to my knowledge, any South Dakota,
         Nebraska or federal court, not already obtained, is legally required
         for the issuance and sale of the Securities as contemplated by the
         Financing Agreements, except such as may have been obtained under the
         1933 Act, the 1934 Act, the 1939 Act and such as may be required under
         state securities or blue sky laws (as to which I express no opinion).

10.      Except as disclosed in the Registration Statement, to my knowledge,
         there is not pending or overtly threatened any action, suit,
         proceeding, inquiry or investigation, to which the Company or any




                                      B-6
<Page>

         Subsidiary is a party, or to which the property of the Company or any
         Subsidiary is subject, before or brought by any court or governmental
         agency or body, domestic or foreign, which would result in a Material
         Adverse Effect, or which would materially and adversely affect the
         ability of the Company to consummate the transactions contemplated by
         the Underwriting Agreement.

11.      To my knowledge, there are no statutes or regulations that are required
         to be described in the Prospectus that are not described as required.

12.      To my knowledge, there are no material franchises, contracts,
         indentures, mortgages, loan agreements, notes, leases or other
         instruments required to be described or referred to in the Registration
         Statement or to be filed as exhibits thereto other than those described
         or referred to therein or filed or incorporated by reference as
         exhibits thereto, and insofar as any descriptions of such material
         franchises, contracts, indentures, mortgages, loan agreements, notes,
         leases or other instruments purport to constitute a summary of the
         terms thereof, such summaries are correct in all material respects.

13.      The documents incorporated by reference in the Prospectus (except for
         the financial statements, notes and schedules thereto, the other
         financial, accounting and statistical data derived from the internal
         financial records of the Company included or incorporated by reference
         therein or omitted therefrom and Exhibit 25 to the Registration
         Statement, as to which it is understood I express no opinion), when
         they were filed with the Commission, complied as to form in all
         material respects with the requirements of the 1933 Act or the 1934
         Act, as applicable, and the rules and regulations of the Commission
         thereunder.

I have participated in conferences with directors, officers and other
representatives of the Company, the trustees and other representatives of the
Trust, representatives of the independent public accountants for the Company and
the Trust, representatives of the Underwriters and representatives of counsel
for the Underwriters, at which conferences the contents of the Registration
Statement and the Prospectus and related matters were discussed and, although I
did not undertake to determine or verify independently and, therefore, am not
passing upon and do not assume any responsibility, explicitly or implicitly, for
the accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus (except to the extent specified in
paragraph 12 above), no facts have come to my attention that have caused me to
believe that, the Registration Statement on the effective date thereof,
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements contained
therein not misleading or that the Prospectus, on the date thereof or on the
date hereof, contained or contains an untrue statement of a material fact or
omitted or omits to state a material fact required to be stated therein or
necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading (it being understood
that I express no view with respect to the financial statements, notes and
schedules thereto, the other financial, accounting and statistical data derived
from the internal financial records of the Company included or incorporated by
reference therein or omitted therefrom and Exhibit 25 to the Registration
Statement).

The opinions and views expressed herein are solely for the information of the
addressee in connection with the transactions contemplated by the Financing
Agreements, and is not to be relied upon in any other context or by any other
person, firm or entity, or relied upon or quoted



                                      B-7
<Page>




in whole or part and not otherwise referred to for any other purpose, nor is it
to be delivered to, filed with, or furnished or disclosed to any governmental
agency or other person, firm or entity without my prior express written consent.

Sincerely,









                                      B-8


<PAGE>




                                                                       Exhibit C

                   FORM OF OPINION OF SPECIAL DELAWARE COUNSEL
                     FOR THE TRUST TO BE DELIVERED PURSUANT
                                 TO SECTION 5(c)


         (i) The Trust has been duly formed and is validly existing in good
standing as a business trust under the Delaware Act. All filings required under
the laws of the State of Delaware with respect to the formation and valid
existence of the Trust as a business trust have been made. Under the Declaration
and the Delaware Act, the Trust has the requisite business trust power and
authority to conduct its business, all as described in the Prospectus.

         (ii) The Declaration constitutes a legal, valid and binding obligation
of the Company and each of the Trustees, and is enforceable against the Company
and each of the Trustees, in accordance with its terms, except to the extent
that enforcement thereof may be limited by (i) bankruptcy, insolvency,
moratorium, receivership, reorganization, liquidation, fraudulent conveyance or
transfer and other similar laws relating to or affecting the rights and remedies
of creditors generally, (ii) principles of equity, including applicable law
relating to fiduciary duties (regardless of whether considered and applied in a
proceeding in equity or at law), and (iii) the effect of applicable public
policy on the enforceability of provisions relating to indemnification or
contribution.

         (iii) The Preferred Securities have been duly authorized by the
Declaration and, when issued, executed, authenticated, delivered and paid for in
accordance with the Declaration and the Purchase Agreement, will be validly
issued, fully paid and, subject to the qualifications set forth in paragraph
(iv) below, non-assessable undivided beneficial interests in the assets of the
Trust and will entitle the holders of the Preferred Securities to the benefits
of the Declaration except to the extent that enforcement of the Declaration may
be limited by (i) bankruptcy, insolvency, moratorium, receivership,
reorganization, liquidation, fraudulent conveyance or transfer and other similar
laws relating to or affecting the rights and remedies of creditors generally,
(ii) principles of equity, including applicable law relating to fiduciary duties
(regardless of whether considered and applied in a proceeding in equity or at
law), and (iii) the effect of applicable public policy on the enforceability of
provisions relating to indemnification or contribution. Under the Delaware Act
and the Declaration, the issuance of the Preferred Securities is not subject to
any preemptive or other similar rights.

         (iv) Under the Declaration and the Delaware Act, each Preferred
Security Holder of the Trust, in such capacity, will be entitled to the same
limitation on personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of the State
of Delaware; provided, however, we express no opinion with respect to the
liability of any Preferred Security Holder who is, was or may become a named
Trustee of the Trust. Notwithstanding the foregoing, we note that, pursuant to
the Declaration, Preferred Security Holders may be obligated to make payments or
provide indemnity or security under the circumstances set forth therein.



                                       C-1
<PAGE>

         (v) The Common Securities have been duly authorized for issuance by the
Declaration and, when issued, executed, authenticated, delivered and paid for in
accordance with the Declaration and the Common Securities Subscription
Agreement, will be validly issued, fully paid undivided beneficial interests in
the assets of the Trust and will entitle the holders of the Common Securities to
the benefits of the Declaration except to the extent that enforcement of the
Declaration may be limited by (i) bankruptcy, insolvency, moratorium,
receivership, reorganization, liquidation, fraudulent conveyance or transfer and
other similar laws relating to or affecting the rights and remedies of creditors
generally, (ii) principles of equity, including applicable law relating to
fiduciary duties (regardless of whether considered and applied in a proceeding
in equity or at law), and (iii) the effect of applicable public policy on the
enforceability of provisions relating to indemnification or contribution. Under
the Delaware Act and the Declaration, the issuance of the Preferred Securities
is not subject to any preemptive or other similar rights.

         (vi) Under the Declaration and the Delaware Act, the Trust has the
requisite business trust power and authority to execute and deliver the Purchase
Agreement and to perform its obligations under the Purchase Agreement and to
consummate the transactions contemplated thereby. Under the Declaration and the
Delaware Act, the execution and delivery by the Trust of the Purchase Agreement,
and the performance of its obligations thereunder, have been duly authorized by
all requisite trust action on the part of the Trust.

         (vii) We have reviewed the statements made in the Prospectus under the
captions "The Trusts" and "NorthWestern Capital Financing III" and, insofar as
they contain statements of Delaware law, such statements are fairly presented.

         (viii) No authorization, approval, consent or order of any Delaware
court or Delaware governmental authority or Delaware agency is required to be
obtained by the Trust solely as a result of the issuance and sale of the Trust
Securities.

         (ix) The issuance and sale by the Trust of the Trust Securities, the
execution, delivery and performance by the Trust of the Purchase Agreement and
the Declaration and compliance by the Trust with its obligations thereunder do
not violate (i) any provisions of the Declaration or (ii) any applicable
Delaware law or Delaware administrative regulation.



                                       C-2