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                                                                    Exhibit 10.7
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                            NORTHWESTERN CORPORATION

                                  COMPREHENSIVE
                              EMPLOYMENT AGREEMENT
                                       AND
                        EQUITY PARTICIPATION PROGRAM FOR

                                ERIC R. JACOBSEN

                                  MARCH 1, 2001
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                                    AGREEMENT

         This COMPREHENSIVE EMPLOYMENT AGREEMENT AND EQUITY PARTICIPATION
PROGRAM ("Agreement"), dated as of March 1, 2001, is entered into by and between
Eric R. Jacobsen, an individual ("EXECUTIVE"), and NorthWestern Corporation
("NorthWestern") and supersedes any prior Employment Agreement between Executive
and NorthWestern.

AGREEMENT:

   1.    EMPLOYMENT BY NORTHWESTERN AND DURATION.

         a. FULL TIME AND BEST EFFORTS. Subject to the terms set forth herein,
NorthWestern agrees to employ Executive to provide management services for
NorthWestern as Vice President, General Counsel and Chief Legal Officer, and
Executive hereby accepts such employment. During the term of his employment with
NorthWestern, Executive will devote his best efforts and substantially all of
his business time and attention to the performance of his duties hereunder,
except for vacation periods as set forth herein and reasonable absences due to
injury, illness as permitted by NorthWestern's general policies. Executive may
participate in the affairs of any governmental, educational or other charitable
institution, engage in professional speaking and writing activities and serve as
a member of the board of directors of civic, private or publicly held
corporations or entities, so long as NorthWestern's Chief Executive Officer, in
good faith, does not determine that such activities unreasonably interfere with
Executive's obligations under this Agreement, and Executive shall be entitled to
retain all fees, royalties and other compensation derived from such activities

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in addition to the compensation and other benefits payable to him under this
Agreement.

         b. DUTIES. Executive shall serve as Vice President, General Counsel and
Chief Legal Officer and shall perform such duties as are customarily associated
with his current title, consistent with the By-Laws of NorthWestern and as
required by NorthWestern's Board of Directors (the "Board").

         c. NORTHWESTERN POLICIES. The employment relationship between the
parties shall be governed by the general employment policies and practices of
NorthWestern, including without limitation those relating to conduct,
confidential information, avoidance of conflicts, and sexual and other unlawful
harassment (collectively, "NorthWestern Policies") except that when the terms of
this Agreement differ from or are in conflict with NorthWestern's general
employment policies or practices, this Agreement shall control.

         d. DURATION. The term of employment hereunder shall commence March 1,
2001, and end on February 28, 2004, and, subject to the termination provisions
hereinafter contained, such termination date shall be automatically extended for
an additional period of one (1) year on each March 1st, unless either
NorthWestern or Executive notifies the other party of the intent not to extend
such termination date, such notice to be given in writing not less than ninety
(90) days prior to the automatic renewal date.

         e. LOCATIONS OF PERFORMANCE. Executive shall perform his principal
services for NorthWestern in the vicinity of Sioux Falls, South Dakota. The
parties acknowledge, however, that Executive will be required to undertake
reasonable travel to NorthWestern's market areas in connection with the
performance of his duties hereunder.

   2.    COMPENSATION AND BENEFITS.

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         a. SALARY. Executive shall receive, for services to be rendered
hereunder, annual base compensation included in Schedule A hereto.

         b. BONUS. Executive shall receive such discretionary bonuses, if any,
as the Board in its sole discretion and from time to time may deem appropriate.

         c. SHORT-TERM INCENTIVE PLANS. Executive shall be eligible to
participate in the Short-Term Incentive Plans on the terms and conditions set
forth in Schedule B attached hereto.

         d. LONG-TERM EQUITY PLANS. Executive shall be eligible to participate
in the Long-Term Equity Plans for NorthWestern on the terms and conditions set
forth in Schedule C attached hereto.

         e. PARTICIPATION IN BENEFIT PLANS. During the term hereof, Executive
shall be entitled to participate in the plans and programs as set forth in
Schedule D attached hereto, or those established by NorthWestern hereafter as a
substitute for or alternative to one or more Schedule D plans so long as any
such plan provides Executive (and covered family members or dependants) with
substantially equivalent benefits in all material respects (hereinafter,
"Equivalent Coverage") (all such pensions, plans or programs, including without
limitation, any pension, retirement benefit, supplemental pension, supplemental
income plan, whether qualified, non-qualified, or whether fully, partially or
unfunded, shall be collectively referred to herein as "Benefit Plans").
Executive shall be eligible to participate in only one, not both, of the plans
in question. NorthWestern may, in its sole discretion and from time to time,
establish additional senior management benefit programs as it deems appropriate,
and Executive shall be entitled to participate in such additional senior
management benefit programs on the same basis as other senior executives of
NorthWestern.

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         f. CHANGE IN CONTROL. Executive shall be entitled to certain special
rights under the Change in Control and Major Transaction provisions as set forth
in paragraph 7 of this Agreement.

         g. WITHHOLDING. All payments and benefits under this paragraph 2 for
which withholding is required under applicable law will be made subject to the
required withholding.

         h. HOLD HARMLESS. NorthWestern shall hold Executive harmless against
any and all losses that he may directly or indirectly incur as a result of (I)
any third party claims brought against Executive (other than by any taxing
authority) with respect to NorthWestern's performance of, or (II) NorthWestern's
failure to perform any commitment made to Executive, in this paragraph 2.

  3.     REASONABLE BUSINESS EXPENSES AND SUPPORT.

         Executive shall be reimbursed for documented and reasonable business
expenses in connection with the performance of his duties hereunder.

   4.    TERMINATION OF EMPLOYMENT.

         The date on which Executive's employment by NorthWestern ceases, under
any of the following circumstances, shall be defined herein as the "Termination
Date."

         a.       TERMINATION WITHOUT CAUSE.

                  i. TERMINATION PAYMENT. Upon notice to Executive,
NorthWestern's Board may terminate Executive's employment with NorthWestern at
will at any time for any reason and without "Cause," as defined below. In the
event Executive's employment is terminated by NorthWestern without Cause,
Executive shall receive payment for all accrued salary and vacation time through
the Termination Date, and NorthWestern shall pay to Executive within 90 days of
the Termination Date a lump sum, in cash, equal to the sum of:

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         (1) the "Term Factor" multiplied by the sum of (i) Executive's annual
base salary in effect as of the Termination Date, (ii) the higher of the most
recent annual bonuses and incentive compensation provided under paragraphs 2.b.
and 2.c. and the average of the annual bonuses and incentive compensation
provided to Executive under any annual incentive compensation programs,
including those under paragraph 2.b. and 2.c. with respect to the three calendar
years preceding the calendar year containing the Termination Date, all as if
fully vested, and (iii) an amount equal to the higher of the fair market value,
determined as provided herein, of the sum of the most recent annual stock option
grants and the other long-term incentive awards provided under paragraph 2.d.
and the average of the fair market value of the annual stock option grants
provided under paragraph 2.d. with respect to the three calendar years preceding
the calendar year containing the Termination Date (in each case, subject to
paragraph (3) below, fair market value shall be determined in a manner
consistent with past practice of the Board's Nominating and Compensation
Committee), all as if fully vested; PLUS

         (2) an amount equal to the sum of: (i) the "Term Factor" multiplied by
the higher of the fair market value of the most recent acquisition return and
improved return private equity interests provided under paragraph 2.d. and the
average of the fair market value of the acquisition return and improved return
private equity interests provided under paragraph 2.d. with respect to the three
calendar years preceding the calendar year containing the Termination Date
(including for purposes of this calculation amounts allocated to Executive in
respect of annual acquisition returns, annual appreciation from improved returns
or similar items under any private equity investment partnership, limited
liability company or other entity that has invested in NorthWestern or any of
its affiliates (collectively, a "Private Equity Entity")), all as if fully
vested; (ii) an amount equal to the fair market value of all long term private
equity interests provided under

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paragraph 2.d. (without duplication for long-term private equity interests held
by Executive in any Private Equity Entity) all as if fully vested; and (iii) the
value of Executive's interest in all Benefit Plans under paragraph 2.e. as if
fully vested (and giving effect to the provisions of paragraph 4.f.), payable in
a lump sum (subject to Executive's right to elect a deferral) as set forth in
paragraph 4.g. (without duplication of the value of Executive's interest in any
such plans for which Executive retains his contractual rights to future benefits
in lieu of a current or deferred lump sum payment). Payments will be made
directly from the Benefit Plans only to the extent allowed for by law and
provided for by such Benefit Plans.

     (3) for purposes of the foregoing calculations: (i) the "Term Factor" shall
equal the number of full and partial years (prorated to the nearest month) in
the remaining term of this Agreement as specified in paragraph 1.d. plus one
year; (ii) the determination of fair market value of any interest or amount
shall be determined in each case, without a discount for minority interest, lack
of liquidity or other factor by a nationally recognized investment banking firm
reasonably acceptable to NorthWestern and Executive at the cost of NorthWestern,
(iii) the most recent annual amount or the average amount of any item
calculated, as the case may be, shall include the amounts payable in respect of,
or the fair market value of the private equity interests created with respect
to, the acquisitions and investments made in the current year, assuming the
immediate and full vesting thereof, if the inclusion of such amounts or fair
market value would result in a higher payment, or, at Executive's option, any
stock options may continue to be held by Executive; and (iv) any amounts payable
under sub-paragraph (2) above shall be grossed-up to such higher amount that
results in the net amount retained by Executive being equivalent to the amount
that Executive would have retained had such payments

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been subject to the then applicable income tax rate on long-term capital gains
(an example of the method of calculation of these amounts is set forth on
Schedule E).

                  ii. FUNDAMENTAL CHANGES. In the event of the occurrence of a
fundamental change as defined herein below, Executive may terminate his
employment at any time after providing NorthWestern with both notice of the
conduct Executive alleges to be a fundamental change and with a reasonable
period of time not to exceed thirty (30) days during which NorthWestern may cure
such fundamental change. "Fundamental Change" shall be defined as any of the
following:

         (a) Diminution in Executive's duties, authority, or responsibilities,
or a reduction in compensation and/or benefits as provided herein or a
significant adverse change in the nature of Executive's reporting
responsibilities (including, without limitation, a change in reporting that
would indicate a diminution in Executive's duties, authority and
responsibilities);

         (b) NorthWestern moves Executive's primary office more than thirty (30)
miles from its location on the Effective Date or requires Executive to travel
for business to an extent materially greater than Executive's customary travel
obligations, in each case without Executive's consent;

         (c)      A Change in Control or Major Transaction has occurred; or

         (d)      A material breach of this Agreement by NorthWestern.

                  Executive's right to terminate Executive's employment due to a
Fundamental Change shall not be affected by Executive's incapacity due to
physical or mental illness, and Executive's continued employment shall not
constitute consent to, or a waiver of rights with respect to, any Fundamental
Change. A termination by Executive in the event of a Fundamental Change shall be
treated as a NorthWestern

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termination without Cause, and Executive shall be entitled to the termination
payments as provided in paragraph 4.a.i. of this Agreement.

         b.       TERMINATION FOR CAUSE.

                  i. TERMINATION PAYMENTS. NorthWestern's Board may terminate
Executive's employment with NorthWestern at any time for "Cause" as defined
below, upon notice to Executive in the manner set forth below in paragraph
4.b.ii. In the event that Executive's employment is terminated for Cause,
Executive shall receive payment for all accrued salary and vacation time through
the Termination Date, which in this event shall be the date upon which notice of
termination is given. Executive shall also receive any vested compensation
benefits or incentives as provided under the benefit programs provided pursuant
paragraphs 2.c., 2.d. and 2.e. hereof, including NorthWestern Stock Options and
in Private Equities in which Executive has an interest, as included in Schedules
B and C, based on the fair market value of the interest as determined under the
provisions of paragraph 4.a.i.(3). In addition, Executive's interest in all
vested Benefit Plans under paragraph 2.e. shall be payable in either a lump sum
or deferral pursuant to paragraph 4.g. NorthWestern shall pay all amounts due
under this paragraph 4.b.i. within 90 days of the Termination Date and shall
have no further obligation to pay severance of any kind nor to make any payment
in lieu of notice.

                  ii. DEFINITION OF CAUSE. For purposes of this Agreement, the
termination of Executive's employment shall be deemed to have been for "Cause"
only if termination of his employment shall have been the result of: (i) the
willful engaging by Executive in dishonest or fraudulent conduct intended to
result, directly or indirectly, in demonstrable and material financial or
economic harm to NorthWestern, (ii) gross negligence by Executive in the
performance of Executive's duties with NorthWestern, or (iii) intentional or
grossly negligent failure, on a repeated basis, to adhere in material

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respects to the terms and provisions of the NorthWestern Policies in such a way
as to have an adverse impact on NorthWestern's reputation. Notwithstanding the
foregoing, for purposes hereof (A) Executive shall not be deemed to have been
terminated for Cause under either clause (i) or (ii) above unless and until (1)
there shall have been delivered to Executive a notice of termination and a
certified copy of a resolution of the Board duly adopted by not less than
three-quarters (3/4) of the entire membership of the Board (other than Executive
if he is a member of the Board at the time) at a meeting called and held for
that purpose and at which Executive, together with Executive's counsel, was
given the opportunity to be heard, finding that, in the good faith opinion of
the Board, Executive was guilty of conduct set forth above based on reasonable
evidence, specifying the particulars thereof in detail, and (2) Executive has
failed to cure, within thirty (30) days of the Board's determination, any
conduct reasonably capable of being cured, and (B) no act, or failure to act, on
Executive's part shall be deemed "willful" unless done, or omitted to be done,
by Executive not in good faith and without reasonable belief that Executive's
act, or failure to act, was in the best interest of NorthWestern.

         c. VOLUNTARY TERMINATION PRIOR TO A FUNDAMENTAL CHANGE. Executive may
terminate his employment with NorthWestern at any time prior to the occurrence
of a Fundamental Change upon written notice to NorthWestern in the manner set
forth in paragraph 4.b.ii. In the event of such termination of employment by
Executive, he shall be entitled to the termination payments as provided in
paragraph 4.b.i.

         d. TERMINATION UPON DISABILITY. NorthWestern may terminate Executive's
employment in the event Executive suffers a disability ("Disability") that
renders Executive unable to perform the essential functions of his position,
even with reasonable accommodation, for nine (9) months within any twelve (12)
month period

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and within thirty (30) days after written notice of termination is thereafter
given by NorthWestern Executive shall not have returned to substantially
full-time performance of Executive's duties. Commencing on the Termination Date,
which in this event shall be the date upon which notice of termination is given,
NorthWestern shall pay Executive within 90 days of the Termination Date an
amount that is equal to all compensation, incentive and private equity programs
and other benefit programs of Executive under paragraph 2 of this Agreement for
a period equal to the Term Factor calculated in the same fashion as the
calculation of termination benefits provided under paragraph 4.a.i. (an example
of the method of calculation of these amounts is set forth on Schedule E).

         e. TERMINATION UPON DEATH. If Executive dies prior to the expiration of
the term of this Agreement, NorthWestern shall pay Executive's representative
within 90 days of the Termination Date an amount that is equal to the
termination benefits payable to Executive as provided under paragraph 4.d. (an
example of the method of calculation of these amounts is set forth on Schedule
E).

         f. BENEFITS UPON TERMINATION.

                  i. EXTENSION OF BENEFITS. Upon the termination of this
Agreement, (except in the event of a termination for Cause described in
paragraph 4.b.), all benefits provided under paragraph 2.e. hereof shall be
extended, to the extent permitted by NorthWestern's insurance policies and
benefit plans, for, in the case of a termination under paragraph 4.a., 4.d. or
4.e., a period equal to the Term Factor. If NorthWestern is unable to continue
Executive's benefits (including covered family members and dependants) for the
Term Factor as required, NorthWestern will promptly purchase Equivalent Coverage
and will reimburse Executive for any Federal or state income tax liabilities
associated with the benefits received under such Equivalent Coverage. In each
such case, for purposes of determining the amount of benefit payable to
Executive

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under any such plan, Executive shall be given credit for additional years of
service equal to the Term Factor at the compensation level in effect immediately
prior to the Termination Date. If Executive would have become entitled to
benefits under NorthWestern's post-retirement health care or life insurance
plans had his employment terminated at any time during the Term Factor following
the Termination Date, NorthWestern shall pay such benefits to Executive
commencing on the later of (a) the date that such coverage would have first
become available and (b) the date the benefits described above in this paragraph
terminate.

         ii. Additional Benefit Plan Credits.

         (A) In addition to the retirement benefits to which Executive is
entitled under each Benefit Plan that is a defined benefit plan or any successor
plan thereto, NorthWestern shall pay Executive a lump sum amount, in cash, equal
to the excess of (x) the actuarial equivalent of any applicable retirement
pension (taking into account any early retirement subsidies associated therewith
and determined as a straight life annuity commencing at Normal Retirement Age or
any earlier date, but in no event earlier than the expiration of the Term Factor
following the Termination Date,

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whichever annuity the actuarial equivalent of which is greatest) which Executive
would have accrued under the terms of each such Benefit Plan, determined as if
Executive were fully vested thereunder and had accumulated (after the
Termination Date) additional years of service thereunder equal to the Term
Factor and had been credited under each such Benefit Plan during such period
with Executive's compensation during the twelve (12) months immediately
preceding the Termination Date, over (y) the actuarial equivalent of the
retirement pension (taking into account any early retirement subsidies
associated therewith and determined as a straight life annuity commencing at
Normal Retirement Age or any earlier date, but in no event earlier than the
Termination Date, whichever annuity the actuarial equivalent is greatest) which
Executive had accrued pursuant to the provisions of each such Benefit Plan as of
the Termination Date. For purposes hereof, "actuarial equivalent" shall be
determined using the same methods and assumptions utilized under each of the
Benefit Plans, as applicable, immediately prior to the Termination Date (without
regard to any amendment of such methods and assumptions made subsequent thereto,
which amendment would result in a reduction in payments hereunder. To the extent
additional actuarial assumptions are required for the purpose of calculating
benefits under this paragraph, such assumptions shall be as reasonably agreed by
the parties.

         (B) In addition to the retirement benefits to which Executive is
entitled under each Benefit Plan that is a defined contribution plan or any
successor plan thereto, NorthWestern shall pay Executive a lump sum amount, in
cash, equal to the excess of (x) any account balance (assuming employer
contributions and investment returns continue at the rate in effect on the
Termination Date) which would have been credited to Executive under the Benefit
Plan, determined as if Executive were fully vested thereunder and had
accumulated (after the Termination Date) additional years of service thereunder
equal to the Term Factor and had been credited under each such Benefit Plan
during such period with Executive's compensation during the twelve (12) months
immediately preceding the Termination Date, over (y) the account balance
credited to Executive under the Benefit Plan as of the Termination Date.

         (C) In addition to the retirement benefits to which Executive is
entitled under each Benefit Plan that is not a defined benefit plan or a defined
contribution plan (whether funded by insurance or otherwise), NorthWestern shall
pay Executive a lump sum amount, in cash, equal to the excess of (x) the
retirement benefit (assuming employer contributions and investment returns
continue at the rate in effect on the

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Termination Date) Executive would have received under the Benefit Plan,
determined as if Executive were fully vested thereunder and had accumulated
(after the Termination Date) additional years of service thereunder equal to the
Term Factor and had been credited under each such Benefit Plan during such
period with Executive's compensation during the twelve (12) months immediately
preceding the Termination Date, over (y) the retirement benefit Executive is
entitled to received under the Benefit Plan as of the Termination Date. To the
extent additional actuarial assumptions are required for the purpose of
calculating benefits under this paragraph, such assumptions shall be as
reasonably agreed to by the parties.

         iii. VESTING OF STOCK OPTIONS. Any outstanding options to purchase the
capital stock of NorthWestern held by Executive on the Termination Date shall
immediately become fully vested without change to the remaining term for the
exercise of such options, and all restrictions on any private equity awards
shall lapse.

         g. LUMP SUM OR DEFERRAL OPTIONS. In lieu of any compensation, benefit
or other payment of any kind to be made to Executive under this Agreement
(including without limitation any payment payable as a result of a Change in
Control or Major Transaction) that by its respective terms or pursuant to the
provisions of this Agreement would be payable for a period subsequent to the
Termination Date, Executive may elect, by delivery of written notice to
NorthWestern not more than ninety (90) days following the Termination Date, to
cause NorthWestern to pay to Executive a lump sum payment, in cash, equal to the
Present Value of all or a portion of the total amounts that would otherwise be
payable to Executive in respect of such compensation or benefit over time.
Present Value shall be determined using a discount rate equal to the most
recently published yield for ten (10) year United States Treasury Bonds (as
quoted by the Wall Street Journal). In the event that Executive makes such lump
sum election, the

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Present Value shall be distributed to Executive within thirty (30) days of the
date NorthWestern receives such written notice from Executive. Executive may
also, by delivery of written notice to NorthWestern at least ninety (90) days
before any otherwise scheduled payment date, elect to defer all or any portion
of any payment to be made by NorthWestern to Executive under the terms of this
Agreement. Deferred amounts shall be credited with an investment return equal to
the prime rate of interest (as quoted by The Wall Street Journal), adjusted
quarterly, shall be distributed to Executive or his designated beneficiary in
accordance with a Distribution Election Form, in a form provided by
NorthWestern, and in the absence of a valid distribution election, shall be
distributed to Executive in equal monthly installments over five (5) years
beginning thirty (30) days after the Termination Date. In the event that
Executive makes any such deferral election, NorthWestern shall deposit the
amount deferred and earnings thereon into a grantor trust (the "Trust") having
terms consistent with Revenue Procedure 92-64, and provide the trustee with a
written direction (i) to hold said amount and any investment return thereon in a
segregated account for the benefit of Executive and (ii) to pay the deferred
amounts and earnings thereon to Executive in accordance with Executive's valid
Distribution Election Form and in the absence thereof in accordance with the
terms of this paragraph. Not later than three (3) business days after a Change
in Control, within the meaning of paragraph 7.m.(C), NorthWestern shall deposit
in the Trust an amount that NorthWestern reasonably projects to be sufficient to
fund the payment of all benefits that are or may become payable to Executive
pursuant to this Agreement.

         h. SUBSEQUENT CHANGES. Reference herein to the terms or provisions of
any compensation, bonus, incentive, private equity, benefit or other
arrangement, plan or program in which Executive is participating under this
Agreement shall be without

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regard to any proposed amendment, modification or termination to such
arrangement, plan or program made subsequent to the Termination Date which would
adversely affect Executive's rights thereunder, and the obligations of
NorthWestern hereunder with respect to such arrangement, plan or program shall
continue as to Executive (and covered family members and dependants) in full
force and effect. In all such cases, if NorthWestern is unable to continue
Executive's benefits (including covered family members and dependants) as
required, NorthWestern will promptly purchase Equivalent Coverage.

   5. PROPRIETARY INFORMATION OBLIGATIONS. During the duration of employment
under this Agreement, Executive will have access to and become acquainted with
confidential and proprietary information of NorthWestern and its affiliates,
including but not limited to information or plans regarding customer
relationships, personnel, sales, marketing, and financial operations and
methods, trade secrets, formulas, devices, secret inventions, processes, and
other compilations of information, records, and specifications (collectively,
except to the extent it was already known from other sources, or is or becomes
general knowledge, in each case without known violation of any confidentiality
obligation, "Proprietary Information"). Executive shall not disclose any of the
Proprietary Information, directly or indirectly, or use it in any way, either
during the term of this Agreement or at any time thereafter, except as required
in the course of his employment with NorthWestern or as authorized in writing by
NorthWestern or pursuant to order of any court, legislature or government
agency. All files, records, documents, computer-recorded information, drawings,
specifications, intellectual property, equipment and similar items relating to
the business of NorthWestern, whether prepared by Executive or otherwise coming
into his possession, shall remain the exclusive property of NorthWestern,
respectively, and shall not be removed under any circumstances

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whatsoever without the prior written consent of NorthWestern, except when (and
only for the period) necessary to carry out Executive's duties hereunder, and if
removed shall be immediately returned to NorthWestern upon any termination of
his employment and no copies thereof shall be kept by Executive; provided,
however, that Executive shall be entitled to retain documents that were
personally owned or that reflect personal notes that do not contain Proprietary
Information. Executive shall disclose promptly to NorthWestern any and all
significant conceptions and ideas for inventions, improvements and valuable
discoveries, whether patentable or not, which are conceived or made by
Executive, solely or jointly with another, during the period of employment or
within one (1) year thereafter, and which are related to the business or
activities of NorthWestern, and which Executive conceives as a result of or in
connection with his employment with NorthWestern. Executive hereby assigns and
agrees to assign all his interests therein to NorthWestern or its nominee.
Whenever requested to do so by NorthWestern, Executive shall execute any and all
applications, assignments or other instruments that NorthWestern shall deem
necessary to apply for and obtain Letters Patent of the United States or any
foreign country or to otherwise protect NorthWestern's interest therein.

         6. COVENANT NOT TO COMPETE AND NON-SOLICITATION.

         a. During the term of Executive's employment with NorthWestern and for
a period of two years thereafter (provided NorthWestern has complied with each
of its obligations under this Agreement and Executive has been fully compensated
pursuant to all provisions of this Agreement, including those related to
compensation and incentive programs, equity interests, and Benefit Plans),
Executive will not in any manner, directly or indirectly:

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               i. manage, be employed by, operate, join, control or participate
in the business of any individual, firm, corporation, institution or company
engaged in the Same or Similar Activities (as defined below) carried on by
NorthWestern or its affiliates or any of their predecessors in its market areas;
or

               ii. own or have any ownership interest exceeding 10% in any
privately-held corporation, firm, institution or company, or exceeding 5% of the
publicly-traded securities of any public corporation, firm, institution or
company engaged in the Same or Similar Activities carried on by NorthWestern or
its affiliates or any of their predecessors in its market areas.

         For purposes of this Agreement, Same or Similar Activities shall mean,
to the extent such activities are then being conducted by NorthWestern or its
affiliates in its market areas, the operation of electric, natural gas and
propane distribution; steel fabrication; energy distribution services; heating,
ventilation, air conditioning, plumbing and related services; and integrated
communication and data services to small and medium sized businesses.

         b.    During the term of Executive's employment with NorthWestern and
for a period of two years thereafter, Executive will not in any manner, directly
or indirectly, cause, persuade, solicit, induce or attempt to do any of the
foregoing in order to;

               i. cause any person, business or entity which is a supplier or
customer of NorthWestern or its affiliates at any time during the term of his
employment to terminate any written or oral agreement or understanding with
NorthWestern or its affiliates; or

               ii. cause any person employed by NorthWestern or its affiliates
at any time during the term of his employment to terminate their employment with
NorthWestern or its affiliates to terminate their employment in order to work
for any individual, firm,

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corporation, institution or company engaged in the Same or Similar Activities
carried on by NorthWestern or its affiliates in the United States.

         c. If any provision contained in this paragraph 6 shall for any reason
be held invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provisions of this
paragraph 6, rather this paragraph 6 shall be construed as if such invalid,
illegal or unenforceable provision had never been contained herein. It is the
intention of the parties that if any of the restrictions or covenants contained
herein is held to cover a geographic area or to be of a duration of time which
is not permitted by applicable law, or in any way construed to be too broad or
to any extent invalid, such provisions shall not be construed to be null, void
or of no effect, but, to the extent such provision would be valid or enforceable
under applicable law if limited in scope or duration, a court of competent
jurisdiction shall construe and interpret or reform this paragraph 6 to provide
for a covenant consistent with the original intent of the parties that is
reasonable in scope as to geographic area, time period and other provisions (not
greater than those contained herein) which shall be valid and enforceable under
such applicable law.

         d. Executive acknowledges that NorthWestern and its affiliates have a
legitimate interest which the provisions of this paragraph 6 are reasonably
necessary to protect, that the restrictions on competition contained in this
paragraph 6 are reasonable and that the consideration set forth in this
Agreement is sufficient for purposes of this paragraph 6.

         e. Executive acknowledges that NorthWestern would be irreparably harmed
by any breach of this paragraph 6 and that there would be no adequate remedy at
law or in damages to compensate NorthWestern for any such breach. Accordingly,
NorthWestern will be entitled, in addition to any other rights or remedies it
may have at

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<Page>

law or in equity, to apply for an injunction enjoining and restraining Executive
from doing or continuing to do any such act or any other violations or
threatened violations of paragraph 6.

  7.     CHANGE IN CONTROL OR MAJOR TRANSACTION

         a. Executive's employment under this Agreement may be terminated by
Executive for Good Reason (as defined herein) on written notice to NorthWestern.
NorthWestern agrees, under the conditions described herein, to pay Executive the
compensation and the "Severance Payments" described in this paragraph 7 and the
other payments and benefits described herein in the event Executive's employment
with NorthWestern is terminated by NorthWestern without Cause or by Executive
for Good Reason (determined by treating a Potential Change in Control or
Potential Major Transaction as a Change in Control or a Major Transaction, as
applicable, in applying the definition of Good Reason) following a Change in
Control or a Major Transaction and during the term of this Agreement. Executive
may elect to give written notice and terminate his employment within thirty (30)
days after the occurrence of a Change in Control or Major Transaction, and such
termination shall be deemed a termination for Good Reason. Unless Executive
gives such written notice to NorthWestern and terminates employment within
thirty (30) days after the occurrence of a Change in Control or Major
Transaction, no amount or benefit shall be payable under this paragraph 7 unless
there shall have been (or, under the terms hereof, there shall be deemed to have
been) a termination of Executive's employment by NorthWestern without Cause or
by Executive for Good Reason following a Change in Control or a Major
Transaction.

         b. In the event of a Potential Change in Control or a Potential Major
Transaction during the term of this Agreement, Executive agrees to remain in the

                                       19

<Page>

employ of NorthWestern until the earliest of (i) a date which is six (6) months
from the date of such Potential Change in Control or Potential Major
Transaction, (ii) the date of a Change in Control or a Major Transaction, (iii)
the date of termination by Executive of Executive's employment for Good Reason
(determined by treating the Potential Change in Control or Potential Major
Transaction as a Change in Control or a Major Transaction, as applicable, in
applying the definition of Good Reason), or by reason of death or Disability or
Retirement, or (iv) the termination by NorthWestern of Executive's employment.

         c. If Executive's employment with NorthWestern shall be terminated
without Cause or by Executive for Good Reason (determined by treating a
Potential Change in Control or Potential Major Transaction as a Change in
Control or a Major Transaction, as applicable, in applying the definition of
Good Reason) following a Change in Control or a Major Transaction and during the
term of this Agreement, Executive shall be entitled to receive from NorthWestern
(or its successor) the termination payments described in paragraphs 4.a. and
4.f, and subject to Executive's additional rights under paragraphs 4.g. and 4.h.

         d. Tax Treatment

                  i. In the event that any payment or benefit received or to be
received by Executive in connection with a Change in Control or Major
Transaction or the termination of Executive's employment (all such payments and
benefits being hereinafter called "Total Payments") will be subject (in whole or
part) to the Excise Tax, then, subject to the provisions of this paragraph 7.d.,
NorthWestern shall pay to Executive an additional amount (the "Gross-Up
Payment") such that the net amount retained by Executive, after deduction of any
Excise Tax on the Total Payments and any federal, state and local income tax and
Excise Tax upon the payment provided for

                                       20

<Page>

by this paragraph 7.d., shall be equal to the Total Payments. For purposes of
determining the amount of the Gross-Up Payment, Executive shall be deemed to pay
federal income taxes at the highest marginal rate of federal income taxation in
the calendar year in which the Gross-Up Payment is to be made and state and
local income taxes at the highest marginal rate of taxation in the state and
locality of Executive's residence on the Date of Termination, net of the maximum
reduction in federal income taxes which could be obtained from deduction of such
state and local taxes.

                  ii. In the event that, after giving effect to any
redeterminations described in paragraph 7.d.iv. below, a reduction in the
Severance Payments, to the largest amount that would result in no portion of the
Total Payments being subject to the Excise Tax (after taking into account any
reduction in the Total Payments provided by reason of section 28OG of the Code
in such other plan, arrangement or agreement), would produce a net amount (after
deduction of the net amount of federal, state and local income tax on such
reduced Total Payments) that would be greater than the net amount of unreduced
Total Payments (after deduction of the net amount of federal, state and local
income tax and the amount of Excise Tax to which Executive would be subject in
respect of such Total Payments), then paragraph 7.d.i. shall not apply, and the
Severance Payments shall be so reduced.

                  iii. For purposes of determining whether any of the Total
Payments will be subject to the Excise Tax and the amount of such Excise Tax,
(a) all of the Total Payments shall be treated as "parachute payments" within
the meaning of section 28OG(b)(2) of the Code, unless in the opinion of tax
counsel selected by NorthWestern's independent auditors and reasonably
acceptable to Executive ("Tax Counsel"), such other payments or benefits (in
whole or in part) do not constitute parachute payments, including by reason of
section 28OG(b)(4)(A) of the Code, (b) all

                                       21

<Page>

"excess parachute payments" within the meaning of section 28OG(b)(1) of the Code
shall be treated as subject to the Excise Tax, unless in the opinion of Tax
Counsel such excess parachute payments (in whole or in part) represent
reasonable compensation for services actually rendered, within the meaning of
section 28OG(b)(4)(B) of the Code, in excess of the Base Amount allocable to
such reasonable compensation, or are otherwise not subject to the Excise Tax,
and (c) the value of any non-cash benefits or any deferred payment or benefit
shall be determined by NorthWestern's independent auditors in accordance with
the principles of sections 28OG(d)(3) and (4) of the Code. Prior to the payment
date for any payment subject to the provisions of paragraph 7.d., NorthWestern
shall provide Executive with its calculation of the amounts referred to here and
such supporting materials as are reasonably necessary for Executive to evaluate
NorthWestern's calculations. If Executive disputes NorthWestern's calculations
(in whole or in part), the reasonable opinion of Tax Counsel with respect to the
matter in dispute shall prevail.

                  iv. In the event that (a) the Excise Tax is subsequently
determined to be less than the amount taken into account hereunder at the time
of termination of Executive's employment and (b) after giving effect to such
redetermination, the Severance Payments are not reduced pursuant to paragraph
7.d., Executive shall repay to NorthWestern, at the time that the amount of such
reduction in Excise Tax is finally determined, the portion of the Gross-Up
Payment attributable to such reduction (plus that portion of the Gross-Up
Payment attributable to the Excise Tax and federal, state and local income tax
imposed on the Gross-Up Payment being repaid by Executive to the extent that
such repayment results in a reduction in the Excise Tax and/or a federal, state
or local income tax deduction) plus interest on the amount of such repayment at
the rate provided in section 1274(b)(2)(B) of the Code. In the event that (x)
the Excise

                                       22

<Page>

Tax is determined to exceed the amount taken into account hereunder at the time
of the termination of Executive's employment (including by reason of any payment
the existence or amount of which cannot be determined at the time of the
Gross-Up Payment) and (y) after giving effect to such redetermination, the
Severance Payments are not reduced pursuant to paragraph 7.d., NorthWestern
shall make an additional Gross-Up Payment in respect of such excess (plus any
interest, penalties or additions payable by Executive with respect to such
excess) at the time that the amount of such excess is finally determined.

         e. Severance Payments provided for in this paragraph 7 shall be made
not later than the fifth day following the Termination Date, provided, however,
that if the amounts of such payments, and the limitation on such payments set
forth in paragraph 7.d. hereof, cannot be finally determined on or before such
day, NorthWestern shall pay to Executive on such day an estimate, as determined
in good faith by NorthWestern with the consent of Executive, of the minimum
amount of such payments to which Executive is clearly entitled and shall pay the
remainder of such payments (together with interest at the rate provided in
section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be
determined but in no event later than the thirtieth (30th) day after the
Termination Date. In the event that the amount of the estimated payments exceeds
the amount subsequently determined to have been due, such excess shall
constitute a loan by NorthWestern to Executive, payable on the fifth (5th)
business day after demand by NorthWestern (together with interest at the rate
provided in section 1274(b)(2)(B) of the Code).

         f. NorthWestern also shall pay to Executive all legal and accounting
fees and expenses incurred by Executive in disputing in good faith the
application of paragraph 7 to any termination of his employment, in seeking in
good faith to dispute

                                       23

<Page>

any valuation conducted or payment made with respect to such termination, to
obtain or enforce any benefit or right provided by this Agreement with respect
to such termination or in connection with any tax audit or proceeding to the
extent attributable to the application of section 4999 of the Code to any
payment or benefit provided hereunder. Such payments shall be made within five
(5) business days after delivery of Executive's written requests for payment
accompanied with such evidence of fees and expenses incurred as NorthWestern
reasonably may require.

         g. After a Change in Control or a Major Transaction (or the deemed
occurrence of such event pursuant to the provisions of this Agreement) and
during the term of this Agreement, any purported termination of Executive's
employment (other than by reason of death) shall be communicated by written
Notice of Termination from one party hereto to the other party hereto in
accordance with this paragraph. "Notice of Termination" shall mean a notice,
delivered in accordance with paragraph 10.a., which shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of Executive's employment under the provision so indicated. Further,
a Notice of Termination for Cause shall comply with the provisions of paragraph
4.b.ii.

         h. "Termination Date", with respect to any purported termination of
Executive's employment after a Change in Control or a Major Transaction (or the
deemed occurrence of such event pursuant to the provisions of this Agreement)
and during the term of this Agreement, shall mean (i) if Executive's employment
is terminated for Disability, thirty (30) days after Notice of Termination is
given (provided that Executive shall not have returned to the substantially
full-time performance of Executive's duties during such thirty (30) day period),
and (ii) if Executive's employment is terminated for any other reason, the date
specified in the Notice of Termination

                                       24

<Page>

(which, in the case of a termination by NorthWestern, shall not be less than
thirty (30) days (except in the case of a termination for Cause) and, in the
case of a termination by Executive, shall not be less than fifteen (15) days nor
more than sixty (60) days, respectively, from the date such Notice of
Termination is given).

         i. If within fifteen (15) days after any Notice of Termination is
given, or, if later, prior to the Termination Date (as determined without regard
to this paragraph 7.i.), the party receiving such Notice of Termination notifies
the other party that a dispute exists concerning the termination, the
Termination Date shall be the date on which the dispute is finally resolved,
either by mutual written agreement of the parties or by a final and binding
arbitration as set forth in this Agreement; provided further that the Date of
Termination shall be extended by a notice of dispute only if such notice is
given in good faith and the party giving such notice pursues the resolution of
such dispute with reasonable diligence.

         j. If a purported termination occurs following a Change in Control or a
Major Transaction (or, under the terms hereof, the deemed occurrence of such
event) and during the term of this Agreement, and such termination is disputed
in accordance with this paragraph, NorthWestern shall pay Executive the full
compensation in effect and continue Executive on an equivalent basis as a
participant in all Benefit Plans (including, but not limited to, compensation,
incentive, private equity and benefits under paragraph 2 hereof) in which
Executive was participating when the notice giving rise to the dispute was
given, until the dispute is finally resolved in accordance with this Agreement.
Amounts paid under this paragraph are in addition to all other amounts otherwise
payable under this Agreement for termination following a Change in Control or a
Major Transaction (or, under the terms hereof, the deemed occurrence of such
event) and shall not be offset against or reduce any other amounts due under
this

                                       25

<Page>

Agreement. NorthWestern agrees that it shall not assert any breach or alleged
breach by Executive of any provision of this Agreement or any other agreement
between NorthWestern and Executive as a defense or off-set to NorthWestern's
obligation to make any payment under this Agreement, but shall be required to
assert any such action it chooses to pursue in one or more separate proceedings.

         k. NorthWestern agrees that, if Executive's employment with
NorthWestern terminates during the term of this Agreement, following a Change in
Control or a Major Transaction (or, under the terms hereof, the deemed
occurrence of such event), Executive is not required to seek other employment or
to attempt in any way to reduce any amounts payable to Executive by NorthWestern
pursuant to this Agreement. Further, the amount of any payment or benefit
provided for in this Agreement shall not be reduced by any compensation earned
by Executive as the result of employment by another employer, by retirement
benefits, by offset against any amount claimed to be owed by Executive to
NorthWestern, or otherwise.

         l. In addition to any obligations imposed by law upon any successor to
NorthWestern, NorthWestern will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of NorthWestern to expressly
assume and agree in writing to perform the responsibilities of NorthWestern
under this Agreement in the same manner and to the same extent that NorthWestern
would be required to perform it if no such succession had taken place. Failure
of NorthWestern to obtain such assumption and agreement on terms reasonable
acceptable to Executive and deliver same to Executive prior to the effectiveness
of any such succession shall be a breach of this Agreement and shall entitle
Executive to compensation from NorthWestern in the same amount and on the same
terms as Executive would be entitled to hereunder if Executive were to terminate

                                       26

<Page>

Executive's employment for Good Reason after a Change in Control or a Major
Transaction (or, under the terms hereof, the deemed occurrence of such event),
except that, for purposes of implementing the foregoing, the date on which any
such succession becomes effective shall be deemed the Termination Date.

         m. Definitions. Terms not otherwise defined in this Agreement shall
have the meanings indicated below:

                  (A) "Base Amount" shall have the meaning defined in section
         28OG(b)(3) of the Code.

                  (B) "Beneficial Owner" shall have the meaning defined in Rule
         13d-3 under the Securities and Exchange Act of 1934, as amended
         ("Exchange Act") (except that a Person shall be deemed the beneficial
         owner of all securities which such Person may have the right to
         acquire, whether or not such right is presently exercisable or is
         subject to a contingency).

                  (C) A "Change in Control" shall be deemed to have occurred if
         the conditions set forth in any one of the following paragraphs shall
         have been satisfied:

                           (I) any Person is or becomes the Beneficial Owner,
                  directly or indirectly, of securities of NorthWestern (not
                  including in the securities beneficially owned by such Person
                  any securities acquired directly from NorthWestern or its
                  affiliates) representing 20% or more of the combined voting
                  power of NorthWestern's then outstanding securities;

                           (II) there occurs within any 12-month period any
                  change in the directors of NorthWestern such that the members
                  of the Board prior to such change do not constitute a majority
                  of the directors after giving effect to all changes during
                  such 12-month period, unless the election, or the

                                       27

<Page>

                  nomination for election by NorthWestern's stockholders, of
                  each new director was approved by a vote of two-thirds (2/3)
                  of the directors then in office who were directors at the
                  beginning of the period; or

                           (III) the occurrence of any other event that would be
                  required to be reported in response to Item 6(e) of Schedule
                  14A of Regulation 14A of the Exchange Act.

                  (D) "Code" shall mean the Internal Revenue Code of 1986, as
         amended from time to time.

                  (E) "Excise Tax" shall mean any excise tax imposed under
         section 4999 of the Code.

                  (F) "Good Reason" for termination by Executive of Executive's
         employment shall mean the occurrence (without Executive's express
         written consent) of any one of the following acts by NorthWestern, or
         failures by NorthWestern to act, unless, in the case of any act or
         failure to act described in paragraph (III) or (IV) below, such act or
         failure to act is corrected prior to the Termination Date specified in
         the Notice of Termination given in respect thereof:

                           (I) the occurrence of any of the events set forth in
                  paragraph 4.a.ii.(a) or (b) hereof;

                           (II) the failure by NorthWestern to make any payment
                  to Executive within seven (7) days of the date such payment is
                  due or the breach by NorthWestern of any other material
                  provision of this Agreement;

                           (III) the failure by NorthWestern to continue in
                  effect any compensation plan, private equity plan, arrangement
                  or benefit in which Executive participates under this
                  Agreement immediately prior to the Change in Control or the
                  Major Transaction (or deemed occurrence of

                                       28

<Page>

                  such event), unless an equitable arrangement satisfactory to
                  Executive (embodied in an ongoing substitute or alternative
                  plan) has been made with respect to such plan, or the failure
                  by NorthWestern to continue Executive's participation therein
                  (or in such substitute or alternative plan) on a basis not
                  substantially less favorable, including but not limited to the
                  nature, amount, vesting and duration of benefits provided and
                  the level of Executive's participation relative to other
                  participants, as existed at the time of the Change in Control
                  or Major Transaction (or deemed occurrence of such event); or

                           (IV) the failure by NorthWestern to continue to
                  provide Executive (and any covered family member or
                  dependants) with benefits substantially similar in all
                  material respects to those which Executive is receiving
                  immediately prior to the Change in Control or Major
                  Transaction (or deemed occurrence of such event), including,
                  without limitation the benefit plans and arrangements set
                  forth on Schedule D of this Agreement; the taking of any
                  action by NorthWestern which would directly or indirectly
                  materially reduce any of such benefits or deprive Executive of
                  any material fringe benefit enjoyed by Executive at the time
                  of the Change in Control or Major Transaction (or deemed
                  occurrence of such event), or the failure by NorthWestern to
                  provide Executive with the number of paid vacation days to
                  which Executive is entitled on the basis of years of service
                  with NorthWestern in accordance with NorthWestern's normal
                  vacation policy in effect at the time of the Change in Control
                  or Major Transaction (or deemed occurrence of such event).

                                       29

<Page>

         Executive's employment shall be deemed to have been terminated by
         Executive for Good Reason following a Change in Control or a Major
         Transaction if: (i) Executive's employment is terminated by
         NorthWestern prior to a Change in Control or a Major Transaction
         without Cause at the direction of a Person who has entered into an
         agreement, arrangement or understanding with NorthWestern or another
         Person the consummation of which would constitute (or which is
         contingent upon or entered into in connection with) a Change in Control
         or a Major Transaction, (ii) Executive terminates his employment for
         Good Reason prior to a Change in Control or a Major Transaction
         (determined by treating a Potential Change in Control or Potential
         Major Transaction as a Change in Control or a Major Transaction, as
         applicable, in applying the definition of Good Reason) if the
         circumstance or event which constitutes Good Reason occurs at the
         direction of the Person(s) referred to in clause (i), or (iii)
         Executive's employment is terminated without Cause or for a Fundamental
         Change (as defined in this Agreement) that follows or is followed
         within six months by a Change in Control or Major Transaction (or
         Potential Change in Control or Potential Major Transaction).
         Executive's right to terminate Executive's employment for Good Reason
         shall not be affected by Executive's incapacity due to physical or
         mental illness. Executive's continued employment shall not constitute
         consent to, or a waiver of rights with respect to, any act or failure
         to act constituting Good Reason hereunder.

                  (G) A "Gross-up Payment" shall have the meaning given in
         paragraph 7.d. hereof.

                                       30

<Page>

                  (H) A "Major Transaction" shall be deemed to have occurred if
         the conditions set forth in any one of the following paragraphs shall
         have been satisfied:

                           (I) the Board or the shareholders of NorthWestern
                  approve a merger or consolidation of NorthWestern with any
                  corporation or other entity, other than (i) a merger or
                  consolidation which would result in the individuals who prior
                  to such merger or consolidation constitute the Board
                  constituting at least two-thirds (2/3) of the board of
                  directors of NorthWestern or the surviving or succeeding
                  entity immediately after such merger or consolidation, or (ii)
                  a merger or consolidation effected to implement a
                  recapitalization of NorthWestern (or similar transaction) in
                  which no Person acquires more than 20% of the combined voting
                  power of NorthWestern's then outstanding securities; or

                           (II) the Board or the shareholders of NorthWestern
                  approve a plan of complete liquidation of NorthWestern; or

                           (III) the Board or the shareholders of NorthWestern
                  approve an agreement or transaction (or series of agreements
                  or transactions) for the sale or disposition by NorthWestern
                  of all or substantially all of NorthWestern's assets (meaning
                  assets representing thirty percent (30%) or more of the net
                  tangible assets of NorthWestern or generating thirty percent
                  (30%) or more of the operating income or operating cash flow
                  of NorthWestern), other than a sale or disposition which would
                  result in the individuals who prior to such sale or
                  disposition constitute the Board constituting at least
                  two-thirds (2/3) of the board of directors of the Person
                  purchasing such assets immediately after such sale or
                  disposition.

                                       31

<Page>

                  (I) "Normal Retirement Age" shall mean the earliest age at
         which Executive may commence Retirement and become entitled to an
         unreduced pension under the IRS qualified Pension Plan.

                  (J) "Person" shall have the meaning given in Section 3(a)(9)
         of the Exchange Act, as modified and used in Sections 13(d) and 14(d)
         thereof; however, a Person shall not include (i) NorthWestern, (ii) a
         trustee or other fiduciary holding securities under an employee benefit
         plan of NorthWestern (so long as such employee benefit plan is not
         being utilized, directly or indirectly, to effect, assist or contribute
         to a Change in Control or Major Transaction), (iii) an underwriter
         temporarily holding securities pursuant to an offering of such
         securities, or (iv) a corporation owned, directly or indirectly, by the
         shareholders of NorthWestern in substantially the same proportions as
         their ownership of shares of NorthWestern prior to the Change in
         Control or Major Transaction.

                  (K) "Potential Change in Control" shall be deemed to have
         occurred if the conditions set forth in any one of the following
         paragraphs shall have been satisfied:

                           (I) NorthWestern enters into an agreement, the
                  consummation of which would result in the occurrence of a
                  Change in Control;

                           (II) any Person publicly announces a solicitation of
                  proxies or a tender offer (within the meaning of the Exchange
                  Act) to seek control or acquire 20% or more of North Western's
                  outstanding common stock, respectively;

                           (III) any Person who is or becomes the Beneficial
                  Owner, directly or indirectly, of securities of NorthWestern
                  representing 10% or more of the combined voting power of
                  NorthWestern's then outstanding securities,

                                       32

<Page>

                  increases such Person's beneficial ownership of such
                  securities by an additional 5% or more of such outstanding
                  securities, unless such Person has reported or is required to
                  report such ownership (but less than 20%) on Schedule 13G
                  under the Exchange Act (or any comparable or successor report)
                  or on Schedule 13D under the Exchange Act (or any comparable
                  or successor report) which Schedule 13D does not state any
                  intention to or reserve the right to control or influence the
                  management or policies of NorthWestern or engage in any of the
                  actions specified in Item 4 of such Schedule (other than the
                  disposition of the common shares) and, within 10 business days
                  of being requested by NorthWestern to advise it regarding the
                  same (and Executive may cause NorthWestern to so request),
                  certifies to NorthWestern that such Person acquired such
                  securities of NorthWestern in excess of 14.9% inadvertently
                  and who, together with its affiliates, shall promptly reduce
                  its Beneficial Ownership below 15%; provided, however, that if
                  the Person requested to so certify fails to do so within 10
                  business days, or amends such filing, publicly announces or
                  otherwise manifests its intention to seek to control or
                  influence the management or policies of NorthWestern, then
                  such occurrence shall be deemed a Potential Change in Control;
                  or

                           (IV) the Board adopts a resolution to the effect
                  that, for purposes of this Agreement, a Potential Change in
                  Control has occurred.

                  (L) "Potential Major Transaction" shall be deemed to have
         occurred if the conditions set forth in any one of the following
         paragraphs shall have been satisfied:

                                       33

<Page>

                           (I) NorthWestern enters into an agreement, the
                  consummation of which would result in the occurrence of a
                  Major Transaction; or

                           (II) the Board adopts a resolution to the effect
                  that, for purposes of this Agreement, a Potential Major
                  Transaction has occurred.

                  (M) "Retirement" shall be deemed the reason for the
         termination by NorthWestern or Executive of Executive's employment if
         such employment is terminated in accordance with NorthWestern's written
         mandatory retirement policy, if any, as in effect immediately prior to
         the Change in Control or Major Transaction (or deemed occurrence of
         such event), or in accordance with any retirement arrangement
         established with Executive's written consent with respect to Executive.

  8. ARBITRATION OF DISPUTES. Any disputes of any kind regarding this Agreement,
including, but not limited to, its termination shall be subject to final and
binding arbitration, to the extent permitted by law, pursuant to the Employment
Dispute Resolution Rules and Regulations of the American Arbitration
Association. Such disputes shall include, but are not limited to, claims for
breach of contract (express or implied), tort claims, claims for discrimination,
and claims for violation of any federal or state law or regulation. Any request
for arbitration must be made in writing within 365 calendar days of the
occurrence giving rise to the dispute. The arbitrator shall apply the
substantive law (and the law of remedies, if applicable) of the State of
Delaware, or federal law, or both, as applicable to the claim or claims
asserted. The arbitration shall be final and binding upon all of the parities
and shall be enforceable to the extent permitted by law. Judgment may be entered
on the arbitrator's award in any court having jurisdiction, and Executive
(subject to the provisions of paragraph 7.f) shall be entitled to reimbursement
of attorney fees if substantially successful on the merits.

                                       34

<Page>

Executive shall be entitled to seek specific performance of Executive's right to
be paid any amounts payable under this Agreement during the pendency of any
dispute or controversy arising under or in connection with this Agreement.

   9. INDEMNIFICATION. NorthWestern shall, to the fullest extent to which it is
empowered to do so by the General Corporation Law of Delaware, or any other
applicable laws, as from time to time in effect, and in the manner therein
provided, indemnify and hold harmless Executive, through the duration of all
statutory periods during which any such claim may be brought or asserted, from
and against any actual, threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative, investigative or otherwise,
to which Executive is or is threatened to be made a party by reason of the fact
that he is or was a director, officer, employee or agent of NorthWestern, or is
or was serving at the request of NorthWestern as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise against all expenses (including attorney's fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding. Expenses incurred by Executive
in defending a civil, criminal, administrative, investigative or other action,
suit or proceeding shall be paid by NorthWestern in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of Executive to repay such amount if it is ultimately determined
that NorthWestern is entitled to recover such expenses. The indemnification and
advancement provisions set forth in this Agreement shall not be deemed exclusive
but shall be cumulative with all other rights to indemnification or expense
advancement to which Executive may be entitled, including his rights under
paragraph 7.f. of this Agreement.

   10.    MISCELLANEOUS.

                                       35

<Page>

         a. NOTICES. Any notices provided hereunder must be in writing and shall
be deemed effective on the date of delivery if delivered by hand (receipt
requested), mailed by registered mail, return receipt requested, or delivered by
nationally recognized overnight courier (regularly providing proof of delivery),
to the recipient at the address indicated below:

         To Executive:

                  Eric R. Jacobsen

         To NorthWestern:

                  Corporate Secretary
                  NorthWestern Corporation
                  125 S. Dakota Ave.
                  Sioux Falls, SD 57104

or to such other address or to the attention of such other person as the
recipient party shall have specified by prior written notice to the sending
party.

         b. SEVERABILITY. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceablility will not affect
any other provision or any other jurisdiction, and the parties shall endeavor in
good faith negotiations to replace such invalid, illegal or unenforceable
provision with one or more provisions that faithfully reflect the original
economic intent of the parties as manifested in the invalid, illegal or
unenforceable provision.

                                       36

<Page>

         c. ENTIRE AGREEMENT. This document constitutes the final, complete, and
exclusive embodiment of the entire agreement and understanding between the
parties related to the subject matter hereof and supersedes and preempts any
prior or contemporaneous understandings, agreements, or representations by or
between the parties, written or oral. The schedules, appendices and agreements
attached hereto or referenced herein are hereby incorporated by this reference
into this Agreement and made a part hereof as though the terms thereof were
fully set forth herein.

         d. COUNTERPARTS. This Agreement may be executed on separate
counterparts, any one of which need not contain signatures of more than one
party, but all of which taken together will constitute one and the same
agreement.

         e. SUCCESSORS AND ASSIGNS. This Agreement is intended to bind and inure
to the benefit of and be enforceable by Executive and NorthWestern, and their
respective successors and assigns, except that Executive may not assign any of
his duties hereunder, and he may not assign any of his rights hereunder without
the written consent of NorthWestern, which shall not be withheld unreasonably.
In the event of Executive's death after termination of employment, his heirs,
legal representative or other designated representative shall be entitled to any
payments due him under this Agreement.

         f. ATTORNEYS' FEES. Except as expressly provided herein to the contrary
(including, without limitation, paragraph 7.f.), if any proceeding is necessary
to enforce or interpret the terms of this Agreement, or to recover damages for
breach hereof, Executive shall, if substantially successful on the merits, be
entitled to recover reasonable legal and accounting fees, as well as costs and
disbursements, in addition to any other relief to which he or it may be
entitled.

                                       37

<Page>

         g. AMENDMENTS. No amendments or other modifications to this Agreement
may be made except by a writing signed by both parties. Nothing in this
Agreement, express or implied, is intended to confer upon any third person any
rights or remedies under or by reason of this Agreement. No amendment or waiver
of this Agreement

         h. CHOICE OF LAW. All questions concerning the construction, validity
and interpretation of this Agreement will be governed by the internal law, and
not the law of conflicts, of the State of Delaware.

         i. REFERENCES. The words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Agreement as a whole, including the
schedules, appendices and agreements attached hereto. Wherever from the context
it appears appropriate, each term stated in either the singular or plural shall
include the other, and pronouns stated in the masculine, feminine or neuter
gender shall include the others.

   11.   EFFECTIVE DATE.  Except as otherwise expressly provided, this Agreement
shall be effective for the term referred to in paragraph 1.d. hereof.

NORTHWESTERN CORPORATION                    "EXECUTIVE"

By /s/  Merle D. Lewis                      /s/  ERIC R. JACOBSEN
  ------------------------                  ---------------------------------
  Chairman & Chief Executive Officer        Eric R. Jacobsen

                                       38

<Page>

                                                                      SCHEDULE A

SALARY. Executive shall receive for services to be rendered hereunder annual
base compensation as follows:

<Table>
<S>                                             <C>
Year Ended February 28, 2002                    $285,000

Years Ended February 28,                        Base compensation for the years ended February 28,
2003-2004                                       2003 and 2004 shall be set within a range around the
                                                median of comparable companies as determined by William M.
                                                Mercer Incorporated or other qualified consultant selected by
                                                the NOR Board Nominating and Compensation Committee (but not
                                                less than the base compensation for the year ended February 28,
                                                2002).
</Table>

                                       39

<Page>

                                                                      SCHEDULE B

SHORT-TERM INCENTIVE PLANS. Executive shall be eligible to participate in the
following Short-Term Incentive Plans of NorthWestern:

<Table>
<Caption>
SHORT-TERM INCENTIVE       2001 ANNUAL INCENTIVE AT TARGET PERFORMANCE
--------------------       -------------------------------------------
<S>                        <C>
NOR ST Performance Plan    $175,000   61.3% of base salary
</Table>

                                       40

<Page>

                                                                      SCHEDULE C

LONG-TERM EQUITY PLANS - Executive shall be eligible to participate in the
following Long-Term Incentive Plans of NorthWestern:

NOR Stock Options        2001 Grant of 28,000 shares
                         Implied Face Amount of $203,000 (71.2% of base salary)

OTHER LONG-TERM INCENTIVE             2001 INCENTIVE AT TARGET PERFORMANCE
-------------------------             ------------------------------------
NOR LT Performance Plan                $64,000       22.5% of base salary

PRIVATE EQUITY INCENTIVE PLANS. Executive shall participate in the Private
Equity Incentive Plans for NorthWestern Growth Corporation and other entities as
provided below. It is understood and agreed by NorthWestern and Executive that,
subject to their mutual consent, Executive's participation in one or more of the
private equity plans referred to above may be effected through equity ownership
interests (or securities exercisable for, convertible into or exchangeable for
such interests) in one or more private equity entities either now existing or to
be formed by NorthWestern for such purposes.

Executive's member interest in NorthWestern Capital Partners, LLC (NCP), a
Delaware limited liability company, through Executive's initial personal
investment, entitles Executive to receive the value allocated to his Targeted
Capital Account (TCA) corresponding to the following components:

Executive's LLC Improved Return element target for 2001 is set at $60,000 or
21.1% of base salary.

Executive's LLC Acquisition Return element target for 2001 is set at $100,000
or 35.1% of base salary.

Executive's LLC Equity Return element target for 2001 is set at $88,000 or 30.9%
of base salary.

<Table>
<Caption>
COMPONENT                        MECHANISM/INVESTMENT PERFORMANCE CRITERIA(1)                            SHARE AMOUNT(2)(3)
---------                        -----------------------------------------                               ------------
<S>                              <C>                                                                     <C>
ACQUISITION RETURN               Credit to TCA of Share Amount of the appreciation in the                (See attached table)
                                 Fair Market Value (FMV) realized from each acquisition
                                 measured by multiplying the total transaction
                                 value; assumes meeting pro forma EBITDA
                                 performance for each transaction

ANNUAL APPRECIATION              Credit to TCA of Share Amount of annual appreciation in FMV in
                                 investment strategies attibutable to the actual after tax return
                                 on invested capital (after hurdle rate),based on following schedule:

                                 6.5%     -        less than 10%
                                 10%      -        less than 13%
                                 13% or greater

EQUITY OWNERSHIP                 Credit to TCA of Share Amount of `improved equity value' of new Investment
                                 strategies attributable to actual gain in equity value  (after hurdle rate),
                                 based on following schedule (vesting 25% on each  of the

                                       41

<Page>

                                 2nd, 3rd, 4th, and 5th anniversaries of the commencement of
                                 the particular strategy):

                                 6.5%     -        less than 10%
                                 10%      -        less than 13%
                                 13% or greater

</Table>
--------------------------------
NOTE (1): The Managing and Non-managing Members of NCP are parties to that
          certain Limited Liability Company Agreement, dated as of
          September 30, 1999.
NOTE (2): See attached Targeted Capital Account Summary, Schedule C.
NOTE (3): All interests shall be determined without duplication for other
          payments or interests held by Executive in any other private equity
          investment partnership, limited liability company or other entity
          sponsored by NorthWestern Corporation or its affiliates.

                                       42

<Page>

                                                                      SCHEDULE D

PARTICIPATION IN BENEFIT PLANS - During the term hereof, Executive shall be
entitled to participate in the plans and programs of NorthWestern available to
employees of Executive's level as generally listed below (copies or summaries of
the plans are incorporated by reference and are available to Executive upon
request):

o        Health Plans
o        401(K) and Supplemental 401(K) Plan
o        ESOP Plan
o        Pension Plan (and related Supplemental Pension)
o        Family Protector Plan
o        Supplemental Income Security Plan
o        Short-Term and Long-Term Disability Plans
o        Standard Life Insurance Plan
o        Standard Vacation Plan
o        Standard Executive Reimbursement Program for Business Expenses
o        Association Dues, Automobile Allowance (including insurance, gas &
         maintenance costs), Country Club and Service Club Dues<Page>

                                                                   EXHIBIT 10.8

                            NORTHWESTERN CORPORATION
                        SUPPLEMENTAL INCOME SECURITY PLAN

                   AMENDED AND RESTATED EFFECTIVE JULY 1, 1999

      The Northwestern Corporation Supplemental Income Security Plan ("Plan")
was adopted by Northwestern Corporation (formerly Northwestern Public Service
Company), effective April 1, 1983 and has been amended and restated from time to
time. Northwestern Corporation now amends and restates the Plan, effective July
1, 1999, as hereinafter set forth:

                                    ARTICLE I
                         DEFINITIONS AND INTERPRETATIONS

      1.1 DEFINITIONS. When the following terms are used herein with initial
capital letters, they shall mean:

            (a) ADMINISTRATOR. The Company or such individual or committee as
      the Company shall designate from time to time. The Administrator shall
      have the authority to administer the Plan, to construe its provisions and
      to issue rules with respect thereto, and the decisions of the
      Administrator shall be final and binding on all parties. The Administrator
      shall constitute the "administrator" and "named fiduciary" of the Plan
      within the meaning of the Employee Retirement Income Security Act of 1974,
      as amended ("ERISA").

            (b) BENEFICIARY. The person or persons, or entity or entities,
      designated by a Participant or a Beneficiary to receive a Death Benefit
      hereunder pursuant to the terms of Article VI.

            (c) BOARD. The Board of Directors of the Company.

            (d) COMPANY. Northwestern Corporation.

            (e) DEATH BENEFIT. The benefit payable to a Participant's
      Beneficiary hereunder, in the event of his death (i) while employed by the
      Company or an affiliate, or (ii) following his termination of employment
      and either prior to or after the date payment of his Retirement Benefit
      commences.

            (f) DISABILITY. The total and permanent disability of a Participant
      as determined by a doctor of medicine approved by the Company, which event
      will be deemed to have occurred on the date of delivery of such doctor's
      certificate to such effect to the Company. In lieu of such certification,
      the Company may accept, as proof of total and permanent disability, proof
      of the Participant's eligibility for disability benefits under the Federal
      Social Security Act, as amended from time to time.

            (g) EARNINGS. The amount of base compensation paid by the Company or
      an affiliate to an Eligible Employee who is a Participant for services
      rendered, excluding any bonuses and commissions, or the amount of
      director's fees paid to an Outside Director who is a Participant.

            (h) EARNINGS LEVEL. Earnings within a prescribed range as shown on
      the attached Schedules A, B and C.

            (i) ELIGIBLE EMPLOYEE. A senior management Employee selected by the
      Chief Executive Officer of the Company to participate in the Plan.

            (j) EMPLOYEE. An individual who customarily works a regularly
      scheduled work week with the Company or an affiliate thereof of at least
      twenty (20) hours per week.

            (k) ENTRY DATE. January 1 and July 1 of each calendar year and any
      other date designated by the Chief Executive Officer of the Company.

<Page>

            (l) OUTSIDE DIRECTOR. A member of the Board who is not an Employee.

            (m) PARTICIPANT. An Employee or Outside Director who has become
      eligible to participate in the Plan in accordance with Article II.

            (n) PLAN ANNIVERSARY. The first day of a Plan Year which is July 1
      of each calendar year.

            (o) PLAN YEAR. The twelve (12) month period beginning on July 1 and
      ending on June 30.

            (p) RETIREMENT BENEFIT. The benefit payable to a Participant
      hereunder following his Retirement Date.

            (q) RETIREMENT DATE. The later of the Employee's or Outside
      Director's (i) 65th birthday, or (ii) retirement from employment with the
      Company or service on the Board.

      1.2 GENDER AND NUMBER. The pronouns "he", "him" and "his", referring to
an Employee, Outside Director, Participant or Beneficiary, shall also refer to
and include females as well as males, and the singular shall include the plural,
and the plural the singular, except when the context otherwise requires.

                                   ARTICLE II
                                   ELIGIBILITY

      2.1 ELIGIBILITY. An individual shall be eligible to participate in the
Plan as of the Entry Date next following either (a) the date he becomes an
Outside Director, or (b) the date he is selected by the Chief Executive Officer
of the Company for participation as an Eligible Employee. To be an Eligible
Employee, an individual must:

            (a) Be credited with six months or more of service in a qualifying
      position as a senior management Employee with the Company or an affiliate;
      and

            (b) Be in a state of health that would meet customary requirements
      at reasonable standard insurance rates.

      2.2 WAIVER OF ELIGIBILITY. If an individual who is eligible for
participation in the Plan pursuant to Section 2.1 elects not to participate, he
must execute a written waiver acknowledging his decision not to participate in
the Plan, and further indicating his waiver of the right to participate at any
future date unless he is selected by the Chief Executive Officer of the Company
for participation. Any such waiver must be executed by the Participant, and his
spouse if he is married, and delivered to the Administrator as soon as
practicable after he is notified of his eligibility for participation. Any
designated individual who does not deliver such properly executed waiver to the
Administrator within 60 days after the date of his eligibility for
participation, shall be deemed to have elected not to participate in the Plan.

      2.3 SPECIAL STATE OF HEALTH RULE. Participation in the Plan shall be
limited to an Eligible Employees or Outside Director whose state of health at
the time of his entry into the Plan is determined, to the satisfaction of the
Administrator, to be normal for his age group, on the basis of standards
comparable to those customarily employed in the insurance industry for setting
standard premium rates; provided, however, that the Administrator, in its sole
discretion, may permit participation by an Eligible Employee or Outside Director
whose state of health does not meet this requirement on the condition that the
amount of Retirement Benefit and Death Benefit provided to him or his
Beneficiary may be reduced, at the Administrator's discretion, from that which
would otherwise apply to him under the terms of the Plan. An Eligible Employee
or Outside Director who participates in the Plan under the preceding sentence of
this Section shall be advised by the Administrator in a written notice, no later
than sixty (60) days after the determination of his state of health as required
herein, of the dollar amount of Retirement Benefit and Death Benefit to be
provided to him (or his Beneficiary) under the Plan.

                                       2
<Page>

                                   ARTICLE III
                                  CONTRIBUTIONS

      3.1 PARTICIPANT CONTRIBUTIONS. (a) An Eligible Employee who is selected
for participation in the Plan must, as a condition of participation, elect in
writing to reduce his Earnings, during a four year period commencing on the
Entry Date on which his participation in the Plan commences. The amount of such
reduction shall be based upon his Earnings Level as set forth in Schedule A, and
shall be applied to the cost of providing his Retirement Benefit and Death
Benefit. Such election shall be made by the Eligible Employee prior to the Entry
Date on which his participation in the Plan commences and shall apply only to
Earnings that would otherwise be received on or after that Entry Date. Any such
election to reduce Earnings shall be irrevocable for the Plan Year in which such
election is made and for each subsequent Plan Year until revoked by a written
instrument delivered by the Eligible Employee to the Administrator prior to the
first day of the Plan Year with respect to which such revocation is to become
effective. An Eligible Employee's contribution requirement will be based upon
his Earnings Level as set forth in Schedule A for each applicable Plan Year. If
the Eligible Employee's Earnings Level increases during, or at any time after
the end of, the four year period commencing on the Entry Date on which his
initial participation in the Plan commences, his contribution requirement shall
increase by an amount applicable to the increased Earnings Level set forth on
Schedule A, and such increase shall remain in effect for a four year period
commencing on the date of increase of his Earnings Level. An Eligible Employee's
participation in the Plan shall immediately terminate upon the effective date of
a revocation of his election to contribute to the Plan as hereinafter set forth.
Outside Directors shall not be required to contribute to the Plan.

      (b) A Participant who is an Eligible Employee may elect to accelerate
payment of his contribution obligation pursuant to paragraph (a) next above by
electing to reduce all or any portion of any bonus payable to him by the Company
or an affiliate. Any such election shall be made by the Participant by a written
instrument delivered to the Administrator prior to the first day of the Plan
Year in which the applicable bonus is payable to the Participant. Such election
shall specify the portion of the bonus that is subject to reduction and such
election shall be irrevocable for the Plan Year in which it is effective. Any
such election shall apply only to the bonus payable to the Participant in the
Plan Year in which the election is effective, and shall not be applicable with
respect to any subsequent Plan Year. An election by a Participant to accelerate
payment of his contribution obligation pursuant to this paragraph (b) shall not
accelerate the period set forth in the first sentence of Section 4.6 after which
a Participant's Retirement Benefit and Death Benefit become non-forfeitable.

      3.2 COMPANY CONTRIBUTIONS. The Company shall contribute all amounts
necessary to satisfy the cost of a Retirement Benefit and Death Benefit with
respect to a Participant in excess of the amount contributed by the Participant
pursuant to the preceding section.

                                   ARTICLE IV
                                    BENEFITS

      4.1 RETIREMENT BENEFIT. A Participant shall be eligible to receive a
Retirement Benefit commencing on the first day of the month next following his
Retirement Date. The monthly amount of the Retirement Benefit shall be set forth
on the Participant's certificate or other record on file with the Company on his
Retirement Date, and shall be generally based upon the guidelines set forth in
Schedule B.

      4.2 DEATH BENEFIT. A Death Benefit shall be payable to the Participant's
Beneficiary commencing on the first day of the month next following his date of
death. The monthly amount of the Death Benefit shall be set forth in the
Participant's certificate or other record on file with the Company on his date
of death, and shall generally be based upon the guidelines set forth in Schedule
C.

      4.3 INCREASE IN RETIREMENT BENEFIT AND DEATH BENEFIT. A Participant whose
Earnings increase following the Entry Date on which he commences participation
in the Plan, so as to be included within a higher Earnings Level, shall become
entitled to the Retirement Benefit and Death Benefit set forth in his
certificate or other record on file with the Company, as adjusted to reflect
such higher Earnings Level, and shall generally be based upon the higher
Earnings Level set forth in Schedules B and C, as of the Plan Anniversary
coincident with or next following such increase in Earnings. The preceding
sentence shall apply with respect to a Participant who is an Eligible Employee
only if he is credited with six or more months of service in a qualifying
position as a senior management Employee with the Company or an affiliate. If
the state of such a Participant's health, is not then determined, to the
satisfaction of the Administrator, to be normal for his age group, on the basis
of standards comparable to those customarily employed by the insurance industry
in setting standards or reasonable premium rates, such increase in Retirement
Benefit and Death Benefit shall apply only to the extent authorized by the

                                       3
<Page>

Administrator. The Administrator shall advise any such Participant in a written
notice no later than 60 days after the determination of the state of his health
as required herein, of the increased amount of Retirement Benefit and Death
Benefit to be provided to him (or his Beneficiary) under the Plan, which amount
shall in no event be less than that to which he was entitled prior to such
notice.

      4.4 ELECTION WITH RESPECT TO AMOUNT OF RETIREMENT BENEFIT AND DEATH
BENEFIT.

            (a) A Participant, during the period commencing on the Entry Date on
      which his participation in the Plan commences and ending on the date 30
      days prior to his Retirement Date ("Election Period"), may elect to reduce
      the amount of his monthly Retirement Benefit and increase the amount of
      his monthly Death Benefit, in 25% increments, based upon the amounts set
      forth in his certificate or record on file with the Company, and the
      guidelines set forth in Schedules B and C. Any such reduction will be
      based upon the following schedule:

<Table>
<Caption>

     Elected Amount of Retirement Benefit      Elected Amount of Death Benefit
     ------------------------------------      -------------------------------

<S>                                                      <C>
                   100%                                    0%
                    75%                                   25%
                    50%                                   50%
                    25%                                   75%
                     0%                                  100%
</Table>

      Any such election may be revoked by the Participant at any time during the
      Election Period, and shall become irrevocable on the last day of the
      Election Period.

      4.5   PAYMENT OF BENEFIT.

            (a) The elected amount of Retirement Benefit shall be paid to the
      Participant in monthly installments during the 15 year period commencing
      on the first day of the month next following his Retirement Date. If the
      Participant dies prior to the end of such 15 year period, the monthly
      amount of Retirement Benefit shall be continued to be paid to his
      Beneficiary for the balance of such 15 year period. A Retirement Benefit
      is not payable with respect to a Participant who dies prior to the date
      payment of his Retirement Benefit commences.

            (b) The elected amount of Death Benefit shall be paid to the
      Participant's Beneficiary in monthly installments during the 15 year
      period commencing on the first day of the month next following the
      Participant's date of death. If such Beneficiary dies during such 15 year
      period, the monthly amount of Death Benefit shall continue to be paid to
      the secondary Beneficiary designated by the primary Beneficiary for the
      balance of such 15 year period.

      4.6   FORFEITURES.

            (a) The Retirement Benefit and Death Benefit of a Participant who is
      an Eligible Employee will be forfeited if the Participant's employment
      with the Company and its affiliates terminates before he has either (a)
      been employed for a period of 10 years, or (b) participated in the Plan
      for a period of five years. However, the Retirement Benefit and Death
      Benefit shall not be forfeited if: (1) the Participant retires from
      employment with the Company and its affiliates under the terms of the
      Northwestern Corporation Pension Plan, (2) the Participant's employment
      terminates due to death or Disability, or (3) the Participant's employment
      terminates within 12 months following a "Change in Control" or a Major
      Transaction, and if at the time of such termination pursuant to this
      sentence (other than due to death) the Participant has satisfied all
      Participant contributions due under the Plan.

            (b) If a Participant terminates employment under conditions that
      cause a forfeiture of his Retirement Benefit and his Death Benefit as set
      forth in the preceding paragraph, he shall not be entitled to a refund of
      any Participant contributions previously made by him pursuant to the Plan.
      However, a Participant who has satisfied either the 10 year employment
      requirement, or the 5 year participation

                                       4
<Page>

      requirement, set forth in the preceding paragraph at the date of his
      termination of employment shall be entitled to retain entitlement to his
      Retirement Benefit and Death Benefit by continuing to make the remaining
      required Participant contributions due under the Plan. In the event of the
      death of a Participant, there shall be no remaining Participant
      contribution obligation.

            (c) The Retirement Benefit and Death Benefit payable with respect to
      a Participant who is an Outside Director shall be non-forfeitable at all
      times after he becomes a Participant.

                                    ARTICLE V
                       ELIGIBILITY FOR RETIREMENT BENEFIT
                           IN THE EVENT OF TERMINATION

      5.1 PAYMENT OF RETIREMENT BENEFIT. An Eligible Employee whose employment
has terminated and whose Retirement Benefit is not forfeited pursuant to Section
4.6, or an Outside Director whose service on the Board has terminated, will be
eligible for a Retirement Benefit.

      5.2   DEFINITIONS OF CHANGE IN CONTROL AND MAJOR TRANSACTION.

            (a) CHANGE IN CONTROL. For purposes of the Plan, a Change in Control
      of the Company shall occur upon the happening of the earliest to occur of
      the following:

                  1. any Person (as defined below) is or becomes the Beneficial
            Owner (as defined below), directly or indirectly, of securities of
            the Company (not including in the securities beneficially owned by
            such Person any securities acquired directly from the Company or its
            affiliates) representing 20% or more of the combined voting power of
            the Company's then outstanding securities: or

                  2. during any period of not more than two consecutive years,
            individuals, who at the beginning of such period constitute the
            Board and any new director (other than a director designated by a
            Person who has entered into an agreement with the Company to effect
            a transaction described in clause 1 of this paragraph or clauses 2
            or 3 of paragraph (b) below) whose election by the Board or
            nomination for election by the Company's shareholders was approved
            or recommended by a vote of at least two-thirds (2/3) of the
            directors then still in office who either were directors at the
            beginning of the period or whose election or nomination for election
            was previously so approved or recommended, cease, for any reason to
            constitute a majority thereof.

            (b) MAJOR TRANSACTION. For purposes of the Plan, a Major Transaction
      shall occur upon the happening of the earliest to occur of the following:

                  1. the shareholders of the Company approve a merger or
            consolidation of the Company with any corporation or business trust,
            other than (i) a merger or consolidation which would result in the
            individuals who prior to such merger or consolidation constitute the
            Board constituting at least two-thirds (2/3) of the board of
            directors of the Company or the surviving or succeeding entity
            immediately after such merger or consolidation, or (ii) a merger or
            consolidation effected to implement a recapitalization of the
            Company (or similar transaction) in which no Person acquires more
            than 20% of the combined voting power of the Company's then
            outstanding securities; or

                  2. the shareholders of the Company approve a plan of complete
            liquidation of the Company; or

                  3. the shareholders of the Company approve an agreement for
            the sale or disposition by the Company of all or substantially all
            of the Company's assets, other than a sale or disposition which
            would result in the individuals who prior to such sale or
            disposition constitute the Board constituting at least two- thirds
            (2/3) of the board of directors of the Person purchasing such assets
            immediately after such sale or disposition.

                                       5
<Page>

      For purposes of the Plan, "Beneficial Owner" shall have the meaning
      defined in Rule 13d-3 under the Securities Exchange Act of 1934, as
      amended (the "Exchange Act") and "Person" shall have the meaning given in
      Section 3(a)(9) of the Exchange Act, as modified and used in Sections
      13(d) and 14(d) thereof: however: a Person shall not include (i) the
      Company, (ii) a trustee or other fiduciary holding securities under an
      employee benefit plan of the Company, (iii) an underwriter temporarily
      holding securities pursuant to an offering of such securities, or (iv) a
      corporation owned: directly or indirectly by the shareholders of the
      Company in substantially the same proportions as their ownership of shares
      of the Company.

                                   ARTICLE VI
                           DESIGNATION OF BENEFICIARY

      6.1 GENERAL. A Participant or a primary Beneficiary, as applicable, shall
designate in writing, in a form acceptable to the Administrator, a person or
persons or entity or entities to receive the Retirement Benefit in the event of
the Participant's death, or the Death Benefit in the event of the primary
Beneficiary's death. Such a designation may be revoked in writing by the
Participant or primary Beneficiary at any time, and the last such designation
executed by the Participant or primary Beneficiary and filed with the
Administrator shall control. A Participant or primary Beneficiary may, by
completing and filing with the Administrator a form provided by the
Administrator for that purpose, waive entirely his right to designate a
Beneficiary hereunder, [or irrevocably assign such right to either the Company
or the Beneficiary].

      6.2 PLAN DESIGNATIONS. If there is no Beneficiary designated to receive
any amount that becomes payable to a Beneficiary, or in the event a designated
Beneficiary has predeceased the Participant or a primary Beneficiary, or if the
Participant or primary Beneficiary designated distribution according to the Plan
("Per Plan"), the balance of the Retirement Benefit or Death Benefit shall be
paid in equal shares to the person or persons in the first surviving class of
the following classes of preference Beneficiaries:

            (a) The Participant's or primary Beneficiary's surviving spouse,
      with a balance of payments that may be payable in the event that the
      spouse dies before the end of the fixed payment period, to be paid in
      order of preference to those designated in classes (b), (c) or (d)
      hereafter, or as the spouse may validly designate during his or her
      lifetime,

            (b) The Participant's or primary Beneficiary's surviving issue,
      (including legally adopted issue), PER STIRPES and not PER CAPITA,

            (c) The Participant's or primary Beneficiary's surviving parents in
      equal shares,

            (d) The Participant's or primary Beneficiary's surviving siblings in
      equal shares, and

            (e) The legal representative of the Participant's or primary
      Beneficiary's estate:

      6.3 INTERPRETATIONS. Any ambiguity in the interpretation of a Beneficiary
designation shall be determined by the Administrator:

                                   ARTICLE VII
                                     CLAIMS

      A Participant or Beneficiary who has become entitled to a Retirement
Benefit or Death Benefit and who wishes payment to commence shall submit a claim
to the Administrator in writing, in such form and with such supporting documents
and authorizations as the Administrator may require. If a Participant's or a
Beneficiary's claim for benefits is denied in whole or in part, he shall be
entitled to a written explanation from the Administrator setting forth the
specific reasons for the denial, and to a full and fair review by the
Administrator of the decision denying the claim. All such claims shall be
processed pursuant to Section 503 of ERISA and regulations issued thereunder.

                                       6
<Page>

                                  ARTICLE VIII
                           EXCLUSIONS AND LIMITATIONS

      8.1 GENERAL. Notwithstanding anything to the contrary contained herein:

            (a)   No Retirement Benefit or Death Benefit shall be payable under
      the Plan:

                  (i) on account of a Participant's death by suicide within two
            (2) years of the Entry Date on which his initial participation in
            the Plan commenced, or

                  (ii) to a Participant (or Beneficiary) within two (2) years
            after the Participant has materially misrepresented the state of his
            health to the Company, or to any party designated by the Company, on
            the occasion of his entry into the Plan.

            (b)   In the case of a Participant who has become eligible for an
      increase in a Retirement Benefit under Section 4.3, no such increase shall
      apply:

                  (i) in the event of the Participant's suicide within two (2)
            years after such increase becomes effective, or

                  (ii) within two (2) years following the Participant's material
            misrepresentation of the state of his health to the Company, or to
            any party designated by the Company, on the occasion of his becoming
            eligible for an increase in his Retirement Benefit.

            (c)   No Retirement Benefit or Death Benefit shall be payable to a
      Participant (or his Beneficiary) who has materially misrepresented his age
      to the Company, except as the Administrator shall authorize in its sole
      discretion.

      8.2 BENEFIT AS STATED IN CERTIFICATE OR OTHER RECORD. No Retirement
Benefit or Death Benefit shall apply with respect to a terminated or deceased
Participant except as shall be set forth in a certificate or other record on
file with the Company, according to such reasonable rules and procedures as the
Administrator may establish. The amount of Retirement Benefit and Death Benefit
set forth in such certificate or other record shall be binding and conclusive
for all purposes of the Plan and the amounts determined from Schedules B and C
attached hereto shall constitute guidelines only. In the event of any
inconsistency between the amount set forth on such certificate or other record,
and the amount determined by reference to Schedule B or C, the amount set forth
in the certificate or other record shall govern.

      8.3 PARTICIPANT COOPERATION. The right of any Eligible Employee or
Outside Director to participate in the Plan is conditioned upon and subject to
his cooperation with the efforts of the Administrator to determine the state of
his health.

                                   ARTICLE IX
                            AMENDMENT OR TERMINATION

      9.1 AMENDMENT OR TERMINATION. The Company intends the Plan to be permanent
but reserves the right to amend or terminate the Plan when, in the sole opinion
of the Company, such amendment or termination is advisable. Any such amendment
or termination shall be made pursuant to a resolution of the Board and shall be
effective as of the date of such resolution.

      9.2 EFFECT OF AMENDMENT OR TERMINATION. No amendment or termination of the
Plan shall directly or indirectly reduce or adversely affect any Retirement
Benefit or Death Benefit payment of which has commenced, or is non-forfeitable
under Section 4.6, as of the effective date of such amendment or termination.
Upon termination of the Plan, payment of each Retirement Benefit and Death
Benefit shall be made to the applicable Participant or Beneficiary in the manner
and at the time described in Articles IV and V of the Plan.

                                       7
<Page>

                                    ARTICLE X
                               GENERAL PROVISIONS

      10.1 RIGHTS UNSECURED. The Plan at all times shall be entirely unfunded
and no provision shall at any time be made with respect to segregating any
assets of the Company or its affiliates for payment of any Retirement Benefit or
Death Benefit hereunder. The right of a Participant or Beneficiary to receive a
Retirement Benefit or Death Benefit hereunder shall be an unsecured claim
against the general assets of the Company or its affiliates, and neither the
Participant nor a Beneficiary shall have any rights in or against any specific
assets of the Company or its affiliates.

      10.2 NO GUARANTEE OF BENEFIT. Nothing contained in the Plan shall
constitute a guaranty by the Company or any affiliate or any other person or
entity that the assets of the Company or any affiliate will be sufficient to pay
any Retirement Benefit or Death Benefit hereunder.

      10.3 NO ENLARGEMENT OF BENEFIT RIGHTS. No Participant or Beneficiary shall
have any right to receive a distribution of a Retirement Benefit or Death
Benefit under the Plan except in accordance with the terms of the Plan.
Establishment of the Plan shall not be construed to give any Participant the
right to be retained in the service of the Company or any affiliate or to
continue as a member of the Board.

      10.4 SPENDTHRIFT PROVISION. No interest of any person or entity in, or
right to receive a distribution under, the Plan shall be subject in any manner
to sale, transfer, assignment, pledge, attachment, garnishment, or other
alienation or encumbrance of any kind; nor may such interest or right to receive
a distribution be taken, either voluntarily or involuntarily, for the
satisfaction of the debts of, or other obligations or claims against, such
person or entity, including claims for alimony, support, separate maintenance
and claims in bankruptcy proceedings.

      10.5 APPLICABLE LAW. To the extent the laws of the United States do not
apply, the Plan shall be construed and administered under the laws of the State
of South Dakota, other than its laws respecting choice of law.

      10.6 INCAPACITY OF RECIPIENT. If any person entitled to a distribution
under the Plan is deemed by the Administrator to be incapable of personally
receiving and giving a valid receipt for such payment, then, unless and until
claim therefor shall have been made by a duly appointed guardian or other legal
representative of such person, the Administrator may provide for such payment or
any part thereof to be made to any other person or institution then contributing
toward or providing for the care and maintenance of such person. Any such
payment shall be a payment for the account of such person and a complete
discharge of any liability of the Company, the Administrator and the Plan
therefor.

      10.7 CORPORATE SUCCESSORS. The Plan shall not be automatically terminated
by a transfer or sale of assets of the Company, or by the merger or
consolidation of the Company into or with any other corporation or other entity,
but the Plan shall be continued after such sale, merger or consolidation only if
and to the extent that the transferee, purchaser or successor entity agrees to
continue the Plan. If the Plan is not continued by the transferee, purchaser or
successor entity, then the Plan shall terminate subject to the provisions of
Article IX.

      10.8 UNCLAIMED BENEFIT. In the event that all, or any portion, of a
Retirement Benefit or Death Benefit payable to a Participant or Beneficiary
hereunder shall, at the expiration of five years after it shall become payable,
remain unpaid solely by reason of the inability of the Administrator, after
sending a registered letter, return receipt requested, to the last known
address, and after further diligent effort, to ascertain the whereabouts of such
Participant or Beneficiary, the amount of the Benefit so distributable shall be
treated as a forfeiture and shall be retained by the Company as part of its
general assets. In the event a Participant or Beneficiary is located subsequent
to his Retirement Benefit or Death Benefit being forfeited, such Benefit shall
be restored.

      10.9 LIMITATIONS ON LIABILITY. Notwithstanding any of the preceding
provisions of the Plan, none of the Company, the Administrator or any individual
acting as employee or agent of the Company or the Administrator shall be liable
to any Participant, former Participant, Beneficiary or other person for any
claim, loss, liability or expense incurred in connection with the Plan.

                                       8
<Page>

      IN WITNESS WHEREOF, Northwestern Corporation has caused this amendment and
restatement of the Plan to be executed in its name, by its duly authorized
officer, on this 1st day of July, 1999, effective as of the first day of July,
1999.

                                          NORTHWESTERN CORPORATION

                                          By:  /s/ Merle D. Lewis

                                       9
<Page>

SCHEDULE A

                            NORTHWESTERN CORPORATION
                        SUPPLEMENTAL INCOME SECURITY PLAN

                            Participant Contributions

This schedule is prepared to determine the portion of the cost of the Retirement
Benefit and Death Benefit payable with respect to a Participant that will be
deducted from the Participant's base salary for a maximum period of four years.

As the Participant moves to a higher Earnings Level, the cost of the Retirement
Benefit and Death Benefit will increase accordingly.

<Table>
<Caption>

               Earnings Level            Annual Amount
                                     Deducted Over 4 Years
                                       From Participant's
                                       Earnings At Time
                                    Of Next Earnings Review

=============================================================
<S>                                         <C>
   A.     Directors                         $-0-
   B.     Employees up to $39,999               1,500
   C.     $40,000 to $49,999                    2,000
   D.     $50,000 to $64,999                    2,750
   E.     $65,000 to $79,999                    3,500
   F.     $80,000 to $99,999                    4,500
   G.     $100.000 to $119,999                  5,500
   H.     $120,000 to $144,999                  6,750
   I.     $145,000 to $169,999                  8,000
   J.     $170,000 to $199,999                  9,500
   K.     $200,000 to $229,999                 11,000
   L.     $230,000 to $264,999                 12,750
   M.     $265,000 to $299,999                 14,500
   N.     $300,000 to $339,999                 16,500
   O.     $340,000 to $379,999                 18,500
   P.     $380,000 to $424,999                 20,750
   Q.     $425,000 to $469,999                 23,000
   R.     $470,000 to $519,999                 25,500
   S.     $520,000 to $569,999                 28,000
   T.     $570,000 to $624,999                 30,750
</Table>

                                       10
<Page>

<Table>
<S>                                            <C>
   U.     $625,000 to $679,999                 33,500
   V.     $680,000 to $739,999                 36,500
   W.     $740,000 to $799,999                 39,500
   X.     $800,000 to $864,999                 42,750
   Y.     $865,000 to $929,999                 46,000
   Z.     $930,000 and over                    49,500
</Table>

SCHEDULE B

                            NORTHWESTERN CORPORATION
                        SUPPLEMENTAL INCOME SECURITY PLAN

                          Amount of Retirement Benefit

<Table>
<Caption>

                Earnings Level          Monthly        Annual     Total of All
                                       Retirement    Retirement     Payments
                                        Benefit        Benefit
                                       Payable at    Payable for
                                       Retirement     15 Years
                                       Date for 15
                                         Years

================================================================================
<S>                                          <C>          <C>          <C>
   A.     Directors                          $1,056       $12,672      $190,080
   B.     Employees up to $39,999             1,584        19,008       285,120
   C.     $40,000 to $49,999                  1,848        22,176       332,640
   D.     $50,000 to $64,999                  2,112        25,344       380,160
   E.     $65,000 to $79,999                  2,640        31,680       475,200
   F.     $80,000 to $99,999                  3,168        38,016       570,240
   G.     $100,000 to $119,999                3,960        47,520       712,800
   H.     $120,000 to $144,999                4,752        57,024       855,360
   I.     $145,000 to $169,999                5,808        69,696     1,045,440
   J.     $170,000 to $199,999                6,864        82,368     1,235,520
   K.     $200,000 to $229,999                8,184        98,208     1,473,120
   L.     $230,000 to $264,999                9,504       114,048     1,710,720
   M.     $265,000 to $299,999               11,088       133,056     1,995,840
   N.     $300,000 to $339,999               12,672       152,064     2,280,960
   O.     $340,000 to $379,999               14,520       174,240     2,613,600
   P.     $380,000 to $424,999               16,368       196,416     2,946,240
   Q.     $425,000 to $469,999               18,480       221,760     3,326,400
   R.     $470,000 to $519,999               20,592       247,104     3,706,560
   S.     $520,000 to $569,999               22,968       275,616     4,134,240
</Table>

                                       11
<Page>

<Table>
<S>                                          <C>          <C>         <C>
   T.     $570,000 to $624,999               25,344       304,128     4,561,920
   U.     $625,000 to $679,999               27,984       335,808     5,037,120
   V.     $680,000 to $739,999               30,624       367,488     5,512,320
   W.     $740,000 to $799,999               33,528       402,336     6,035,040
   X.     $800,000 to $864,999               36,432       437,184     6,557,760
   Y.     $865,000 to $929,999               39,600       475,200     7,128,000
   Z.     $930,000 and over                  42,768       513,216     7,698,240
</Table>

THIS SCHEDULE IS A GUIDELINE ONLY. THE ACTUAL RETIREMENT BENEFIT IS SET FORTH ON
A PARTICIPANT'S CERTIFICATE OR OTHER RECORD ON FILE WITH THE COMPANY AT THE
LATER OF THE PARTICIPANT'S ATTAINMENT OF AGE 65 OR RETIREMENT DATE.

                                       12
<Page>

                                   SCHEDULE C

                            NORTHWESTERN CORPORATION
                        SUPPLEMENTAL INCOME SECURITY PLAN

                            Amount of Death Benefit:

<Table>
<Caption>

                Earnings Level       Monthly Death   Annual Death   Total of All
                                        Benefit         Benefit       Payments
                                      Payable To A   Payable To A
                                         Named          Named
                                      Beneficiary     Beneficiary
                                      For 15 Years   For 15 Years

================================================================================
<S>       <C>                                <C>          <C>          <C>
   A.     Directors                          $2,112       $25,344      $380,160
   B.     Employees up to $39,999             3,168        38,016       570,240
   C.     $40,000 to $49,999                  3,696        44,352       665,280
   D.     $50,000 to $64,999                  4,224        50,688       760,320
   E.     $65,000 to $79,999                  5,280        63,360       950,400
   F.     $80,000 to $99,999                  6,336        76,032     1,140,480
   G.     $100,000 to $119,999                7,920        95,040     1,425,600
   H.     $120,000 to $144,999                9,504       114,048     1,710,720
   I.     $145,000 to $169,999               11,616       139,392     2,090,880
   J.     $170,000 to $199,999               13,728       164,736     2,471,040
   K.     $200,000 to $229,999               16,368       196,416     2,946,240
   L.     $230,000 to $264,999               19,008       228,096     3,421,440
   M.     $265,000 to $299,999               22,176       266,112     3,991,680
   N.     $300,000 to $339,999               25,344       304,128     4,561,920
   O.     $340,000 to $379,999               29,040       348,480     5,227,200
   P.     $380,000 to $424,999               32,736       392,832     5,892,480
   Q.     $425,000 to $469,999               36,960       443,520     6,652,800
   R.     $470,000 to $519,999               41,184       494,208     7,413,120
   S.     $520,000 to $569,999               45,936       551,232     8,268,480
   T.     $570,000 to $624,999               50,688       608,256     9,123,840
   U.     $625,000 to $679,999               55,968       671,616    10,074,240
   V.     $680,000 to $739,999               61,248       734,976    11,024,640
   W.     $740,000 to $799,999               67,056       804,672    12,070,080
   X.     $800,000 to $864,999               72,864       874,368    13,115,520
   Y.     $865,000 to $929,999               79,200       950,400    14,256,000
</Table>

                                       13
<Page>

<Table>
<S>       <C>                                <C>        <C>          <C>
   Z.     $930,000 and over                  85,536     1,026,432    15,396,480
</Table>

  THIS SCHEDULE IS A GUIDELINE ONLY. THE ACTUAL DEATH BENEFIT IS SET FORTH ON A
    PARTICIPANT'S CERTIFICATE OR OTHER RECORD ON FILE WITH THE COMPANY AT THE
                          PARTICIPANT'S DATE OF DEATH.

                                       14

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