NORTHWESTERN PUBLIC SERVICE CO, 8-K, 1995-08-29

NORTHWESTERN PUBLIC SERVICE CO
8-K, 1995-08-29
ELECTRIC & OTHER SERVICES COMBINED

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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (date of earliest event reported) August 14, 1995
---------------

NORTHWESTERN PUBLIC SERVICE COMPANY

- ----------------------------------------------------------------------
(Exact name of registrant as specified in its charter)

Delaware 0-692 46-01722280
- ----------------------------------------------------------------------
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)

33 Third St. SE
P.O. Box 1318
Huron, South Dakota 57350-1318
- ----------------------------------------------------------------------
(Address of principal executive officers) (Zip code)

Registrant's telephone number, including area code 605-352-8411
------------

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Item 2. ACQUISITION OR DISPOSITION OF ASSETS.

Pursuant to the Purchase and Sale Agreement, dated as of May 17, 1995,
as amended and supplemented by an agreement dated as of August 11, 1995, SYN
Inc., a majority owned subsidiary of registrant, on August 14, 1995 acquired
certain of the assets of Synergy Group Incorporated and its subsidiaries
("Synergy"). On August 15, 1995, in a second closing, SYN Inc. acquired all
of the outstanding stock of Synergy Group Incorporated, thereby completing
the acquisition of Synergy (the "Acquisition").

Prior to the Acquisition, Synergy had been principally engaged as a
retail propane distributor serving over 200,000 customers from 152 locations
in 23 states in the eastern and south central regions of the United States.
Registrant's present plan is to continue that business except for that part
sold to Empire Energy Corporation as discussed below. Incorporated herein by
this reference is the discussion of Synergy's business, the plans and
arrangements for the management of the business subsequent to the Acquisition
and the capitalization of SYN Inc., set forth under the subcaptions
"General," "Business of Synergy," "Management of Synergy" and "Capitalization
of SYN" under the caption "Acquisition of Synergy Group Incorporated" in the
prospectus dated August 16, 1995 relating to $200,000,000 of registrant's
Mortgage Bonds, Subordinated Debt Securities and Common Stock, and Preferred
Securities of NWPS Capital Financing I, NWPS Capital Financing II and NWPS
Capital Financing III, filed with the Securities and Exchange Commission
pursuant to Rule 424(b) with respect to registrant's Registration Statement
on Form S-3, Registration No. 33-60423.

The consideration paid by SYN for the Acquisition was determined by
arms-length negotiations. Such consideration, in addition to the assumption
of various liabilities of Synergy, consisted of (i) cash in the amount of
$137,500,000, which amount is subject to adjustment upward or downward based
on the working capital of Synergy (as specially defined in the Acquisition
Agreement) as of the closing date, which adjustment was estimated at the time
of the closing to be an upward adjustment of $3,358,000, (ii) a promissory
note payable by SYN in the principal amount of $1,250,000, and (iii) the
issuance to the stockholders of Synergy Group Incorporated of 17,500 shares
of the Common Stock of SYN (17.5% of the total outstanding) and 2,500 shares
of the 15% Series A Cumulative Preferred Stock of SYN (valued at $2,500,000).
Such shares of preferred stock are part of a series of preferred stock of
SYN of which 50,000 shares were issued to registrant in exchange for
$50,000,000 as part of the long-term financing which registrant has provided
to SYN. Substantially all ($88.2 million) of Synergy's loan indebtedness
outstanding at the time of the closings was paid from the cash portion of the
consideration paid for the Acquisition.

The $140,858,000 ($137,500,000 plus the preliminary estimate of
$3,358,000 for the working capital adjustment) paid or set aside for payment
as the cash component of the consideration for the Acquisition was obtained
by registrant and invested in SYN Inc. (by the purchase of stock of SYN Inc.
and by making a secured loan to SYN Inc.) as follows: approximately
$93,500,000 was obtained from the proceeds of underwritten public offerings

<PAGE>

of (i) $60,000,000 principal amount of registrant's 7.10% Mortgage Bonds due
August 1, 2025, (ii) 1,300,000 of Preferred Securities of NWPS Capital
Financing I, (iii) 1,200,000 shares of registrant's Common Stock (all of
which are more fully described under Item 5 of this Report on Form 8-K); and
the balance was obtained by registrant from loans to registrant by The First
National Bank of Boston and The Bank of New York, initially in the aggregate
amount of $51,000,000 on August 15, 1995, and then reduced to zero by the
application of part of the net proceeds subsequently received from
registrant's above-mentioned sale of Common Stock and by the application of
the cash proceeds from the sale of assets to Empire Energy Corporation
discussed below.

On August 15, 1995, following the completion of the Acquisition, SYN
sold to Empire Energy Corporation the business and assets of certain of the
retail branches acquired in the Acquisition. For this sale, SYN Inc. was
paid approximately $38,000,000 of consideration at the closing (consisting of
cash and the business and assets of nine retail branches of Empire Energy
Corporation that were transferred in exchange). The consideration for the
sale to Empire Energy Corporation is subject to adjustment (upward or
downward) based upon certain closing date financial information concerning
the branches sold and received in exchange which will be determined after the
closing.

ITEM 5. OTHER EVENTS.

On August 8, 1995, registrant sold its New Mortgage Bonds, 7.10% Series
due August 1, 2005 in the principal amount of $60,000,000 (the "Bonds") which
were issued under the registrant's General Mortgage Indenture and Deed of
Trust dated as of August 1, 1993 between the registrant and The Chase
Manhattan Bank (National Association) (the "New Mortgage Trustee") as
supplemented by a Supplemental Indenture dated as of August 1, 1995. The
Bonds were sold pursuant to an Underwriting Agreement dated August 3, 1995
among the registrant, Morgan Stanley & Co. Incorporated and NatWest Capital
Markets Limited.

In connection with the issuance of the Bonds, on July 28, 1995,
registrant entered into an agreement with Metropolitan Life Insurance
Company, The Travelers Insurance Company, The Phoenix Insurance Company, The
Travelers Indemnity Company and the New Mortgage Trustee (collectively the
"Bondholders") whereby the Bondholders consented to an amendment to the
Indenture dated August 1, 1940 by and between registrant and The Chase
Manhattan Bank (National Association), successor to The Chase National Bank
of the City of New York and C.J. Heinzelmann, successor to Carl E. Buckley.
The Bondholders also agreed to exchange bonds issued pursuant to the
Indenture dated August 1, 1940 held by them for bonds issued pursuant to a
Supplemental Indenture to the General Mortgage Indenture and Deed of Trust
dated as of August 1, 1993.

On August 8, 1995, registrant also sold $33,500,000 of its 8 1/8% Junior
Subordinated Deferrable Interest Debentures due September 30, 2025
("Subordinated Debt Securities"). The Subordinated Debt Securities are all
of the assets of NWPS Capital Financing I, a statutory business trust formed
under the laws of the State of Delaware ("NWPS Capital"). NWPS Capital
issued $32,500,000 of its 8 1/8% Trust Preferred Capital Securities having

<PAGE>

a liquidation amount of $25 per Preferred Security (the "Preferred
Securities"). The Preferred Securities represent preferred undivided
beneficial interests in the assets of NWPS Capital. Registrant directly owns
all the common interests in the assets of NWPS Capital (the "Common
Securities"). NWPS Capital exists for the sole purpose of issuing the
Preferred Securities and Common Securities and investing the proceeds thereof
in an equivalent amount of the Subordinated Debt Securities. The Preferred
Securities were sold pursuant to an Underwriting Agreement dated August 3,
1995 among the registrant, Morgan Stanley & Co. Incorporated, Dean Witter
Reynolds Inc., NatWest Capital Markets Limited, PaineWebber Incorporated and
Piper Jaffray Inc.

On August 22, 1995, the registrant also sold 1,200,000 shares of its
Common Stock, $3.50 par value per share for a total of $30,150,000. The
Common Stock was sold pursuant to an Underwriting Agreement dated August 16,
1995 among the registrant, Morgan Stanley & Co. Incorporated and PaineWebber
Incorporated.

Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.

(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.

Incorporated herein by this reference are the audited financial
statements of Synergy Group Incorporated and its subsidiaries
consolidated as filed with the Securities and Exchange Commission
as part of the Annual Report on Form 10-K of Synergy Group
Incorporated and its 23 Operating Subsidiaries for the fiscal year
ended March 31, 1995, Commission file number 33-83222, consisting
of:

Starting at page
number in
Report
Document on Form 10-K
-------- ----------------

Report of Independent Certified Public Accountants F-1

Consolidated Balance Sheets at March 31, 1994
and 1995 F-2

Consolidated Statements of Operations for the years
ended March 31, 1993, 1994 and 1995 F-3

Consolidated Statements of Stockholders' Equity
(Deficiency) for the years ended March 31, 1993,
1994 and 1995 F-4

Consolidated Statements of Cash Flows for the years
ended March 31, 1993, 1994 and 1995 F-5

Notes to Consolidated Financial Statements F-6

<PAGE>

Consolidated Financial Statement Schedules:
Schedule II--Valuation and Qualifying Accounts F-20

Also incorporated herein by this reference are the interim
unaudited financial statements of Synergy Group Incorporated and its
subsidiaries consolidated as filed with the Securities and Exchange
Commission as part of the Quarterly Report on Form 10-Q of Synergy
Group Incorporated and its 23 Operating Subsidiaries for the
fiscal quarter ended June 30, 1995, Commission file
number 33-83222, consisting of:

Starting at page
number in Report
Document on Form 10-Q
-------- ----------------
Consolidated Balance Sheets at March 31, 1995
(audited) and June 30, 1995 (unaudited) 3

Consolidated Statements of Operations and Retained
Earnings (Deficit) for the three months ended
June 30, 1994 and 1995 (unaudited) 4

Consolidated Statements of Cash Flows for the three
months ended June 30, 1994 and 1995 (unaudited) 5

Notes to Consolidated Financial Statements 6

(b) PRO FORMA FINANCIAL INFORMATION

Also incorporated herein by this reference is the Pro Forma
Financial Information for registrant and Synergy Group Incorporated and
its subsidiaries consolidated as set forth in the prospectus dated
August 16, 1995 relating to $200,000,000 of registrant's Mortgage Bonds,
Subordinated Debt Securities and Common Stock and Preferred Securities
of NWPS Capital Financing I, NWPS Capital Financing II and NWPS
Capital Financing III, filed with the Securities and Exchange Commission
pursuant to Rule 424(b) with respect to registrant's Registration
Statement on Form S-3, Registration No. 33-60423 consisting of:

Starting at
page number in
prospectus dated
Document August 16, 1995
-------- ----------------
Northwestern Public Service Company and Synergy Group
Incorporated Pro Forma Financial Information 10

<PAGE>

Unaudited Pro Forma Statement of Operations Year Ended
December 31, 1994 11

Unaudited Pro Forma Statement of Operations Six Months
Ended June 30, 1995 12

Unaudited Pro Forma Balance Sheet - June 30, 1995 13

Notes to Pro Forma Financial Information 14

1(a) Underwriting Agreement dated August 3, 1995 among the
registrant, Morgan Stanley & Co. Incorporated and NatWest
Capital Markets Limited.

1(b) Underwriting Agreement dated August 3, 1995 among the
registrant, Morgan Stanley & Co. Incorporated, Dean Witter
Reynolds Inc. NatWest Capital Markets Limited, PaineWebber
Incorporated and Piper Jaffray Inc.

1(c) Underwriting Agreement dated August 16, 1995 among the
registrant, Morgan Stanley & Co. Incorporated and
PaineWebber Incorporated.

1(d) Preferred Securities Guarantee Agreement dated August 3,
1995 between the registrant and Wilmington Trust Company.

1(e) Common Securities Guarantee Agreement by the registrant
dated August 1, 1995.

2(a) Purchase and Sale Agreement dated as of May 17, 1995 by and
among Sherman C. Vogel, Stephen A. Vogel, Jeffrey K. Vogel,
Jon M. Vogel and Jeanette Vogel, Synergy Group Incorporated,
S&J Investments, SYN Inc. and Northwestern Growth
Corporation is incorporated by reference to Exhibit 2 to the
Form 8-K dated June 21, 1995, Commission File No. 0-692.

2(b) Agreement dated as of August 11, 1995, amending and
supplementing the Purchase and Sale Agreement dated as of
May 17, 1995 by and among Sherman C. Vogel, Stephen A.
Vogel, Jeffrey K. Vogel, Jon M. Vogel and Jeanette Vogel,
Synergy Group Incorporated, S&J Investments, SYN Inc. and
Northwestern Growth Corporation.

<PAGE>

4(a) Consent to Amendment to 1940 Indenture and Agreement to
Exchange Bonds dated July 28, 1995 among the registrant,
Metropolitan Life Insurance Company, The Travelers
Insurance Company, The Phoenix Insurance Company, The
Travelers Indemnity Company and The Chase Manhattan Bank
(National Association), as Trustee.

4(b) Supplemental Indenture dated as of August 1,1995 to the
General Mortgage Indenture and Deed of Trust dated as of
August 1, 1993 executed by the registrant to The Chase
Manhattan Bank (National Association), as Trustee.

4(c) Supplemental Indenture dated August 1, 1995 to the Indenture
dated August 1, 1940 from the registrant to The Chase
Manhattan Bank (National Association) and C.J. Heinzelmann,
as successor Trustees.

4(d) Declaration of Trust of NWPS Capital Financing I.

4(e) Amended and Restated Declaration of Trust of NWPS Capital
Financing I.

4(f) Subordinated Debt Securities Indenture dated as of
August 1, 1995 between the registrant and The Chase
Manhattan Bank (National Association) as Trustee.

4(g) First Supplemental Indenture dated August 1, 1995 to the
Subordinated Debt Securities Indenture.

23 Consent of KPMG Peat Marwick LLP.

99(a) Management Agreement dated May 17, 1995 among the
registrant, SYN Inc. and Empire Gas Company is
incorporated by reference to Exhibit 99.1 to Form 8-K dated
June 21, 1995, Commission File No. 0-692.

99(b) Agreement Amending Management Agreement, dated July 31,
1995, among Empire Gas Corporation, Northwestern Growth
Corporation and SYN Inc.

99(c) Amended and Restated Agreement Among Initial Stockholders
and SYN Inc., dated as of May 17, 1995, among Empire Gas
Corporation, Northwestern Growth Corporation and SYN Inc.

<PAGE>

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.

NORTHWESTERN PUBLIC SERVICE COMPANY
(Registrant)

By: /s/ Rogene A. Thaden
-----------------------------------
Rogene A. Thaden
Treasurer

By: /s/ Alan D. Dietrich
-----------------------------------
Alan D. Dietrich
Vice President-Corporate Services &
Corporate Secretary

August 29, 1995

<PAGE>

EXHIBIT INDEX

1(a) Underwriting Agreement dated August 3, 1995 among the
Registrant, Morgan Stanley & Co. Incorporated and NatWest
Capital Markets Limited.

1(b) Underwriting Agreement dated August 3, 1995 among the
Registrant, Morgan Stanley & Co. Incorporated, Dean Witter
Reynolds Inc. NatWest Capital Markets Limited, PaineWebber
Incorporated and Piper Jaffray Inc.

1(c) Underwriting Agreement dated August 16, 1995 among the
Registrant, Morgan Stanley & Co. Incorporated and
PaineWebber Incorporated.

1(d) Preferred Securities Guarantee Agreement dated August 3,
1995 between the Registrant and Wilmington Trust Company.

1(e) Common Securities Guarantee Agreement by the Registrant
dated August 1, 1995.

4(a) Consent to Amendment to 1940 Indenture and Agreement to
Exchange Bonds dated July 28, 1995 among the registrant,
Metropolitan Life Insurance Company, The Travelers Insurance
Company, The Phoenix Insurance Company, The Travelers
Indemnity Company and The Chase Manhattan Bank (National
Association), as Trustee.

4(b) Supplemental Indenture dated as of August 1, 1995 to the
General Mortgage Indenture and Deed of Trust dated as of

<PAGE>

August 1, 1993 executed by the Registrant to The Chase
Manhattan Bank (National Association), as Trustee.

4(c) Supplemental Indenture dated August 1, 1995 to the Indenture
dated August 1, 1940 from the Registrant to The Chase
Manhattan Bank (National Association) and C.J. Heinzelmann,
as successor Trustees.

4(d) Declaration of Trust of NWPS Capital Financing I.

4(e) Amended and Restated Declaration of Trust of NWPS Capital
Financing I.

4(f) Subordinated Debt Securities Indenture dated as of August 1,
1995 between the Registrant and The Chase Manhattan Bank
(National Association) as Trustee.

4(g) First Supplemental Indenture dated August 1, 1995 to the
Subordinated Debt Securities Indenture.

23 Consent of KPMG Peat Marwick LLP.

99(a) Management Agreement dated May 17, 1995 among the
Registrant, SYN Inc. and Empire Gas Company is
incorporated by reference to Exhibit 99.1 to Form 8-K dated
June 21, 1995, Commission File No. 0-692.

99(b) Agreement Amending Management Agreement, dated July 31,
1995, among Empire Gas Corporation, Northwestern Growth
Corporation and SYN Inc.

99(c) Amended and Restated Agreement Among Initial Stockholders
and SYN Inc., dated as of May 17, 1995, among Empire Gas
Corporation, Northwestern Growth Corporation and SYN Inc.

<PAGE>

EXECUTION COPY

MORTGAGE BONDS

UNDERWRITING AGREEMENT

NORTHWESTERN PUBLIC SERVICE COMPANY
33 Third Street SE
Huron, South Dakota 57350-1318

August 3, 1995

Ladies and Gentlemen:

On the basis of the representations and warranties, and subject to the
terms and conditions, set forth in this agreement ("this Agreement" or the
"Underwriting Agreement"), we, the Underwriters (as defined below), understand
that Northwestern Public Service Company, a Delaware corporation (the
"Company"), proposes to issue and sell to the Underwriters $60,000,000 aggregate
principal amount of its 7.10% Mortgage Bonds due August 1, 2005 (the "Bonds").
The Bonds will be issued pursuant to the provisions of the General Mortgage
Indenture and Deed of Trust dated as of August 1, 1993 between the Company and
The Chase Manhattan Bank (National Association), as Trustee (the "Trustee"), as
it will be supplemented by a supplemental indenture (the "Supplemental
Indenture") relating to the Bonds (said Mortgage Indenture and Deed of Trust as
so supplemented is hereinafter referred to as the "Indenture"). The Bonds will
be a portion of the Company's New Mortgage Bonds issued under the Indenture (the
"New Mortgage Bonds").

The term "Underwriters," as used herein, shall be deemed to mean the
several persons, firms or corporations named in Schedule I hereto, and the term
"Representative," as used herein, shall be deemed to mean the representative or
representatives of such Underwriters by whom or on whose behalf this
Underwriting Agreement is signed. If there shall be one person, firm or
corporation named in Schedule I, the term "Underwriters" and the term
"Representative," as used herein,

<PAGE>

shall mean that person, firm or corporation. All obligations of the
Underwriters are several and not joint. The use of the term "Underwriter"
herein shall not be deemed to establish or admit that a purchaser of the Bonds
is an "underwriter" of the Bonds as such term is defined in and used under the
Securities Act of 1933, as amended (the "Securities Act").

1. REPRESENTATIONS AND WARRANTIES. The Company represents and
warrants to and agrees with each of the Underwriters that:

(a) The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-3 (Registration Statement
No. 33-60423), including a prospectus, relating to the Bonds, and has filed
with, or transmitted for filing to, or shall promptly hereafter file with or
transmit for filing to, the Commission a prospectus supplement (the "Prospectus
Supplement") specifically relating to the Bonds pursuant to Rule 424 under the
Securities Act. The term "Registration Statement" means the registration
statement, including the exhibits thereto, as amended to the date of this
Agreement. The term "Basic Prospectus" means the prospectus included in the
Registration Statement, as amended and supplemented to the date of this
Agreement (exclusive of any supplement to the prospectus relating solely to
securities other than the New Mortgage Bonds). The term "Prospectus" means the
Basic Prospectus together with the Prospectus Supplement. The term "preliminary
prospectus" means a preliminary prospectus supplement specifically relating to
the Bonds, together with the Basic Prospectus. As used herein, the terms "Basic
Prospectus," "Prospectus" and "preliminary prospectus" shall include in each
case the documents, if any, incorporated by reference therein. The terms
"supplement", "amendment" and "amend" as used herein shall include all documents
deemed to be incorporated by reference in the Prospectus that are filed
subsequent to the date of the Basic Prospectus by the Company with the
Commission pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act").

(b) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect, and, to
the Company's knowledge, after due inquiry, no proceedings for such purpose are
pending before or threatened by the Commission.

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<PAGE>

(c) (i) Each document, if any, filed or to be filed pursuant to the
Exchange Act and incorporated by reference in the Prospectus complied or will
comply when so filed in all material respects with the Exchange Act and the
applicable rules and regulations of the Commission thereunder or pursuant to
said rules and regulations will be deemed to comply therewith; (ii) each part of
the Registration Statement, when such part became effective, did not contain,
and each such part, as amended or supplemented, if applicable, will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading; (iii) the Registration Statement and the Prospectus comply and, as
amended or supplemented, if applicable, will comply in all material respects
with the Securities Act and the applicable rules and regulations of the
Commission thereunder or pursuant to said rules and regulations will be deemed
to comply therewith; and (iv) the Prospectus does not contain and, as amended or
supplemented, if applicable, will not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading,
except that the representations and warranties set forth in this Section 1(c) do
not apply (A) to statements or omissions in the Registration Statement or the
Prospectus based upon information relating to any Underwriter furnished to the
Company in writing by such Underwriter expressly for use therein or (B) to that
part of the Registration Statement that constitutes the Statement of Eligibility
(Form T-l) under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"), of the Trustee.

(d) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the State of Delaware, has the
corporate power and authority to own its property and to conduct its business as
described in the Prospectus and to enter into and perform its obligations under
the Underwriting Agreement, the Indenture and the Bonds. The Company is duly
qualified to transact business and is in good standing in each jurisdiction in
which the conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole.

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<PAGE>

(e) Each subsidiary of the Company has been duly incorporated, is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority to own
its property and to conduct its business as described in the Prospectus and is
duly qualified to transact business and is in good standing in each jurisdiction
in which the conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole.

(f) This Agreement has been duly authorized, executed and delivered
by the Company.

(g) The execution and delivery by the Company of, and the performance
by the Company of its obligations under, the Underwriting Agreement, the
Indenture and the Bonds will not conflict with, result in a breach of or
constitute a default under any provision of (A) applicable law (except for the
indemnification provisions hereof which may be unenforceable as against public
policy under certain circumstances), (B) the certificate of incorporation or by-
laws of the Company, (C) any indenture, mortgage, deed of trust or other
agreement or instrument to which the Company or any of its subsidiaries is a
party that is material to the Company and its subsidiaries, taken as a whole, or
(D) any judgment, order or decree of any governmental body, agency or court
having jurisdiction over the Company or any subsidiary.

(h) The Federal Energy Regulatory Commission (the FERC") has issued
an appropriate order or orders with respect to the issuance and sale of the
Bonds in accordance with the Underwriting Agreement; such order or orders are in
full force and effect; the issuance and sale of the Bonds are in conformity with
the terms of such order or orders; and no other authorization, approval or
consent of any other governmental body or agency is legally required for the
issuance and sale of the Bonds as contemplated by the Underwriting Agreement,
except such as have been obtained under the Securities Act and the Trust
Indenture Act and such as may be required under the state securities or Blue Sky
laws in connection with the purchase and distribution of the Bonds by the
Underwriters.

-4-
<PAGE>

(i) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the condition,
financial or otherwise, or in the earnings, business or operations of the
Company and its subsidiaries, taken as a whole, from that set forth in the
Prospectus.

(j) There are no legal or governmental proceedings pending or
threatened to which the Company or any of its subsidiaries is a party or to
which any of the properties of the Company or any of its subsidiaries is subject
that are required to be described in the Registration Statement or the
Prospectus and are not so described, or any statutes, regulations, contracts or
other documents that are required to be described in the Registration Statement
or the Prospectus or to be filed or incorporated by reference as exhibits to the
Registration Statement that are not described, filed or incorporated as
required.

(k) On the basis of the present knowledge of the senior management of
the Company as to the business and affairs of Synergy Group Incorporated, a
Delaware corporation ("Synergy"), and its subsidiaries, the Company has no
reason to believe that the representations contained in subsections (i) and (j)
above would be incorrect in any material respect on the date hereof as a result
of the consummation of the acquisition of such business on the terms described
in the Prospectus (the "Acquisition").

(l) The unaudited pro forma consolidated financial statements
included or incorporated by reference in the Registration Statement and the
Prospectus have been prepared in good faith by the Company, and the assumptions
on which such pro forma financial statements have been prepared provide a
reasonable basis for presenting the significant effects directly attributable to
the Acquisition described in the notes thereto.

(m) The Company is not aware of any facts or circumstances that would
prevent any of the conditions to the consummation of the Acquisition contained
in the Purchase and Sale Agreement dated as of May 17, 1995, by and among
Synergy and the other parties thereto (the "Acquisition Agreement") from being
satisfied in the ordinary course on or prior to September 30, 1995.

-5-
<PAGE>

2. PUBLIC OFFERING. The Company is advised by the Underwriters that
they propose to make a public offering of their respective portions of the Bonds
as soon after the Underwriting Agreement has been entered into as in the
Underwriters' judgment is advisable. The terms of the public offering of the
Bonds are set forth in the Prospectus.

3. PURCHASE AND DELIVERY. Subject to the terms and conditions herein
set forth, the Company hereby agrees to sell and the Underwriters agree to
purchase, severally and not jointly, the respective principal amounts of Bonds
set forth opposite the name of such Underwriter in Schedule I hereto at the
purchase price set forth in Schedule II in the type of funds and method of
payment specified in Schedule II.

Delivery of the Bonds and payment of the purchase price shall be made
at the time, date and place indicated in Schedule II. The time and date of such
payment and delivery are hereinafter referred to as the Closing Date.

The Bonds shall be delivered to the Underwriters in such authorized
denominations and registered in such names as the Representative shall request
in writing not less than two full business days prior to the date of delivery.
The Company agrees to make the Bonds available to the Underwriters for checking
not later than 2:30 P.M., New York time, on the last business day preceding the
Closing Date at such place as may be agreed upon between the Representative and
the Company.

4. CONDITIONS TO CLOSING. The several obligations of the
Underwriters hereunder are subject to the following conditions:

(a) Subsequent to the execution and delivery of the Underwriting
Agreement and prior to the Closing Date,

(i) there shall not have occurred any downgrading in the rating
accorded any of the Company's securities by any "nationally recognized
statistical rating organization," as such term is defined for purposes of
Rule 436(g)(2) under the Securities Act;

(ii) there shall not have occurred any change, or any development
involving a prospective change, in the condition, financial or otherwise,
or in the earnings,

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<PAGE>

business or operations, of the Company and its subsidiaries, taken as a
whole, from that set forth in the Prospectus, that, in the judgment of the
Representative, is material and adverse and that makes it, in the judgment
of the Representative, impracticable to market the Bonds on the terms and
in the manner contemplated in the Prospectus; and

(iii) the Company shall have obtained an appropriate order or
orders of the FERC authorizing the issuance, sale and delivery of the Bonds
as contemplated by this Agreement, which order or orders at the Closing
Date shall be in full force and effect and shall not be contested or the
subject of review or appeal.

(b) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer of the
Company to the effect (x) set forth in clause (a)(i) and (iii) above; (y) that
the representations and warranties of the Company contained in this Agreement
are true and correct as of the Closing Date and that the Company has complied
with all of the agreements and satisfied all of the conditions on its part to be
performed or satisfied on or before the Closing Date; and (z) that no executive
officer of the Company has received any notification from the Sellers (as
defined in the Acquisition Agreement) or their counsel that any information
(including, without limitation, financial information) relating to Synergy
contained or incorporated by reference in the Registration Statement or the
Prospectus contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. The officer
signing and delivering such certificate may rely upon the best of his knowledge
as to proceedings threatened.

(c) The Representative shall have received on the Closing Date an
opinion dated the Closing Date of Schiff Hardin & Waite, special counsel to the
Company, to the effect that

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<PAGE>

Dakota and South Dakota, with corporate powers and statutory authority to carry
on the business which it now carries on as stated in the Prospectus and to own
and operate the properties used by it in such business;

(ii) each subsidiary of the Company has been duly incorporated
and based upon certificates or letters from state or other appropriate
authorities, is validly existing as a corporation in good standing under
the laws of the jurisdiction of its incorporation with corporate powers and
statutory authority to carry on the business which it now carries on as
stated in the Prospectus and to own and operate the properties used by it
in such business and is duly qualified and in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent that
the failure to be so qualified or be in good standing would not have a
material adverse effect on the Company and its subsidiaries, taken as a
whole;

(iii) the Class "A" Bonds (as that term is defined in the
Indenture) which, at the date hereof, have been deposited with the Trustee
under the Indenture have been duly pledged, assigned and transferred to the
Trustee, and the Indenture constitutes a direct and valid first lien
thereupon; no registration, recording or filing of the Indenture (or
notices or financing statements in respect thereof) is required by law to
make effective and to maintain the lien intended to be created by the
Indenture on such Class "A" Bonds;

(iv) the Indenture has been duly qualified under the Trust
Indenture Act and has been duly authorized, executed and delivered by the
Company and is a valid and binding agreement of the Company, enforceable in
accordance with its terms, except as limited by bankruptcy, insolvency or
other laws affecting the enforcement of mortgagees' and other creditors'
rights and general equitable principles (whether considered in a proceeding
at law or in equity) and except that no opinion is expressed with respect
to the enforceability of the lien of the Indenture on chattels as against
third parties (other than chattels delivered in pledge to the Trustee), or
with respect to the enforceability of the lien of the Indenture on after
acquired property (in respect of which a supplemental

-8-
<PAGE>

indenture shall not have been executed, delivered and recorded) as against
purchasers for value without notice;

(v) the Bonds have been duly authorized and, when executed and
authenticated in accordance with the provisions of the Indenture and
delivered to and paid for by the Underwriters in accordance with the terms
of the Underwriting Agreement, will be entitled to the benefits of the
Indenture and will be valid and binding obligations of the Company, in each
case enforceable in accordance with their respective terms, except as
limited by bankruptcy, insolvency or other laws affecting the enforcement
of mortgagees' and other creditors' rights and by general equitable
principles (whether considered in a proceeding at law or in equity);

(vi) each Class "A" Mortgage (as that term is defined in the
Indenture, including all supplemental indentures thereto executed and
delivered on or prior to the Closing Date) has been duly and validly
authorized by all necessary corporate action, has been duly and validly
executed and delivered, and is a valid and binding instrument, enforceable
in accordance with its terms, except as limited by bankruptcy, insolvency
or other laws affecting the enforcement of mortgagees' and other creditors'
rights and by general equitable principles (whether considered in a
proceeding at law or in equity) and except that no opinion is expressed
with respect to the enforceability of the lien of each Class "A" Mortgage
on chattels as against third parties (other than chattels delivered in
pledge to the Class A Mortgage Trustee), or with respect to the
enforceability of the lien of the Class A Mortgage on after acquired
property (in respect of which a supplemental indenture shall not have been
executed, delivered and recorded) as against purchasers for value without
notice;

(vii) each Class "A" Mortgage constitutes a valid and direct
first mortgage lien on the properties which are described therein subject
only to excepted encumbrances as defined therein and to minor defects and
encumbrances customarily found on properties of like size and character,
which do not materially impair the use of such properties by the Company;

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<PAGE>

(viii) the Class "A" Bonds which, at the date hereof, have been
deposited with the Trustee under the Indenture, have been duly authorized,
executed and delivered by the Company, have been issued in accordance with
the requirements of the applicable Class "A" Mortgage and are legal, valid
and binding obligations of the Company, enforceable in accordance with
their respective terms, except as limited by bankruptcy, insolvency or
other laws affecting the enforcement of mortgagees' and other creditors'
rights and by general equitable principles (whether considered in a
proceeding at law or in equity), and are entitled to the benefit of the
security afforded by the respective Class "A" Mortgage under which they
were issued;

(ix) the Underwriting Agreement has been duly authorized,
executed and delivered by the Company;

(x) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, the Underwriting
Agreement, the Indenture and the Bonds will not conflict with, result in a
breach of or constitute a default under any provision of (A) applicable law
(except for the indemnification provisions hereof which may be
unenforceable as against public policy under certain circumstances), (B)
the certificate of incorporation or by-laws of the Company, (C) to the best
of such counsel's knowledge, any indenture, mortgage, deed of trust or
other agreement or instrument to which the Company or any of its
subsidiaries is a party that is material to the Company and its
subsidiaries, taken as a whole, or (D) to the best of such counsel's
knowledge, any judgment, order or decree of any governmental body, agency
or court having jurisdiction over the Company or any subsidiary;

(xi) the FERC has issued an appropriate order or orders with
respect to the issuance and sale of the Bonds in accordance with the
Underwriting Agreement; such order or orders are in full force and effect;
the issuance and sale of the Bonds are in conformity with the terms of such
order or orders; and no other authorization, approval or consent of any
other governmental body or agency (including, without limitation, in the
jurisdictions of South Dakota, Nebraska, North Dakota and Iowa) is legally
required for the issuance and sale of the Bonds as contemplated by the
Underwriting

-10-
<PAGE>

Agreement, except such as have been obtained under the Securities Act and
the Trust Indenture Act and such as may be required under the state
securities or Blue Sky laws in connection with the purchase and
distribution of the Bonds by the Underwriters;

(xii) the statements (A) in the Prospectus under the captions
"Certain Terms of the Offered Securities," "Description of the Mortgage
Bonds," "Underwriting" and "Plan of Distribution," (B) "Pending Acquisition
of Synergy Group Incorporated," (C) in the Registration Statement under
Item 15, (D) in "Item 3 - Legal Proceedings" of the Company's most recent
annual report on Form 10-K incorporated by reference in the Prospectus and
(E) in "Item 1 - Legal Proceedings" of Part II of the Company's quarterly
reports on Form 10-Q filed since such annual report and reviewed by such
counsel, in each case insofar as such statements constitute summaries of
the legal matters, documents or proceedings referred to therein, fairly
present the information called for with respect to such legal matters,
documents and proceedings and fairly summarize the matters referred to
therein;

(xiii) after due inquiry, such counsel does not know of any
legal or governmental proceedings pending or threatened to which the
Company or any of its subsidiaries is a party or to which any of the
properties of the Company or any of its subsidiaries is subject that are
required to be described in the Registration Statement or the Prospectus
and are not so described or of any statutes, regulations, contracts or
other documents that are required to be described in the Registration
Statement or the Prospectus or to be filed or incorporated by reference as
exhibits to the Registration Statement that are not described, filed or
incorporated as required;

(xiv) the Company is not (A) an "investment company" or an
entity "controlled" by an "investment company," as such terms are defined
in the Investment Company Act of 1940, as amended or (B) a "holding
company" as such term is defined in the Public Utility Holding Company Act
of 1935, as amended;

(xv) the Registration Statement has become and is effective
under the Securities Act, and, to the best of such

-11-
<PAGE>

counsel's knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for a stop order with
respect thereto are pending or threatened under Section 8(d) of the Securities
Act; and

(xvi) such counsel (A) is of the opinion that (except for
financial statements and schedules included therein as to which such
counsel need not express any opinion) each document, if any, filed pursuant
to the Exchange Act and incorporated by reference in the Prospectus
complied when so filed as to form in all material respects with the
Exchange Act and the applicable rules and regulations of the Commission
thereunder, (B) believes that (except for financial statements and
schedules as to which such counsel need not express any belief and except
for that part of the Registration Statement that constitutes the Form T-l
heretofore referred to) each part of the Registration Statement, when such
part became effective did not, and, as of the date such opinion is
delivered, does not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make
the statements therein not misleading, (C) is of the opinion that the
Registration Statement and Prospectus (except for financial statements and
schedules included therein as to which such counsel need not express any
opinion), comply as to form in all material respects with the Securities
Act and the applicable rules and regulations of the Commission thereunder
and (D) believes that (except for financial statements and schedules as to
which such counsel need not express any belief) the Prospectus as of the
date such opinion is delivered does not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading.

(d) The Representative shall have received on the Closing Date
opinions dated the Closing Date (i) of Churchill, Manolis, Freeman, Kludt &
Kaufman, South Dakota counsel to the Company, with respect to franchises and
titles to the properties of the Company, the validity and enforceability of the
lien of the Indenture and of each Class "A" Mortgage with respect thereto and
the non-necessity of authorization by any public body of the State of South
Dakota with respect to the issuance of the Bonds

-12-
<PAGE>

and the Class "A" Bonds, (ii) of Shamberg, Wolf, McDermott & Depue, Nebraska
counsel to the Company, with respect to franchises and titles to the properties
of the Company, the validity and enforceability of the lien of the Indenture and
of each Class "A" Mortgage with respect thereto and the non-necessity of
authorization by any public body of the State of Nebraska with respect to the
issuance of the Bonds and the Class "A" Bonds, (iii) of Pearce & Durick, North
Dakota counsel to the Company, with respect to titles to the properties of the
Company, the validity and enforceability of the lien of the Indenture and of
each Class "A" Mortgage with respect thereto and the non-necessity of
authorization by any public body of the State of North Dakota with respect to
the issuance of the Bonds and the Class "A" Bonds, and (iv) of Nymann & Kohl,
Iowa counsel to the Company, with respect to franchises, if any, and titles to
the properties of the Company, the validity and enforceability of the lien of
the Indenture and of each Class "A" Mortgage with respect thereto and the non-
necessity of authorization by any public body of the State of Iowa with respect
to the issuance of the Bonds and the Class "A" Bonds.

(e) The Representative shall have received on the Closing Date an
opinion dated the Closing Date of Winthrop, Stimson, Putnam & Roberts, counsel
for the Underwriters, covering the matters referred to in subparagraphs (iv),
(v), (ix), (xii) (but only as to the statements referred to in clause (A)
thereof), (xv) and (xvi) (B), (C) and (D) of paragraph (c) above.

As to matters of South Dakota, Nebraska, North Dakota and Iowa law,
Winthrop, Stimson, Putnam & Roberts and Schiff Hardin & Waite may rely upon the
opinions of even date herewith of Churchill, Manolis, Freeman, Kludt & Kaufman;
Shamberg, Wolf, McDermott & Depue; Pearce & Durick and Nymann & Kohl,
respectively.

With respect to the subparagraph (xvi) of paragraph (c) above, Schiff
Hardin & Waite, special counsel to the Company, may state that its opinion and
belief are based upon its participation in the preparation of the Registration
Statement and Prospectus and any amendments or supplements thereto (excluding
(for purposes of clauses (B) and (D) of such paragraph) certain of the documents
incorporated by reference therein (to be specified in such opinion)) and review
and discussion of the contents thereof (including the documents incorporated by
reference therein), but are without independent

-13-
<PAGE>

check or verification, except as specified. With respect to clauses (B), (C)
and (D) of subparagraph (xvi) of paragraph (c) above, Winthrop, Stimson, Putnam
& Roberts may state that their opinion and belief are based upon their
participation in the preparation of the Registration Statement and Prospectus
and any amendments or supplements thereto (but not including documents
incorporated therein by reference) and review and discussion of the contents
thereof (including documents incorporated therein by reference) but are without
independent check or verification, except as specified.

The opinions of Schiff Hardin & Waite, special counsel to the Company,
Churchill, Manolis, Freeman, Kludt & Kaufman, South Dakota counsel to the
Company, Shamberg, Wolf, McDermott & Depue, Nebraska counsel to the Company,
Pearce & Durick, North Dakota counsel to the Company and Nymann & Kohl, Iowa
counsel to the Company, described in paragraphs (c) and (d) above shall be
rendered to the Underwriters at the request of the Company and shall so state
therein.

(f) The Representative shall have received on the date of this
Agreement a letter, dated the date of this Agreement, in form and substance
satisfactory to the Representative, from Arthur Andersen LLP, the Company's
independent public accountants, containing statements and information of the
type ordinarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial information contained
in or incorporated by reference into the Prospectus. Such letter shall include,
without limitation, statements to the effect that (i) the unaudited pro forma
condensed consolidated financial statements included or incorporated by
reference in the Prospectus comply as to form with the applicable accounting
requirements of Rule 11-02 of Regulation S-X of the Commission, (ii)
management's assumptions provide a reasonable basis for presenting the
significant effects directly attributable to the Acquisition described in the
notes to the unaudited pro forma condensed consolidated financial statements,
(iii) the related pro forma adjustments give appropriate effect to those
assumptions, and (iv) the pro forma column reflects the proper application of
those adjustments to the historical financial statement amounts contained in
such unaudited pro forma consolidated statements.

(g) The Representative shall have received on the Closing Date a
letter, dated the Closing Date, in form and

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<PAGE>

substance satisfactory to the Representative, from Arthur Andersen LLP, the
Company's independent public accountants, to the effect that such accountants
reaffirm, as of the Closing Date, and as though made on the Closing Date, the
statements made in the letter furnished by such accountants pursuant to Section
4(f), except that the specified date referred to therein shall be a date not
more than five business days prior to the Closing Date.

(h) The Representative shall have received on the date of this
Agreement a letter, dated the date of this Agreement, in form and substance
satisfactory to the Representative, from KPMG Peat Marwick LLP, Synergy's
independent public accountants, containing statements and information of the
type ordinarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial information of Synergy
contained or incorporated by reference into the Prospectus.

(i) On the Closing Date, Standard & Poor's and Moody's Investors
Service, Inc. shall have publicly assigned to the Bonds ratings of A and A2,
respectively, which ratings shall be in full force and effect on the Closing
Date.

5. COVENANTS OF THE COMPANY. In further consideration of the
agreements of the Underwriters herein contained, the Company covenants as
follows:

(a) To furnish the Representative, without charge, a signed copy of
the Registration Statement (including exhibits thereto) and to deliver to each
other Underwriter a conformed copy of the Registration Statement (without
exhibits thereto) and, during the period mentioned in paragraph (c) below, as
many copies of the Prospectus, any documents incorporated by reference therein
and any supplements and amendments thereto or to the Registration Statement as
the Underwriters may reasonably request (delivery of the Prospectus to be made
in New York, New York no later than 10:00 A.M. on the business day immediately
succeeding the date of this Agreement).

(b) To cause the Prospectus to be filed with the Commission pursuant
to and in compliance with Rule 424 under the Act.

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<PAGE>

(c) Before amending or supplementing the Registration Statement or
the Prospectus, to furnish to the Underwriters a copy of each such proposed
amendment or supplement and not to file any such proposed amendment or
supplement to which the Underwriters reasonably object.

(d) If, during such period after the first date of the public
offering of the Bonds as in the opinion of counsel for the Underwriters the
Prospectus is required by law to be delivered in connection with sales by an
Underwriter or dealer, any event shall occur or condition exist as a result of
which it is necessary to amend or supplement the Prospectus in order to make the
statements therein, in the light of the circumstances when the Prospectus is
delivered to a purchaser, not misleading, or if, in the opinion of counsel for
the Underwriters, it is necessary to amend or supplement the Prospectus to
comply with law, forthwith to prepare, file with the Commission and furnish, at
its own expense, to the Underwriters, and to the dealers (whose names and
addresses the Representative will furnish to the Company) to which Bonds may
have been sold by the Underwriters on behalf of the Underwriters and to any
other dealers upon request, either amendments or supplements to the Prospectus
so that the statements in the Prospectus as so amended or supplemented will not,
in the light of the circumstances when the Prospectus is delivered to a
purchaser, be misleading or so that the Prospectus, as amended or supplemented,
will comply with law.

(e) To endeavor to qualify the Bonds for offer and sale under the
securities or Blue Sky laws of such jurisdictions as the Underwriters shall
reasonably request and to maintain such qualification for as long as the
Underwriters shall reasonably request.

(f) To make generally available to the Company's security holders and
to the Representative as soon as practicable an earning statement covering a
twelve month period beginning on the first day of the first full fiscal quarter
after the date of the Underwriting Agreement, which earning statement shall
satisfy the provisions of Section 11(a) of the Securities Act and the rules and
regulations of the Commission thereunder. If such fiscal quarter is the last
fiscal quarter of the Company's fiscal year, such earning statement shall be
made available not later than 90 days after the close of the period covered
thereby and in all other cases shall be made available not later than 45 days
after the close of the period covered thereby.

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<PAGE>

(g) During the period beginning on the date of this Agreement and
continuing to and including the Closing Date, without the prior written consent
of Morgan Stanley & Co. Incorporated, not to (1) offer, pledge, sell, contract
to sell, sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant to purchase, or otherwise
transfer or dispose of, directly or indirectly, any debt securities of the
Company or warrants to purchase debt securities of the Company substantially
similar to the Bonds or any securities convertible into or exercisable or
exchangeable therefor (other than (i) the Bonds, (ii) commercial paper issued in
the ordinary course of business and (iii) other debt securities evidencing
commercial bank loans) or (2) enter into any swap or similar arrangement that
transfers, in whole or part, the economic risk of ownership of any of the
foregoing, whether any such transaction described in clause (1) or (2) above is
to be settled by delivery of Bonds or such other securities, in cash or
otherwise.

(h) Whether or not any sale of Bonds is consummated, to pay all
expenses incident to the performance of its obligations under the Underwriting
Agreement, including: (i) the preparation and filing of the Registration
Statement and the Prospectus and all amendments and supplements thereto, (ii)
the preparation, issuance and delivery of the Bonds, (iii) the fees and
disbursements of the Company's counsel and accountants and of the Trustee and
its counsel, (iv) the qualification of the Bonds under securities or Blue Sky
laws in accordance with the provisions of Section 5(d), including filing fees
and the fees and disbursements of counsel for the Underwriters in connection
therewith and in connection with the preparation of any Blue Sky Memoranda in an
aggregate amount not to exceed $10,000, (v) the printing and delivery to the
Underwriters in quantities as hereinabove stated of copies of the Registration
Statement and all amendments thereto and of the Prospectus and any amendments or
supplements thereto, (vi) any fees charged by rating agencies for the rating of
the Bonds and (vii) the fees and expenses, if any, incurred with respect to any
filing with the National Association of Securities Dealers, Inc.

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<PAGE>

damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred by any Underwriter or any such controlling person
in connection with investigating or defending any such action or claim) caused
by any untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement or any amendment thereof, any preliminary
prospectus or the Prospectus (as amended or supplemented if the Company shall
have furnished any amendments or supplements thereto), or caused by any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as such losses, claims, damages or liabilities are caused by any such
untrue statement or omission or alleged untrue statement or omission based upon
information relating to any Underwriter furnished to the Company in writing by
such Underwriter expressly for use therein.

(b) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors, its officers who sign the
Registration Statement and each person, if any, who controls the Company within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act to the same extent as the foregoing indemnity from the Company to
such Underwriter, but only with reference to information relating to such
Underwriter furnished to the Company in writing by such Underwriter expressly
for use in the Registration Statement, any preliminary prospectus, the
Prospectus or any amendments or supplements thereto.

(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to either paragraph (a) or (b) above, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of

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<PAGE>

such counsel or (ii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified party
and representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them. It is understood
that the indemnifying party shall not, in respect of the legal expenses of any
indemnified party in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for the fees and expenses of more than one
separate firm (in addition to any local counsel) for all such indemnified
parties and that all such fees and expenses shall be reimbursed as they are
incurred. Such firm shall be designated in writing by the Representative, in
the case of parties indemnified pursuant to paragraph (a) above, and by the
Company, in the case of parties indemnified pursuant to paragraph (b) above.
The indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment. Notwithstanding the foregoing sentence, if at
any time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel as contemplated
by the second and third sentences of this paragraph, the indemnifying party
agrees that it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into more than 30
days after receipt by such indemnifying party of the aforesaid request and (ii)
such indemnifying party shall not have reimbursed the indemnified party in
accordance with such request prior to the date of such settlement. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in respect
of which any indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party, unless such settlement
includes an unconditional release of such indemnified party from all liability
on claims that are the subject matter of such proceeding.

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<PAGE>

such indemnified party thereunder, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Underwriters on the
other hand from the offering of the Bonds or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and of the
Underwriters on the other hand in connection with the statements or omissions
that resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Underwriters on the other hand in connection
with the offering of the Bonds shall be deemed to be in the same respective
proportions as the net proceeds from the offering of such Bonds (before
deducting expenses) received by the Company and the total underwriting discounts
and commissions received by the Underwriters, in each case as set forth in the
table on the cover of the Prospectus Supplement, bear to the aggregate public
offering price of the Bonds. The relative fault of the Company on the one hand
and of the Underwriters on the other hand shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Underwriters' respective obligations to
contribute pursuant to this Section 6 are several in proportion to the
respective principal amounts of Bonds they have purchased hereunder, and not
joint.

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<PAGE>

connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 6, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Bonds underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages that such Underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The remedies provided for in this Section 6 are
not exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.

7. TERMINATION. This Agreement shall be subject to termination, by
notice given by the Representative to the Company, if (a) after the execution
and delivery of the Underwriting Agreement and prior to the Closing Date (i)
trading generally shall have been suspended or materially limited on or by, as
the case may be, any of the New York Stock Exchange, the American Stock
Exchange, the National Association of Securities Dealers, Inc., the Chicago
Board of Options Exchange, the Chicago Mercantile Exchange or thee Chicago Board
of Trade, (ii) trading of any securities of the Company shall have been
suspended on any exchange or in any over-the-counter market, (iii) a general
moratorium on commercial banking activities in New York shall have been declared
by either Federal or New York State authorities or (iv) there shall have
occurred any outbreak or escalation of hostilities or any change in financial
markets or any calamity or crisis that, in the judgment of the Representative,
is material and adverse and (b) in the case of any of the events specified in
clauses (a)(i) through (iv), such event, singly or together with any other such
event, makes it, in the judgment of the Representative, impracticable to market
the Bonds on the terms and in the manner contemplated in the Prospectus. This
Agreement may also be terminated at any time prior to the Closing Date if in the
judgment of the Representative the subject matter of any amendment or supplement
to the Registration Statement or Prospectus prepared and furnished by the
Company reflects a material adverse change in the business, properties or
financial condition of the Company which renders it either inadvisable to
proceed with such

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<PAGE>

offering, if any, or inadvisable to proceed with the delivery of the Bonds to be
purchased hereunder.

8. DEFAULTING UNDERWRITERS. If, on the Closing Date, any one or
more of the Underwriters shall fail or refuse to purchase the Bonds that it has
or they have agreed to purchase hereunder on such date, and the aggregate amount
of Bonds which such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase is not more than one-tenth of the aggregate amount of the
Bonds to be purchased on such date, the other Underwriters shall be obligated
severally in the proportions that the amount of Bonds set forth opposite their
respective names in the Underwriting Agreement bears to the aggregate amount of
Bonds set forth opposite the names of all such non-defaulting Underwriters, or
in such other proportions as the Representative may specify, to purchase the
Bonds which such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase on such date; PROVIDED that in no event shall the amount of
Bonds that any Underwriter has agreed to purchase pursuant to this Agreement be
increased pursuant to this Section 8 by an amount in excess of one-ninth of such
amount of Bonds without the written consent of such Underwriter. If, on the
Closing Date, any Underwriter or Underwriters shall fail or refuse to purchase
Bonds that it has or they have agreed to purchase and the aggregate amount of
Bonds with respect to which such default occurs is more than one-tenth of the
aggregate amount of Bonds to be purchased on such date, and arrangements
satisfactory to the Representative and the Company for the purchase of such
Bonds are not made within 36 hours after such default, the Underwriting
Agreement shall terminate without liability on the part of any non-defaulting
Underwriter or the Company. In any such case either the Representative or the
Company shall have the right to postpone the Closing Date but in no event for
longer than seven days, in order that the required changes, if any, in the
Registration Statement and in the Prospectus or in any other documents or
arrangements may be effected. Any action taken under this paragraph shall not
relieve any defaulting Underwriter from liability in respect of any default of
such Underwriter under the Underwriting Agreement.

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<PAGE>

obligations under the Underwriting Agreement, the Company will reimburse the
Underwriters or such Underwriters as have so terminated the Underwriting
Agreement with respect to themselves, severally, for all out-of-pocket expenses
(including the fees and disbursements of their counsel) reasonably incurred by
such Underwriters in connection with the Underwriting Agreement or the offering
of the Bonds.

If the Underwriting Agreement shall be terminated by the Company
because of any failure or refusal on the part of the Underwriters to comply with
the terms or to fulfill any of the conditions of the Underwriting Agreement, or
if for any reason the Underwriters shall be unable to perform their obligations
under the Underwriting Agreement, the Underwriters will reimburse the Company
for all out-of-pocket expenses (including the fees and disbursements of its
counsel) reasonably incurred by the Company in connection with the Underwriting
Agreement or the offering of the Bonds.

9. REPRESENTATIONS AND INDEMNITIES TO SURVIVE. The respective
indemnity and contribution agreements and the representations, warranties and
other statements of the Company, its officers and the Underwriters set forth in
the Underwriting Agreement will remain in full force and effect, regardless of
any termination of the Underwriting Agreement, any investigation made by or on
behalf of any Underwriter or the Company or any of the officers, directors or
controlling persons referred to in Section 6 and delivery of and payment for the
Bonds.

10. SUCCESSORS. This Agreement will enure to the benefit of and be
binding upon the parties hereto and their respective successors and the
officers, directors and controlling persons referred to in Section 6, and no
other person will have any right or obligation hereunder.

11. COUNTERPARTS. The Underwriting Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument.

12. APPLICABLE LAW. The Underwriting Agreement shall be governed by
and construed in accordance with the internal laws of the State of New York.

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<PAGE>

13. HEADINGS. The headings of the sections of the Underwriting
Agreement have been inserted for convenience of reference only and shall not be
deemed a part of the Underwriting Agreement.

14. NOTICES. All communications hereunder will be in writing and, if
sent to the Underwriters, will be mailed, delivered or telecopied and confirmed
to Morgan Stanley & Co. Incorporated at 1221 Avenue of the Americas, 4th Floor,
New York, New York 10020, Attn: Manager - Debt Syndicate, Telecopy No: (212)
764-7490, or, if sent to the Company, will be mailed, delivered or telecopied
and confirmed to it at 33 Third Street SE, Huron, South Dakota 57350, Attn: Mr.
Richard R. Hylland, Vice President -- Finance & Corporate Development, Telecopy
No: (605) 353-8286.

15. DEFINITION OF "SUBSIDIARY". The term "subsidiary," as used in
this Agreement, shall be deemed to refer only to (i) those direct or indirect
subsidiaries of the Company which would qualify as "significant subsidiaries"
pursuant to Rule 405 under the Securities Act and (ii) SYN Inc.

16. CERTAIN AGREEMENTS AND REPRESENTATIONS OF NATWEST CAPITAL MARKETS
LIMITED. NatWest Capital Markets Limited agrees and represents that (i) it has
not offered or sold and will not offer or sell prior to the date six months
after their date of issue any Bonds, having an original maturity of one year or
greater, to persons in the United Kingdom, except to persons whose ordinary
activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of their businesses or
otherwise in circumstances which have not resulted and will not result in an
offer to the public in the United Kingdom within the meaning of the Public
Offers of Securities Regulations 1995, (ii) it has complied with and will comply
with all applicable provisions of the Financial Services Act 1986 with respect
to anything done by it in relation to the Bonds in, from or otherwise involving
the United Kingdom and (iii) it has only issued or passed on and will only issue
or pass on in the United Kingdom any document received by it in connection with
the issue of the Bonds to a person who is of a kind described in Article 11(3)
of the Financial Services Act 1986 (Investment Advertisements) (Exemptions)
Order 1995 or is a person to whom such document may otherwise lawfully be issued
or passed on.

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<PAGE>

Please confirm your agreement by having an authorized officer sign a
copy of the Underwriting Agreement in the space set forth below.

Very truly yours,

MORGAN STANLEY & CO. INCORPORATED
NATWEST CAPITAL MARKETS LIMITED

By: MORGAN STANLEY & CO. INCORPORATED

By: /s/ James D. Glasgott
-----------------------------
Name: James D. Glasgott
Title: Managing Director

Accepted, August 3, 1995

NORTHWESTERN PUBLIC SERVICE COMPANY

By: /s/ M. D. Lewis
--------------------------------
Name: M. D. Lewis
Title: President & CEO

<PAGE>
SCHEDULE I

Principal Amount
Name of Underwriter of Bonds
- ------------------- ----------------
<S> <C>
Morgan Stanley & Co. Incorporated. . . . . . . . . . . . . . $36,000,000

NatWest Capital Markets Limited. . . . . . . . . . . . . . . $24,000,000
-----------

Total $60,000,000
-----------------
-----------------
</TABLE>

<PAGE>

SCHEDULE II

Underwriting Agreement dated August 3, 1995
Registration Statement No. 33-60423
Representative and Address:

Morgan Stanley & Co. Incorporated
1251 Avenue of the Americas
New York, New York 10020

NatWest Capital Markets Limited
175 Water Street, New York, New York 10038

Securities: Mortgage Bonds

Designation: 7.10% Mortgage Bonds due August 1, 2005
Principal Amount: $60,000,000

Supplemental Indenture
dated as of: August 1, 1995

Date of Maturity: August 1, 2005

Interest Rate: 7.10%

Purchase Price: 99.208%

Public Offering Price: 99.858%

Type of Funds/Method
of Payment: Immediately available funds/check or wire transfer

Closing Date
and Location: August 8, 1995 at the office of Winthrop, Stimson, Putnam &
Roberts,
New York, New York

<PAGE>
EXECUTION COPY

TRUST PREFERRED CAPITAL SECURITIES

UNDERWRITING AGREEMENT

NWPS CAPITAL FINANCING I
c/o Northwestern Public Service Company
33 Third Street SE
Huron, South Dakota 57350-1318

NORTHWESTERN PUBLIC SERVICE COMPANY
33 Third Street SE
Huron, South Dakota 57350-1318

August 3, 1995

Ladies and Gentlemen:

On the basis of the representations and warranties, and subject to the
terms and conditions, set forth in this agreement ("this Agreement" or the
"Underwriting Agreement"), we, the Representatives of the Underwriters (as
defined below), understand that NWPS Capital Financing I (the "Trust"), a
statutory business trust organized under the Delaware Business Trust Act of the
State of Delaware (Chapter 38, Title 12, of the Delaware Code, 12 Del. C.
Section 3801 ET SEQ.) (the "Delaware Act") and Northwestern Public Service
Company, a Delaware corporation, as holder of the Common Securities (as defined
herein) of the Trust and as guarantor (the "Company"), propose that the Trust
issue and sell (i) 1,300,000 aggregate number of its 8 1/8% Trust Preferred
Capital Securities (liquidation amount $25 per security), representing preferred
undivided beneficial interests in the assets of the Trust (the "Firm
Securities") and (ii) not more than an additional 195,000 aggregate number of
such Trust Preferred Capital Securities (the "Additional Securities"), in the
case of such Additional Securities, if and to the extent that the
Representatives shall determine to exercise, on behalf of the Underwriters, the
right to purchase such Additional Securities granted to the Underwriters in
Section 3 hereof. The

<PAGE>

Firm Securities and the Additional Securities are hereinafter collectively
referred to as the "Preferred Securities." The Preferred Securities will be
guaranteed by the Company with respect to distributions and payments upon
liquidation, redemption and otherwise (the "Preferred Securities Guarantee")
pursuant to, and to the extent set forth in, the Preferred Securities Guarantee
Agreement (the "Preferred Securities Guarantee Agreement"), dated as of August
1, 1995, between the Company and Wilmington Trust Company, as Trustee (the
"Guarantee Trustee"). The Preferred Securities and the related Preferred
Securities Guarantee are referred to herein as the "Securities."

The entire proceeds from the sale of the Securities will be combined
with the entire proceeds from the sale by the Trust to the Company of its common
securities representing common undivided beneficial interests in the assets of
the Trust (the "Common Securities") guaranteed by the Company, to the extent
set forth in the Prospectus, with respect to distributions and payments upon
liquidation, redemption and otherwise (the "Common Securities Guarantee" and
together with the Preferred Securities Guarantee, the "Guarantees") pursuant to
the Common Securities Guarantee Agreement (the "Common Securities Guarantee
Agreement" and, together with the Preferred Securities Guarantee Agreement, the
"Guarantee Agreements"), dated as of August 1, 1995, between the Company and the
Guarantee Trustee, as Trustee, and will be used by the Trust to purchase
subordinated debt securities issued by the Company ("Subordinated Debt
Securities" and, together with the Guarantee Agreements and the Guarantees, the
"Company Securities"). The Preferred Securities and the Common Securities will
be issued pursuant to the amended and restated declaration of trust of the
Trust, dated as of August 1, 1995 (the "Declaration"), among the Company, as
Sponsor, the trustees named therein (the "Trustees") and the holders from time
to time of undivided beneficial interests in the assets of the Trust. The
Subordinated Debt Securities will be issued pursuant to an indenture, dated as
of August 1, 1995 (the "Base Indenture"), between the Company and The Chase
Manhattan Bank (N.A.), as trustee (the "Debt Trustee"), and a supplement to the
Base Indenture, dated as of August 1, 1995 (the "Supplemental Indenture," and
together with the Base Indenture and any other amendments or supplements
thereto, the "Indenture"), between the Company and the Debt Trustee.

The term "Underwriters" as used herein, shall be deemed to mean the
several persons, firms or corporations named in

-2-
<PAGE>

Schedule I hereto, and the term "Representatives," as used herein, shall be
deemed to mean the representatives of such Underwriters by whom or on whose
behalf this Underwriting Agreement is signed. If there shall be one person,
firm or corporation named in Schedule I, the term "Underwriters" and the term
"Representative," as used herein, shall mean that person, firm or corporation.
All obligations of the Underwriters are several and not joint. The use of the
term "Underwriter" herein shall not be deemed to establish or admit that a
purchaser of the Securities is an "underwriter" of the Securities as such term
is defined in and used under the Securities Act of 1933, as amended (the
"Securities Act").

1. REPRESENTATIONS AND WARRANTIES. Each of the Trust and the
Company jointly and severally represents and warrants to and agrees with each of
the Underwriters that:

(a) The Trust and the Company have filed with the Securities and
Exchange Commission (the "Commission") a registration statement on Form S-3
(Registration Statement No. 33-60423), including a prospectus, relating to the
Securities, and has filed with, or transmitted for filing to, or shall promptly
hereafter file with or transmit for filing to, the Commission a prospectus
supplement (the "Prospectus Supplement") specifically relating to the Securities
pursuant to Rule 424 under the Securities Act. The term "Registration
Statement" means the registration statement, including the exhibits thereto, as
amended to the date of this Agreement (exclusive of any supplement to the
prospectus relating solely to securities other than the Securities). The term
"Basic Prospectus" means the prospectus included in the Registration Statement,
as amended and supplemented to the date of this Agreement. The term
"Prospectus" means the Basic Prospectus together with the Prospectus Supplement.
The term "preliminary prospectus" means a preliminary prospectus supplement
specifically relating to the Securities, together with the Basic Prospectus. As
used herein, the terms "Basic Prospectus," "Prospectus" and "preliminary
prospectus" shall include in each case the documents, if any, incorporated by
reference therein. The terms "supplement," "amendment" and "amend" as used
herein shall include all documents deemed to be incorporated by reference in the
Prospectus that are filed subsequent to the date of the Basic Prospectus by the
Company with the Commission pursuant to the Securities Exchange Act of 1934, as
amended (the "Exchange Act").

-3-

<PAGE>

(b) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect, and, to
the Trust's and the Company's knowledge, after due inquiry, no proceedings for
such purpose are pending before or threatened by the Commission.

(c) (i) Each document, if any, filed or to be filed pursuant to the
Exchange Act and incorporated by reference in the Prospectus complied or will
comply when so filed in all material respects with the Exchange Act and the
applicable rules and regulations of the Commission thereunder or pursuant to
said rules and regulations will be deemed to comply therewith; (ii) each part of
the Registration Statement, when such part became effective, did not contain,
and each such part, as amended or supplemented, if applicable, will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading; (iii) the Registration Statement and the Prospectus comply, and, as
amended or supplemented, if applicable, will comply in all material respects
with the Securities Act and the applicable rules and regulations of the
Commission thereunder or pursuant to said rules and regulations will be deemed
to comply therewith; and (iv) the Prospectus does not contain and, as amended or
supplemented, if applicable, will not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading,
except that the representations and warranties set forth in this Section 1(c) do
not apply (A) to statements or omissions in the Registration Statement or the
Prospectus based upon information relating to any Underwriter furnished to the
Trust or the Company in writing by such Underwriter expressly for use therein or
(B) to that part of the Registration Statement that constitutes the Statement of
Eligibility (Form T-l) under the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act").

-4-

<PAGE>

and to consummate the transactions herein and therein contemplated. The Company
is duly qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or leasing of
property, except to the extent that the failure to be so qualified or be in good
standing would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole.

(f) The Trust has been duly created and is validly existing as a
business trust in good standing under the Delaware Act, has the power and
authority to own its property and to conduct its business as described in the
Prospectus, to issue and sell the Preferred Securities and the Common
Securities, and to enter into and perform its obligations under this Agreement,
the Preferred Securities, the Common Securities and the Declaration and to
consummate the transactions herein and therein contemplated; the Trust has no
subsidiaries and is duly qualified to transact business and in good standing in
each jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent that the
failure to do so qualified or be in good standing would not have a material
adverse effect on the Trust; the Trust has conducted and will conduct no
business other than the transactions contemplated by this Agreement and
described in the Prospectus; the Trust is not a party to or otherwise bound by
any agreement other than those described in the Prospectus, and is not a party
to any action, suit or proceeding of any nature; the Trust is not and will not
be classified as an association taxable as a corporation for United States
federal income tax purposes; and the Trust is and will be treated as a
consolidated subsidiary of the Company.

-5-

<PAGE>

(g) The Common Securities have been duly authorized and, when issued
and delivered by the Trust to the Company against payment therefor as described
in the Registration Statement and Prospectus, will be validly issued common
undivided beneficial interests in the assets of the Trust; the issuance of the
Common Securities is not subject to preemptive or other similar rights; at the
Closing Date (as defined below), all of the issued and outstanding Common
Securities of the Trust will be, directly owned by the Company free and clear of
any security interest, mortgage, pledge, lien, encumbrance, claim or equity; and
the Common Securities will conform to the descriptions thereof contained in the
Prospectus.

(h) This Agreement has been duly authorized, executed and delivered
by each of the Trust and the Company.

(i) The Declaration has been duly qualified under the Trust Indenture
Act, has been duly authorized by the Company and, at the Closing Date, will have
been duly executed and delivered by the Company and each of the Trustees, and
assuming due authorization, execution and delivery of the Declaration by the
Property Trustee (as defined in the Declaration), the Declaration will, on the
Closing Date, be a valid and binding obligation of the Company and the Trustees,
enforceable against the Company and the Trustees in accordance with its terms,
except to the extent that enforcement thereof may be limited by bankruptcy,
insolvency or other similar laws affecting creditors' rights generally and
general principles of equity (whether as considered in a proceeding at law or in
equity) and will conform to the descriptions thereof in the Prospectus.

(j) The Preferred Securities Guarantee Agreement has been duly
qualified under the Trust Indenture Act, and each of the Guarantee Agreements
has been duly authorized by the Company and, when validly executed and delivered
by the Company, will constitute a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms; and the Guarantees
and the Guarantee Agreement will conform to the descriptions thereof contained
in the Prospectus.

(k) The Preferred Securities have been duly authorized and, when
issued and delivered against payment therefor in accordance with the provisions
of this Agreement and the Declaration, will be validly issued and (subject to
the terms of the Declaration) fully paid and non-assessable preferred

-6-

<PAGE>

undivided beneficial interests in the assets of the Trust, and be entitled to
the benefits of the Declaration; the issuance of the Preferred Securities is not
subject to preemptive or other similar rights; holders of Preferred Securities
will be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware (the "GCL"); the Preferred Securities
will conform to the description thereof contained in the Prospectus.

(l) The Indenture has been duly qualified under the Trust Indenture
Act and has been duly authorized by the Company and, when validly executed and
delivered by the Company, will constitute a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms, except to
the extent that enforcement thereof may be limited by bankruptcy, insolvency or
other similar laws affecting creditors' rights generally or by general
principles of equity (whether considered in a proceeding at law or in equity);
the Indenture will conform to the description thereof contained in the
Prospectus.

(m) The Subordinated Debt Securities have been duly authorized and,
on the Closing Date, will have been duly executed by the Company and, when
authenticated in the manner provided for in the Indenture and delivered against
payment therefor as described in the Prospectus, will be entitled to the
benefits of the Indenture, will rank PARI PASSU without any preference among
themselves and subordinated to all Senior Indebtedness (as defined in the
Indenture) and will constitute validly and binding obligations of the Company,
enforceable in accordance with their terms, except to the extent that
enforcement thereof may be limited by bankruptcy, insolvency or other similar
laws affecting creditors' rights generally or by general or by general
principles of equity (whether considered in a proceeding at law or in equity).

(n) The Company's obligations under the Guarantees are subordinate
and junior in right of payment to all liabilities of the Company and are pari
passu with the most senior preferred stock issued by the Company.

(o) Merle D. Lewis and Richard R. Hylland, as Trustees (the "Regular
Trustees") of the Trust, are employees of the

-7-

<PAGE>

Company and have been duly authorized by the Company to execute and deliver the
Declaration.

(p) Neither the Trust nor the Company is an "investment company" or a
company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended (the "Investment Company Act").

(q) Neither the Company nor any of its subsidiaries is in violation
of its charter or by-laws; the Trust is not in violation of the Declaration or
its Certificate of Trust filed with the State of Delaware on June 19, 1995 (the
"Certificate of Trust"); none of the Company, any of its subsidiaries or the
Trust is in default in the performance or observance of any material obligation,
agreement, covenant or condition contained in any contract, indenture, mortgage,
loan agreement, note, lease or other instrument to which the Company, any of its
subsidiaries or the Trust is a party or by which it or any of them may be bound,
or to which any of the property or assets of the Company, any of its
subsidiaries or the Trust is subject, except for such defaults that would not
have a material adverse effect on the condition (financial or otherwise),
earnings, business affairs or business prospects of the Trust or of the Company
and its subsidiaries, taken as a whole; and the execution, delivery and
performance of this Agreement, the Declaration, the Preferred Securities, the
Common Securities, the Indenture, the Subordinated Debt Securities, the
Guarantee Agreements and the Guarantees and the consummation of the transactions
contemplated herein and therein and compliance by the Trust and the Company with
their respective obligations hereunder and thereunder have been duly authorized
by all necessary action (corporate or otherwise) on the part of the Trust and
the Company and do not and will not result in any violation of the charter or
by-laws of the Company or any subsidiary, or the Declaration or Certificate of
Trust and do not and will not conflict with, or result in a breach of any of the
terms or provisions of, or constitute a default under, or result in the creation
or imposition of any lien, charge or encumbrance upon any property or assets of
the Trust, the Company or any subsidiary under (A) any contract, indenture,
mortgage, loan agreement, note, lease or other agreement or instrument to which
the Trust, the Company or any subsidiary is a party or by which it may be bound
or to which any of its properties may be subject (except for such conflicts,
breaches or defaults or liens, charges or encumbrances that would not have a
material adverse effect on the condition (financial or

-8-

<PAGE>

otherwise), earnings, business affairs or business prospects of the Trust or the
Company and its subsidiaries, taken as a whole as one enterprise) or (B) any
existing applicable law, rule, regulation, judgment, order or decree of any
government, governmental instrumentality or court, domestic or foreign, or any
regulatory body or administrative agency or other governmental body having
jurisdiction over the Trust, the Company, or any subsidiary or any of their
respective properties.

(r) There are no legal or governmental proceedings pending or
threatened to which the Company, any of its subsidiaries or the Trust is a party
or to which any of the properties of the Company, any of its subsidiaries or the
Trust is subject that are required to be described in the Registration Statement
or the Prospectus and are not so described or any statutes, regulations,
contracts or other documents that are required to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement that are not described or filed as required.

(s) The Federal Energy Regulatory Commission (the "FERC") has issued
an appropriate order or orders with respect to the issuance and sale of the
Company Securities in accordance with, and as contemplated by, this Agreement;
such order or orders are in full force and effect; the issuance and sale of the
Company Securities are in conformity with the terms of such order or orders; and
no other authorization, approval or consent of any other governmental body or
agency is legally required for the issuance and sale of the Common Securities,
the Preferred Securities and the Company Securities as contemplated by this
Agreement, except such as have been obtained under the Securities Act and the
Trust Indenture Act and such as may be required under the state securities or
Blue Sky laws in connection with the purchase and distribution of the Securities
by the Underwriters.

(t) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the condition,
financial or otherwise, or in the earnings, business or operations of the
Company and its subsidiaries (taken as a whole) or the Trust from that set forth
in the Prospectus.

(u) On the basis of the present knowledge of the senior management of
the Company as to the business and affairs of Synergy Group Incorporated, a
Delaware corporation

-9-

<PAGE>

("Synergy"), and its subsidiaries, the Company has no reason to believe that the
representations contained in subsections (r) and (t) above would be incorrect in
any material respect on the date hereof as a result of the consummation of the
acquisition of such business on the terms described in the Prospectus (the
"Acquisition").

(v) The unaudited pro forma consolidated financial statements
included or incorporated by reference in the Registration Statement and the
Prospectus have been prepared in good faith by the Company, and the assumptions
on which such pro forma financial statements have been prepared provide a
reasonable basis for presenting the significant effects directly attributable to
the Acquisition described in the notes thereto.

(w) The Company is not aware of any facts or circumstances that would
prevent any of the conditions to the consummation of the Acquisition contained
in the Purchase and Sale Agreement dated as of May 17, 1995, by and among
Synergy and the other parties thereto (the "Acquisition Agreement") from being
satisfied in the ordinary course on or prior to September 30, 1995.

2. PUBLIC OFFERING. The Trust and the Company are advised by the
Representatives that the Underwriters propose to make a public offering of their
respective portions of the Preferred Securities as soon after this Agreement has
been entered into as in the judgment of the Representatives is advisable. The
terms of the public offering of the Preferred Securities are set forth in the
Prospectus.

3. PURCHASE AND DELIVERY. Subject to the terms and conditions set
forth or incorporated by reference herein, the Trust hereby agrees to sell, and
the Underwriters agree to purchase, severally and not jointly, the respective
number of Firm Securities set forth below opposite their names in Schedule I
hereto at a purchase price of $25.00 per Preferred Security.

On the basis of the representations and warranties contained in this
Agreement, and subject to the terms and conditions hereof, the Trust agrees to
sell to the Underwriters the Additional Securities, and the Underwriters shall
have a one-time right to purchase, severally and not jointly, up to 195,000
Additional Securities at a purchase price of $25.00 per Preferred Security.
Additional Securities may be purchased as provided

-10-

<PAGE>

herein solely for the purpose of covering over-allotments made in connection
with the offering of the Firm Securities. If any Additional Securities are to
be purchased, each Underwriter agrees, severally and not jointly, to purchase
the number of Additional Securities (subject to such adjustments as the
Representatives may determine) that bears the same proportion to the total
number of Additional Securities to be purchased as the number of Firm Securities
set forth in Schedule I hereto opposite the name of such Underwriter bears to
the total number of Firm Securities.

The Company agrees to issue the Company Securities concurrently with
the issue and sale of the Preferred Securities as contemplated herein. The
Company hereby guarantees the timely performance by the Trust of its obligations
under this Section 3. The Trust agrees to purchase the Subordinated Debt
Securities with the proceeds of, and concurrently with, the issue and sale of
the Securities.

As compensation to the Underwriters for their commitments hereunder,
and because the proceeds of the sale of the Preferred Securities will be loaned
by the Trust to the Company, the Company hereby agrees to pay on the Closing
Date or the Option Closing Date, as the case may be, to the Representatives, for
the accounts of the several Underwriters, an amount equal to (i) in the case of
such number of Preferred Securities as are reserved by the Underwriters for sale
to institutional investors, $.7875 per Preferred Security and (ii) in the case
of such number of Preferred Securities as are not so reserved, $.50 per
Preferred Security. The Underwriters shall inform the Company in writing, not
later than the business day prior to the Closing Date or the Option Closing
Date, as the case may be, of the number of Preferred Securities reserved for
sale to such institutional investors.

Payment for the Firm Securities shall be made by certified or official
bank check or checks payable, or by wire transfer, to the order of the Trust in
immediately available funds at the office of Winthrop, Stimson, Putnam &
Roberts, New York, New York, at 10:00 A.M. local time, on August 8, 1995, or at
such other time on the same or such other date, not later than August 15, 1995,
as shall be designated in writing by the Representatives. The time and date of
such payment are hereinafter referred to as the "Closing Date".

-11-

<PAGE>

Payment for any Additional Securities shall be made by certified or
official bank check or checks payable, or by wire transfer, to the order of the
Trust in immediately available funds at the office of Winthrop, Stimson, Putnam
& Roberts, New York, New York, at 10:00 A.M. local time, on such date (which may
be the same as the Closing Date but shall in no event be earlier than the
Closing Date nor later than ten business days after the delivery of the notice
hereinafter referred to) as shall be designated in a written notice from the
Representatives to the Trust of the Representatives' determination, on behalf of
the Underwriters, to purchase a number, specified in such notice, of Additional
Securities, or on such other date as shall be designated in writing by the
Representatives. The time and date of such payment are hereinafter referred to
as the "Option Closing Date." The notice of the determination to exercise the
option to purchase Additional Securities and of the Option Closing Date may be
given at any time within 30 days after the date of this Agreement.

Certificates for the Preferred Securities shall be in definitive form
and registered in such names and in such denominations as the Underwriters shall
request not later than two full business days prior to the Closing Date or the
Option Closing Date, as the case may be. The certificates evidencing the
Preferred Securities shall be delivered to the Representatives, through the
facilities of The Depository Trust Company ("DTC") for the account of the
Representatives with any transfer taxes payable in connection with the transfer
of the Securities duly paid, against payment of the purchase price therefor.

4. CONDITIONS TO CLOSING. The several obligations of the
Underwriters hereunder are subject to the following conditions:

(a) Subsequent to the execution and delivery of the Underwriting
Agreement and prior to the Closing Date,

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(ii) there shall not have occurred any change, or any development
involving a prospective change, in the condition, financial or otherwise,
or in the earnings, business or operations, of the Company and its
subsidiaries, taken as a whole, or the Trust, from that set forth in the
Prospectus, that, in the judgment of the Representatives, is material and
adverse and that makes it, in the judgment of the Representatives,
impracticable to market the Preferred Securities on the terms and in the
manner contemplated in the Prospectus; and

(iii) the Company shall have obtained an appropriate order or
orders of the FERC authorizing the issuance, sale and delivery of the
Company Securities as contemplated by this Agreement, which order or orders
at the Closing Date shall be in full force and effect and shall not be
contested or the subject of review or appeal.

(b)(i) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer of the
Company to the effect (x) set forth in clauses (a)(i) and (a)(iii) above; (y)
that the representations and warranties of the Company contained in this
Agreement are true and correct as of the Closing Date and that the Company has
complied with all of the agreements and satisfied all of the conditions on its
part to be performed or satisfied on or before the Closing Date; and (z) that no
executive officer of the Company has received any notification from the Sellers
(as defined in the Acquisition Agreement) or their counsel that any information
(including without limitation financial information) relating to Synergy
contained or incorporated by reference in the Registration Statement or the
Prospectus contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The officer signing
and delivering such certificate may rely upon the best of his knowledge as to
proceedings threatened.

(ii) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an authorized representative
of the Trust to the effect set forth in clause (a)(i) above and to the effect
that the representations and warranties of the Trust contained in the
Underwriting Agreement are true and correct as of the Closing Date and that the
Trust has complied with all of the agreements and satisfied

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<PAGE>

all of the conditions on its part to be performed or satisfied on or before the
Closing Date. The representative signing and delivering such certificate may
rely upon the best of his knowledge as to proceedings threatened.

(c) The Representatives shall have received on the Closing Date an
opinion dated the Closing Date of Schiff Hardin & Waite, counsel to the Company
and the Trust, to the effect that

(i) the Company has been duly incorporated and, based upon
certificates or letters from state or other appropriate authorities, is
validly existing as a corporation in good standing under the laws of the
State of Delaware and is duly qualified and in good standing as a foreign
corporation in the States of Iowa, Nebraska, North Dakota and South Dakota,
with corporate powers and statutory authority to carry on the business
which it now carries on as stated in the Prospectus and to own and operate
the properties used by it in such business;

(iii) the Underwriting Agreement has been duly authorized,
executed and delivered by the Trust and the Company;

(iv) the FERC has issued an appropriate order or orders with
respect to the issuance and sale of the Company Securities, in accordance
with, or as contemplated by, the Underwriting Agreement; such order or
orders are in full force and effect; the issuance and sale of the Company
Securities are in conformity with the terms of such order or

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<PAGE>

orders; and no other authorization, approval or consent of any other
governmental body or agency (including, without limitation, in the
jurisdictions of South Dakota, Nebraska, North Dakota and Iowa) is legally
required for the issuance and sale of the Common Securities, the Preferred
Securities and the Company Securities as contemplated by the Underwriting
Agreement, except such as have been obtained under the Securities Act and
the Trust Indenture Act and such as may be required under the state
securities or Blue Sky laws in connection with the purchase and
distribution of the Securities by the Underwriters;

(v) the statements (A) in the Prospectus under the captions "Risk
Factors," "NWPS Capital Financing I," "Description of the Preferred
Securities," "Description of the Subordinated Debt Securities," "Effect of
Obligations Under the Subordinated Debt Securities and the Guarantee,"
"United States Federal Income Taxation," "Underwriting, "Pending
Acquisition of Synergy Group Incorporated," "The NWPS Trusts," "Description
of the Subordinated Debt Securities," "Description of the Guarantees," and
"Plan of Distribution," (B) in the Registration Statement under Item 15,
(C) in "Item 3 - Legal Proceedings" of the Company's most recent annual
report on Form 10-K incorporated by reference in the Prospectus and (D) in
"Item 1 - Legal Proceedings" of Part II of the Company's quarterly reports
on Form 10-Q filed since such annual report and reviewed by such counsel,
in each case insofar as such statements constitute summaries of the legal
matters, documents or proceedings referred to therein, fairly present the
information called for with respect to such legal matters, documents and
proceedings and fairly summarize the matters referred to therein;

(vi) after due inquiry, such counsel does not know of any legal or
governmental proceedings pending or threatened to which the Company or any
of its subsidiaries, or the Trust, is a party or to which any of the
properties of the Company or any of its subsidiaries, or the Trust, is
subject that are required to be described in the Registration Statement or
the Prospectus and are not so described or of any statutes, regulations,
contracts or other documents that are required to be described in the
Registration Statement or the Prospectus or to be filed or incorporated by
reference as exhibits to the Registration

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<PAGE>

Statement that are not described, filed or incorporated as required;

(vii) neither the Trust nor the Company is (x) an "investment
company" or an entity "controlled" by an "investment company," as such
terms are defined in the Investment Company Act, or (y) a "holding company"
as such term is defined in the Public Utility Holding Company Act of 1935,
as amended.

(viii) the Registration Statement has become and is effective
under the Securities Act, and, to the best of such counsel's knowledge, no
stop order suspending the effectiveness of the Registration Statement has
been issued and no proceedings for a stop order with respect thereto are
pending or threatened under Section 8(d) of the Securities Act; and

(ix) such counsel (A) is of the opinion that (except for
financial statements and schedules included therein as to which such
counsel need not express any opinion) each document, if any, filed pursuant
to the Exchange Act and incorporated by reference in the Prospectus
complied when so filed as to form in all material respects with the
Exchange Act and the applicable rules and regulations of the Commission
thereunder, (B) believes that (except for financial statements and
schedules as to which such counsel need not express any belief and except
for that part of the Registration Statement that constitutes the Form T-l
heretofore referred to) each part of the Registration Statement, when such
part became effective did not, and, as of the date such opinion is
delivered, does not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make
the statements therein not misleading, (C) is of the opinion that the
Registration Statement and Prospectus (except for financial statements and
schedules included therein as to which such counsel need not express any
opinion), comply as to form in all material respects with the Securities
Act and the applicable rules and regulations of the Commission thereunder
and (D) believes that (except for financial statements and schedules as to
which such counsel need not express any belief) the Prospectus as of the
date such opinion is delivered does not contain any untrue statement of a
material fact or omit to state a

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<PAGE>

material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.

(x) The Trust has been duly created and is validly existing in
good standing as a business trust under the Delaware Act; all filings
required under the laws of the State of Delaware with respect to the
formation and valid existence of the Trust as a business trust have been
made; the Trust has all necessary power and authority to own property and
to conduct its business as described in the Prospectus, to issue and sell
the Preferred Securities and the Common Securities, and to enter into and
perform its obligations under this Agreement, the Preferred Securities, the
Common Securities and the Declaration and to consummate the transactions
herein and therein contemplated; the Trust has no subsidiaries and is duly
authorized to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, and is not required to be
authorized to do business in any other jurisdiction; the Trust is not a
party to or otherwise bound by any agreement other than those described in
the Prospectus, and is not a party to any action, suit or proceeding of any
nature; the Trust is not and will not be classified as an association
taxable as a corporation for United States federal income tax purposes.

(xi) The Declaration has been duly qualified under the Trust
Indenture Act and has been duly authorized, executed and delivered by the
Company and the Trustees and is a valid and binding obligation of the
Company and each of the Regular Trustees, enforceable against the Company
and each of the Regular Trustees, in accordance with its terms, except as
enforcement thereof may be limited by bankruptcy, insolvency or other laws
affecting creditors' rights generally and by general principles of equity
(whether considered in a proceeding, in equity or at law).

(xii) The Common Securities have been duly authorized and are
validly issued common undivided beneficial interests in the assets of the
Trust; and the issuance of the Common Securities is not subject to
preemptive or other similar rights.

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<PAGE>

(xiii) The Preferred Securities have been duly authorized and
are validly issued and (subject to the terms of the Declaration) when
delivered to and paid for by Underwriters pursuant to this Agreement will
be validly issued, fully paid and non-assessable preferred undivided
beneficial interests in the assets of the Trust; the holders of the
Preferred Securities will be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit
organized under the GCL; and the issuance of the Preferred Securities is
not subject to preemptive or other similar rights.

(xiv) The issuance and sale by the Trust of the Preferred
Securities and Common Securities, the execution, delivery and performance
by the Trust of this Agreement, the Guarantee Agreements, and the
consummation of the transactions contemplated hereby and thereby and
compliance by the Trust with its obligations hereunder and thereunder have
been duly authorized by all necessary actions of the Trust and will not
conflict with or constitute a breach of, or default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property
or assets of the Trust pursuant to, any contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which the Trust is a party or
by which it or any of them may be bound, or to which any of the property or
assets of the Trust is subject, nor will such action result in any
violation of the provisions of the Certificate of Trust or the Declaration,
or any applicable law, administrative regulation or administrative or court
decree to which it is subject.

(xv) The Trust is not in violation of its Certificate of Trust
or the Declaration or in default in the performance or observance of any
material obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note, lease or any other
instrument of which the Trust is a party or by which it may be bound, or to
which any of the property or assets of the Trust is subject.

(xvi) The Common Securities, the Preferred Securities, the
Subordinated Debt Securities, the Guarantees, the Declaration, the
Indenture and the Guarantee Agreements conform to all statements relating
thereto contained in the Prospectus.

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<PAGE>

(xvii) All of the issued and outstanding Common Securities of
the Trust are directly owned by the Company free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity.

(xviii) This Agreement has been duly authorized, executed and
delivered by the Trust and the Company.

(xix) Each of the Guarantee Agreements has been duly authorized,
executed and delivered by the Company and, (in the case of the Preferred
Security Guarantee Agreement only) assuming it is duly authorized,
executed, and delivered by the Property Trustee, constitutes a valid and
binding obligation of the Company, enforceable against the Company, in
accordance with its terms, except to the extent that enforcement thereof
may be limited by bankruptcy, insolvency or other similar laws involving
creditors' rights generally and general principles of equity (whether
considered in a proceeding at law or in equity); and the Preferred
Securities Guarantee Agreement has been duly qualified under the Trust
Indenture Act.

(xx) The Indenture has been duly executed and delivered by the
Company and, assuming due authorization, execution, and delivery thereof by
the Debt Trustee, is a valid and binding obligation of the Company,
enforceable in accordance with its terms, except to the extent that
enforcement thereof may be limited by the bankruptcy, insolvency or other
similar laws involving creditors' rights generally and general principles
of equity (whether considered in a proceeding at law or in equity); and the
Indenture has been duly qualified under the Trust Indenture Act.

(xxi) The Subordinated Debt Securities are in the form
contemplated by the Indenture; the Subordinated Debt Securities have been
duly authorized, executed and delivered by the Company and when
authenticated by the Debt Trustee in the manner provided in the Indenture
and delivered against payment therefor, will constitute valid and binding
obligations of the Company, enforceable against the Company in accordance
with their terms, except to the extent that, enforcement thereof may be
limited by bankruptcy, insolvency or other similar laws involving
creditors' rights generally

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<PAGE>

and general principles of equity (whether considered in a proceeding at law
or in equity).

(xxii) The execution, delivery and performance of this
Agreement, the Subordinated Debt Securities, the Guarantee Agreements, the
Indenture and the Guarantees and the consummation of the transactions
contemplated herein and therein and compliance by the Company with its
obligations hereunder and thereunder have been duly authorized by all
necessary action (corporate or otherwise) and do not and will not result in
any violation of the charter or by-laws of the Company or any subsidiary,
and do not and will not conflict with, or result in a breach of any of the
terms or provisions of, or constitute a default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property
or assets of the Company or any subsidiary under (A) any contract,
indenture, mortgage, loan agreement, note, lease or any other agreement or
instrument known to such counsel, to which the Company or any subsidiary is
a party or by which it may be bound or to which any of its properties may
be subject (except for such conflicts, breaches or defaults or liens,
charges or encumbrances that would not have a material adverse effect on
the condition (financial or otherwise), earnings, business affairs or
business prospects of the Company and its subsidiaries, considered as one
enterprise), (B) any existing applicable law, rule or regulation (other
than the securities or blue sky laws of the various states, as to which
such counsel need express no opinion), or (C) any judgment, order or decree
of any government, governmental instrumentality or court, domestic or
foreign, or any regulatory body or administrative agency or other
governmental body having jurisdiction over the Company or any subsidiary or
any of their respective properties.

(d) The Representatives shall have received on the Closing Date an
opinion dated the Closing Date of Richards, Layton & Finger, Delaware counsel to
the Company and the Trust, with respect to certain of the matters referred to in
subparagraphs (x), (xi), (xii), (xiii), (xiv), (xv) and (xviii).

(e) The Representatives shall have received on the Closing Date,
opinions dated the Closing Date of Richards, Layton & Finger, counsel to
Wilmington Trust Company, as Property Trustee under the Declaration, and
Guarantee Trustee under the

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<PAGE>

Guarantee Agreements, in form and substance satisfactory to counsel for the
Underwriters, to the effect that,

(i) Wilmington Trust Company ("WTC") is duly organized, validly
existing and in good standing as a banking corporation with trust powers
under the laws of the State of Delaware.

(ii) WTC, the Delaware Trustee, the Property Trustee or the Guarantee
Trustee, as the case may be, each has all necessary power and authority to
execute and deliver, and to carry out and perform its obligations under the
terms of the Declaration and the Guarantee Agreements.

(iii) The Declaration and the Guarantee Agreements have been duly
authorized, executed and delivered by WTC, the Delaware Trustee, the
Property Trustee or the Guarantee Trustee, as the case may be.

(iv) The execution, delivery and performance of the Declaration and
the Guarantee Agreements by WTC, the Property Trustee or the Guarantee
Trustee, as the case may be, do not conflict with or constitute a breach of
the Articles of Organization or Bylaws of the WTC.

(v) No consent, approval or authorization of, or registration with or
notice to, any governmental authority or agency of the State of Delaware or
United States governing the banking or trust powers of WTC is required for
the execution, delivery or performance by WTC, the Property Trustee or the
Guarantee Trustee, as the case may be, of the Declaration and the Guarantee
Agreements.

(f) The Representatives shall have received on the Closing Date an
opinion dated the Closing Date, of Winthrop, Stimson, Putnam & Roberts, counsel
for the Underwriters, covering such matters as the Underwriters may reasonably
request.

With respect to subparagraph (ix) of paragraph (c) above, Schiff
Hardin & Waite, counsel to the Company, may state that its opinion and belief
are based upon its participation in the preparation of the Registration
Statement and Prospectus and any amendments or supplements thereto (excluding
(for purposes of clauses (B) and (D) of such paragraph ) certain of the
documents incorporated by reference therein (to be specified in such

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<PAGE>

opinion)) and review and discussion of the contents thereof (including the
documents incorporated by reference therein), but are without independent check
or verification, except as specified.

The opinions of Schiff Hardin & Waite, special counsel to the Company
and Richards, Layton & Finger, Delaware counsel to the Company and the Trust
described in paragraphs (c) and (d) above shall be rendered to the Underwriters
at the request of the Company and shall so state therein.

(g) The Representatives shall have received on the date of this
Agreement a letter, dated the date of this Agreement, in form and substance
satisfactory to the Representatives, from Arthur Andersen LLP, the Company's
independent public accountants, containing statements and information of the
type ordinarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial information contained
in or incorporated by reference into the Prospectus. Such letter shall include,
without limitation, statements to the effect that (i) the unaudited pro forma
condensed consolidated financial statements included or incorporated by
reference in the Prospectus comply as to form with the applicable accounting
requirements of Rule 11-02 of Regulation S-X of the Commission, (ii)
management's assumptions provide a reasonable basis for presenting the
significant effects directly attributable to the Acquisition described in the
notes to the unaudited pro forma condensed consolidated financial statements,
(iii) the related pro forma adjustments give appropriate effect to those
assumptions, and (iv) the pro forma column reflects the proper application of
those adjustments to the historical financial statement amounts contained in
such unaudited pro forma consolidated statements.

(h) The Representatives shall have received on the Closing Date a
letter, dated the Closing Date, in form and substance satisfactory to the
Representatives, from Arthur Andersen LLP, the Company's independent public
accountants, to the effect that such accountants reaffirm, as of the Closing
Date, and as though made on the Closing Date, the statements made in the letter
furnished by such accountants pursuant to Section 4(g), except that the
specified date referred to therein shall be a date not more than five business
days prior to the Closing Date.

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(i) The Representatives shall have received on the date of this
Agreement a letter, dated the date of this Agreement, in form and substance
satisfactory to the Representatives, from KPMG Peat Marwick LLP, Synergy's
independent public accountants, containing statements and information of the
type ordinarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial information of Synergy
contained or incorporated by reference into the Prospectus.

(j) At the Closing Date, a registration statement on Form 8-A under
the Exchange Act with respect to the Preferred Securities shall be effective and
the Preferred Securities shall have been approved for listing on the New York
Stock Exchange upon notice of issuance.

(k) On the Closing Date, Standard & Poor's and Moody's Investors
Service, Inc. shall have publicly assigned to the Preferred Securities ratings
of A- and A3, respectively, which ratings shall be in full force and effect on
the Closing Date.

If any condition specified in this Section shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be terminated
at any time at or prior to the Closing Date, and such termination shall be
without liability of any party to any other party except as provided in Section
5(i) hereof.

The several obligations of the Underwriters to purchase Additional
Securities hereunder are subject to the satisfaction of each of the conditions
specified above (with all references to the Closing Date deemed to refer to the
Option Closing Date) and to the delivery to the Underwriters of such other
documents as the Representatives may reasonably request.

5. COVENANTS OF THE TRUST AND THE COMPANY. In further consideration
of the agreements of the Underwriters herein contained, the Trust and the
Company covenant as follows:

(a) To furnish the Representatives, without charge, a signed copy of
the Registration Statement (including exhibits thereto) and to deliver to each
other Underwriter a conformed copy of the Registration Statement (without
exhibits thereto) and, during the period mentioned in paragraph (c) below, as
many copies of the Prospectus, any documents incorporated by reference

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therein and any supplements and amendments thereto or to the Registration
Statement as the Underwriters may reasonably request (delivery of the Prospectus
to be made in New York, New York no later than 10:00 A.M. on the business day
immediately succeeding the date of this Agreement).

(b) To cause the Prospectus to be filed with the Commission pursuant
to and in compliance with Rule 424 under the Act.

(d) If, during such period after the first date of the public
offering of the Preferred Securities as in the opinion of counsel for the
Underwriters the Prospectus is required by law to be delivered in connection
with sales by an Underwriter or dealer, any event shall occur or condition exist
as a result of which it is necessary to amend or supplement the Prospectus in
order to make the statements therein, in the light of the circumstances when the
Prospectus is delivered to a purchaser, not misleading, or if, in the opinion of
counsel for the Underwriters, it is necessary to amend or supplement the
Prospectus to comply with law, forthwith to prepare, file with the Commission
and furnish, at its own expense, to the Underwriters, and to the dealers (whose
names and addresses the Representatives will furnish to the Company) to which
Preferred Securities may have been sold by the Underwriters on behalf of the
Underwriters and to any other dealers upon request, either amendments or
supplements to the Prospectus so that the statements in the Prospectus as so
amended or supplemented will not, in the light of the circumstances when the
Prospectus is delivered to a purchaser, be misleading or so that the Prospectus,
as amended or supplemented, will comply with law.

(e) To endeavor to qualify the Preferred Securities and Subordinated
Debt Securities for offer and sale under the securities or Blue Sky laws of such
jurisdictions as the Underwriters shall reasonably request and to maintain such
qualification for as long as the Underwriters shall reasonably request.

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<PAGE>

(f) To make generally available to the Trust's security holders and
to the Representatives as soon as practicable an earning statement covering a
twelve month period beginning on the first day of the first full fiscal quarter
after the date of the Underwriting Agreement, which earning statement shall
satisfy the provisions of Section 11(a) of the Securities Act and the rules and
regulations of the Commission thereunder. If such fiscal quarter is the last
fiscal quarter of the Company's fiscal year, such earning statement shall be
made available not later than 90 days after the close of the period covered
thereby and in all other cases shall be made available not later than 45 days
after the close of the period covered thereby.

(g) During the period ending 90 days after the date of this
Agreement, without the prior written consent of Morgan Stanley & Co.
Incorporated, not to (1) offer, pledge, sell, contract to sell, sell any option
or contract to purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase, or otherwise transfer or dispose of,
directly or indirectly, any debt securities or preferred securities of the
Company or the Trust or warrants to purchase debt securities or preferred
securities of the Company or the Trust substantially similar to the Preferred
Securities or any securities convertible into or exercisable or exchangeable
therefor (other than (i) the Preferred Securities, (ii) commercial paper issued
in the ordinary course of business and (iii) other debt securities evidencing
commercial bank loans), or (2) enter into any swap or similar arrangement that
transfers, in whole or in part, the economic risk or ownership of the foregoing,
whether any such transaction described in clause (1) or (2) above is to be
settled by delivery of Preferred Securities or such other securities, in cash or
otherwise.

(h) To use its reasonable efforts to cause each of its current
executive officers and directors to refrain, during the period ending 90 days
after the date of this Agreement, without the prior written consent of Morgan
Stanley & Co. Incorporated, from (1) offering, pledging, selling, contracting to
sell, granting any option, right or warrant to purchase, or otherwise
transferring or disposing of, directly or indirectly, any debt securities or
preferred securities of the Company or the Trust substantially similar to the
Preferred Securities or any securities convertible into or exercisable or
exchangeable therefor or (2) entering into any swap or similar arrangement

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that transfers, in whole or in part, the economic risk or ownership of the
foregoing, whether any such transaction described in clause (1) or (2) above is
to be settled by delivery of Preferred Securities or such other securities, in
cash or otherwise.

(i) Whether or not any sale of Preferred Securities is consummated,
to pay all expenses incident to the performance of its obligations under the
Underwriting Agreement, including: (i) the preparation and filing of the
Registration Statement and the Prospectus and all amendments and supplements
thereto, (ii) the preparation, issuance and delivery of the Preferred
Securities, (iii) the fees and disbursements of the Company's counsel and
accountants and of the Trustee and its counsel, (iv) the qualification of the
Preferred Securities under securities or Blue Sky laws in accordance with the
provisions of Section 5(d), including filing fees and the fees and disbursements
of counsel for the Underwriters in connection therewith and in connection with
the preparation of any Blue Sky Memoranda in an aggregate amount not to exceed
$10,000, (v) the printing and delivery to the Underwriters in quantities as
hereinabove stated of copies of the Registration Statement and all amendments
thereto and of the Prospectus and any amendments or supplements thereto, (vi)
any fees charged by rating agencies for the rating of the Preferred Securities,
(vii) the fees and expenses, if any, incurred with respect to any filing with
the National Association of Securities Dealers, Inc., and (viii) the fees and
expenses, if any, incurred in connection with the listing of the Preferred
Securities on any securities exchange.

6. INDEMNIFICATION AND CONTRIBUTION. (a) The Company and the Trust
agree to jointly and severally indemnify and hold harmless each Underwriter and
each person, if any, who controls such Underwriter within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act from and
against any and all losses, claims, damages and liabilities (including, without
limitation, any legal or other expenses reasonably incurred by any Underwriter
or any such controlling person in connection with investigating or defending any
such action or claim) caused by any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement or any amendment
thereof, any preliminary prospectus or the Prospectus (as amended or
supplemented if the Company or the Trust shall have furnished any amendments or
supplements thereto), or caused by any omission or alleged omission to state

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therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any such untrue statement or omission or
alleged untrue statement or omission based upon information relating to any
Underwriter furnished to the Company or the Trust in writing by such Underwriter
expressly for use therein.

(b) The Company agrees jointly and severally to indemnify the Trust
against all loss, liability, claim, damage and expense whatsoever, as due from
the Trust under Section 6(a) hereof.

(c) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the directors, officers or Trustees of the Company or the
Trust who sign the Registration Statement and each person, if any, who controls
the Company or the Trust within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from the Company and the Trust to such Underwriter, but only
with reference to information relating to such Underwriter furnished to the
Company and Trust in writing by such Underwriter expressly for use in the
Registration Statement, any preliminary prospectus, the Prospectus or any
amendments or supplements thereto.

(d) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to either paragraph (a) or (b) above, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both

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<PAGE>

parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all such indemnified parties and that all such fees
and expenses shall be reimbursed as they are incurred. Such firm shall be
designated in writing by the Representatives, in the case of parties indemnified
pursuant to paragraph (a) above, and by the Company, in the case of parties
indemnified pursuant to paragraph (b) above. The indemnifying party shall not
be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the second and third
sentences of this paragraph, the indemnifying party agrees that it shall be
liable for any settlement of any proceeding effected without its written consent
if (i) such settlement is entered into more than 30 days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying party
shall not have reimbursed the indemnified party in accordance with such request
prior to the date of such settlement. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.

(e) To the extent the indemnification provided for in paragraph (a)
or (b) of this Section 6 is unavailable to an indemnified party or insufficient
in respect of any losses, claims, damages or liabilities referred to therein,
then each indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as

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<PAGE>

is appropriate to reflect the relative benefits received by the Company and the
Trust on the one hand and the Underwriters on the other hand from the offering
of the Preferred Securities or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company or the Trust on the one hand and of the
Underwriters on the other hand in connection with the statements or omissions
that resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations. The relative benefits received by the
Company and the Trust on the one hand and the Underwriters on the other hand in
connection with the offering of the Preferred Securities shall be deemed to be
in the same respective proportions as the net proceeds from the offering of such
Securities (before deducting expenses) received by the Company and the Trust and
the total underwriting discounts and commissions received by the Underwriters,
in each case as set forth in the table on the cover of the Prospectus
Supplement, bear to the aggregate public offering price of the Preferred
Securities. The relative fault of the Company and the Trust on the one hand and
of the Underwriters on the other hand shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Trust or by the Underwriters and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Underwriters' respective
obligations to contribute pursuant to this Section 6 are several in proportion
to the respective principal amounts of Preferred Securities they have purchased
hereunder, and not joint.

(f) The Company, the Trust and the Underwriters agree that it would
not be just or equitable if contribution pursuant to this Section 6 were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in paragraph (d) above. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or

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<PAGE>

claim. Notwithstanding the provisions of this Section 6, no Underwriter shall
be required to contribute any amount in excess of the amount by which the total
price at which the Preferred Securities underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages that
such Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The remedies provided for in this
Section 6 are not exclusive and shall not limit any rights or remedies which may
otherwise be available to any indemnified party at law or in equity.

7. TERMINATION. This Agreement shall be subject to termination, by
notice given by the Representatives to the Company and the Trust, if (a) after
the execution and delivery of the Underwriting Agreement and prior to the
Closing Date or the Option Closing Date, as the case may be, (i) trading
generally shall have been suspended or materially limited on or by, as the case
may be, any of the New York Stock Exchange, the American Stock Exchange, the
National Association of Securities Dealers, Inc., the Chicago Board of Options
Exchange, the Chicago Mercantile Exchange or the Chicago Board of Trade, (ii)
trading of any securities of the Trust or the Company shall have been suspended
on any exchange or in any over-the-counter market, (iii) a general moratorium on
commercial banking activities in New York shall have been declared by either
Federal or New York State authorities or (iv) there shall have occurred any
outbreak or escalation of hostilities or any change in financial markets or any
calamity or crisis that, in the judgment of the Representatives, is material and
adverse and (b) in the case of any of the events specified in clauses (a)(i)
through (iv), such event, singly or together with any other such event, makes
it, in the judgment of the Representatives, impracticable to market the
Preferred Securities on the terms and in the manner contemplated in the
Prospectus. This Agreement may also be terminated at any time prior to the
Closing Date or the Option Closing Date, as the case may be, if in the judgment
of the Representatives the subject matter of any amendment or supplement to the
Registration Statement or Prospectus prepared and furnished by the Company and
its subsidiaries, taken as a whole, or the Trustee reflects a material adverse
change in the business, properties or financial condition of the Company or the
Trust which renders it either

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<PAGE>

inadvisable to proceed with such offering, if any, or inadvisable to proceed
with the delivery of the Preferred Securities to be purchased hereunder.

8. DEFAULTING UNDERWRITERS. If, on the Closing Date or the Option
Closing Date, as the case may be, any one or more of the Underwriters shall fail
or refuse to purchase the Preferred Securities that it has or they have agreed
to purchase hereunder on such date, and the aggregate amount of Preferred
Securities which such defaulting Underwriter or Underwriters agreed but failed
or refused to purchase is not more than one-tenth of the aggregate amount of the
Preferred Securities to be purchased on such date, the other Underwriters shall
be obligated severally in the proportions that the amount of Preferred
Securities set forth opposite their respective names in the Underwriting
Agreement bears to the aggregate amount of Preferred Securities set forth
opposite the names of all such non-defaulting Underwriters, or in such other
proportions as the Representatives may specify, to purchase the Preferred
Securities which such defaulting Underwriter or Underwriters agreed but failed
or refused to purchase on such date; PROVIDED that in no event shall the amount
of Preferred Securities that any Underwriter has agreed to purchase pursuant to
this Agreement be increased pursuant to this Section 8 by an amount in excess of
one-ninth of such amount of Preferred Securities without the written consent of
such Underwriter. If, on the Closing Date or the Option Closing Date, as the
case may be, any Underwriter or Underwriters shall fail or refuse to purchase
Securities that it has or they have agreed to purchase and the aggregate amount
of Preferred Securities with respect to which such default occurs is more than
one-tenth of the aggregate amount of Preferred Securities to be purchased on
such date, and arrangements satisfactory to the Representatives and the Company
for the purchase of such Preferred Securities are not made within 36 hours after
such default, the Underwriting Agreement shall terminate without liability on
the part of any non-defaulting Underwriter, the Company or the Trust. In any
such case either the Representatives or the Company shall have the right to
postpone the Closing Date or the Option Closing Date, as the case may be, but in
no event for longer than seven days, in order that the required changes, if any,
in the Registration Statement and in the Prospectus or in any other documents or
arrangements may be effected. Any action taken under this paragraph shall not
relieve any defaulting Underwriter from liability in respect of any default of
such Underwriter under the Underwriting Agreement.

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<PAGE>

If the Underwriting Agreement shall be terminated by the Underwriters,
or any of them, because of any failure or refusal on the part of the Company or
the Trust to comply with the terms or to fulfill any of the conditions of the
Underwriting Agreement, or if for any reason the Company or the Trust shall be
unable to perform its obligations under the Underwriting Agreement, the Company
and the Trust will reimburse the Underwriters or such Underwriters as have so
terminated the Underwriting Agreement with respect to themselves, severally, for
all out-of-pocket expenses (including the fees and disbursements of their
counsel) reasonably incurred by such Underwriters in connection with the
Underwriting Agreement or the offering of the Preferred Securities.

9. REPRESENTATIONS AND INDEMNITIES TO SURVIVE. The respective
indemnity and contribution agreements and the representations, warranties and
other statements of the officers or Trustees of the Company and the Trust (as
the case may be) and the Underwriters set forth in the Underwriting Agreement
will remain in full force and effect, regardless of any termination of the
Underwriting Agreement, any investigation made by or on behalf of any
Underwriter, the Company or the Trust or any of the officers, directors or
controlling persons referred to in Section 6 and delivery of and payment for the
Preferred Securities.

11. COUNTERPARTS. The Underwriting Agreement may be signed in any
number of counterparts, each of which shall be an

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<PAGE>

original, with the same effect as if the signatures thereto and hereto were upon
the same instrument.

12. APPLICABLE LAW. The Underwriting Agreement shall be governed by
and construed in accordance with the internal laws of the State of New York.

13. HEADINGS. The headings of the sections of the Underwriting
Agreement have been inserted for convenience of reference only and shall not be
deemed a part of the Underwriting Agreement.

14. NOTICES. All communications hereunder will be in writing and, if
sent to (i) the Underwriters, will be mailed, delivered or telecopied and
confirmed to Morgan Stanley & Co. Incorporated at 1251 Avenue of the Americas,
New York, New York 10020, Attn: Mr. Jay D. Hatfield, (ii) the Company, will be
mailed, delivered or telecopied and confirmed to it at 33 Third Street SE,
Huron, South Dakota 57350, Attn: Mr. Richard R. Hylland, Vice President --
Finance & Corporate Development, Telecopy No: (605) 353-8286 and (iii) the
Trust, will be mailed, delivered or telecopied and confirmed to it at 33 Third
Street SE, Huron, South Dakota 57350.

16. CERTAIN AGREEMENTS AND REPRESENTATIONS OF NATWEST CAPITAL MARKETS
LIMITED. NatWest Capital Markets Limited agrees and represents that (i) it has
not offered or sold and will not offer or sell any Preferred Securities to
persons in the United Kingdom, except to persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of their businesses or otherwise in
circumstance which have not resulted and will not result in an offer to the
public in the United Kingdom within the meaning of the Public Offers of
Securities Regulations 1995, (ii) it has complied with and will comply with all
applicable provisions of the Financial Services Act 1986 with respect to
anything done by it in relation to the Preferred Securities in, from or
otherwise involving the United Kingdom and (iii) it has only issued or passed on
and will only issue or pass on in the

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<PAGE>

United Kingdom any document received by it in connection with the issue of the
Preferred Securities to a person who is of a kind described in Article 11(3) of
the Financial Services Act 1986 (Investment Advertisements)(Exemptions) Order
1995 or is a person to whom such document may otherwise lawfully be issued or
passed on.

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<PAGE>

Please confirm your agreement by having an authorized officer sign a
copy of the Underwriting Agreement in the space set forth below.

Very truly yours,

MORGAN STANLEY & CO. INCORPORATED
DEAN WITTER REYNOLDS INC.
NATWEST CAPITAL MARKETS LIMITED
PAINEWEBBER INCORPORATED
PIPER JAFFRAY INC.

Acting severally on behalf of themselves
and the several Underwriters named
herein

By: MORGAN STANLEY & CO. INCORPORATED

By: /s/ James D. Glasgott
--------------------------------
Name: James D. Glasgott
Title: Managing Director

Accepted, August 3, 1995

NWPS CAPITAL FINANCING I

By: /s/ M. D. Lewis
-------------------------------
Name: M. D. Lewis
Title: Trustee

By: /s/ R. R. Hylland
-------------------------------
Name: R. R. Hylland
Title: Trustee

NORTHWESTERN PUBLIC SERVICE COMPANY

By: /s/ M. D. Lewis
-------------------------------
Name: M. D. Lewis
Title: President & CEO

<PAGE>
SCHEDULE I

Number of
Name of Underwriter Preferred Securities
- ------------------- --------------------

Morgan Stanley & Co. Incorporated. . . . . . . . . . . . . . . . 175,000
Dean Witter Reynolds Inc.. . . . . . . . . . . . . . . . . . . . 170,000
NatWest Capital Markets Limited. . . . . . . . . . . . . . . . . 170,000
PaineWebber Incorporated . . . . . . . . . . . . . . . . . . . . 170,000
Piper Jaffray Inc. . . . . . . . . . . . . . . . . . . . . . . . 170,000
Advest, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000
Alex. Brown & Sons Incorporated. . . . . . . . . . . . . . . . . 35,000
Crowell, Weedon & Co.. . . . . . . . . . . . . . . . . . . . . . 20,000
Dain Bosworth Incorporated . . . . . . . . . . . . . . . . . . . 20,000
A.G. Edwards & Sons, Inc.. . . . . . . . . . . . . . . . . . . . 35,000
J.J.B. Hilliard, W.L. Lyons, Inc.. . . . . . . . . . . . . . . . 20,000
Interstate/Johnson Lane Corporation. . . . . . . . . . . . . . . 20,000
Janney Montgomery Scott Inc. . . . . . . . . . . . . . . . . . . 20,000
Kemper Securities, Inc.. . . . . . . . . . . . . . . . . . . . . 20,000
Legg Mason Wood Walker, Incorporated . . . . . . . . . . . . . . 20,000
McDonald & Company Securities, Inc.. . . . . . . . . . . . . . . 20,000
Morgan Keegan & Company, Inc.. . . . . . . . . . . . . . . . . . 20,000
The Ohio Company . . . . . . . . . . . . . . . . . . . . . . . . 20,000
Olde Discount Corporation. . . . . . . . . . . . . . . . . . . . 20,000
Oppenheimer & Co., Inc.. . . . . . . . . . . . . . . . . . . . . 35,000
Raymond James & Associates, Inc. . . . . . . . . . . . . . . . . 20,000
The Robinson-Humphrey Company, Inc.. . . . . . . . . . . . . . . 20,000
Trilon Securities International. . . . . . . . . . . . . . . . . 20,000
Tucker Anthony Incorporated. . . . . . . . . . . . . . . . . . . 20,000
Wheat, First Securities, Inc.. . . . . . . . . . . . . . . . . . 20,000
---------

Total 1,300,000
---------
---------

<PAGE>

EXHIBIT 1(c)

EXECUTION COPY

COMMON STOCK

UNDERWRITING AGREEMENT

NORTHWESTERN PUBLIC SERVICE COMPANY
33 Third Street SE
Huron, South Dakota 57350-1318

August 16, 1995

Ladies and Gentlemen:

On the basis of the representations and warranties, and subject to the
terms and conditions, set forth in this agreement ("this Agreement" or the
"Underwriting Agreement"), we, the Representatives of the Underwriters (as
defined below), understand that Northwestern Public Service Company, a Delaware
corporation (the "Company"), proposes to issue and sell to the Underwriters
1,200,000 shares of its Common Stock, par value $3.50 per share (the "Firm
Shares"). The Company also proposes to issue and sell to the several
Underwriters not more than an additional 180,000 shares of its Common Stock, par
value $3.50 per share (the "Additional Shares"), if and to the extent that we,
as Representatives, shall have determined to exercise, on behalf of the
Underwriters, the right to purchase such shares of Common Stock granted to the
Underwriters in Section 3 hereof. The Firm Shares and the Additional Shares are
hereinafter collectively referred to as the Shares. The shares of Common Stock,
par value $3.50 per share, of the Company to be outstanding after giving effect
to the sales contemplated hereby are hereinafter referred to as the Common
Stock.

The term "Underwriters," as used herein, shall be deemed to mean the
several persons, firms or corporations named in Schedule I hereto, and the term
"Representatives," as used herein, shall be deemed to mean the representative of
such Underwriters by whom or on whose behalf this Underwriting Agreement is
signed. If there shall be one person, firm or corporation named in Schedule I,
the term "Underwriters" and the term "Representatives," as used herein, shall
mean that person, firm or corporation. All obligations of the Underwriters are
several and not joint. The use of the term "Underwriter" herein shall not be
deemed to establish or admit that a purchaser of the Shares is an "underwriter"
of the Shares as such term is defined in and used under the Securities Act of
1933, as amended (the "Securities Act").

<PAGE>

1. REPRESENTATIONS AND WARRANTIES. The Company represents and
warrants to and agrees with each of the Underwriters that:

(a) The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-3 (Registration Statement
No. 33-60423), including a prospectus, relating to the Shares, and has filed
with, or transmitted for filing to, or shall promptly hereafter file with or
transmit for filing to, the Commission a prospectus supplement (the "Prospectus
Supplement") specifically relating to the Shares pursuant to Rule 424 under the
Securities Act. The term "Registration Statement" means the registration
statement, including the exhibits thereto, as amended to the date of this
Agreement. The term "Basic Prospectus" means the prospectus included in the
Registration Statement, as amended and supplemented to the date of this
Agreement (exclusive of any supplement to the prospectus relating solely to
securities other than the Shares). The term "Prospectus" means the Basic
Prospectus together with the Prospectus Supplement. The term "preliminary
prospectus" means a preliminary prospectus supplement specifically relating to
the Shares, together with the Basic Prospectus. As used herein, the terms
"Basic Prospectus," "Prospectus" and "preliminary prospectus" shall include in
each case the documents, if any, incorporated by reference therein. The terms
"supplement," "amendment" and "amend" as used herein shall include all documents
deemed to be incorporated by reference in the Prospectus that are filed
subsequent to the date of the Basic Prospectus by the Company with the
Commission pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act").

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<PAGE>

will be deemed to comply therewith; and (iv) the Prospectus does not contain
and, as amended or supplemented, if applicable, will not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, except that the representations and warranties set forth
in this Section 1(c) do not apply to statements or omissions in the Registration
Statement or the Prospectus based upon information relating to any Underwriter
furnished to the Company in writing by such Underwriter expressly for use
therein.

(d) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the State of Delaware, has the
corporate power and authority to own its property and to conduct its business as
described in the Prospectus and to enter into and perform its obligations under
this Agreement. The Company is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification, except to the
extent that the failure to be so qualified or be in good standing would not have
a material adverse effect on the Company and its subsidiaries, taken as a whole.

(f) The authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the Prospectus.

(g) The shares of the Common Stock outstanding prior to the issuance
of the Shares have been duly authorized and are validly issued, fully paid and
non-assessable.

(h) The Shares have been duly authorized and, when issued and
delivered in accordance with the terms of this Agreement, will be validly
issued, fully paid and non-assessable, and the issuance of such Shares will not
be subject to any preemptive or similar rights.

(i) This Agreement has been duly authorized, executed and delivered
by the Company.

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<PAGE>

(j) The execution and delivery by the Company of, and the performance
by the Company of its obligations under, this Agreement will not conflict with,
result in a breach of or constitute a default under any provision of (A)
applicable law (except for the indemnification provisions hereof which may be
unenforceable as against public policy under certain circumstances), (B) the
certificate of incorporation or by-laws of the Company, (C) any indenture,
mortgage, deed of trust or other agreement or instrument to which the Company or
any of its subsidiaries is a party that is material to the Company and its
subsidiaries, taken as a whole, or (D) any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the Company or any
subsidiary.

(k) The Federal Energy Regulatory Commission (the "FERC") has issued
an appropriate order or orders with respect to the issuance and sale of the
Shares in accordance with this Agreement; such order or orders are in full force
and effect; the issuance and sale of the Shares are in conformity with the terms
of such order or orders; and no other authorization, approval or consent of any
other governmental body or agency is legally required for the issuance and sale
of the Shares as contemplated hereby, except such as have been obtained under
the Securities Act and such as may be required under the state securities or
Blue Sky laws in connection with the purchase and distribution of the Shares by
the Underwriters.

(l) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the condition,
financial or otherwise, or in the earnings, business or operations of the
Company and its subsidiaries, taken as a whole, from that set forth in the
Prospectus.

(m) There are no legal or governmental proceedings pending or
threatened to which the Company or any of its subsidiaries is a party or to
which any of the properties of the Company or any of its subsidiaries is subject
that are required to be described in the Registration Statement or the
Prospectus and are not so described, or any statutes, regulations, contracts or
other documents that are required to be described in the Registration Statement
or the Prospectus or to be filed or incorporated by reference as exhibits to the
Registration Statement that are not described, filed or incorporated as
required.

(n) Each of the Company and its subsidiaries has all necessary
consents, authorizations, approvals, orders, certificates and permits of and
from, and has made all declarations and filings with, all federal, state, local
and other governmental authorities, all self-regulatory organizations and all
courts and other tribunals, to own, lease, license and use its properties and
assets and to conduct its business in the manner described in the Prospectus,
except to the extent that the

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<PAGE>

failure to obtain or file would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole.

(o) Each preliminary prospectus filed as part of the registration
statement as originally filed or as part of any amendment thereto, or filed
pursuant to Rule 424 under the Securities Act, complied when so filed in all
material respects with the Securities Act and the rules and regulations of the
Commission thereunder.

(p) The Company is not an "investment company" or an entity
"controlled" by an "investment company" as such terms are defined in the
Investment Company Act of 1940, as amended (the "Investment Company Act").

(q) The Company and its subsidiaries are (i) in compliance with any
and all applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws"), (ii) have received all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct their
respective businesses and (iii) are in compliance with all terms and conditions
of any such permit, license or approval, except where such noncompliance with
Environmental Laws, failure to receive required permits, licenses or other
approvals or failure to comply with the terms and conditions of such permits,
licenses or approvals would not, singly or in the aggregate, have a material
adverse effect on the Company and its subsidiaries, taken as a whole.

(r) In the ordinary course of its business, the Company conducts a
periodic review of the effect of Environmental Laws on the business, operations
and properties of the Company and its subsidiaries, in the course of which it
identifies and evaluates associated costs and liabilities (including, without
limitation, any capital or operating expenditures required for clean-up, closure
of properties or compliance with Environmental Laws or any permit, license or
approval, any related constraints on operating activities and any potential
liabilities to third parties). On the basis of such review, the Company has
reasonably concluded that such associated costs and liabilities would not,
singly or in the aggregate, have a material adverse effect on the Company and
its subsidiaries taken as a whole.

(s) The Company has complied with all provisions of Section 517.075,
Florida Statutes (Chapter 92-198, Laws of Florida).

(t) Each operating subsidiary of Synergy Group Incorporated, a
Delaware corporation ("Synergy"), is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, has the power
and authority to own its property and to conduct its business and is duly

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<PAGE>

qualified to transact business and is in good standing in each jurisdiction in
which the conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse effect on
Synergy and its operating subsidiaries, taken as a whole.

(u) The authorized and outstanding capital stock of SYN, Inc. ("SYN")
consists of (i) 100,000 shares of common stock, of which 100,000 shares are
outstanding, 72,500 shares of which are held of record by Northwestern Growth
Corporation ("NGC"), 10,000 shares of which are held of record by Empire Gas
Corporation and 17,500 shares of which are held of record by former stockholders
of Synergy and (ii) 100,000 shares of 15% Series A Cumulative Preferred Stock,
of which 52,500 shares are outstanding, 50,000 shares of which are held of
record by the Company and 2,500 shares of which are held of record by former
stockholders of Synergy. All of the outstanding common stock of Synergy is
owned by SYN.

2. PUBLIC OFFERING. The Company is advised by the Underwriters that
they propose to make a public offering of their respective portions of the Firm
Shares as soon after the Registration Statement and this Agreement have become
effective as in the Representatives' judgment is advisable. The Company is
further advised by the Representatives that the Firm Shares are to be offered to
the public initially at $26.125 a share (the public offering price) and to
certain dealers selected by the Underwriters at a price that represents a
concession not in excess of $.60 a share under the public offering price, and
that any Underwriter may allow, and such dealers may reallow, a concession, not
in excess of $.10 a share, to any Underwriter or to certain other dealers.

3. PURCHASE AND DELIVERY. Subject to the terms and conditions herein
set forth, the Company hereby agrees to sell and the Underwriters agree to
purchase, severally and not jointly, the respective numbers of Firm Shares set
forth in Schedule I hereto opposite their names at $25.125 a share (the
"Purchase Price").

On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to sell
to the Underwriters the Additional Shares, and the Underwriters shall have a
one-time

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<PAGE>

right to purchase, severally and not jointly, up to 180,000 Additional Shares at
the purchase price (minus, if an Option Closing Date with respect to the
delivery and payment of any Additional Shares occurs after the date fixed for
the determination of stockholders entitled to receive the next dividend payable
on shares of Common Stock, par value $3.50 per share, an amount equal to such
dividend per share of such Additional Shares). Additional Shares may be
purchased as provided herein solely for the purpose of covering over-allotments
made in connection with the offering of the Firm Shares. If any Additional
Shares are to be purchased, each Underwriter agrees, severally and not jointly,
to purchase the number of Additional Shares (subject to such adjustments to
eliminate fractional shares as the Representatives may determine) that bears the
same proportion to the total number of Additional Shares to be purchased as the
number of Firm Shares set forth in Schedule I hereto opposite the name of such
Underwriter bears to the total number of Firm Shares.

Payment for the Firm Shares shall be made by certified or official
bank check or checks payable to the order of the Company in New York Clearing
House funds at the office of Winthrop, Stimson, Putnam & Roberts, New York, New
York, at 10:00 A.M., local time, on August 21, 1995, or at such other time on
the same or such other date, not later than August 28, 1995, as shall be
designated in writing by you. The time and date of such payment are hereinafter
referred to as the Closing Date.

Payment for any Additional Shares shall be made by certified or
official bank check or checks payable to the order of the Company in New York
Clearing House funds at the office of Winthrop, Stimson, Putnam & Roberts, New
York, New York, at 10:00 A.M., local time, on September 20, 1995 (which may be
the same as the Closing Date but shall in no event be earlier than the Closing
Date nor later than ten business days after the giving of the notice hereinafter
referred to) as shall be designated in a written notice from the Representatives
to the Company of the Representatives' determination, on behalf of the
Underwriters, to purchase a number, specified in said notice, of Additional
Shares, or on such other date as shall be designated in writing by the
Representatives. The time and date of such payment are hereinafter referred to
as the "Option Closing Date." The notice of the determination to exercise the
option to purchase Additional Shares and of the Option Closing Date may be given
at any time within 30 days after the date of this Agreement.

Certificates for the Firm Shares and Additional Shares shall be in
definitive form and registered in such names and in such denominations as the
Representatives shall request in writing not later than two full business days
prior to the Closing Date or the Option Closing Date, as the case may be. The
certificates evidencing the Firm Shares and Additional Shares shall be delivered
to the Representatives on the Closing Date or the Option Closing Date, as the
case may be, for the respective

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<PAGE>

accounts of the several Underwriters, with any transfer taxes payable in
connection with the transfer of the Shares to the Underwriters duly paid,
against payment of the purchase price therefor.

4. CONDITIONS TO CLOSING. The several obligations of the
Underwriters hereunder are subject to the following conditions:

(a) Subsequent to the execution and delivery of the Underwriting
Agreement and prior to the Closing Date,

(ii) there shall not have occurred any change, or any
development involving a prospective change, in the condition, financial or
otherwise, or in the earnings, business or operations, of the Company and
its subsidiaries, taken as a whole, from that set forth in the Prospectus,
that, in the judgment of the Representatives, is material and adverse and
that makes it, in the judgment of the Representatives, impracticable to
market the Shares on the terms and in the manner contemplated in the
Prospectus; and

(iii) the Company shall have obtained an appropriate order or
orders of the FERC authorizing the issuance, sale and delivery of the
Shares as contemplated by this Agreement, which order or orders at the
Closing Date shall be in full force and effect and shall not be contested
or the subject of review or appeal.

(b) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer of the
Company to the effect (x) set forth in clauses (a)(i) and (a)(iii) above; (y)
that the representations and warranties of the Company contained in the
Underwriting Agreement are true and correct as of the Closing Date and that the
Company has complied with all of the agreements and satisfied all of the
conditions on its part to be performed or satisfied on or before the Closing
Date; and (z) that no executive officer of the Company has received any
notification from the Sellers (as defined in the Acquisition Agreement dated as
of May 17, 1995, by and among Synergy and the other parties thereto) or their
counsel that any information (including, without limitation, financial
information) relating to Synergy contained or incorporated by reference in the
Registration Statement or the Prospectus contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The

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<PAGE>

officer signing and delivering such certificate may rely upon the best of his
knowledge as to proceedings threatened.

(c) The Representatives shall have received on the Closing Date an
opinion dated the Closing Date of Schiff Hardin & Waite, special counsel to the
Company, to the effect that

(iii) the authorized capital stock of the Company conforms as to
legal matters to the description thereof contained in the Prospectus;

(iv) the shares of the Company's Common Stock outstanding prior
to the issuance of the Shares have been duly authorized and are validly
issued, fully paid and non-assessable;

(v) the Shares have been duly authorized and, when issued and
delivered in accordance with the terms of this Agreement, will be validly
issued, fully paid and non-assessable, and the issuance of such Shares will
not be subject to any preemptive or similar rights;

(vi) this Agreement has been duly authorized, executed and
delivered by the Company;

(vii) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, the Underwriting
Agreement will not conflict with, result in

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a breach of or constitute a default under any provision of (A) applicable law
(except for the indemnification provisions hereof which may be unenforceable as
against public policy under certain circumstances), (B) the certificate of
incorporation or by-laws of the Company, (C) any indenture, mortgage, deed of
trust or other agreement or instrument to which the Company or any of its
subsidiaries is a party that is material to the Company and its subsidiaries,
taken as a whole, or (D) any judgment, order or decree of any governmental body,
agency or court having jurisdiction over the Company or any subsidiary;

(viii) the FERC has issued an appropriate order or orders with
respect to the issuance and sale of the Shares in accordance with the
Underwriting Agreement; such order or orders are in full force and effect;
the issuance and sale of the Shares are in conformity with the terms of
such order or orders; and no other authorization, approval or consent of
any other governmental body or agency (including, without limitation, in
the jurisdictions of South Dakota, Nebraska, North Dakota and Iowa) is
legally required for the issuance and sale of the Shares as contemplated by
the Underwriting Agreement, except such as have been obtained under the
Securities Act and such as may be required under the state securities or
Blue Sky laws in connection with the purchase and distribution of the
Shares by the Underwriters;

(ix) there are no legal or governmental proceedings pending or
threatened to which the Company or any of its subsidiaries is a party or to
which any of the properties of the Company or any of its subsidiaries is
subject that are required to be described in the Registration Statement or
the Prospectus and are not so described, or any statutes, regulations,
contracts or other documents that are required to be described in the
Registration Statement or the Prospectus or to be filed or incorporated by
reference as exhibits to the Registration Statement that are not described,
filed or incorporated as required;

(x) the statements (A) in the Prospectus under the captions
"Description of the Common Stock," "Underwriting," "Acquisition of Synergy
Group Incorporated" and "Plan of Distribution," (B) in the Registration
Statement under Item 15, (C) in "Item 3 - Legal Proceedings" of the
Company's most recent annual report on Form 10-K incorporated by reference
in the Prospectus and (D) in "Item 1 - Legal Proceedings" of Part II of the
Company's quarterly reports on Form 10-Q filed since such annual report and
reviewed by such counsel, in each case insofar as such statements
constitute summaries of the legal matters,

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<PAGE>

documents or proceedings referred to therein, fairly present the
information called for with respect to such legal matters, documents and
proceedings and fairly summarize the matters referred to therein;

(xi) after due inquiry, such counsel does not know of any legal or
governmental proceedings pending or threatened to which the Company or any
of its subsidiaries is a party or to which any of the properties of the
Company or any of its subsidiaries is subject that are required to be
described in the Registration Statement or the Prospectus and are not so
described or of any statutes, regulations, contracts or other documents
that are required to be described in the Registration Statement or the
Prospectus or to be filed or incorporated by reference as exhibits to the
Registration Statement that are not described, filed or incorporated as
required;

(xii) the Company is (A) not an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in the
Investment Company Act or (B) a "holding company" as such term is defined
in the Public Utility Holding Company Act of 1935, as amended;

(xiii) the Registration Statement has become and is effective
under the Securities Act, and, to the best of such counsel's knowledge, no
stop order suspending the effectiveness of the Registration Statement has
been issued and no proceedings for a stop order with respect thereto are
pending or threatened under Section 8(d) of the Securities Act; and

(xiv) such counsel (A) is of the opinion that (except for
financial statements and schedules included therein as to which such
counsel need not express any opinion) each document, if any, filed pursuant
to the Exchange Act and incorporated by reference in the Prospectus
complied when so filed as to form in all material respects with the
Exchange Act and the applicable rules and regulations of the Commission
thereunder, (B) believes that (except for financial statements and
schedules as to which such counsel need not express any belief and except
for that part of the Registration Statement that constitutes the Form T-l)
each part of the Registration Statement, when such part became effective
did not, and, as of the date such opinion is delivered, does not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading, (C) is of the opinion that the Registration Statement and
Prospectus (except for financial statements and schedules included therein
as to which such counsel need not express any opinion), comply as to form
in all material respects with the Securities Act and the applicable rules
and regulations of the Commission thereunder and (D) believes that (except
for financial statements and schedules as to which such counsel need not

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<PAGE>

express any belief) the Prospectus as of the date such opinion is delivered
does not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.

(d) The Representatives shall have received on the Closing Date an
opinion dated the Closing Date of Alan D. Dietrich, Esq., Vice President -
Corporate Services of the Company to the effect that the Company is (i) in
compliance with any and all applicable Environmental Laws, (ii) has received all
permits, licenses or other approvals required of it under applicable
Environmental Laws to conduct its business and (iii) is in compliance with all
terms and conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and conditions
of such permits, licenses or approvals would not, singly or in the aggregate,
have a material adverse effect on the Company.

(e) The Representatives shall have received on the Closing Date an
opinion dated the Closing Date of Winthrop, Stimson, Putnam & Roberts, counsel
for the Underwriters, covering such matters as the Representatives may
reasonably request.

With respect to subparagraph (xi) of paragraph (c) above, Schiff
Hardin & Waite, special counsel to the Company, may state that its opinion and
belief are based upon its participation in the preparation of the Registration
Statement and Prospectus and any amendments or supplements thereto (excluding
(for purposes of clauses (B) and (D) of such paragraph) certain of the documents
incorporated by reference therein (to be specified in such opinion)) and review
and discussion of the contents thereof (including the documents incorporated by
reference therein), but are without independent check or verification, except
as specified.

The opinions of Schiff Hardin & Waite and Alan D. Dietrich, Esq. shall
be rendered to the Underwriters at the request of the Company and shall so state
therein.

(f) The Representatives shall have received on the date of this
Agreement a letter, dated the date of this Agreement, in form and substance
satisfactory to the Representatives, from Arthur Andersen LLP, the Company's
independent public accountants, containing statements and information of the
type ordinarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial information contained
in or incorporated by reference into the Prospectus. Such letter shall include,
without limitation, statements to the effect that (i) the unaudited pro forma
condensed consolidated financial

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<PAGE>

statements included or incorporated by reference in the Prospectus comply as to
form with the applicable accounting requirements of Rule 11-02 of Regulation S-
X, (ii) management's assumptions provide a reasonable basis for presenting the
significant effects directly attributable to the Acquisition described in the
notes to the unaudited pro forma condensed consolidated financial statements,
(iii) the related pro forma adjustments give appropriate effect to those
assumptions, and (iv) the pro forma column reflects the proper application of
those adjustments to the historical financial statement amounts contained in
such unaudited pro forma consolidated statements.

(g) The Representatives shall have received on the Closing Date a
letter, dated the Closing Date, in form and substance satisfactory to the
Representatives, from Arthur Andersen LLP, the Company's independent public
accountants, to the effect that such accountants reaffirm, as of the Closing
Date, and as though made on the Closing Date, the statements made in the letter
furnished by such accountants pursuant to Section 4(f), except that the
specified date referred to therein shall be a date not more than five business
days prior to the Closing Date.

(h) The Representatives shall have received on the date of this
Agreement a letter, dated the date of this Agreement, in form and substance
satisfactory to the Representatives, from KPMG Peat Marwick LLP, Synergy's
independent public accountants, containing statements and information of the
type ordinarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial information contained
or incorporated by reference into the Prospectus.

(i) At the Closing Date, the Firm Shares shall have been approved for
listing on the New York Stock Exchange upon notice of issuance.

The several obligations of the Underwriters to purchase Additional
Shares hereunder are subject to the satisfaction of each of the conditions
specified above (with all references to the Closing Date deemed to refer to the
Option Closing Date) and to the delivery to the Underwriters of such documents
as the Representatives may reasonably request.

5. COVENANTS OF THE COMPANY. In further consideration of the
agreements of the Underwriters herein contained, the Company covenants as
follows:

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<PAGE>

copies of the Prospectus, any documents incorporated by reference therein and
any supplements and amendments thereto or to the
Registration Statement as the Underwriters may reasonably request (delivery of
the Prospectus to be made in New York, New York no later than 10:00 A.M. on the
business day immediately succeeding the date of this Agreement).

(b) To cause the Prospectus to be filed with the Commission pursuant
to and in compliance with Rule 424 under the Act.

(d) If, during such period after the first date of the public
offering of the Shares as in the opinion of counsel for the Underwriters the
Prospectus is required by law to be delivered in connection with sales by an
Underwriter or dealer, any event shall occur or condition exist as a result of
which it is necessary to amend or supplement the Prospectus in order to make the
statements therein, in the light of the circumstances when the Prospectus is
delivered to a purchaser, not misleading, or if, in the opinion of counsel for
the Underwriters, it is necessary to amend or supplement the Prospectus to
comply with law, forthwith to prepare, file with the Commission and furnish, at
its own expense, to the Underwriters, and to the dealers (whose names and
addresses the Representatives will furnish to the Company) to which Shares may
have been sold by the Underwriters on behalf of the Underwriters and to any
other dealers upon request, either amendments or supplements to the Prospectus
so that the statements in the Prospectus as so amended or supplemented will not,
in the light of the circumstances when the Prospectus is delivered to a
purchaser, be misleading or so that the Prospectus, as amended or supplemented,
will comply with law.

(e) To endeavor to qualify the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as the Underwriters shall
reasonably request and to maintain such qualification for as long as the
Underwriters shall reasonably request.

(f) To make generally available to the Company's security holders and
to the Representatives as soon as practicable an earning statement covering a
twelve month period beginning on the first day of the first full fiscal quarter
after the date of the Underwriting Agreement, which earning statement shall
satisfy the provisions of Section 11(a) of the Securities Act and the rules and
regulations of the Commission thereunder. If such fiscal quarter is the last
fiscal quarter of the Company's fiscal year, such earning statement shall be
made

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available not later than 90 days after the close of the period covered thereby
and in all other cases shall be made available not later than 45 days after the
close of the period covered thereby.

(g) Whether or not any sale of Shares is consummated, to pay all
expenses incident to the performance of its obligations under the Underwriting
Agreement, including: (i) the preparation and filing of the Registration
Statement and the Prospectus and all amendments and supplements thereto, (ii)
the preparation, issuance and delivery of the Shares, (iii) the fees and
disbursements of the Company's counsel and accountants, (iv) the qualification
of the Shares under securities or Blue Sky laws in accordance with the
provisions of Section 5(d), including filing fees and the fees and disbursements
of counsel for the Underwriters in connection therewith and in connection with
the preparation of any Blue Sky Memoranda in an aggregate amount not to exceed
$10,000, (v) the printing and delivery to the Underwriters in quantities as
hereinabove stated of copies of the Registration Statement and all amendments
thereto and of the Prospectus and any amendments or supplements thereto, (vi)
the fees and expenses, if any, incurred with respect to any filing with the
National Association of Securities Dealers, Inc., and (vii) the fees and
expenses incurred in connection with the listing of the Shares on any securities
exchange.

(h) During the period ending 90 days after the date of this
Agreement, without the prior written consent of Morgan Stanley & Co.
Incorporated, not to (1) offer, pledge, sell, contract to sell, sell any option
or contract to purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase, or otherwise transfer or dispose of,
directly or indirectly, any shares of Common Stock of the Company or any
securities convertible into or exercisable or exchangeable for such Common
Stock, other than (i) the Shares to be sold hereunder and (ii) any shares of
such Common Stock sold by the Company upon the exercise of an option or warrant
or the conversion of a security outstanding on the date hereof or (2) enter into
any swap or similar arrangement that transfers, in whole or in part, the
economic risk of ownership of the Common Stock of the Company, whether any such
transaction described in clause (1) or (2) above is to be settled by delivery of
Common Stock or such other securities, in cash or otherwise.

(i) To use its reasonable efforts to cause each of its current
executive officers and directors to refrain, during the period ending 90 days
after the date of this Agreement, without the prior written consent of Morgan
Stanley & Co. Incorporated, from (1) offering, pledging, selling, contracting to
sell, sell any option or contract to purchase, purchasing any option or contract
to sell, granting any option, right or warrant to purchase or otherwise
transferring or disposing of, directly or indirectly, any shares of Common Stock
of the Company or any securities convertible into or exercisable or exchangeable
for

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<PAGE>

such Common Stock, other than any shares of such Common Stock sold by such
executive officers and directors upon the exercise of an option or warrant or
the conversion of a security outstanding on the date hereof or (2) entering into
any swap or similar arrangement that transfers, in whole or in part, the
economic risk of ownership of the Common Stock of such executive officers and
directors, whether any such transaction described in clause (1) or (2) above is
to be settled by delivery of Common Stock or such other securities in cash or
otherwise.

6. INDEMNIFICATION AND CONTRIBUTION. (a) The Company agrees to
indemnify and hold harmless each Underwriter and each person, if any, who
controls such Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act from and against any and all
losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred by any Underwriter or any such
controlling person in connection with investigating or defending any such action
or claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any amendment thereof,
any preliminary prospectus or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto), or caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages or liabilities are caused by any
such untrue statement or omission or alleged untrue statement or omission based
upon information relating to any Underwriter furnished to the Company in writing
by such Underwriter expressly for use therein.

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<PAGE>

the fees and disbursements of such counsel related to such proceeding. In any
such proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all such indemnified parties and that all such fees
and expenses shall be reimbursed as they are incurred. Such firm shall be
designated in writing by the Representatives, in the case of parties indemnified
pursuant to paragraph (a) above, and by the Company, in the case of parties
indemnified pursuant to paragraph (b) above. The indemnifying party shall not
be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the second and third
sentences of this paragraph, the indemnifying party agrees that it shall be
liable for any settlement of any proceeding effected without its written consent
if (i) such settlement is entered into more than 30 days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying party
shall not have reimbursed the indemnified party in accordance with such request
prior to the date of such settlement. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.

(d) To the extent the indemnification provided for in paragraph (a)
or (b) of this Section 6 is unavailable to an indemnified party or insufficient
in respect of any losses, claims, damages or liabilities referred to therein,
then each indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as

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is appropriate to reflect the relative benefits received by the Company on the
one hand and the Underwriters on the other hand from the offering of the Shares
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company on the one hand and of the Underwriters on the other hand in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriters on the other hand in connection with the offering of the
Shares shall be deemed to be in the same respective proportions as the net
proceeds from the offering of such Shares (before deducting expenses) received
by the Company and the total underwriting discounts and commissions received by
the Underwriters, in each case as set forth in the table on the cover of the
Prospectus Supplement, bear to the aggregate public offering price of the
Shares. The relative fault of the Company on the one hand and of the
Underwriters on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Underwriters' respective obligations to contribute
pursuant to this Section 6 are several in proportion to the respective number of
Shares they have purchased hereunder, and not joint.

(e) The Company and the Underwriters agree that it would not be just
or equitable if contribution pursuant to this Section 6 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in paragraph (d) above. The amount paid or
payable by an indemnified party as a result of the losses, claims, damages and
liabilities referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 6, no Underwriter shall be required to contribute any
amount in excess of the amount by which the total amount of Shares underwritten
by it and distributed to the public were offered to the public exceeds the
amount of any damages that such Underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The remedies
provided for in this Section 6 are not exclusive and shall not limit any rights
or

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remedies which may otherwise be available to any indemnified party at law or in
equity.

7. TERMINATION. This Agreement shall be subject to termination, by
notice given by the Representatives to the Company, if (a) after the execution
and delivery of the Underwriting Agreement and prior to the Closing Date or the
Option Closing Date, as the case may be (i) trading generally shall have been
suspended or materially limited on or by, as the case may be, any of the New
York Stock Exchange, the American Stock Exchange, the National Association of
Securities Dealers, Inc., the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities, or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in the judgment of the Representatives, is material and adverse and (b) in
the case of any of the events specified in clauses (a)(i) through (iv), such
event, singly or together with any other such event, makes it, in the judgment
of the Representatives, impracticable to market the Shares on the terms and in
the manner contemplated in the Prospectus. This Agreement may also be
terminated at any time prior to the Closing Date or the Option Closing Date, as
the case may be, if in the judgment of the Representatives the subject matter of
any amendment or supplement to the Registration Statement or Prospectus prepared
and furnished by the Company and its subsidiaries, taken as a whole, reflects a
material adverse change in the business, properties or financial condition of
the Company and its subsidiaries, taken as a whole, which renders it either
inadvisable to proceed with such offering, if any, or inadvisable to proceed
with the delivery of the Shares to be purchased hereunder.

8. DEFAULTING UNDERWRITERS. If, on the Closing Date or the Option
Closing Date, as the case may be, any one or more of the Underwriters shall fail
or refuse to purchase the Shares that it has or they have agreed to purchase
hereunder on such date, and the aggregate number of Shares which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase is not more
than one-tenth of the aggregate number of Shares to be purchased on such date,
the other Underwriters shall be obligated severally in the proportions that the
number of Shares set forth opposite their respective names in the Underwriting
Agreement bears to the aggregate number of Shares set forth opposite the names
of all such non-defaulting Underwriters, or in such other proportions as the
Representatives may specify, to purchase the Shares which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase on such
date, PROVIDED that in no event shall the number of Shares that any Underwriter
has agreed to purchase pursuant to this Agreement be increased pursuant to

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this Section 8 by an amount in excess of one-ninth of such number of Shares
without the written consent of such Underwriter. If, on the Closing Date or the
Option Closing Date, as the case may be, any Underwriter or Underwriters shall
fail or refuse to purchase the Shares that it has or they have agreed to
purchase and the aggregate amount of Shares with respect to which such default
occurs is more than one-tenth of the aggregate number of Shares to be purchased
on such date, and arrangements satisfactory to the Representatives and the
Company for the purchase of such Shares are not made within 36 hours after such
default, the Underwriting Agreement shall terminate without liability on the
part of any non-defaulting Underwriter or the Company. In any such case either
the Representatives or the Company shall have the right to postpone the Closing
Date or the Option Closing Date, as the case may be, but in no event for longer
than seven days, in order that the required changes, if any, in the Registration
Statement and in the Prospectus or in any other documents or arrangements may be
effected. Any action taken under this paragraph shall not relieve any
defaulting Underwriter from liability in respect of any default of such
Underwriter under the Underwriting Agreement.

If the Underwriting Agreement shall be terminated by the Underwriters,
or any of them, because of any failure or refusal on the part of the Company to
comply with the terms or to fulfill any of the conditions of the Underwriting
Agreement, or if for any reason the Company shall be unable to perform its
obligations under the Underwriting Agreement, the Company will reimburse the
Underwriters or such Underwriters as have so terminated the Underwriting
Agreement with respect to themselves, severally, for all out-of-pocket expenses
(including the fees and disbursements of their counsel) reasonably incurred by
such Underwriters in connection with the Underwriting Agreement or the offering
of the Shares.

-20-

<PAGE>

officers, directors or controlling persons referred to in Section 6 and delivery
of and payment for the Shares.

12. APPLICABLE LAW. The Underwriting Agreement shall be governed by
and construed in accordance with the internal laws of the State of New York.

13. HEADINGS. The headings of the sections of the Underwriting
Agreement have been inserted for convenience of reference only and shall not be
deemed a part of the Underwriting Agreement.

14. NOTICES. All communications hereunder will be in writing and, if
sent to the Underwriters, will be mailed, delivered or telecopied and confirmed
to Morgan Stanley & Co. Incorporated at 1251 Avenue of the Americas, New York,
New York 10020, Attn: Mr. Jay D. Hatfield or, if sent to the Company, will be
mailed, delivered or telecopied and confirmed to it at 33 Third Street SE,
Huron, South Dakota, 57350, Attn: Mr. Richard R. Hylland, Vice President --
Finance & Corporate Development, Telecopy No: (605) 353-8286.

15. DEFINITION OF "SUBSIDIARY". The term "subsidiary," as used in
this Agreement with respect to the Company, shall be deemed to refer only to
those direct or indirect subsidiaries of the Company which would qualify
(including on a pro forma basis) as "significant subsidiaries" pursuant to Rule
405 under the Securities Act.

-21-

<PAGE>

Please confirm your agreement by having an authorized officer sign a
copy of the Underwriting Agreement in the space set forth below.

Very truly yours,

MORGAN STANLEY & CO. INCORPORATED
PAINEWEBBER INCORPORATED

Acting severally on behalf of themselves and the
several Underwriters named herein

By: MORGAN STANLEY & CO. INCORPORATED

By: /s/ Jeffrey R. Holzschuh
----------------------------------
Name: Jeffrey R. Holzschuh
Title: Managing Director

Accepted, August 16, 1995

NORTHWESTERN PUBLIC SERVICE COMPANY

By: /s/ M. D. Lewis
---------------------------------
Name: M. D. Lewis
Title: President

<PAGE>

SCHEDULE I
----------

Number
Name of Underwriter of Shares
- ------------------- ----------
<S> <C>
Morgan Stanley & Co. Incorporated. . . . . . . . . . . . . . 450,000
PaineWebber Incorporated . . . . . . . . . . . . . . . . . . 450,000
Dain Bosworth Incorporated . . . . . . . . . . . . . . . . . 50,000
Dean Witter Reynolds Inc.. . . . . . . . . . . . . . . . . . 50,000
First of Michigan Corporation. . . . . . . . . . . . . . . . 50,000
NatWest Securities Limited . . . . . . . . . . . . . . . . . 50,000
Piper Jaffray Inc. . . . . . . . . . . . . . . . . . . . . . 50,000
Prudential Securities Incorporated . . . . . . . . . . . . . 50,000
---------

Total . . . . . . . . . . . . . . . . . . . . . . . . . 1,200,000
---------
---------
</TABLE>

<PAGE>

PREFERRED SECURITIES GUARANTEE AGREEMENT

<PAGE>

CROSS-REFERENCE TABLE
FOR THE GUARANTEE AGREEMENT

Section Of Section Of
Trust Indenture Act Guarantee
Of 1939, As Amended Agreement
- ------------------- ---------
Section 310(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4.1(a)
310(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(c), 2.8
310(c) . . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
Section 311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.2(b)
311(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.2(b)
311(c) . . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
Section 312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.2(a)
312(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.2(b)
313. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
Section 314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4
314(b) . . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
314(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
314(d) . . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
314(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.5, 3.2
314(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.1, 3.2
Section 315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3.1(d)
315(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7
315(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1
315(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3.1(d)
Section 316(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.4(a), 2.6
316(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3
316(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2
Section 317(a) . . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
317(b) . . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
Section 318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.1(b)
318(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1
318(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.1(a)

- ----------
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
a part of the Guarantee Agreement.

<PAGE>

TABLE OF CONTENTS

ARTICLE I

Definitions and Interpretation

Page
----

SECTION 1.1. Definitions and Interpretation. . . . . . . . . . . . . . . . . 2
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Common Securities . . . . . . . . . . . . . . . . . . . . . . . 2
Covered Person. . . . . . . . . . . . . . . . . . . . . . . . . 2
Event of Default. . . . . . . . . . . . . . . . . . . . . . . . 2
Guarantee Payments. . . . . . . . . . . . . . . . . . . . . . . 2
Holder. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Indemnified Person. . . . . . . . . . . . . . . . . . . . . . . 3
Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Majority in Liquidation amount of the Securities. . . . . . . . 3
Officers' Certificate . . . . . . . . . . . . . . . . . . . . . 3
Person. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Preferred Guarantee Trust . . . . . . . . . . . . . . . . . . . 4
Responsible Officer . . . . . . . . . . . . . . . . . . . . . . 4
Successor Preferred Guarantee Trustee . . . . . . . . . . . . . 4
Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . 4

ARTICLE II

Trust Indenture Act

SECTION 2.1. Trust Indenture Act; Application. . . . . . . . . . . . . . . . 5

SECTION 2.2. Lists of Holders of Securities. . . . . . . . . . . . . . . . . 5

SECTION 2.3. Reports by the Preferred Trust Guarantee. . . . . . . . . . . . 5

SECTION 2.4. Periodic Reports to Preferred Guarantee Trustee . . . . . . . . 5

SECTION 2.5. Evidence of Compliance with Conditions Precedent. . . . . . . . 6

SECTION 2.6. Event of Default; Waiver. . . . . . . . . . . . . . . . . . . . 6

SECTION 2.7. Event of Default; Notice. . . . . . . . . . . . . . . . . . . . 6

SECTION 2.8. Conflicting Interests . . . . . . . . . . . . . . . . . . . . . 7

- ----------

<PAGE>

Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Guarantee Agreement.

-i-
<PAGE>

Page
----

ARTICLE III

Powers, Duties, Rights of
Preferred Guarantee Trustee

SECTION 3.1. Powers and Duties of the Preferred Guarantee
Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . 7

SECTION 3.2. Certain Rights of Preferred Guarantee Trustee . . . . . . . . . 9

SECTION 3.3. Not Responsible for Recitals or Issuance of
Guarantee. . . . . . . . . . . . . . . . . . . . . . . . .11

ARTICLE IV

Preferred Guarantee Trustee

SECTION 4.1. Preferred Guarantee Trustee; Eligibility. . . . . . . . . . . .11

SECTION 4.2 Appointment, Removal and Resignation of
Preferred Guarantee Trustees . . . . . . . . . . . . . . .12

ARTICLE V

Guarantee

SECTION 5.1. Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . .13

SECTION 5.2. Waiver of Notice and Demand . . . . . . . . . . . . . . . . . .13

SECTION 5.3. Obligations Not Affected. . . . . . . . . . . . . . . . . . . .13

SECTION 5.4. Rights of Holders . . . . . . . . . . . . . . . . . . . . . . .14

SECTION 5.5. Guarantee of Payment. . . . . . . . . . . . . . . . . . . . . .15

SECTION 5.6. Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . .15

SECTION 5.7. Independent Obligations . . . . . . . . . . . . . . . . . . . .15

ARTICLE VI

Limitations of Transactions; Subordination

SECTION 6.1. Limitation of Transactions. . . . . . . . . . . . . . . . . . .15

<PAGE>

SECTION 6.2. Ranking . . . . . . . . . . . . . . . . . . . . . . . . . . . .16

- ----------

Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Guarantee Agreement.

-ii-

<PAGE>

Page
----

ARTICLE VII

Termination

SECTION 7.1. Termination . . . . . . . . . . . . . . . . . . . . . . . . . .16

ARTICLE VIII

Indemnification

SECTION 8.1. Exculpation . . . . . . . . . . . . . . . . . . . . . . . . . .16

SECTION 8.2. Indemnification . . . . . . . . . . . . . . . . . . . . . . . .17

ARTICLE IX

Miscellaneous

SECTION 9.1. Successors and Assigns. . . . . . . . . . . . . . . . . . . . .18

SECTION 9.2. Amendments. . . . . . . . . . . . . . . . . . . . . . . . . . .18

SECTION 9.3. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . .18

SECTION 9.4. Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . .19

SECTION 9.5. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . .19

TESTIMONIUM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19

SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19

<PAGE>

- ----------

Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Guarantee Agreement.

-iii-

<PAGE>

PREFERRED SECURITIES GUARANTEE AGREEMENT

DATED AS OF AUGUST 1, 1995

This GUARANTEE AGREEMENT ("Guarantee Agreement"), dated as of August 1, 1995, is
executed and delivered by Northwestern Public Service Company, a Delaware
corporation (the "Guarantor"), and Wilmington Trust Company, a Delaware banking
corporation, not in its individual capacity but solely as trustee (the
"Preferred Guarantee Trustee"), for the benefit of the Holders (as defined
herein) from time to time of the Preferred Securities (as defined herein) of
NWPS Capital Financing I, a Delaware statutory business trust (the "Issuer").

WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
"Declaration"), dated as of August 1, 1995, among the trustees of the Issuer
named therein, the Guarantor as Sponsor and the holders from time to time of
undivided beneficial interests in the assets of the Issuer, the Issuer is
issuing on the date hereof $32,500,000 aggregate stated liquidation amount of
Preferred Securities designated the 8 1/8% Trust Preferred Capital Securities
(the "Preferred Securities");

WHEREAS, as incentive for the Holders to purchase the Preferred Securities, the
Guarantor desires irrevocably and unconditionally to agree, to the extent set
forth in this Guarantee Agreement, to pay to the Holders of the Preferred
Securities the Guarantee Payments (as defined herein) and to make certain other
payments on the terms and conditions set forth herein;

WHEREAS, the Guarantor is also executing and delivering a guarantee agreement
(the "Common Securities Guarantee Agreement") in substantially identical terms
to this Guarantee Agreement for the benefit of the holders of the Common
Securities (as defined herein) except that if an Event of Default (as defined in
the Indenture (as defined herein)), has occurred and is continuing, the rights
of holders of the Common Securities to receive Guarantee Payments under the
Common Securities Guarantee are subordinated to the rights of Holders of
Preferred Securities to receive Guarantee Payments under this Guarantee
Agreement;

NOW, THEREFORE, in consideration of the purchase by each Holder of Preferred
Securities, which purchase the Guarantor hereby agrees shall benefit the
Guarantor, the Guarantor executes and delivers this Guarantee Agreement for the
benefit of the Holders.

<PAGE>

ARTICLE I
DEFINITIONS AND INTERPRETATION

SECTION 1.1. Definitions and Interpretation.

In this Guarantee Agreement, unless the context otherwise requires:

(a) Capitalized terms used in this Guarantee Agreement but not defined in
the preamble above or otherwise in this Guarantee Agreement have the
respective meanings assigned to them in the Declaration as in effect
on the date hereof;

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

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

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

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

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

"Affiliate" has the same meaning as given to that term in Rule 405 promulgated
under the Securities Act of 1933, as amended, or any successor rule thereunder.

"Common Securities" means the securities representing common undivided
beneficial interests in the assets of the Issuer.

"Covered Person" means any Holder or beneficial owner of Preferred Securities.

"Event of Default" means a default by the Guarantor on any of its payment or
other obligations under this Guarantee Agreement.

"Guarantee Payments" means the following payments or distributions, without
duplication, with respect to the Preferred Securities, to the extent not paid or
made by the Issuer: (i) any accrued and unpaid Distributions (as defined in the
Declaration) that are required to be paid on such Preferred Securities to the
extent the Guarantor has made a payment of principal or interest on the

-2-
<PAGE>

Debentures (as defined in the Declaration), (ii) the redemption price, including
all accrued and unpaid Distributions to the date of redemption (the "Redemption
Price") to the extent the Guarantor has made a payment of principal or interest
on the Debentures, with respect to any Preferred Securities called for
redemption by the Issuer, and (iii) upon a voluntary or involuntary dissolution,
winding-up or termination of the Issuer (other than in connection with the
distribution of Debentures to the Holders in exchange for Preferred Securities
as provided in the Declaration or a redemption of all the Preferred Securities),
in the case of this clause (iii), or in an amount equal to the lesser of (a) the
aggregate of the liquidation amount and all accrued and unpaid Distributions on
the Preferred Securities to the date of payment to the extent the Issuer has
funds legally available therefor, and (b) the amount of assets of the Issuer
remaining available for distribution to Holders in liquidation of the Issuer (in
either case, the "Liquidation Distribution"). If an event of default under the
Indenture has occurred and is continuing, the rights of holders of the Common
Securities to receive payments under the Common Securities Guarantee Agreement
are subordinated to the rights of Holders of Preferred Securities to receive
Guarantee Payments under this Preferred Securities Guarantee Agreement.

"Holder" shall mean any holder, as registered on the books and records of the
Issuer of any Preferred Securities; provided, however, that, in determining
whether the holders of the requisite percentage of Preferred Securities have
given any request, notice, consent or waiver hereunder, "Holder" shall not
include the Guarantor or any Affiliate of the Guarantor.

"Indemnified Person" means the Preferred Guarantee Trustee, any Affiliate of the
Preferred Guarantee Trustee, or any officers, directors, shareholders, members,
partners, employees, representatives or agents of the Preferred Guarantee
Trustee.

"Indenture" means the Indenture dated as of August 1, 1995, between the
Guarantor (the "Debenture Issuer") and The Chase Manhattan Bank (N.A.), as
trustee and any indenture supplemental thereto pursuant to which certain
subordinated debt securities of the Debenture Issuer are to be issued to the
Property Trustee of the Issuer.

"Majority in liquidation amount of the Securities" means, except as provided by
the Trust Indenture Act, a vote by Holder(s) of Preferred Securities, voting
separately as a class, of more than 50% of the liquidation amount (including the
stated amount that would be paid on redemption, liquidation or otherwise, plus
accrued and unpaid Distributions to the date upon which the voting percentages
are determined) of all Preferred Securities.

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

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

-3-
<PAGE>

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

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

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

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

"Preferred Guarantee Trustee" means Wilmington Trust Company, in its capacity as
trustee hereunder and not in its individual capacity, until a Successor
Preferred Guarantee Trustee has been appointed and has accepted such appointment
pursuant to the terms of this Guarantee Agreement and thereafter means each such
Successor Preferred Guarantee Trustee.

"Responsible Officer" means, with respect to the Preferred Guarantee Trustee,
any vice-president, any assistant vice-president, the secretary, any assistant
secretary, the treasurer, any assistant treasurer, any trust officer or
assistant trust officer or any other officer of the Corporate Trust Department
of the Preferred Guarantee Trustee customarily performing functions similar to
those performed by any of the above designated officers and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of that officer's knowledge of and familiarity with
the particular subject.

"Successor Preferred Guarantee Trustee" means a successor Preferred Guarantee
Trustee possessing the qualifications to act as Preferred Guarantee Trustee
under Section 4.1.

"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.

-4-
<PAGE>

ARTICLE II
TRUST INDENTURE ACT

SECTION 2.1. Trust Indenture Act; Application.

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

(b) if and to the extent that any provision of this Guarantee Agreement
limits, qualifies or conflicts with the duties imposed by Section 310
to 317, inclusive, of the Trust Indenture Act, such imposed duties
shall control.

SECTION 2.2. Lists of Holders of Securities.

(a) The Guarantor shall provide the Preferred Guarantee Trustee with a
list, in such form as the Preferred Guarantee Trustee may reasonably
require, of the name and addresses of the Holders of the Preferred
Securities ("List of Holders") as of such date, (i) within 14 days
after January 1 and June 30 of each year, and (ii) at any other time
within 30 days of receipt by the Guarantor of a written request for a
List of Holders as of a date no more than 14 days before such List of
Holders is given to the Preferred Guarantee Trustee, provided that the
Guarantor shall not be obligated to provide such List of Holders at
any time the List of Holders does not differ from the most recent List
of Holders given to the Preferred Guarantee Trustee by the Guarantor.
The Preferred Guarantee Trustee may destroy any List of Holders
previously given to it on receipt of a new List of Holders.

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

SECTION 2.3. Reports by the Preferred Guarantee Trustee.

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

SECTION 2.4. Periodic Reports to Preferred Guarantee Trustee.

The Guarantor shall provide to the Preferred Guarantee Trustee such documents,
reports and information as required by Section 314 (if any) and the compliance
certificate required by Section

-5-
<PAGE>

314 of the Trust Indenture Act in the form, in the manner and at the times
required by Section 314 of the Trust Indenture Act.

SECTION 2.5. Evidence of Compliance with Conditions Precedent.

The Guarantor shall provide to the Preferred Guarantee Trustee such evidence of
compliance with any conditions precedent, if any, provided for in this Guarantee
Agreement that relate to any of the matters set forth in Section 314(c) of the
Trust Indenture Act. Any certificate or opinion required to be given by an
officer pursuant to Section 314(c)(1) may be given in the form of an Officers'
Certificate.

SECTION 2.6. Events of Default; Waiver.

The Holders of a Majority in liquidation amount of Preferred Securities may, by
vote, on behalf of the Holders of all of the Preferred Securities, waive any
past Event of Default and its consequences. Upon such waiver, any such Event of
Default shall cease to exist, and any Event of Default arising therefrom shall
be deemed to have been cured, for every purpose of this Guarantee Agreement, but
no such waiver shall extend to any subsequent or other default or Event of
Default or impair any right consequent thereon.

SECTION 2.7. Event of Default; Notice

(a) The Preferred Guarantee Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail, first class
postage prepaid, to the Holders of the Preferred Securities, notices
of all Events of Default known to the Preferred Guarantee Trustee,
unless such defaults have been cured before the giving of such notice,
provided that the Preferred Guarantee Trustee shall be protected in
withholding such notice if and so long as the board of directors, the
executive committee, or a trust committee of directors and/or
Responsible Officers of the Preferred Guarantee Trustee in good faith
determines that the withholding of such notice is in the interests of
the Holders of the Preferred Securities.

(b) The Preferred Guarantee Trustee shall not be deemed to have knowledge
of any Event of Default unless the Preferred Guarantee Trustee shall
have received written notice, or a Responsible Officer charged with
the administration of the Declaration shall have obtained written
notice, of such Event of Default.

SECTION 2.8 Conflicting Interests.

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

-6-
<PAGE>

ARTICLE III
POWERS, DUTIES AND RIGHTS OF
PREFERRED GUARANTEE TRUSTEE

SECTION 3.1. Powers and Duties of the Preferred Guarantee Trustee.

(a) This Guarantee Agreement shall be held by the Preferred Guarantee
Trustee for the benefit of the Holders of the Preferred Securities,
and the Preferred Guarantee Trustee shall not transfer this Guarantee
Agreement to any Person except a Holder of Preferred Securities
exercising his or her rights pursuant to Section 5.4(b) or to a
Successor Preferred Guarantee Trustee on acceptance by such Successor
Preferred Guarantee Trustee of its appointment to act as Successor
Preferred Guarantee Trustee. The right, title and interest of the
Preferred Guarantee Trustee shall automatically vest in any Successor
Preferred Guarantee Trustee, and such vesting and cessation of title
shall be effective whether or not conveyancing documents have been
executed and delivered pursuant to the appointment of such Successor
Preferred Guarantee Trustee.

(b) If an Event of Default has occurred and is continuing, the Preferred
Guarantee Trustee shall enforce this Guarantee Agreement for the
benefit of the Holders of the Preferred Securities.

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

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

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

(A) the duties and obligations of the Preferred Guarantee
Trustee shall be determined solely by the express provisions
of this Guarantee

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<PAGE>

Agreement, and the Preferred Guarantee Trustee shall not be
liable except for the performance of such duties and
obligations as are specifically set forth in this Guarantee
Agreement, and no implied covenants or obligations shall be
read into this Guarantee Agreement against the Preferred
Guarantee Trustee; and

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

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

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

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

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<PAGE>

SECTION 3.2. Certain Rights of Preferred Guarantee Trustee.

(a) Subject to the provisions of Section 3.1:

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

(ii) any direction or act of the Guarantor contemplated by this
Guarantee Agreement shall be sufficiently evidenced by a
Direction or an Officers' Certificate;

(iii) whenever, in the administration of this Guarantee Agreement, the
Preferred Guarantee Trustee shall deem it desirable that a matter
be proved or established before taking, suffering or omitting any
action hereunder, the Preferred Guarantee Trustee (unless other
evidence is herein specifically prescribed) may, in the absence
of bad faith on its part, request and rely upon an Officers'
Certificate which, upon receipt of such request, shall be
promptly delivered by the Guarantor;

(iv) the Preferred Guarantee Trustee shall have no duty to see to any
recording, filing or registration of any instrument (or any
rerecording, refiling or registration thereof);

(v) the Preferred Guarantee Trustee may consult with counsel, and the
written advice or opinion of such counsel with respect to legal
matters shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted by it
hereunder in good faith and in accordance with such advice or
opinion. Such counsel may be counsel to the Guarantor or any of
its Affiliates and may include any of its employees. The
Preferred Guarantee Trustee shall have the right at any time to
seek instructions concerning the administration of this Guarantee
Agreement from any court of competent jurisdiction;

(vi) the Preferred Guarantee Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this
Guarantee Agreement at the request or direction of any Holder,
unless such Holder shall have provided to the Preferred Guarantee
Trustee such adequate security and indemnity as would satisfy a
reasonable person in the position of the Preferred Guarantee
Trustee, against the costs, expenses (including attorneys' fees
and expenses) and liabilities that might be incurred by it in
complying with

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<PAGE>

such request or direction, including such reasonable advances as
may be requested by the Preferred Guarantee Trustee; provided
that, nothing contained in this Section 3.2(a)(vi) shall be taken
to relieve the Preferred Guarantee Trustee, upon the occurrence
of an Event of Default, of its obligation to exercise the rights
and powers vested in it by this Guarantee Agreement;

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

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

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

(x) whenever in the administration of this Guarantee Agreement the
Preferred Guarantee Trustee shall deem it desirable to receive
instructions with respect to enforcing any remedy or right or
taking any other action hereunder, the Preferred Guarantee
Trustee (i) may request instructions from the Holders of the
Preferred Securities, (ii) may refrain from enforcing such remedy
or right or taking such other action until such instructions are
received, and (iii) shall be protected in acting in accordance
with such instructions.

(b) No provision of this Guarantee Agreement shall be deemed to impose any
duty or obligation on the Preferred Guarantee Trustee to perform any
act or acts or exercise any right, power, duty or obligation conferred
or imposed on it in any

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<PAGE>

jurisdiction in which it shall be illegal, or in which the Preferred
Guarantee Trustee shall be unqualified or incompetent in accordance
with applicable law, to perform any such act or acts or to exercise any
such right, power, duty or obligation. No permissive power or
authority available to the Preferred Guarantee Trustee shall be
construed to be a duty.

SECTION 3.3. Not Responsible for Recitals or Issuance of Guarantee.

The recitals contained in this Guarantee shall be taken as the statements of the
Guarantor, and the Preferred Guarantee Trustee does not assume any
responsibility for their correctness. The Preferred Guarantee Trustee makes no
representation as to the validity or sufficiency of this Guarantee Agreement.

ARTICLE IV
PREFERRED GUARANTEE TRUSTEE

SECTION 4.1. Preferred Guarantee Trustee; Eligibility.

(a) There shall at all times be a Preferred Guarantee Trustee which shall:

(i) not be an Affiliate of the Guarantor; and

(ii) be a corporation organized and doing business under the laws of
the United States of America or any State or Territory thereof
or of the District of Columbia, or a corporation or Person
permitted by the Securities and Exchange Commission to act as an
institutional trustee under the Trust Indenture Act, authorized
under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least 50 million U.S. dollars
($50,000,000), and subject to supervision or examination by
Federal, State, Territorial or District of Columbia authority.
If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the
supervising or examining authority referred to above, then, for
the purposes of this Section 4.1(a)(ii), the combined capital
and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent
report of condition so published.

(b) If at any time the Preferred Guarantee Trustee shall cease to be
eligible to so act under Section 4.1(a), the Preferred Guarantee
Trustee shall immediately resign in the manner and with the effect set
out in Section 4.2(c).

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<PAGE>

(c) If the Preferred Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the
Trust Indenture Act, the Preferred Guarantee Trustee and Guarantor
shall in all respects comply with the provisions of Section 310(b) of
the Trust Indenture Act.

SECTION 4.2. Appointment, Removal and Resignation of Preferred Guarantee
Trustees.

(a) Subject to Section 4.2(b), the Preferred Guarantee Trustee may be
appointed or removed without cause at any time by the Guarantor.

(b) The Preferred Guarantee Trustee shall not be removed in accordance with
Section 4.2(a) until a Successor Preferred Guarantee Trustee has been
appointed and has accepted such appointment by written instrument
executed by such Successor Preferred Guarantee Trustee and delivered to
the Guarantor.

(c) The Preferred Guarantee Trustee appointed to office shall hold office
until a Successor Preferred Guarantee Trustee shall have been appointed
or until its removal or resignation. The Preferred Guarantee Trustee
may resign from office (without need for prior or subsequent
accounting) by an instrument in writing executed by the Preferred
Guarantee Trustee and delivered to the Guarantor, which resignation
shall not take effect until a Successor Preferred Guarantee Trustee has
been appointed and has accepted such appointment by instrument in
writing executed by such Successor Preferred Guarantee Trustee and
delivered to the Guarantor and the resigning Preferred Guarantee
Trustee.

(d) If no Successor Preferred Guarantee Trustee shall have been appointed
and accepted appointment as provided in this Section 4.2 within 60 days
after delivery to the Guarantor of an instrument of resignation, the
resigning Preferred Guarantee Trustee may petition a court of competent
jurisdiction for appointment of a Successor Preferred Guarantee
Trustee. Such court may thereupon, after prescribing such notice, if
any, as it may deem proper, appoint a Successor Preferred Guarantee
Trustee.

ARTICLE V
GUARANTEE

SECTION 5.1. Guarantee.

The Guarantor irrevocably and unconditionally agrees to pay in full to the
Holders the Guarantee Payments (without duplication of amounts theretofore paid
by the Issuer), as and when due, regardless of any defense, right of set-off or
counterclaim that the Issuer may have or assert. The

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<PAGE>

Guarantor's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Guarantor to the Holders or by causing
the Issuer to pay such amounts to the Holders.

SECTION 5.2. Waiver of Notice and Demand.

The Guarantor hereby waives notice of acceptance of this Guarantee Agreement and
of any liability to which it applies or may apply, presentment, demand for
payment, any right to require a proceeding first against the Issuer or any other
Person before proceeding against the Guarantor, protest, notice of nonpayment,
notice of dishonor, notice of redemption and all other notices and demands.

SECTION 5.3. Obligations Not Affected

The obligations, covenants, agreements and duties of the Guarantor under this
Guarantee Agreement shall in no way be affected or impaired by reason of the
happening from time to time of any of the following:

(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied
agreement, covenant, term or condition relating to the Preferred
Securities to be performed or observed by the Issuer;

(b) the extension of time for the payment by the Issuer of all or any
portion of the Distributions, Redemption Price, Liquidation
Distribution or any other sums payable under the terms of the Preferred
Securities or the extension of time for the performance of any other
obligation under, arising out of, or in connection with, the Preferred
Securities (other than an extension of time for payment of
Distributions, Redemption Price, Liquidation Distribution or other sum
payable that results from the extension of any interest payment period
on the Debentures or any extension of the maturity date of the
Debentures permitted by the Indenture);

(c) any failure, omission, delay or lack of diligence on the part of the
Holders to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Holders pursuant to the terms of the Preferred
Securities, or any action on the part of the Issuer granting indulgence
or extension of any kind;

(d) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the
Issuer or any of the assets of the Issuer;

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<PAGE>

(e) any invalidity of, or defect or deficiency in the Preferred Securities;

(f) the settlement or compromise of any obligation guaranteed hereby or
hereby incurred; or

(g) any other circumstance whatsoever that might otherwise constitute a
legal or equitable discharge or defense of a guarantor, it being the
intent of this Section 5.3 that the obligations of the Guarantor
hereunder shall be absolute and unconditional under any and all
circumstances.

There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any
of the foregoing.

SECTION 5.4. Rights of Holders.

(a) The Holders of a Majority in liquidation amount of the Preferred
Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Preferred
Guarantee Trustee in respect of this Guarantee Agreement or exercising
any trust or power conferred upon the Preferred Guarantee Trustee under
this Guarantee Agreement.

(b) If the Preferred Guarantee Trustee fails to enforce this Guarantee
Agreement, any Holder of Preferred Securities may, after such Holder's
written request to the Preferred Guarantee Trustee to enforce this
Guarantee Agreement, institute a legal proceeding directly against the
Guarantor to enforce its rights under this Guarantee Agreement, without
first instituting a legal proceeding against the Issuer, the Preferred
Guarantee Trustee or any other Person.

SECTION 5.5. Guarantee of Payment.

This Guarantee Agreement creates a guarantee of payment and not of collection.
The Guarantor agrees that this Guarantee Agreement shall not be discharged
except by payment of the Guarantee Payments in full and by complete performance
of all obligations of the Guarantor contained in this Guarantee Agreement.

SECTION 5.6. Subrogation.

The Guarantor shall be subrogated to all (if any) rights of the Holders of
Preferred Securities against the Issuer in respect of any amounts paid to such
Holders by the Guarantor under this Guarantee Agreement; provided, however, that
the Guarantor shall not (except to the extent required by mandatory provisions
of law) be entitled to enforce or exercise any right that it may acquire by way
of subrogation or any indemnity, reimbursement or other agreement, in all cases

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<PAGE>

as a result of payment under this Guarantee Agreement, if, at the time of any
such payment, any amounts are due and unpaid under this Guarantee Agreement. If
any amount shall be paid to the Guarantor in violation of the preceding
sentence, the Guarantor agrees to hold such amount in trust for the Holders and
to pay over such amount to the Holders.

SECTION 5.7. Independent Obligations.

The Guarantor acknowledges that its obligations hereunder are independent of the
obligations of the Issuer with respect to the Preferred Securities, and that the
Guarantor shall be liable as principal and as debtor hereunder to make Guarantee
Payments pursuant to the terms of this Guarantee Agreement notwithstanding the
occurrence of any event referred to in subsections (a) through (g), inclusive,
of Section 5.3 hereof.

ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION

SECTION 6.1. Limitation of Transactions.

So long as any Preferred Securities remain outstanding, if there shall have
occurred an Event of Default, or an Event of Default under the Declaration, or
if the Guarantor has given notice of its selection of an Extension Period (as
defined in the Indenture) and such period or any extension thereof, is
continuing, then, in each case, (a) the Guarantor shall not declare or pay any
dividend on, or make any distribution with respect to, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of its capital stock
and (b) the Guarantor shall not make any payment of interest, principal or
premium, if any, on or repay, repurchase or redeem any debt securities issued by
the Guarantor which rank pari passu with or junior to the Debentures; provided
that the foregoing restriction in this Section 6.1 (a) shall not apply to any
stock dividends paid by the Guarantor where the dividend stock is the same stock
as that on which the dividend is being paid or to any payment on this Guarantee.
In addition, so long as any Preferred Securities remain outstanding, the
Guarantor (i) will remain the sole direct or indirect owner of all the
outstanding Common Securities and shall not cause or permit the Common
Securities to be transferred except to the extent such transfer is permitted
under the Declaration, provided that any permitted successor of the Guarantor
under the Indenture may succeed to the Guarantor's ownership of the Common
Securities and (ii) will use its reasonable efforts to cause the Trust to
continue to be treated as a grantor trust for United States federal income tax
purposes except in connection with a distribution of Debentures.

SECTION 6.2. Ranking.

This Guarantee Agreement will constitute an unsecured obligation of the
Guarantor and will rank (i) subordinate and junior in right of payment to all
other liabilities of the Guarantor, including

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<PAGE>

the Debentures, (ii) pari passu with the most senior preferred or preference
stock now or hereafter issued by the Guarantor and with any guarantee now or
hereafter entered into by the Guarantor in respect of any preferred or
preference stock of any Affiliate of the Guarantor, and (iii) senior to the
Guarantor's common stock.

ARTICLE VII
TERMINATION

SECTION 7.1. Termination.

This Guarantee Agreement shall terminate upon (i) full payment of the Redemption
Price of all Securities, (ii) the distribution of the Debentures to the Holders
of all of the Preferred Securities or (iii) full payment of the amounts payable
in accordance with the Declaration upon liquidation of the Issuer.
Notwithstanding the foregoing, this Guarantee Agreement will continue to be
effective or will be reinstated, as the case may be, if at any time any Holder
of Preferred Securities must restore payment of any sums paid under the
Preferred Securities or under this Preferred Securities Guarantee.

ARTICLE VIII
INDEMNIFICATION

SECTION 8.1. Exculpation.

(a) No Indemnified Person shall be liable, responsible or accountable in
damages or otherwise to the Guarantor or any Covered Person for any
loss, damage or claim incurred by reason of any act or omission
performed or omitted by such Indemnified Person in good faith in
accordance with this Guarantee Agreement and in a manner that such
Indemnified Person reasonably believed to be within the scope of the
authority conferred on such Indemnified Person by this Guarantee
Agreement or by law, except that an Indemnified Person shall be liable
for any such loss, damage or claim incurred by reason of such
Indemnified Person's negligence or willful misconduct with respect to
such acts or omissions.

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

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<PAGE>

the existence and amount of assets from which Distributions to Holders
of Preferred Securities might properly be paid.
SECTION 8.2. Indemnification.

(a) To the fullest extent permitted by applicable law, the Guarantor shall
indemnify and hold harmless each Indemnified Person from and against
any loss, damage or claim incurred by such Indemnified Person by reason
of any act or omission performed or omitted by such Indemnified Person
in good faith in accordance with this Guarantee Agreement and in a
manner such Indemnified Person reasonably believed to be within the
scope of authority conferred on such Indemnified Person by this in
accordance with this Guarantee Agreement, except that no Indemnified
Person shall be entitled to be indemnified in respect of any loss,
damage or claim incurred by such Indemnified Person by reason of
negligence or willful misconduct with respect to such acts or
omissions.

(b) To the fullest extent permitted by applicable law, expenses (including
legal fees) incurred by an Indemnified Person in defending any claim,
demand, action, suit or proceeding shall, from time to time, be
advanced by the Guarantor prior to the final disposition of such claim,
demand, action, suit or proceeding upon receipt by the Guarantor of an
undertaking by or on behalf of the Indemnified Person to repay such
amount if it shall be determined that the Indemnified Person is not
entitled to be indemnified as authorized in Section 8.2(a).

ARTICLE IX
MISCELLANEOUS

SECTION 9.1. Successors and Assigns.

All guarantees and agreements contained in this Guarantee Agreement shall bind
the successors, assigns, receivers, trustees and representatives of the
Guarantor and shall inure to the benefit of the Holders of the Preferred
Securities then outstanding.

SECTION 9.2. Amendments.

Except with respect to any changes that do not materially adversely affect the
rights of Holders (in which case no consent of Holders will be required), this
Guarantee Agreement may only be amended with the prior approval of the Holders
of at least 66-2/3% in liquidation amount (including the stated amount that
would be paid on redemption, liquidation or otherwise, plus accrued and unpaid
Distributions to the date upon which the voting percentages are determined) of
all the outstanding Preferred Securities. The provisions of Section 12.2 of the
Declaration with respect to meetings of Holders of the Securities apply to the
giving of such approval.

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<PAGE>

SECTION 9.3. Notices.

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

(a) If given to the Preferred Guarantee Trustee, at the Preferred Guarantee
Trustee's mailing address set forth below (or such other address as the
Preferred Guarantee Trustee may give notice of to the Holders of the
Preferred Securities):

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

(b) If given to the Guarantor, at the Guarantor's mailing address set forth
below (or such other address as the Guarantor may give notice of to the
Holders of the Preferred Securities):

Northwestern Public Service Company
33 Third Street, S.E.
Huron, South Dakota 57350

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

SECTION 9.4. Benefit.

This Guarantee Agreement is solely for the benefit of the Holders of the
Preferred Securities and the Preferred Guarantee Trustee and, subject to Section
3.1(a), is not separately transferable from the Preferred Securities.

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<PAGE>

SECTION 9.5. Governing Law.

THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

THIS GUARANTEE AGREEMENT is executed as of the day and year first above written.

Northwestern Public Service Company

By: /s/ Richard R. Hylland
------------------------------------------
Richard R. Hylland
Vice President -
Strategic Development

Wilmington Trust Company,
as Preferred Guarantee Trustee

By: /s/ Norma P. Closs
------------------------------------------
Name: Norma P. Closs
Title: Vice President

<PAGE>

COMMON SECURITIES GUARANTEE AGREEMENT

DATED AS OF AUGUST 1, 1995

This GUARANTEE AGREEMENT ("Guarantee Agreement"), dated as of August 1,
1995, is executed and delivered by Northwestern Public Service Corporation, a
Delaware corporation (the "Guarantor"), for the benefit of the Holders (as
defined herein) from time to time of the Common Securities (as defined in the
Declaration) of NWPS Capital Financing I, a Delaware business trust (the
"Issuer").

WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
"Declaration"), dated as of August 1, 1995 among the Trustees of the Issuer
named therein, the Guarantor as Sponsor and the holders from time to time of
undivided beneficial interests in the assets of the Issuer, the Issuer is
issuing on the date hereof $1.005 million aggregate stated liquidation amount of
Common Securities designated the 8 1/8% Trust Common Capital Securities.

WHEREAS, as incentive for the Holders to purchase the Common Securities,
the Guarantor desires to irrevocably and unconditionally to agree, to the extent
set forth in this Guarantee Agreement, to pay to the Holders of the Common
Securities the Guarantee Payments (as defined herein) and to make certain other
payments on the terms and conditions set forth herein.

WHEREAS, the Guarantor is also executing and delivering a guarantee
agreement in substantially identical terms to this Guarantee Agreement for the
benefit of the holders of the Preferred Securities (the "Preferred Securities
Guarantee") except that if an Event of Default (as defined in the Indenture (as
defined herein)), has occurred and is continuing, the rights of Holders of the
Common Securities to receive Guarantee Payments under this Guarantee Agreement
are subordinated to the rights of holders of Preferred Securities to receive
Guarantee Payments under the Preferred Securities Guarantee Agreement.

NOW, THEREFORE, in consideration of the purchase by each Holder of Common
Securities, which purchase the Guarantor hereby agrees shall benefit the
Guarantor, the Guarantor executes and delivers this Guarantee Agreement for the
benefit of the Holders.

ARTICLE I

In this Guarantee Agreement, unless the context otherwise requires, the
terms set forth below shall have the following meanings. Terms defined in the
Declaration as at the date of execution of this Guarantee Agreement have the
same meaning when used in this Guarantee Agreement unless otherwise defined in
this Guarantee Agreement. The singular includes the plural and vice versa.

"Guarantee Payments" shall mean the following payments or distributions,
without duplication, with respect to the Common Securities, to the extent not
paid or made by the Issuer:

<PAGE>

(i) any accrued and unpaid Distributions that are required to be paid on such
Common Securities to the extent the Issuer has funds legally available therefor,
(ii) the redemption price, including all accrued and unpaid Distributions to the
date of redemption (the "Redemption Price") to the extent the Issuer has funds
legally available therefor, with respect to any Common Securities called for
redemption by the Issuer, and (iii) upon a voluntary or involuntary dissolution,
winding-up or termination of the Issuer (other than in connection with the
distribution of Debentures to the Holders in exchange for Common Securities as
provided in the Declaration), the lesser of (a) the aggregate of the liquidation
amount and all accrued and unpaid Distributions on the Common Securities to the
date of payment, and (b) the amount of assets of the Issuer remaining available
for distribution to Holders in liquidation of the Issuer (in either case, the
"Liquidation Distribution"). If an event of default under the Indenture has
occurred and is continuing, the rights of Holders of the Common Securities to
receive Guarantee Payments under this Guarantee Agreement are subordinated to
the rights of holders of Preferred Securities to receive Guarantee Payments
under the Preferred Securities Guarantee Agreement.

"Holder" shall mean any holder, as registered on the books and records of
the Issuer of any Common Securities; provided, however, that in determining
whether the holders of the requisite percentage of Common Securities have given
any request, notice, consent or waiver hereunder, "Holder" shall not include the
Guarantor or any Affiliate of the Guarantor.

ARTICLE II

SECTION 2.1. The Guarantor irrevocably and unconditionally agrees to pay
in full to the Holders the Guarantee Payments (without duplication of amounts
theretofore paid by the Issuer), as and when due, regardless of any defense,
right of set-off or counterclaim which the Issuer may have or assert. The
Guarantor's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Guarantor to the Holders or by causing
the Issuer to pay such amounts to the Holders.

SECTION 2.2. The Guarantee hereby waives notice of acceptance of this
Guarantee Agreement and of any liability to which it applies or may apply,
presentment, demand for payment, any right to require a proceeding first against
the Issuer or any other Person before proceeding against the Guarantor, protest,
notice of nonpayment, notice of dishonor, notice of redemption and all other
notices and demands.

SECTION 2.3. The obligations, covenants, agreements and duties of the
Guarantor under this Guarantee Agreement shall in no way be affected or impaired
by reason of the happening from time to time of any of the following:

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<PAGE>

(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied
agreement, covenant, term or condition relating to the Common Securities to
be performed or observed by the Issuer;

(b) the extension of time for the payment by the Issuer of all or any
portion of the Distributions, Redemption price, Liquidation Distribution or
any other sums payable under the terms of the Common Securities or the
extension of time for the performance of any other obligation under,
arising out of, or in connection with, the Common Securities (other than an
extension of time for payment of Distributions, Redemption Price,
Liquidation Distribution or other sum payable that results from the
extension of any interest payment period on the Debentures or any extension
of the maturity date of the Debentures permitted by the Indenture);

(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Holders pursuant to the terms of the Common
Securities, or any action on the part of the Issuer granting indulgence or
extension of any kind;

(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the Issuer
or any of the assets of the Issuer;

(e) any invalidity of, or defect or deficiency in the Common
Securities;

(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or

(g) any other circumstance whatever that might otherwise constitute a
legal or equitable discharge or defense of a guarantor, it being the intent
of this Section 2.3 that the obligations of the Guarantor hereunder shall
be absolute and unconditional under any and all circumstances.

There shall be no obligation of the Holders to give notice to, or obtain consent
of, the Guarantor with respect to the happening of any of the foregoing.

SECTION 2.4. The Guarantor expressly acknowledges that any Holder of
Common Securities may institute a legal proceeding directly against the
Guarantor to enforce its rights under this Guarantee Agreement, without first
instituting a legal proceeding against the Issuer or any other Person.

SECTION 2.5. This Guarantee Agreement creates a guarantee of payment and
not of collection.

-3-

<PAGE>

SECTION 2.6. The Guarantor shall be subrogated to all (if any) rights of
the Holders of Common Securities against the Issuer in respect of any amounts
paid to such Holders by the Guarantor under this Guarantee Agreement; provided,
however, that the Guarantor shall not (except to the extent required by
mandatory provisions of law) be entitled to enforce or exercise any right which
it may acquire by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases as a result of payment under this Guarantee Agreement,
if, at the time of any such payment, any amounts are due and unpaid under this
Guarantee Agreement. If any amount shall be paid to the Guarantor in violation
of the preceding sentence, the Guarantor agrees to hold such amount in trust for
the Holders and to pay over such amount to the Holders.

SECTION 2.7. The Guarantor acknowledges that its obligation hereunder are
independent of the obligations of the Issuer with respect to the Common
Securities and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Guarantee
Agreement notwithstanding the occurrence of any event referred to in subsections
(a) through (g), inclusive, of Section 2.3 hereof.

ARTICLE III

SECTION 3.1. So long as any Common Securities remain outstanding, if (i)
the Guarantor shall be in default with respect to its Guarantee Payments or
other obligations hereunder, (ii) there shall have occurred any Event of Default
under the Declaration or (iii) the Guarantor has given notice of its selection
of an Extension Period (as defined in the Indenture) and such period or any
extension thereof, is continuing, then, in each case (a) the Guarantor shall not
declare or pay any dividend on, or make any distribution with respect to, or
redeem, purchase, acquire or make a liquidation payment with respect to, any of
its capital stock and (b) the Guarantor shall not make any payment of interest,
principal or premium, if any, on or repay, repurchase or redeem any debt
securities issued by the Guarantor which rank pari passu with or junior to the
Debentures; provided that the restriction set forth in paragraph (a) of this
Section 3.1 does not apply in respect of any stock dividends paid by the
Guarantor or any of its subsidiaries, where the dividend stock is the same stock
as that on which the dividend is being paid.

SECTION 3.2. This Guarantee Agreement will constitute an unsecured
obligation of the Guarantor and will rank (i) subordinate and junior in right of
payment to all other liabilities of the guarantor, including the Debenture, (ii)
pari passu with the most senior preferred or preference stock now or hereafter
issued by the Guarantor and with any guarantee now or hereafter entered into by
the Guarantor in respect of any preferred or preference stock of any Affiliate
of the Guarantor, and (iii) senior to the Guarantor's common stock.

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<PAGE>

ARTICLE IV

SECTION 4.1. This Guarantee Agreement shall terminate upon (i) full
payment of the Redemption Price of all Securities, (ii) the distribution of the
Debentures to the Holders of all of the Common Securities or (iii) full payment
of the amounts payable in accordance with the Declaration upon liquidation of
the Issuer. Notwithstanding the foregoing, this Guarantee Agreement will
continue to be effective or will be reinstated, as the case may be, if at any
time any Holder of Common Securities must restore payment of any sums paid under
the Common Securities or under this Common Securities Guarantee.

ARTICLE V

SECTION 5.1. All guarantees and agreements contained in this Guarantee
Agreement shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of the Common Securities then outstanding.

SECTION 5.2. Except with respect to any changes which do not adversely
affect the rights of Holders (in which case no consent of Holders will be
required), this Guarantee Agreement may only be amended with the prior approval
of the Holders of at least 66-2/3% in liquidation amount of all the outstanding
Common Securities. The provisions of Section 12.2 of the Declaration with
respect to meetings of Holders of the Securities apply to the giving of such
approval.

SECTION 5.3. All notices provided for in this Guarantee Agreement shall be
in writing, duly signed by the party giving such notice, and shall be delivered,
telecopied or mailed by registered or certified mail, as follows:

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

NWPS Capital Financing I
c/o Northwestern Public Service Company
33 Third Street, S.E.
Huron, South Dakota 57350

-5-

<PAGE>

(b) if given to the Guarantor, at the Guarantor's mailing address set
forth below (or such other address as the Guarantor may give notice of
to the Holders of the Common Securities):

Northwestern Public Service Company
33 Third Street, S.E.
Huron, South Dakota 57350

All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepared except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which not notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.

SECTION 5.4. This Guarantee Agreement is solely for the benefit of the
Holders and is not separately transferable from the Common Securities.

SECTION 5.5. THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

THIS GUARANTEE AGREEMENT is executed as of the day and year first above
rewritten.

Northwestern Public Service Company

By: /s/ Richard R. Hylland
----------------------
Richard R. Hylland
Vice President -
Strategic Development

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<PAGE>

AMENDMENT AND SUPPLEMENT
TO
PURCHASE AND SALE AGREEMENT

This Agreement dated as of August 11, 1995 (the "Amendment")
amending and supplementing the Purchase and Sale Agreement dated as of May 17,
1995 (the "Purchase Agreement") by and among Sherman C. Vogel, Stephen A. Vogel,
Jeffrey K. Vogel, Jon M. Vogel and Jeanette Vogel (collectively, the
"Stockholders", and each individually, a "Stockholder"); Synergy Group
Incorporated, a Delaware corporation (the "Company," and collectively with the
Stockholders, "Sellers"); S&J Investments, a New York general partnership
("S&J"); SYN Inc., a Delaware corporation ("Buyer"); and Northwestern Growth
Corporation, a South Dakota corporation ("NGC");

W I T N E S S E T H:

WHEREAS, due to changed circumstances, each of the parties desires to
amend certain of the provisions of the Purchase Agreement and to supplement the
Purchase Agreement by the addition of certain additional provisions.

NOW THEREFORE, in consideration of the foregoing and the covenants,
agreements and conditions contained herein and in the Purchase Agreement, the
receipt and sufficiency of which is hereby acknowledged by each of the parties
hereto, and intending to be legally bound hereby, the parties hereto agree as
follows:

1. DEFINITIONS. Capitalized terms not otherwise defined herein shall
have the meaning given in the Purchase Agreement.

2. EFFECTIVE DATES. The effective date of the transactions involved
in the First Closing under the Purchase Agreement shall be the First Closing
Date and the effective date of the transactions involved in the Second Closing
under the Purchase Agreement shall be the Second Closing Date.

3. S&J MASTER LEASE. The Real Estate Master Lease Agreement dated
July 3, 1995 between S&J and the Company (the "Master Lease") is hereby
rescinded, and made null and void and without any force or effect; and all real
estate leases between the Company and S&J in effect as of May 17, 1995 are
hereby reinstated by the Company and S&J and made to be in full force and effect
as if the Master Lease had never existed.

4. Section 1.6(a)(i) is hereby amended in its entirety to read as
follows:

(i) the Cash Component (as defined below) plus or minus an estimate
(the "Estimate"), prepared by the Stockholders with the assistance
of the Company's accountants, delivered to Buyer (and accompanied by
the consolidated balance sheet of the Company and its
Subsidiaries, as of the month end required by the proviso in this
sentence, prepared from their books and records on a basis
consistent with the Interim Statements (as defined in

<PAGE>

Section 4.5 hereof)) at least ten business days prior to the First
Closing Date of the amount of any adjustment to the Cash Component
under Section 1.6(b) and 1.6(c) hereof (the Cash Component, without
any adjustment for the Estimate, being hereinafter called the
"Closing Date Amount"). For purposes of determining the Estimate at
the time of the First Closing, the most recent month end next
preceding the First Closing Date by at least fifteen business days
shall be substituted for the Second Closing Date in Section 1.6(b)
and 1.6(c) hereof,

5. The second sentence of Section 1.6(b) is hereby amended to read in
its entirety as follows:

Promptly after preparation and final determination, pursuant to
Section 1.7 hereof, of the Statement of Working Capital (as defined
in Section 1.6(c) hereof) (but in no event later than three business
days thereafter),

(i) if the Closing Date Amount is less than the Adjusted Cash
Component, Buyer shall make payment to the Stockholders' Agent (as
defined in Section 9.5 hereof) in cash of the amount of such
difference, together with an amount in cash equal to the interest
accrued thereon at an interest rate per annum equal to the interest
rate announced by Citibank, N.A. as its base rate, calculated on the
basis of the actual number of days elapsed from the Second Closing
Date to the date of payment divided by 365, by wire transfer to the
bank account designated by the Stockholders' Agent to receive such
funds at least one business day prior to the date of such payment,
provided that the Buyer shall be permitted to apply the Estimate,
and all interest or other earnings accrued thereon, from the escrow
under the Contract Escrow Agreement (as defined in Section 6.17
hereof), to the extent needed, to such payment to be made by Buyer
as aforesaid, with the remainder (if any) to be distributed to Buyer
from such escrow as Buyer's property; and

(ii) if the Closing Date Amount is more than the Adjusted Cash
Component, the Stockholders' Agent shall make payment to the Buyer
in cash of the amount of such difference, together with an amount in
cash equal to the interest accrued thereon at an interest rate per
annum equal to the interest rate announced by Citibank, N.A. as its
base rate, calculated on the basis of the actual number of days
elapsed from the Second Closing Date to the date of payment divided
by 365, by wire transfer to the bank account designated by the Buyer
to receive such funds at least one business day prior to the date of
such payment, and all of the Estimate, and all interest or other
earnings accrued thereon, shall be distributed to Buyer from the
escrow under the Contract Escrow Agreement as Buyer's property.

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<PAGE>

6. The fifth sentence in Section 1.7 is amended by adding thereto the
following additional text:

and shall calculate therefrom the Adjusted Cash Component and give
written instructions to the Contract Escrow Agent, with copies to
the Stockholders' Agent and the Buyer, as to the disposition of the
Working Capital Estimate (as that term is defined in the Contract
Escrow Agreement), which instructions shall be conclusive and
binding on all parties hereto.

7. Section 1.7 is hereby further amended to add the following at the
end of such Section:

At the time that Buyer and the Stockholders' Agent agree on the
Statement of Working Capital and the resulting adjustment (if any)
to the Cash Component, the Buyer and the Stockholders' Agent shall
jointly notify the Contract Escrow Agent in writing with respect to
the disbursement of the Estimate from escrow. In the event the
determination of the Statement of Working Capital is determined by
the Firm, the Firm shall be instructed to make the calculations and
give written instructions to the Contract Escrow Agent as
hereinabove provided.

8. Section 1.8 is hereby amended in its entirety to read as follows:

1.8 CONTRACT ESCROW FUNDS. Simultaneously with the Second
Closing, Buyer shall deliver to the Contract Escrow Agent, as
defined in and, pursuant to the Contract Escrow Agreement (as
defined in Section 6.17 hereof) (i) $11,250,000 in cash (the
"Contract Escrow Cash") (ii) 2,500 shares of Buyer Series A
Preferred Stock, (iii) the Promissory Note, and (iv) out of Buyer's
own funds, cash in the amount of the Estimate (the cash in the
amount of the Estimate, collectively with the Promissory Note, such
shares of Buyer Series A Preferred Stock and the Contract Escrow
Cash, the "Contract Escrow Funds").

9. Section 3.4(a)(i) is hereby amended in its entirety to read as
follows: (a)(i) the Contract Escrow Cash, plus cash in the amount of
the Estimate, by wire transfer to the bank account designated to
Buyer by the Contract Escrow Agent at least one business day prior
to the First Closing Date,

10. INDEMNIFICATION BY STOCKHOLDERS. The third proviso of paragraph
(a) of Section 9.2 is hereby amended to read as follows:

provided, however, that $9 million of the Contract Escrow Cash for
the first 180 days after the Second Closing shall be allocated
solely to settle Claims for Damages with respect to a breach of the
representation and warranties in Section 4.9(a) hereof with respect
to ownership of consumer propane tanks,

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<PAGE>

and any amount remaining after 180 days after the Second Closing and
not in dispute with respect to such Claims, (a) with respect to the
first $5 million of the $9 million of the Contract Escrow Cash shall
be released to the Stockholders' Agent in accordance with the
provisions of the Contract Escrow Agreement and (b) with respect to
up to the remaining $4 million of the $9 million of the Contract
Escrow Cash, shall be available to provide the Stockholder with a
source to fund the payment of damages relating to the C&L Matters;
or

11. C&L MATTERS. The second proviso of Section 10.1 is hereby amended
to read as follows:

provided, further that, 180 days after the Second Closing Date up to
$4 million of the Contract Escrow Case allocated to cover Damages
for a breach of the consumer propane tank ownership representation
and warranty in Section 4.9(a) hereof, less (a) any Damages paid in
accordance with this Agreement and the Contract Escrow Agreement
from such $4 million for a breach of such tank ownership
representation and warranty, and (b) any amount in dispute with
respect to such $4 million (in accordance with the Agreement and the
Contract Escrow Agreement) with respect to a claim for such Damages
for a breach of such tank representation and warranty, shall be
available to provide the Stockholders with a source to fund the
payment of Damages relating to the C&L Matters in accordance with
the provisions of Section 9.2 hereof.

12. CONTRACT ESCROW AGREEMENT. The form of the Contract Escrow
Agreement is hereby changed to be an agreement substantially in the
form attached hereto as Amended Exhibit C.

13. C&L MATTERS ESCROW AGREEMENT. The form of the C&L Matters Escrow
Agreement is hereby changed to be an agreement substantially in the form
attached hereto as Amended Exhibit D.

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<PAGE>

IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Amendment as of the date first above written.

THE STOCKHOLDERS

/s/ Sherman C. Vogel
---------------------------------
Sherman C. Vogel

/s/ Stephen A. Vogel
--------------------------------
Stephen A. Vogel

/s/ Jeffrey K. Vogel
--------------------------------
Jeffrey K. Vogel

/s/ Jon M. Vogel
--------------------------------
Jon M. Vogel

/s/ Jeanette Vogel
--------------------------------
Jeanette Vogel

-5-
<PAGE>

SYNERGY GROUP INCORPORATED

By: /s/ STEPHEN A. VOGEL
---------------------------
Name: Stephen A. Vogel
Title: Executive Vice President

S&J INVESTMENTS

By: /s/ SHERMAN C. VOGEL
---------------------------
Name: Sherman C. Vogel
Title: General Partner

By: /s/ STEPHEN A. VOGEL
--------------------------
Name: Stephen A. Vogel
Title: General Partner

By: /s/ JEFFREY K. VOGEL
--------------------------
Name: Jeffrey K. Vogel
Title: General Partner

By: /s/ JON M. VOGEL
--------------------------
Name: Jon M. Vogel
Title: General Partner

SYN INC.

By: /s/ VALERIA SCHALL
--------------------------
Name: Valeria Schall
Title: Vice President

NORTHWESTERN GROWTH CORPORATION

By: /s/ DANIEL K. NEWELL
--------------------------
Name: Daniel K. Newell
Title: Executive Vice President

-6-

<PAGE>

EXHIBIT 4(a)

NORTHWESTERN PUBLIC SERVICE COMPANY
33 THIRD STREET S.E.
HURON, SOUTH DAKOTA 57350-1318

July 28, 1995

The Travelers Insurance Company
The Phoenix Insurance Company
The Travelers Indemnity Company
205 Columbus Boulevard
Hartford, CT 06183

Metropolitan Life Insurance Company
One Lincoln Centre, Suite 800
Oakbrook, IL 60181

The Chase Manhattan Bank (National
Association)
4 Chase MetroTech Center
3rd Floor
Brooklyn, NY 11245

Re: Northwestern Public Service Company--Consent to Amendment to 1940
Indenture and Agreement to Exchange Bonds
-----------------------------------------------------------------

Ladies and Gentlemen:

We refer to:

(i) the Indenture dated August 1, 1940 (as the same has been amended from
time to time, the "1940 Indenture") by and between Northwestern Public Service
Company (the "Company") and The Chase Manhattan Bank (National Association),
successor to The Chase National Bank of the City of New York (the "1940
Trustee"), and C. J. Heinzelmann, successor to Carl E. Buckley (the 1940 Trustee
and said C. J. Heinzelmann being hereinafter called the "1940 Trustees");

(ii) the Supplemental Indenture dated November 1, 1989 by and between the
Company and the 1940 Trustees, pursuant to which the Company issued $7,500,000
of its First Mortgage Bonds, 8.90% Series due 1999 (the "8.90% Bonds") to
Metropolitan Life Insurance Company ("Metropolitan Life");

(iii) the Supplemental Indenture dated July 15, 1991 by and between the
Company and the 1940 Trustees, pursuant to which the Company issued $15,000,000
of its First Mortgage Bonds, 8.824% Series due 1998 (the "8.824% Bonds"),
$11,000,000 of which were issued to The Travelers Insurance Company
("Travelers") and the remaining $4,000,000 of which were issued to The Phoenix
Insurance Company ("Phoenix");

<PAGE>

(iv) the Supplemental Indenture dated September 1, 1992 by and between the
Company and the 1940 Trustees, pursuant to which the Company issued $25,000,000
of its First Mortgage Bonds, 6.99% Series due 2002 (the "6.99% Bonds"),
$22,000,000 of which were issued to Travelers and the remaining $3,000,000 of
which were issued to The Travelers Indemnity Company ("Indemnity"); and

(v) the Supplemental Indenture dated August 15, 1993 by and between the
Company and the 1940 Trustees, pursuant to which the Company issued $55,000,000
of its First Mortgage Bonds, 7% Series due 2023 (the "7% Bonds") to The Chase
Manhattan Bank (National Association), as Trustee (the "1993 Trustee") under the
General Mortgage Indenture and Deed of Trust dated as of August 1, 1993 (the
"1993 Indenture") by and between the Company and the 1993 Trustee.

Unless otherwise defined herein, the terms defined in the 1940 Indenture
shall be used herein as therein defined.

As of the date of this letter, the only Bonds outstanding under the 1940
Indenture are the 8.90% Bonds, the 8.824% Bonds, the 6.99% Bonds and the 7%
Bonds, and the only holders of the Bonds are Metropolitan Life, Travelers,
Phoenix, Indemnity and the 1993 Trustee (collectively, the "Bondholders").

The Company has advised the Bondholders that it desires to enter into a
Supplemental Indenture with the 1940 Trustees pursuant to which the Company
would issue up to $75,000,000 of Bonds (the "New 1940 Bonds") to the 1993
Trustee to be used as "Pledged Bonds" under the 1993 Indenture for purposes of
issuing to the public a like amount of bonds ("New Mortgage Bonds") under the
1993 Indenture (the "Public Offering"). At present, the Company is not able to
issue the full amount of New 1940 Bonds under the 1940 Indenture, because of (a)
the limitation in Section 3 of Article II of the 1940 Indenture that it may
issue Bonds pursuant to such Section only to the extent in principal amount of
sixty percent (60%) of all "net expenditures" (as defined in such Section), and
(b) the prohibition in Section 3 of Article II of the 1940 Indenture on using as
the basis for the issuance of Bonds any expenditures for property which has
previously been used by the Company to satisfy its maintenance and renewal fund
obligations under Article VII of the 1940 Indenture.

The undersigned Bondholders have agreed (a) to consent to the amendment of
Section 3 of Article II to the 1940 Indenture (i) to increase the percentage
stated therein from sixty percent (60%) to seventy-five percent (75%), and (ii)
to eliminate the restriction regarding the use of expenditures for property that
has been used to satisfy the Company's obligations under Article VII of the 1940
Indenture, pursuant to a Supplemental Indenture to the 1940 Indenture in
substantially the form of EXHIBIT A attached hereto, and (b) in the case of
Metropolitan Life, Travelers, Phoenix and Indemnity (collectively, the
"Exchanging Bondholders"), to exchange the Bonds held by each of them for bonds
of like tenor to be issued pursuant to a Supplemental Indenture to the 1993
Indenture in substantially the form of EXHIBIT B-1, EXHIBIT B-2 or EXHIBIT B-3
(as applicable), in each case so long as the Company agrees to the conditions
and other provisions set forth herein.

-2-

<PAGE>

1. Accordingly, the Company and the undersigned Bondholders (including
the 1993 Trustee) hereby agree as follows:

(a) The actions set forth in clause (b) of this Paragraph 1 shall be
effective as if the same had taken place at a meeting of Bondholders
pursuant to Article XVIII (Meetings of Bondholders) of the 1940 Indenture
(which provision was added to the 1940 Indenture by the Supplemental
Indenture dated October 1, 1946), and the undersigned Bondholders hereby
waive any and all notice of a meeting of the Bondholders provided for in
said Article XVIII; and

(b) The undersigned Bondholders hereby consent to the execution by
the Company and the 1940 Trustees of the Supplemental Indenture to the 1940
Indenture in substantially the form of EXHIBIT A attached hereto, and the
recording and filing thereof in the various jurisdictions in which the 1940
Indenture is recorded or filed.

2. The Company and the Exchanging Bondholders hereby agree as follows:

(a) On a date not later than the last to occur of September 1, 1995
or the date of the Public Offering, the Company will issue:

(i) to Metropolitan Life, and Metropolitan Life will accept, one
or more bonds in the aggregate principal amount of $7,500,000 in
exchange for all of the issued and outstanding 8.90% Bonds, which
bonds shall bear interest at a rate of 8.90% per annum, shall mature
on November 1, 1999, and shall be issued pursuant to a Supplemental
Indenture to the 1993 Indenture in substantially the form of EXHIBIT
B-1 attached hereto (as the same may be modified by mutual agreement
of the Company and Metropolitan Life) and afforded the benefits set
forth therein;

(ii) to Travelers, and Travelers will accept, one or more bonds
in the aggregate principal amount of $11,000,000 in exchange for a
like amount of 8.824% Bonds held by it, and to Phoenix, and Phoenix
will accept, one or more bonds in the aggregate principal amount of
$4,000,000 in exchange for a like amount of 8.824% Bonds held by it,
in each case which bonds shall bear interest at a rate of 8.824% per
annum, shall mature on July 15, 1998, and shall be issued pursuant to
a Supplemental Indenture to the 1993 Indenture in substantially the
form of EXHIBIT B-2 attached hereto (as the same may be modified by
mutual agreement of the Company, Travelers and Phoenix) and afforded
the benefits set forth therein; and

(iii) to Travelers, and Travelers will accept, one or more
bonds in the aggregate principal amount of $22,000,000 in exchange for
a like amount of 6.99% Bonds held by it, and to Indemnity, and
Indemnity will accept, one or more bonds in the aggregate principal
amount of $3,000,000 in exchange for a like amount of 6.99% Bonds held
by it, in each case which bonds shall bear interest at a rate of 6.99%
per

-3-

<PAGE>

annum, shall mature on September 1, 2002, and shall be issued
pursuant to a Supplemental Indenture to the 1993 Indenture in
substantially the form of EXHIBIT B-3 attached hereto (as the same may
be modified by mutual agreement of the Company, Travelers and
Indemnity) and afforded the benefits set forth therein.

The bonds to be issued under the 1993 Indenture and the Supplemental
Indentures thereto pursuant to this clause (a) are referred to herein as
the "Exchanged Bonds."

(b) At the time of the issue of the Exchanged Bonds pursuant to
clause (a) of this Paragraph 2, each of the Exchanging Bondholders will
surrender their respective Bonds in exchange for the Exchanged Bonds (which
shall be stated to accrue interest from the date of the last interest
payment date of the Bonds to be exchanged for the Exchanged Bonds), subject
to satisfaction of the following conditions:

(i) Each Exchanging Bondholder shall have received an opinion of
counsel from Schiff Hardin & Waite in substantially the form (MUTATIS
MUTANDIS) of the opinion delivered pursuant to Paragraph 9(b) (or in
the case of the Exchanged Bonds issued in exchange for the 8.90%
Bonds, Paragraph 10(b)) of the Bond Purchase Agreements pursuant to
which the Bonds were issued to such Exchanging Bondholder;

(ii) Each Exchanging Bondholder shall have received an opinion of
counsel from local counsel in the States of South Dakota and Nebraska
in substantially the form (MUTATIS MUTANDIS) of the opinions delivered
pursuant to Paragraph 9(c) (or in the case of the Exchanged Bonds
issued in exchange for the 8.90% Bonds, Paragraph 10(c)) of the Bond
Purchase Agreements pursuant to which the Bonds were issued to such
Exchanging Bondholder;

(iii) Each Exchanging Bondholder shall have received an
officer's certificate in substantially the form (MUTATIS MUTANDIS) of
the officer's certificate delivered pursuant to Paragraph 9(d) (or in
the case of the Exchanged Bonds issued in exchange for the 8.90%
Bonds, Paragraph 10(d)) of the Bond Purchase Agreements pursuant to
which the Bonds were issued to such Exchanging Bondholder, which
officer's certificate shall also include a representation by the
Company to the effect that the issuance of the Exchanged Bonds and the
compliance by the Company with the provisions thereof will not involve
any prohibited transaction within the meaning of ERISA or Section 4975
of the Internal Revenue Code;

(iv) Each Exchanging Bondholder shall be satisfied with the
proceedings taken on or before the date of the exchange in connection
with the transactions contemplated by this Paragraph 2, and with the
form and substance of all instruments applicable to the issuance of
the Exchanged Bonds;

-4-

<PAGE>

(v) The exchange shall, on the date of the exchange, be
permitted by the laws and regulations of all jurisdictions to which
each Exchanging Bondholder is then subject, and each Exchanging
Bondholder shall have received such factual certificates, signed by
officers of the Company, or such other evidence as it may request to
establish compliance with this condition; and

(vi) The obligation of each Exchanging Bondholder to surrender
its respective Bonds is subject to the surrender by each of the other
Exchanging Bondholders of their Bonds.

(c) Concurrently with the issuance of the Exchanged Bonds in
accordance with clause (a) of this Paragraph 2 and the surrender of the
Bonds in accordance with clause (b) of this Paragraph 2, the Company will
deliver to the 1993 Trustee the "Company Order" and the other documents and
instruments referred to in Section 7.07 of the 1993 Indenture for purposes
of causing the 1993 Trustee to surrender for cancellation to the 1940
Trustees all of the Pledged Bonds (including the 7% Bonds and the New 1940
Bonds) then held by the 1993 Trustee.

(d) Promptly following the surrender by the 1993 Trustee of the
Pledged Bonds in accordance with clause (c) of this Paragraph 2, the
Company will deliver (i) to the 1940 Trustees the request of the Company
and the other documents and instruments referred to in Article XII of the
1940 Indenture for purposes of causing the 1940 Trustees to cancel and
discharge the lien of the 1940 Indenture as provided for in said Article
XII, and (ii) to the Exchanging Bondholders a certificate to the effect
that the 1940 Mortgage has been cancelled and discharged, together with an
opinion of counsel from Schiff Hardin & Waite to the same effect.

3. As further consideration for the agreement of the Exchanging
Bondholders to the consent to the amendment to the 1940 Indenture, the exchange
of the Bonds for the Exchanged Bonds and the other matters provided for herein,
the Company agrees that each Exchanging Bondholder (or its respective successors
or assigns), with respect to the Exchanged Bonds then held by it, shall have the
following rights, in addition to the rights provided for in the 1993 Indenture
and the Supplemental Indentures pursuant to which the Exchanged Bonds were
issued:

(a) If, at any time subsequent to the earlier of (i) the date which
is 120 days following the issuance of New Mortgage Bonds pursuant to the
S-3 Registration Statement filed by the Company on June 21, 1995, as the
same may be amended or supplemented, or (ii) January 1, 1996, an Exchanging
Bondholder gives written notice to the Company (specifying that it is being
given pursuant to this clause (a)) requesting the Company to file a
registration statement to register under the 1933 Act all (but not less
than all) of a series of Exchanged Bonds owned by the requesting person
(PROVIDED, HOWEVER, that (1) in the event that such request is made with
respect to the Exchanged Bonds to be issued in exchange for the 8.824%
Bonds, such request shall be submitted by both Travelers and Phoenix, and
(2) in

-5-

<PAGE>

the event that such request is made with respect to the Exchanged
Bonds to be issued in exchange for the 6.99% Bonds, such request shall be
submitted by both Travelers and Indemnity), then the Company shall promptly
notify each of the other Exchanging Bondholders of such request. Within 15
days after receipt by any such other Exchanging Bondholder of notice of
such request, it may notify the Company that it too requests that all (but
not less than all) of a series of Exchanged Bonds owned by such Exchanging
Bondholder be included in such registration (all of the Exchanging
Bondholders who at that point have requested the Company to include their
Exchanged Bonds in the registration being hereinafter referred to as the
"Selling Bondholders"); PROVIDED, HOWEVER, that the failure by an
Exchanging Bondholder to make such a request shall not preclude such
Exchanging Bondholder from subsequently exercising its rights under this
Paragraph 3. The Company shall then use its best efforts to cause to be
registered under the 1933 Act all Exchanged Bonds that the Selling
Bondholders have so requested to be registered. Notwithstanding the
foregoing, the Company shall not be obligated to effect a registration
pursuant to this clause (a) during the period starting with the date 45
days prior to the Company's estimated date of filing of, a registration
statement pertaining to an underwritten public offering of New Mortgage
Bonds for the account of the Company, provided that the Company is actively
employing in good faith all reasonable efforts to cause such registration
statement to become effective and that the Company's estimate of the date
of filing such registration statement is made in good faith. The Company
shall be obligated to effect one registration pursuant to this clause (a)
for each series of Exchanged Bonds. At any time prior to the effectiveness
of the registration statement, any request for registration under this
clause (a) may be withdrawn by a Selling Bondholder, whereupon, if such
withdrawal affects all of the Exchanged Bonds that were to be the subject
of the registration statement, the Company shall either not file or
withdraw the filing of the registration statement, as applicable, and such
withdrawal of the request for registration will not be deemed to have been
the exercise of the registration right granted in this clause (a).

(b) Whenever under clause (a) of this Paragraph 3 the Company is to
use its best efforts to effect the registration of any Exchanged Bonds,
that shall require the Company to do the following:

(i) As expeditiously as reasonably possible (and in any event
within 30 days following the delivery to the Company of the request by
the first Selling Bondholder pursuant to clause (a) of this Paragraph
3), prepare and file with the Securities and Exchange Commission
("SEC," which term includes any successor agency) a registration
statement with respect to such Exchanged Bonds, and use its best
efforts to cause such registration statement to become and remain
effective under the 1933 Act, except that the Company shall in no
event be obligated to cause any such registration to remain effective
for more than nine months.

(ii) As expeditiously as reasonably possible, prepare and file
with the SEC such amendments and supplements to such registration
statement and the prospectus

-6-

<PAGE>

used in connection with such registration statement as may be
necessary to comply with the provisions of the 1933 Act with respect
to the disposition of all securities covered by such registration
statement.

(iii) As expeditiously as reasonably possible, furnish to
each Selling Bondholder such numbers of the copies of the prospectus
used in connection with such registration statement (including all
preliminary prospectuses and the final prospectus), and all amendments
and supplements thereto, and such other documents as they may
reasonably request in order to facilitate the distribution of the
Exchanged Bonds owned by such Selling Bondholder.

(iv) As expeditiously as reasonably possible, make a commercially
reasonable effort to register and qualify the securities covered by
such registration statement under such securities or Blue Sky laws of
such jurisdictions as shall be reasonably appropriate or requested by
each Selling Bondholder or by the underwriter (if any) for the
distribution of the securities covered by the registration statement,
except that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such jurisdiction, and
except that (anything in this letter to the contrary notwithstanding
with respect to the bearing of expenses) if any jurisdiction in which
the Exchanged Bonds shall be qualified shall require that expenses
incurred in connection with the registration or qualification of the
Exchanged Bonds in that jurisdiction be borne by those selling the
Exchanged Bonds, then such expenses shall be payable by the Selling
Bondholders pro rata in accordance with the principal amount of the
Exchanged Bonds being registered, to the extent required by such
jurisdiction.

(v) Advise each Selling Bondholder promptly after the Company
shall receive notice or obtain knowledge thereof of (1) the issuance
of any stop order by the SEC suspending the effectiveness of such
registration statement or the initiation or threatening of any
proceeding for that purpose, (2) any similar action by any regulatory
agency of competent jurisdiction under the securities or Blue Sky laws
of any jurisdiction, and in any such case promptly make a commercially
reasonable effort to prevent the issuance of any stop order or the
taking of any such similar action or to obtain its withdrawal if such
stop order shall be issued or any such similar action shall be taken,
and (3) the happening of any event as a result of which the prospectus
included in such registration statement contains an untrue statement
of material fact or omits to state any fact necessary to make the
statements therein not misleading.

(vi) Furnish to each Selling Bondholder copies of all documents
proposed to be filed with respect to any amendment or supplement to
such registration statement or prospectus at a reasonable time prior
to such filing, and not file any such amendment or supplement to which
the Selling Bondholders of a majority of the Exchanged Bonds covered
by such registration statement shall have reasonably

-7-

<PAGE>

objected on the grounds that such amendment or supplement does not
comply in all material respects with the requirements of the 1933 Act
or the rules and regulations thereunder, unless in the opinion of
counsel for the Company the filing of such amendment or supplement is
reasonably necessary to protect the Company from any liabilities under
any applicable federal or state law and such filing will not violate
applicable law.

(vii) Furnish on the effective date of the registration
statement and, if such registration includes an underwritten public
offering, at the closing provided for in the underwriting agreement:
(1) an opinion, dated each such date, of the counsel representing the
Company for the purposes of such registration, addressed to the
underwriters, if any, and to the Selling Bondholders participating in
such registration, stating that such registration statement has become
effective under the 1933 Act and that (A) to the best of such
counsel's knowledge, no stop order suspending the effectiveness
thereof has been issued and no proceedings for that purpose have been
instituted or are pending or contemplated under the 1933 Act, (B) the
registration statement, related prospectus and each amendment or
supplement thereto comply as to form in all material respects with the
requirements of the 1933 Act and the applicable rules and regulations
of the SEC thereunder (except that such counsel need express no
opinion as to financial statements and financial data contained
therein), (C) such counsel have no reason to believe that the
registration statement, the prospectus or any amendment or supplement
thereto contains any untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to
make the statements therein, in the light of circumstances under which
they were made, not misleading (except that such counsel need express
no belief as to the financial statements and financial data contained
therein, nor as to any of the information provided by the Selling
Bondholders pursuant to clause (c) of this Paragraph 3), (D) the
description in the registration statement or prospectus or any
amendment or supplement thereto of all legal and governmental
proceedings and all contracts and other legal documents or instruments
filed as exhibits to the registration statement are accurate and
fairly present the information required to be shown, and (2) a letter
dated each such date, from the independent certified public
accountants of the Company, addressed to the underwriters, if any, and
to the Selling Bondholders participating in such registration,
covering such matters as such underwriters and such Selling
Bondholders may reasonably request, in which letter such accountants
shall state (without limiting the generality of the foregoing) that
they are independent certified public accountants within the meaning
of the 1933 Act and that in the opinion of such accountants the
financial statements and other financial data of the Company included
in the registration statement or the prospectus or any amendment or
supplement thereto comply in all material respects with the applicable
accounting requirements of the 1933 Act and applicable rules and
regulations thereunder.

(viii) Enter into such customary agreements and take all such
other actions as the Selling Bondholders that are holders of a
majority of the Exchanged Bonds

-8-

<PAGE>

covered by such registration statement or the managing underwriters
for such registration, if any, may reasonably request in order to
facilitate the distribution of such Exchanged Bonds (including,
without limitation, to cause such Exchanged Bonds to be listed on such
securities exchange on which similar securities issued by the Company
are then listed, to cause such Exchanged Bonds to be eligible for
quotation and transaction reporting through an automated inter-dealer
quotation system operated by a national securities association, and to
provide a transfer agent and registrar).

(ix) Make available for inspection by, and cause the Company's
officers, directors, employees and independent accountants to supply
to, any Selling Bondholder, any underwriter participating in the
distribution pursuant to such registration statement, and any
attorney, accountant or other agent for any thereof, all financial and
other records of the Company and all information reasonable requested
in connection with such registration statement.

(x) Enter into an indemnity agreement pursuant to which the
Company agrees (to the extent permitted by law) to indemnify and hold
harmless each Selling Bondholder, each of its directors, officers,
employees and agents, each underwriter (if any), each other person who
participates in the offering of such Exchanged Bonds, and each other
person, if any, who controls (within the meaning of the 1933 Act) such
Selling Bondholder, underwriter or participating person, against any
losses, claims, damages or liabilities, joint or several, to which
such Selling Bondholder, director, officer, employee, agent,
underwriter, participating person or controlling person may become
subject under the 1933 Act or any other statute or at common law,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon (A) any alleged untrue
statement of any material fact contained, on the effective date
thereof, in any registration statement under which such Exchanged
Bonds were registered under the 1933 Act, any preliminary prospectus
or final prospectus contained therein, or any summary prospectus
issued in connection with any Exchanged Bonds being registered, or any
amendment or supplement thereto, or (B) any alleged omission to state
in any such document a material fact required to be stated therein or
necessary to make the statements therein not misleading, and shall
reimburse such Selling Bondholders, director, officer, employee,
agent, underwriter, participating person or controlling person for any
legal or other expenses reasonably incurred by such Selling
Bondholder, director, officer, employee, agent, underwriter,
participating person or controlling person in connection with
investigating or defending any such loss, damage, liability or action;
PROVIDED, HOWEVER, that the Company shall not be liable to such
Selling Bondholder, director, officer, employee, agent, underwriter,
participating person or controlling person in any such case to the
extent that any such loss, claim, damage or liability arises out of or
is based upon any alleged untrue statement or alleged omission made in
such registration statement, preliminary prospectus, final prospectus,
summary prospectus or amendment or supplement thereto in reliance upon
and in conformity with written

-9-

<PAGE>

information furnished to the Company by such Selling Bondholder,
specifically for use therein. Such indemnity agreement shall contain
customary provisions with respect to the procedure to be followed in
connection with the assertion of any right to indemnification, as well
as customary provisions with respect to just and equitable
contribution in the event where any such indemnity is unavailable.

(c) It shall be a condition precedent to the obligations of the
Company to take any action pursuant to this Paragraph 3 that each Selling
Bondholder shall furnish to the Company such information regarding such
Selling Bondholder, the Exchanged Bonds held by such Selling Bondholder,
and the intended method of disposition of such Exchanged Bonds (which may,
but need not, involve an underwritten transaction) as the Company shall
reasonably request and as shall be required in connection with the action
to be taken by the Company.

(d) All expenses incurred in connection with a registration pursuant
to clause (a) of this Paragraph 3 (excluding underwriters' discounts and
commissions (if any), fees of any counsel which the Selling Bondholder may
separately engage and expenses expressly required by clause (b)(iv) of this
Paragraph 3 to be paid by the Selling Bondholders), including without
limitation all registration and qualification fees, printers' and
accounting fees, fees and disbursements of counsel for the Company,
internal expenses of the Company (including, without limitation, salaries
of officers and employees) and listing fees shall be borne by the Company.

(e) In the event that, for any reason other than the failure by a
Selling Bondholder to comply with the provisions of this Paragraph 3, the
registration statement provided for in clause (a) of this Paragraph 3 is
not declared effective by the SEC within 90 days following the filing
thereof pursuant to clause (b)(i) of this Paragraph 3, the Company shall be
obligated to pay to each Selling Bondholder a fee equal to fifteen basis
points (.15%) per annum (calculated on the basis of a 360-day year) of the
principal amount of the Exchanged Bonds owned by such Selling Bondholder
that are subject to such registration statement for the period beginning on
the 90th day following the filing of such registration statement and ending
on the earlier of (i) the date that such registration statement is declared
effective by the SEC, or (ii) the date on which the Exchanged Bonds with
respect to which the fee applies are paid in full by the Company. The fee
provided for under this clause (e) shall be payable semi-annually in
arrears on the date on which interest on the Exchanged Bonds is due and
payable and on the last day of the period referred to in the preceding
sentence.

(f) For purposes of this Paragraph 3: (i) the term "1933 Act" means
the Securities Act of 1933, as amended; and (ii) the terms "register,"
"registered" and "registration" refer to a registration effected by filing
a registration statement in compliance with the 1933 Act (a "registration
statement") and such registration statement becoming effective under the
1933 Act.

In order to induce the Bondholders to execute and deliver this letter, the
Company represents and warrants to the Bondholders that:

-10-

<PAGE>

(a) This letter is the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms,
except as may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors rights in general and by general
principles of equity;

(b) No "default" or "event of default" (as such terms are defined in
the 1940 Indenture) or "Event of Default" (as such term is defined in the
1993 Indenture) exists, in each case both before and after giving effect to
the consents and other matters contemplated hereby; and

(c) Upon the discharge of the lien of the 1940 Indenture in
accordance with clause (d) of Paragraph 2, the lien of the 1993 Indenture
on the property formerly subject to the lien of the 1940 Indenture, to the
extent the same is part of the "Mortgaged Property" under the 1993

Indenture, will be subject to no lien prior to the lien of the 1993
Indenture except "Permitted Liens" under the 1993 Indenture and liens of
the character permitted to exist or to be created under Section 6.06 of the
1993 Indenture.

Nothing contained in this letter shall affect in any manner the Company's
obligations under the Bond Purchase Agreements pursuant to which the 8.90%
Bonds, the 8.824% Bonds or the 6.99% Bonds, respectively, were issued, except to
the extent that any such obligations relate to the "New Bonds" or the
"Indenture" (as such terms are defined in such Bond Purchase Agreements), in
which case such obligations shall relate to the applicable series of Exchanged
Bonds and the 1993 Indenture (MUTATIS MUTANDIS), respectively, and such Bond
Purchase Agreements shall otherwise remain in full force and effect.

This letter shall be construed and enforced as an agreement in accordance
with, and the rights of the parties shall be governed by, the law of the State
of New York (without giving effect to principles of conflicts of law).

This letter may be executed by the parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original
and all of which taken together shall constitute but one and the same
instrument.

-11-

<PAGE>

If you are in agreement with the foregoing, please sign the form of
acceptance on the enclosed counterpart of this letter and return the same to the
Company, whereupon this letter shall become a binding agreement among you and
the Company.

Very truly yours,

NORTHWESTERN PUBLIC SERVICE COMPANY

By: /s/ Richard R. Hylland
---------------------------------------------
Title: Vice President - Stretegic Development

The foregoing letter is
hereby accepted as of the
date first above written.

METROPOLITAN LIFE INSURANCE COMPANY

By: /s/ John R. Endres
---------------------------------
Title: Assistant Vice President

THE TRAVELERS INSURANCE COMPANY

By: /s/ Robert M. Mills
--------------------------------
Title: Assistant Investment Officer

THE PHOENIX INSURANCE COMPANY

By: /s/ Robert M. Mills
---------------------------------
Title: Assistant Investment Officer

THE TRAVELERS INDEMNITY COMPANY

-12-

<PAGE>

Signature Page to Consent to Amendment to
1940 Indenture and Agreement to Exchange Bonds

By: /s/ Robert M. Mills
-------------------------------------
Title: Assistant Investment Officer

THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION),
in its capacity as Trustee under the 1993 Indenture

By: /s/ J.D. Heaney
--------------------------------------
Title: Vice President

-13-

<PAGE>

EXHIBIT A
TO CONSENT

SUPPLEMENTAL INDENTURE, dated the _____ day of July, nineteen hundred and
ninety-five (1995), made by and between NORTHWESTERN PUBLIC SERVICE COMPANY, a
corporation organized and existing under the laws of the State of Delaware
(hereinafter called the "Company"), party of the first part, and THE CHASE
MANHATTAN BANK (National Association), a national banking association organized
and existing under the laws of the United States of America and having its
principal office or place of business in the Borough of Manhattan, The City of
New York, State of New York, successor to The Chase National Bank of the City of
New York (hereinafter called the "Trustee"), and C. J. HEINZELMANN, of Nassau
County, New York, successor to Carl E. Buckley (the Trustee and said C. J.
HEINZELMANN being hereinafter called the "Trustees," which term where the
context requires may also designate their respective predecessors in trust, the
post office address of the Trustees being Corporate Trust Administration
Division, 4 Chase MetroTech Center - 3rd Floor, Brooklyn, New York 11245), as
Trustees under the Indenture dated August 1, 1940, hereinafter mentioned,
parties of the second part.

WHEREAS the Company has heretofore executed and delivered its Indenture
(hereinafter referred to as the "Original Indenture"), dated August 1, 1940, to
the Trustees for the security of the bonds of the Company issued and to be
issued thereunder; and

WHEREAS the Company, from time to time, has heretofore duly made and
delivered to the Trustees certain indentures supplemental to the Original
Indenture, including supplemental indentures dated January 15, 1941, August 18,
1945, September 23, 1946, October 1, 1946, July 24, 1947, June 1, 1948,
September 1, 1948, June 1, 1949, August 16, 1950, March 1, 1952, May 1, 1953,
February 1, 1955, August 27, 1955, October 1, 1956, July 1, 1957, August 1,
1959, July 1, 1961, July 1, 1966, September 1, 1970, August 1, 1972, July 1,
1973, November 14, 1974, May 1, 1975, June 1, 1977, July 1, 1978, December 1,
1978, May 6, 1987, November 1, 1989, July 15, 1991, November 15, 1991, September
1, 1992 and August 15, 1993 (the Original Indenture as supplemented and amended
by the aforementioned supplemental indentures and by this Supplemental Indenture
being hereinafter referred to as the "Indenture"); and

WHEREAS pursuant to the terms and provisions of the Original Indenture and
a Supplemental Indenture dated November 1, 1989, the Company created a new
series of bonds, to be issued under the Original Indenture, and to be known as
First Mortgage Bonds, 8.90% Series due 1999, of which Bonds of the 8.90% Series
there are issued and outstanding, as of the date of this Supplemental Indenture,
$7,500,000 principal amount; and

WHEREAS pursuant to the terms and provisions of the Original Indenture and
a Supplemental Indenture dated July 15, 1991, the Company created a new series
of bonds, to be issued under the Original Indenture, and to be known as First
Mortgage Bonds, 8.824% Series due 1998, of which Bonds of the 8.824% Series
there are issued and outstanding, as of the date of this Supplemental Indenture,
$15,000,000 principal amount; and

WHEREAS pursuant to the terms and provisions of the Original Indenture and
a Supplemental Indenture dated September 1, 1992, the Company created a new
series of Bonds, to be issued under the Original Indenture, and to be known as
First Mortgage Bonds, 6.99% Series due 2002, of which Bonds of the 6.99% Series
there are issued and outstanding, as of the date of this Supplemental Indenture,
$25,000,000 principal amount; and

WHEREAS pursuant to the terms and provisions of the Original Indenture and
a Supplemental Indenture dated August 15, 1993, the Company created a new series
of Bonds, to be issued under the Original Indenture, and to be known as First
Mortgage Bonds, 7% Series due 2023, of which Bonds of the 7% Series there are
issued and outstanding, as of the date of this Supplemental Indenture,
$55,000,000 principal amount; and

WHEREAS the Company desires to modify the Indenture in certain respects;
and

<PAGE>

WHEREAS the holders of all of the Bonds issued and outstanding under the
Original Indenture as of the date hereof (being the Bonds of the 8.90% Series,
the Bonds of the 8.824% Series, the Bonds of the 6.99% Series and the Bonds of
the 7% Series) have consented to the modifications reflected herein, and to the
execution by the Company and the Trustees of this Supplemental Indenture; and

WHEREAS the Company, in the exercise of the powers and authority conferred
upon and reserved to it under the provisions of the Original Indenture, and
pursuant to appropriate resolutions of its Board of Directors, has duly resolved
and determined to make, execute and deliver to the Trustees a Supplemental
Indenture in the form hereof for the purposes herein provided; and

WHEREAS all conditions and requirements necessary to make this Supplemental
Indenture a valid, binding and legal instrument have been done, performed and
fulfilled and the execution and delivery hereof have been in all respects duly
authorized;

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

THAT Northwestern Public Service Company, in consideration of the premises
and of One Dollar to it duly paid by the Trustees at or before the ensealing and
delivery of these presents, the receipt whereof is hereby acknowledged, hereby
covenants and agrees to and with the Trustees and their successors in the trust
under the Indenture, for the benefit of those who shall hold the bonds and
coupons, or any of them, to be issued thereunder as hereinafter amended, as
follows:

ARTICLE I
AMENDMENT OF ORIGINAL INDENTURE

Section 1. Section 3 of Article II of the Indenture (referred to on pages
17-26 of the Supplemental Indenture dated October 1, 1946) is hereby amended by
deleting the figure "sixty per centum (60%)" and inserting in lieu thereof the
figure "seventy-five per centum (75%)" in both places where it appears.

Section 2. Section 3 of Article II of the Indenture (referred to on pages
17-26 of the Supplemental Indenture dated October 1, 1946) is hereby amended
further amended by:

(a) Deleting the phrase "or which shall have been certified or used
to comply with any requirement of Article VII of this Indenture" in the
first paragraph thereof;

(b) Deleting the phrase "the GREATER of (a) the aggregate amount of
such gross expenditures, if any, certified to the Trustee for or during
such period pursuant to the provisions of Section 1 of Article VII hereof
as expended for the purposes stated in sub-paragraph (b) of said Section or
(b)" in the first paragraph of the definition of "net expenditures"
contained therein;

(c) Deleting the phrase "(1) were certified to the Trustee pursuant
to the provisions of Section 1 of Article VII hereof as expended by the
Company for the purpose stated in sub-paragraph (c) of Section 1 of Article
VII hereof, (2) were paid to the Trustee to comply with the requirements of
Section 1 of Article VII hereof, and (3)" in the first paragraph of the
definition of "net expenditures" contained therein;

A-2

<PAGE>

(d) Deleting the phrase "or the certification of net expenditures to
the Trustee under the provisions of Section 2 of Article VII of this
Indenture" in the second paragraph of the definition of "net expenditures"
contained therein;

(e) Deleting clauses (3), (4)(b) and (4)(c) of sub-paragraph (b)
thereof (referred to on page 24 of the Supplemental Indenture dated October
1, 1946); and

(f) Deleting the phrase "or has been certified or used to comply with
any requirement of Article VII of this Indenture" in sub-paragraph (b)
thereof (referred to on page 25 of the Supplemental Indenture dated October
1, 1946).

ARTICLE II
THE TRUSTEES

The Trustees hereby accept the trusts hereby declared and provided and
agree to perform the same upon the terms and conditions in the Original
Indenture set forth and upon the following terms and conditions:

The Trustees shall not be responsible in any manner whatsoever for or in
respect of the validity or sufficiency of this Supplemental Indenture or the due
execution hereof by the Company or for or in respect of the recitals contained
herein, all of which recitals are made by the Company solely. In general each
and every term and condition contained in Article XV of the Original Indenture,
as amended by Section 15 of Article IV of the Supplemental Indenture dated
October 1, 1946, shall apply to this Supplemental Indenture with the same force
and effect as if the same were herein set forth in full, with such omissions,
variations and modifications thereof as may be appropriate to make the same
conform to this Supplemental Indenture.

IN WITNESS WHEREOF, said Northwestern Public Service Company has caused
this instrument to be executed in its corporate name by its President or one of
its Vice Presidents, and its corporate seal to be hereunto affixed and to be
attested by its Corporate Secretary or an Assistant Secretary, and said The
Chase Manhattan Bank (National Association), to evidence its acceptance of the
trust hereby created, has caused this instrument to be executed in its corporate
name by its President or one of its Second Vice Presidents and its corporate
seal to be hereunto affixed and to be attested by one of its Assistant
Secretaries, and said C.J. Heinzelmann, to

A-3

<PAGE>

evidence his acceptance of the trust hereby created, has signed this instrument,
in several counterparts, all as of the day and year first above written.

NORTHWESTERN PUBLIC SERVICE COMPANY

By
------------------------------------
[Title]
ATTEST:

By
---------------------------------------
[Title]

Executed by Northwestern
Public Service Company in the presence of:

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

- --------------------------------------------
Witnesses

A-4

<PAGE>

(BANK SEAL) THE CHASE MANHATTAN BANK (NATIONAL
ASSOCIATION)

By
-------------------------------------
[Title]

ATTEST:

By
---------------------------------
Assistant Secretary

Executed by The Chase
Manhattan Bank (National Association) in
the presence of:

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

- ------------------------------------------
Witnesses

By
-----------------------------------
C. J. Heinzelmann

Executed by C. J. Heinzelmann
in the presence of:

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

- ----------------------------------------
Witnesses

A-5

<PAGE>

STATE OF SOUTH DAKOTA )
) SS
COUNTY OF BEADLE )

On this _____th day of July, in the year 1995, before me, ___________, a
Notary Public in and for said County and State, personally appeared __________
and __________, known to me to be the _______________ and the _______________,
respectively, of Northwestern Public Service Company, a Delaware corporation,
and one of the corporations that is described in and that executed the within
instrument, and to be officers of said corporation authorized to execute said
instrument on its behalf, and acknowledged to me that said corporation executed
the same, and further acknowledged to me that they had executed said instrument
as such officers and on behalf of said corporation, thereunto duly authorized.

IN WITNESS WHEREOF, I have hereunto set my hand and affixed my seal of
office this _____th day of July, 1995.

(NOTARIAL SEAL)

-------------------------------------------------
Notary Public
[NAME]
Notary Public, Beadle County, S.D.
My Commission expires __________, _____

STATE OF SOUTH DAKOTA )
) SS
COUNTY OF BEADLE )

On this _____th day of July, in the year 1995, before me, ___________, a
Notary Public in and for said County and State, personally appeared __________
and __________, known to me to be the _______________ and the _______________,
respectively, of the within named Northwestern Public Service Company, a
Delaware corporation, and to be the same persons whose names are signed to the
foregoing instrument as such _______________ and such _______________,
respectively, of said corporation, and acknowledged said instrument to be the
voluntary act and deed of said corporation, and further acknowledged that they
had signed, sealed and delivered said instrument as their voluntary act and deed
as the _______________ and the _______________, respectively, of said
corporation and that the seal of said corporation affixed to said instrument is
the common seal of said corporation.

IN WITNESS WHEREOF, I have hereunto set my hand and affixed my seal of
office this _____th day of July, 1995.

(NOTARIAL SEAL)
-------------------------------------------------
Notary Public
[NAME]
Notary Public, Beadle County, S.D.
My Commission expires __________, ____

<PAGE>

STATE OF NEW YORK )
) SS
COUNTY OF KINGS )

On this _____th day of July, in the year 1995, before me, __________, a
Notary Public in and for said County and State, personally appeared __________
and __________ to me personally known and known to me to be a _______________
and an Assistant Secretary, respectively, of THE CHASE MANHATTAN BANK (National
Association), a national banking association organized and existing under the
laws of the United States of America and one of the corporations described in
and which executed the foregoing instrument, who, being by me severally duly
sworn, each for himself did depose, and say and acknowledge that he, said
__________, resides at _________________, and is a _______________ of said Bank
and that she, said __________, resides at _______________, and is an Assistant
Secretary of said Bank; that they respectively know the seal of said Bank and
that the seal affixed to said instrument is such corporate seal; that it was so
affixed by order of the Board of Directors of said Bank, and that they,
respectively, signed their names thereto by like order; and that said instrument
is the voluntary act and deed of said Bank, by it voluntarily executed.

IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed my
official seal this _____th day of July, 1995.

(NOTARIAL SEAL)
------------------------------------------
Notary Public

Notary Public, State of New York
No. __________
Qualified in Kings County
Commission expires __________, ____

<PAGE>

STATE OF NEW YORK )
) SS
COUNTY OF NEW YORK )

On this _____th day of July, in the year 1995, before me, __________, a
Notary Public in and for said County and State, personally appeared C. J.
HEINZELMANN, to me personally known and known by me to be the person described
in and who executed the foregoing instrument, who, being by me duly sworn, did
depose, say and acknowledge that he resides at 15 Boylston Street, Garden City,
New York, and that said instrument is his voluntary act and deed, by him
voluntarily executed.

IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed my
official seal this _____th day of July, 1995.

(NOTARIAL SEAL)
--------------------------------------------
Notary Public

Notary Public, State of New York
No. __________
Qualified in New York County
Commission expires __________, _____

<PAGE>

ACKNOWLEDGMENT

The undersigned acknowledges the delivery to it and the receipt by it of a
full, true and complete copy of the foregoing Supplemental Indenture dated July,
1995.

NORTHWESTERN PUBLIC SERVICE COMPANY

--------------------------------------------
[Title]

(CORPORATE SEAL)

By
---------------------------------
[Title]

<PAGE>

EXHIBIT B-1
TO CONSENT

SUPPLEMENTAL INDENTURE, dated as of __________, 1995 (the "Supplemental
Indenture"), made by and between NORTHWESTERN PUBLIC SERVICE COMPANY, a
corporation organized and existing under the laws of the State of Delaware (the
"Company"), the post office address of which is 33 Third Street, S.E., Huron,
South Dakota 57350, and THE CHASE MANHATTAN BANK (National Association), a
national banking association organized and existing under the laws of the United
States of America (the "Trustee"), as Trustee under the General Mortgage
Indenture and Deed of Trust dated as of August 1, 1993, hereinafter mentioned,
the post office address of which is 4 Chase MetroTech Center, 3rd Floor,
Brooklyn, New York 11245;

WHEREAS, the Company has heretofore executed and delivered its General
Mortgage Indenture and Deed of Trust dated as of August 1, 1993 (the "Original
Indenture"), to the Trustee, for the security of the Bonds of the Company issued
and to be issued thereunder (the "Bonds"); and

WHEREAS, the Company has heretofore executed and delivered to the Trustee a
certain indenture supplemental to the Original Indenture dated August 15, 1993
(the Original Indenture, as supplemented and amended by the aforementioned
supplemental indenture and by this Supplemental Indenture being hereinafter
referred to as the "Indenture"); and

WHEREAS, the Company desires to create a new series of Bonds to be issued
under the Indenture, to be known as New Mortgage Bonds, 8.90% Series due 1999
(the "New Mortgage Bonds of the 8.90% Series"), which New Mortgage Bonds of the
8.90% Series are to be issued in exchange for certain other bonds of the Company
of like tenor and amount that were issued pursuant to a supplemental indenture
to the Company's Indenture dated August 1, 1940; and

WHEREAS, the Company, in the exercise of the powers and authority conferred
upon and reserved to it under the provisions of the Indenture, and pursuant to
appropriate resolutions of the Board of Directors, has duly resolved and
determined to make, execute and deliver to the Trustee a Supplemental Indenture
in the form hereof for the purposes herein provided; and

WHEREAS, all conditions and requirements necessary to make this
Supplemental Indenture a valid, binding and legal instrument have been done,
performed and fulfilled and the execution and delivery hereof have been in all
respects duly authorized;

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

THAT Northwestern Public Service Company, in consideration of the exchange
referred to above and ownership from time to time of the Bonds and the service
by the Trustee, and its successors, under the Indenture and of One Dollar to it
duly paid by the Trustee at or before the ensealing and delivery of these
presents, the receipt whereof is hereby acknowledged, hereby covenants and
agrees to and with the Trustee and its successors in the trust under the
Indenture, for the benefit of those who shall hold the Bonds as follows:

ARTICLE I
DESCRIPTION OF BONDS OF THE 8.90% SERIES DUE 1999

Section 1. The Company hereby creates a new series of Bonds to be known as
"New Mortgage Bonds, 8.90% Series due 1999." The New Mortgage Bonds of the
8.90% Series shall be executed, authenticated and delivered in accordance with
the provisions of, and shall in all respects be subject to, all of the terms,
conditions and covenants of the Indenture, as supplemented and modified.

<PAGE>

The commencement of the first interest period for the New Mortgage Bonds of
the 8.90% Series shall be May 1, 1995. The New Mortgage Bonds of the 8.90%
Series shall mature November 1, 1999, and shall bear interest at the rate of
8.90% per annum, payable semi-annually on the first day of May and the first day
of November in each year; PROVIDED, HOWEVER, that if the Company shall default
in the payment of principal of, premium, if any, or interest on, any New
Mortgage Bond of the 8.90% Series when the same shall have become due and such
default shall continue for more than five days, then the Company covenants and
agrees that it will pay to the holder thereof, to the extent permitted by
applicable law, interest on the outstanding principal amount of such New Bond at
the rate of 9.90% per annum commencing on the due date of such payment and
continuing until such overdue amount is paid. The person in whose name any of
the New Mortgage Bonds of the 8.90% Series are registered at the close of
business on any record date (as hereinafter defined) with respect to any
interest payment date shall be entitled to receive the interest payable on such
interest payment date notwithstanding the cancellation of such New Mortgage
Bonds of the 8.90% Series upon any transfer or exchange subsequent to the record
date and prior to such interest payment date; PROVIDED, HOWEVER, that if and to
the extent the Company shall default in the payment of the interest due on such
interest payment date, such defaulted interest shall be paid as provided in
Section 3.07(b) of the Indenture.

The term "record date" as used in this Section with respect to any interest
payment date shall mean April 15 or October 15, as the case may be, next
preceding the semi-annual interest payment date, or, if such April 15 or October
15 shall be a legal holiday or a day on which banking institutions in the
Borough of Manhattan, The City of New York, State of New York, are authorized by
law to close, then the next preceding day which shall not be a legal holiday or
a day on which such institutions are so authorized to close.

Section 2. The New Mortgage Bonds of the 8.90% Series shall be issued only
as registered Bonds without coupons of the denomination of $1,000, or any
integral multiple of $1,000, appropriately numbered. The New Mortgage Bonds of
the 8.90% Series may be exchanged, upon surrender thereof, at the agency of the
Company in the Borough of Manhattan, The City of New York, State of New York,
for one or more new New Mortgage Bonds of the 8.90% Series of other authorized
denominations, for the same aggregate principal amount, subject to the terms and
conditions set forth in the Indenture.

New Mortgage Bonds of the 8.90% Series may be exchanged or transferred
without expense to the registered owner thereof except that any taxes or other
governmental charges required to be paid with respect to such transfer or
exchange shall be paid by the registered owner requesting such transfer or
exchange as a condition precedent to the exercise of such privilege.

Section 3. The New Mortgage Bonds of the 8.90% Series and the Trustee's
Certificate of Authentication shall be substantially in the following forms
respectively:

[FORM OF BOND OF THE 8.90% SERIES DUE 1999]

NORTHWESTERN PUBLIC SERVICE COMPANY
(Incorporated under the laws of the State of South Dakota)
NEW MORTGAGE BOND, 8.90% SERIES DUE 1999

No. R- $______________

B-1-2

<PAGE>

shall be discharged as provided in the Indenture hereinafter mentioned;
PROVIDED, HOWEVER, that if the Company shall default in the payment of principal
of, premium, if any, or interest on, this Bond when the same shall have become
due and such default shall continue for more than five days, then the Company
covenants and agrees that it will pay to the holder hereof, to the extent
permitted by applicable law, interest on the outstanding principal amount of
this Bond at the rate of 9.90% per annum commencing on the due date of such
payment and continuing until such overdue amount is paid. The interest so
payable on any May 1 or November 1 will, subject to certain exceptions provided
in the Supplemental Indenture dated as of __________, 1995, be paid to the
person in whose name this Bond is registered at the close of business on the
immediately preceding April 15 or October 15, as the case may be. Both principal
of, and interest on, this Bond are payable at the agency of the Company in the
Borough of Manhattan, The City of New York, State of New York.

This Bond shall not be entitled to any benefit under the Indenture or any
indenture supplemental thereto, or become valid or obligatory for any purpose,
until the form of certificate endorsed hereon shall have been signed by or on
behalf of The Chase Manhattan Bank (National Association), the Trustee under the
Indenture, or a successor trustee thereto under the Indenture, or by an
authenticating agent duly appointed by the Trustee in accordance with the terms
of the Indenture.

The provisions of this New Mortgage Bond are continued on the reverse
hereof and such continued provisions shall for all purposes have the same effect
as though fully set forth at this place.

IN WITNESS WHEREOF, Northwestern Public Service Company has caused this New
Mortgage Bond to be signed (manually or by facsimile signature) in its name by
an Authorized Executive Officer, as defined in the Indenture, and its corporate
seal (or a facsimile thereof) to be hereto affixed and attested (manually or by
facsimile signature) by an Authorized Executive Officer, as defined in the
Indenture.

Dated: NORTHWESTERN PUBLIC SERVICE COMPANY

By
------------------------------------------
AUTHORIZED EXECUTIVE OFFICER
ATTEST:

- ----------------------------------
AUTHORIZED EXECUTIVE OFFICER

[FORM OF TRUSTEE'S CERTIFICATE]

This is one of the Bonds of the series designated therein referred to in
the within-mentioned Indenture and Supplemental Indenture dated as of _________,
1995.

THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION),
AS TRUSTEE

By
----------------------------------
AUTHORIZED OFFICER

B-1-3

<PAGE>

[FORM OF REVERSE OF BOND]

This New Mortgage Bond of the 8.90% Series is one of a duly authorized
issue of Bonds of the Company (the "Bonds"), of the series hereinafter
specified, all issued and to be issued under and equally secured by a General
Mortgage Indenture and Deed of Trust (the "Indenture"), dated as of August 1,
1993, executed by the Company to The Chase Manhattan Bank (National Association)
(the "Trustee"), as Trustee, to which Indenture and all indentures supplemental
thereto reference is hereby made for a description to the properties mortgaged
and pledged, the nature and extent of the security, the rights of registered
owners of the Bonds and of the Trustee in respect thereof, and the terms and
conditions upon which the Bonds are, and are to be, secured. The Bonds may be
issued in series, for various principal sums, may mature at different times, may
bear interest at different rates and may otherwise vary as provided in the
Indenture. This New Mortgage Bond of the 8.90% Series is one of a series
designated as the "New Mortgage Bonds, 8.90% Series Due 1999" (the "New Mortgage
Bonds of the 8.90% Series") of the Company issued under and secured by the
Indenture and described in the supplemental indenture dated as of __________,
1995 (the "Supplemental Indenture dated as of __________, 1995"), between the
Company and the Trustee, supplemental to the Indenture.

New Mortgage Bonds of the 8.90% Series, of which this is one, are subject
to redemption as follows:

At the option of the Company and upon the notice and in the
manner and with the effect provided in the Indenture, any or all of
the New Mortgage Bonds of the 8.90% Series may be redeemed by the
Company at any time and from time to time prior to maturity, upon
payment of the Yield Maintenance Price (as defined in Section 1 of
Article III of the Supplemental Indenture dated as of __________,
1995) for each of the New Mortgage Bonds of the 8.90% Series to be
redeemed, together in each case with principal and accrued interest to
the redemption date.

To the extent permitted by, and as provided in, the Indenture,
modifications or alterations of the Indenture, or of any indenture supplemental
thereof, and of the rights and obligations of the Company and of the holders of
the Bonds may be made with the consent of the Company by an affirmative vote of
the holders of a majority in aggregate principal amount of the Bonds entitled to
vote then outstanding, at a meeting of the holders of the Bonds called and held
as provided in the Indenture, and by an affirmative vote of the holders of a
majority in aggregate principal amount of the Bonds of any series or any tranche
or tranches of any series entitled to vote then outstanding and affected by such
modification or alteration, in case one or more but less than all of the series
of Bonds or of any tranche or tranches of any series of Bonds then outstanding
under the Indenture are so affected; PROVIDED, HOWEVER, that no such
modification or alteration shall be made which will affect the terms of payment
of the principal of, or interest or premium, if any, on this Bond.

In case an Event of Default, as defined in the Indenture, shall occur, the
principal of all the New Mortgage Bonds of the 8.90% Series at any such time
outstanding under the Indenture may be declared or may become due and payable,
upon the conditions and in the manner and with the effect provided in the
Indenture. The Indenture provides that such declaration may be rescinded under
certain circumstances.

ARTICLE II
ISSUE OF NEW MORTGAGE BONDS OF THE 8.90% SERIES

Section 1. The Company hereby exercises the right to obtain the
authentication of $7,500,000 principal amount of Bonds pursuant to the terms of
Section 4.03 of the Indenture. All such Bonds shall be New Mortgage Bonds of
the 8.90% Series.

B-1-4

<PAGE>

Section 2. Such New Mortgage Bonds of the 8.90% Series may be
authenticated and delivered prior to the filing for recordation of this
Supplemental Indenture.

ARTICLE III
REDEMPTION

Section 1. The New Mortgage Bonds of the 8.90% Series shall, upon the
notice and in the manner and with the effect provided in Article Five of the
Original Indenture, as amended by Section 2 of this Article III, be redeemable
at any time and from time to time prior to maturity, at the option of the
Company, as a whole, upon payment of the Yield Maintenance Price (as hereinafter
defined) for each of the New Mortgage Bonds of the 8.90% Series to be redeemed,
together with accrued interest to the redemption date; PROVIDED HOWEVER, the
Company shall not redeem any New Mortgage Bonds of the 8.90% Series in a
principal amount less than $100,000 or a multiple thereof.

If the notice of redemption shall have been given by the Company as
provided in the Indenture, the Computing Holder shall deliver written notice to
the Company on the fifth business day prior to such redemption date, of the
amount of the Yield Maintenance Price for the principal amount of the New
Mortgage Bonds of the 8.90% Series held by such Computing Holder so to be
redeemed, which notice shall set forth in reasonable detail the computation
thereof. The Yield Maintenance Price set forth in such notice shall be binding
on the Company absent manifest error.

The Company shall deliver to each holder of the New Mortgage Bonds of the
8.90% Series to be redeemed on or before such redemption date a certificate
signed by a principal financial officer of the Company setting forth the Yield
Maintenance Price of the principal amount of the New Mortgage Bonds of the 8.90%
Series held by such holder so to be redeemed, and setting forth in reasonable
detail the calculation thereof accompanied by a copy of the written notice given
by the Computing Holder which sets forth the computation of the Yield
Maintenance Price of the New Mortgage Bonds of the 8.90% Series held by the
Computing Holder. The Company covenants and agrees that it will on such
redemption date redeem the New Mortgage Bonds of the 8.90% Series held by each
holder so to be redeemed by payment to such holder the Yield Maintenance Price
therefor, together with interest accrued thereon to the date fixed for
redemption.

As used in this Section 1:

"Computing Holder" shall mean the holder who holds bonds of the New
Mortgage Bonds of the 8.90% Series with an aggregate principal amount
outstanding higher than that of New Mortgage Bonds of the 8.90% Series held by
any other holder, or in the event two or more holders hold an equal amount which
constitutes the highest principal amount of the New Mortgage Bonds of the 8.90%
Series, any holder designated by the other holders. For purposes of determining
the Computing Holder, the New Mortgage Bonds of the 8.90% Series then held by
Metropolitan Life Insurance Company and its subsidiaries shall be aggregated.

"Weighted Average Life to Final Maturity" of any of the New Mortgage Bonds
of the 8.90% Series to be redeemed, shall mean the number of years (rounded to
the nearest one-twelfth of a year) which will elapse between the scheduled date
of redemption thereof and the scheduled date of maturity of the New Mortgage
Bonds of the 8.90% Series.

"Yield Maintenance Price" shall mean the higher of (1) the entire unpaid
principal amount of the New Mortgage Bonds of the 8.90% Series to be redeemed
and (2) the sum of the respective Payment Values of each prospective interest
payment and the principal payment as maturity in respect of the principal amount
of the New

B-1-5

<PAGE>

Mortgage Bonds of the 8.90% Series to be redeemed (the amount of each
such payment being herein referred to as a "Payment"). The Payment Value of
each Payment shall be determined by discounting such Payment at the Reinvestment
Rate, for the period from the scheduled date on which such Payment is due to be
made to the applicable date of redemption. The Reinvestment Rate is the yield
which shall be imputed from the yields of those actively traded "On The Run"
United States Treasury securities having maturities as close as practicable to
the Weighted Average Life to Final Maturity of the New Mortgage Bonds of the
8.90% Series to be redeemed. The yields of such United States Treasury
securities shall be determined as of 10 A.M. Eastern Time on the date on which
the Yield Maintenance Price is determined.

Section 2. Notice of redemption of any New Mortgage Bonds of the 8.90%
Series shall be given as provided in Section 5.04 of the Original Indenture. If
given by mail, the mailing of such notice shall be a condition precedent to
redemption, provided that any notice which is mailed in the manner provided in
Section 5.04 of the Original Indenture shall be conclusively presumed to have
been duly given whether or not the holders receive such notice, and failure to
give such notice by mall, or any defect in such notice, to the holder of any
such bond designated for redemption shall not affect the validity of the
redemption of any other such bond. Except for the changes in the giving of
notice of redemption as provided in this Section, the procedures for redemption
of the New Mortgage Bonds of the 8.90% Series shall be as provided in Article
Five of the Original Indenture.

Section 3. The Company, with the approval of the Trustee, may enter into a
written agreement with the holder of any New Mortgage Bonds of the 8.90% Series
providing that payment of such bonds called for redemption in part only be made
directly by mail, wire transfer or in any other manner to the holder thereof
without presentation or surrender thereof if there shall be delivered to the
Trustee an agreement (which may be a composite with other such agreements)
between the Company and such holder (or other person acting as agent for such
holder or for whom such holder is a nominee) that payment shall be so made, and
that in the event the holder thereof shall sell or transfer any such bonds (a)
it will, prior to the delivery of such bonds, either (i) surrender such bonds to
the Trustee to make a proper notation of the amount of principal paid thereon or
(ii) surrender such bonds to the Trustee against receipt of one or more New
Mortgage Bonds of the 8.90% Series in an aggregate principal amount equal to the
unpaid principal portion of the bonds so surrendered, and (b) it will promptly
notify the Company of the name and address of the transferee of any New Mortgage
Bonds of the 8.90% Series so transferred. The Trustee shall not be liable or
responsible to any such holder or transferee or to the Company or to any other
person for any act or omission to act on the part of the Company or any such
holder in connection with any such agreement. The Company will indemnify and
save the Trustee harmless against any liability resulting from any such act or
omission and against any liability resulting from any action taken by the
Trustee in accordance with the provisions of any such agreement.

ARTICLE IV
THE TRUSTEE

The Trustee hereby accepts the trusts hereby declared provided, and agrees
to perform the same upon the terms and conditions in the Indenture set forth and
upon the following terms and conditions:

The Trustee shall not be responsible in any manner whatsoever for
or in respect of the validity or sufficiency of this Supplemental
Indenture or the due execution hereof by the Company or for or in
respect of the recitals contained herein, all of which recitals are
made by the Company solely. In general, each and every term and
condition contained in Article Eleven of the Indenture shall apply to
this Supplemental Indenture with the same force and effect as if the
same were herein set forth in full, with such omissions, variations
and modifications thereof as may be appropriate to make the same
conform to this Supplemental Indenture.

B-1-6

<PAGE>

ARTICLE VI
MISCELLANEOUS PROVISIONS

This Supplemental Indenture may be simultaneously executed in any number of
counterparts, each of which when so executed shall be deemed to be an original;
but such counterparts shall together constitute but one and the same instrument.

IN WITNESS WHEREOF, said Northwestern Public Service Company has caused
this Indenture to be executed on its behalf by an Authorized Executive Officer
as defined in the Indenture, and its corporate seal to be hereto affixed and
said seal and this Indenture to be attested by an Authorized Executive Officer
as defined in the Indenture; and The Chase Manhattan Bank (National
Association), in evidence of its acceptance of the trust hereby created, has
caused this Indenture to be executed on its behalf by its President or one of
its Vice Presidents and its corporate seal to be hereto affixed and said seal
and this Indenture to be attested by its Secretary or one of its Assistant
Secretaries; all as of the _____ day of __________, 1995.

NORTHWESTERN PUBLIC SERVICE COMPANY

By
---------------------------------------------
VICE PRESIDENT

(CORPORATE SEAL)

ATTEST:

- ----------------------------
[ASSISTANT] SECRETARY
THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION)

By
---------------------------------------------
VICE PRESIDENT

(CORPORATE SEAL)

ATTEST:

- --------------------------------
ASSISTANT SECRETARY

B-1-7

<PAGE>

STATE OF SOUTH DAKOTA )
) SS
COUNTY OF BEADLE )

BE IT REMEMBERED, that on this _____th day of __________, 1995, before me,
___________, a Notary Public within and for the County and State aforesaid,
personally came _________, Vice President, and __________, [Assistant] Corporate
Secretary of Northwestern Public Service Company, a Delaware corporation, who
are personally known to me to be such officers, and who are personally known to
me to be the same persons who executed as such officers the within instrument of
writing, and such persons duly acknowledged that they signed, sealed and
delivered the said instrument as their free and voluntary act as such Vice
President and [Assistant] Corporate Secretary, respectively, and as the free and
voluntary act of Northwestern Public Service Company for the uses and purposes
therein set forth.

IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed my
official seal on the day and year last above written.

(NOTARIAL SEAL)
--------------------------------------------
Notary Public
[NAME]
Notary Public, Beadle County, S.D.
My Commission expires __________, _____

<PAGE>

STATE OF NEW YORK )
) SS
COUNTY OF KINGS )

BE IT REMEMBERED, that on this _____th day of __________, 1995, before me,
___________, a Notary Public within and for the County and State aforesaid,
personally came _________, Vice President, and __________, Assistant Secretary
of The Chase Manhattan Bank (National Association), a national banking
association, who are personally known to me to be such officers, and who are
personally known to me to be the same persons who executed as such officers the
within instrument of writing, and such persons duly acknowledged that they
signed, sealed and delivered the said instrument as their free and voluntary act
as such Vice President and Assistant Secretary, respectively, and as the free
and voluntary act of The Chase Manhattan Bank (National Association) for the
uses and purposes therein set forth.

IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed my
official seal on the day and year last above written.

(NOTARIAL SEAL)
--------------------------------------------
Notary Public

Notary Public, State of New York
No. __________
Qualified in Kings County
Commission expires __________, ____

<PAGE>

EXHIBIT B-2
TO CONSENT

WHEREAS, the Company desires to create a new series of Bonds to be issued
under the Indenture, to be known as New Mortgage Bonds, 8.824% Series due 1998
(the "New Mortgage Bonds of the 8.824% Series"), which New Mortgage Bonds of the
8.824% Series are to be issued in exchange for certain other bonds of the
Company of like tenor and amount that were issued pursuant to a supplemental
indenture to the Company's Indenture dated August 1, 1940; and

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

ARTICLE I
DESCRIPTION OF BONDS OF THE 8.824% SERIES DUE 1998

Section 1. The Company hereby creates a new series of Bonds to be known as
"New Mortgage Bonds, 8.824% Series due 1998." The New Mortgage Bonds of the
8.824% Series shall be executed, authenticated and delivered in accordance with
the provisions of, and shall in all respects be subject to, all of the terms,
conditions and covenants of the Indenture, as supplemented and modified.

<PAGE>

The commencement of the first interest period for the New Mortgage Bonds of
the 8.824% Series shall be July 15, 1995. The New Mortgage Bonds of the 8.824%
Series shall mature July 15, 1998, and shall bear interest at the rate of 8.824%
per annum, payable semi-annually on the fifteenth day of January and the
fifteenth day of July in each year. The person in whose name any of the New
Mortgage Bonds of the 8.824% Series are registered at the close of business on
any record date (as hereinafter defined) with respect to any interest payment
date shall be entitled to receive the interest payable on such interest payment
date notwithstanding the cancellation of such New Mortgage Bonds of the 8.824%
Series upon any transfer or exchange subsequent to the record date and prior to
such interest payment date; PROVIDED, HOWEVER, that if and to the extent the
Company shall default in the payment of the interest due on such interest
payment date, such defaulted interest shall be paid as provided in Section
3.07(b) of the Indenture.

The term "record date" as used in this Section with respect to any interest
payment date shall mean January 1 or July 1, as the case may be, next preceding
the semi-annual interest payment date, or, if such January 1 or July 1 shall be
a legal holiday or a day on which banking institutions in the Borough of
Manhattan, The City of New York, State of New York, are authorized by law to
close, then the next preceding day which shall not be a legal holiday or a day
on which such institutions are so authorized to close.

Section 2. The New Mortgage Bonds of the 8.824% Series shall be issued
only as registered Bonds without coupons of the denomination of $1,000, or any
integral multiple of $1,000, appropriately numbered. The New Mortgage Bonds of
the 8.824% Series may be exchanged, upon surrender thereof, at the agency of the
Company in the Borough of Manhattan, The City of New York, State of New York,
for one or more new New Mortgage Bonds of the 8.824% Series of other authorized
denominations, for the same aggregate principal amount, subject to the terms and
conditions set forth in the Indenture.

New Mortgage Bonds of the 8.824% Series may be exchanged or transferred
without expense to the registered owner thereof except that any taxes or other
governmental charges required to be paid with respect to such transfer or
exchange shall be paid by the registered owner requesting such transfer or
exchange as a condition precedent to the exercise of such privilege.

Section 3. The New Mortgage Bonds of the 8.824% Series and the Trustee's
Certificate of Authentication shall be substantially in the following forms
respectively:

[FORM OF BOND OF THE 8.824% SERIES DUE 1998]

NORTHWESTERN PUBLIC SERVICE COMPANY
(Incorporated under the laws of the State of South Dakota)
NEW MORTGAGE BOND, 8.824% SERIES DUE 1998

No. R- $______________

Northwestern Public Service Company, a corporation organized and existing
under the laws of the State of Delaware (the "Company", which term shall include
any successor corporation as defined in the Indenture hereinafter referred to),
for value received, hereby promises to pay to __________ or registered assigns,
the sum of __________ dollars on the fifteenth day of July, 1998, in any coin or
currency of the United States of America which at the time of payment is legal
tender for public and private debts, and to pay interest thereon in like coin or
currency from July 15, 1995, payable semi-annually, on the fifteenth days of
January and July in each year, at the rate of 8.824% per annum, until the
Company's obligation with respect to the payment of such principal shall be
discharged as provided in the Indenture hereinafter mentioned. The interest so
payable on any January 15 or July 15 will, subject to certain exceptions
provided in the Supplemental Indenture dated as of __________,

B-2-2

<PAGE>

1995, be paid to the person in whose name this Bond is registered at the close
of business on the immediately preceding January 1 or July 1, as the case may
be. Both principal of, and interest on, this Bond are payable at the agency of
the Company in the Borough of Manhattan, The City of New York, State of New
York.

The provisions of this New Mortgage Bond are continued on the reverse
hereof and such continued provisions shall for all purposes have the same effect
as though fully set forth at this place.

Dated: NORTHWESTERN PUBLIC SERVICE COMPANY

By
--------------------------------------------
AUTHORIZED EXECUTIVE OFFICER
ATTEST:

- ---------------------------------
AUTHORIZED EXECUTIVE OFFICER

[FORM OF TRUSTEE'S CERTIFICATE]

This is one of the Bonds of the series designated therein referred to in
the within-mentioned Indenture and Supplemental Indenture dated as of _________,
1995.

THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION),
AS TRUSTEE

By
---------------------------------------------
AUTHORIZED OFFICER

[FORM OF REVERSE OF BOND]

This New Mortgage Bond of the 8.824% Series is one of a duly authorized
issue of Bonds of the Company (the "Bonds"), of the series hereinafter
specified, all issued and to be issued under and equally secured by a General
Mortgage Indenture and Deed of Trust (the "Indenture"), dated as of August 1,
1993, executed by the Company to The Chase Manhattan Bank (National Association)
(the "Trustee"), as Trustee, to which Indenture and all indentures supplemental
thereto reference is hereby made for a description to the properties mortgaged
and pledged, the nature and extent of the security, the rights of registered
owners of the Bonds and

B-2-3

<PAGE>

of the Trustee in respect thereof, and the terms and conditions upon which the
Bonds are, and are to be, secured. The Bonds may be issued in series, for
various principal sums, may mature at different times, may bear interest at
different rates and may otherwise vary as provided in the Indenture. This New
Mortgage Bond of the 8.824% Series is one of a series designated as the "New
Mortgage Bonds, 8.824% Series Due 1998" (the "New Mortgage Bonds of the 8.824%
Series") of the Company issued under and secured by the Indenture and described
in the supplemental indenture dated as of __________, 1995 (the "Supplemental
Indenture dated as of __________, 1995"), between the Company and the Trustee,
supplemental to the Indenture.

New Mortgage Bonds of the 8.824% Series, of which this is one, are subject
to redemption at the option of the Company and upon the notice and in the manner
and with the effect provided in the Indenture, all, but not less than all, of
the New Mortgage Bonds of the 8.824% Series may be redeemed by the Company at
any time, on or after July 15, 1996 and prior to maturity, upon payment of the
following percentages of the principal amounts thereof:

If redeemed during the twelve month period beginning the fifteenth day of
July of the year:

1996 ---------- 101.471%
1997 ---------- 100.000%

together with accrued interest to the redemption date.

In case an Event of Default, as defined in the Indenture, shall occur, the
principal of all the New Mortgage Bonds of the 8.824% Series at any such time
outstanding under the Indenture may be declared or may become due and payable,
upon the conditions and in the manner and with the effect provided in the
Indenture. The Indenture provides that such declaration may be rescinded under
certain circumstances.

ARTICLE II
ISSUE OF NEW MORTGAGE BONDS OF THE 8.824% SERIES

Section 1. The Company hereby exercises the right to obtain the
authentication of $15,000,000 principal amount of Bonds pursuant to the terms of
Section 4.03 of the Indenture. All such Bonds shall be New Mortgage Bonds of
the 8.824% Series.

Section 2. Such New Mortgage Bonds of the 8.824% Series may be
authenticated and delivered prior to the filing for recordation of this
Supplemental Indenture.

ARTICLE III

B-2-4

<PAGE>

REDEMPTION

Section 1. The New Mortgage Bonds of the 8.824% Series shall, upon the
notice and in the manner and with the effect provided in Article Five of the
Original Indenture, as amended by Section 2 of this Article III, be redeemable
at any time, on or after July 15, 1996 and prior to maturity, at the option of
the Company, as a whole, upon payment of the following percentages of the
principal amounts thereof:

If redeemed during the twelve month period beginning the fifteenth day of
July of the year:

1996 ---------- 101.471%
1997 ---------- 100.000%

together with accrued interest to the redemption date.

Section 2. Notice of redemption of any New Mortgage Bonds of the 8.824%
Series shall be given as provided in Section 5.04 of the Original Indenture. If
given by mail, the mailing of such notice shall be a condition precedent to
redemption, provided that any notice which is mailed in the manner provided in
Section 5.04 of the Original Indenture shall be conclusively presumed to have
been duly given whether or not the holders receive such notice, and failure to
give such notice by mall, or any defect in such notice, to the holder of any
such bond designated for redemption shall not affect the validity of the
redemption of any other such bond. Except for the changes in the giving of
notice of redemption as provided in this Section, the procedures for redemption
of the New Mortgage Bonds of the 8.824% Series shall be as provided in Article
Five of the Original Indenture.

Section 3. The Company, with the approval of the Trustee, may enter into a
written agreement with the holder of any New Mortgage Bonds of the 8.824% Series
providing that payment of such bonds called for redemption in part only be made
directly by mail, wire transfer or in any other manner to the holder thereof
without presentation or surrender thereof if there shall be delivered to the
Trustee an agreement (which may be a composite with other such agreements)
between the Company and such holder (or other person acting as agent for such
holder or for whom such holder is a nominee) that payment shall be so made, and
that in the event the holder thereof shall sell or transfer any such bonds (a)
it will, prior to the delivery of such bonds, either (i) surrender such bonds to
the Trustee to make a proper notation of the amount of principal paid thereon or
(ii) surrender such bonds to the Trustee against receipt of one or more New
Mortgage Bonds of the 8.824% Series in an aggregate principal amount equal to
the unpaid principal portion of the bonds so surrendered, and (b) it will
promptly notify the Company of the name and address of the transferee of any New
Mortgage Bonds of the 8.824% Series so transferred. The Trustee shall not be
liable or responsible to any such holder or transferee or to the Company or to
any other person for any act or omission to act on the part of the Company or
any such holder in connection with any such agreement. The Company will
indemnify and save the Trustee harmless against any liability resulting from any
such act or omission and against any liability resulting from any action taken
by the Trustee in accordance with the provisions of any such agreement.

ARTICLE IV
THE TRUSTEE

The Trustee hereby accepts the trusts hereby declared provided, and agrees
to perform the same upon the terms and conditions in the Indenture set forth and
upon the following terms and conditions:

The Trustee shall not be responsible in any manner whatsoever for
or in respect of the validity or sufficiency of this Supplemental
Indenture or the due execution hereof by the

B-2-5

<PAGE>

Company or for or in respect of the recitals contained herein, all of which
recitals are made by the Company solely. In general, each and every term
and condition contained in Article Eleven of the Indenture shall apply to
this Supplemental Indenture with the same force and effect as if the
same were herein set forth in full, with such omissions, variations
and modifications thereof as may be appropriate to make the same
conform to this Supplemental Indenture.

ARTICLE V
MISCELLANEOUS PROVISIONS

NORTHWESTERN PUBLIC SERVICE COMPANY

By
--------------------------------------------
VICE PRESIDENT

(CORPORATE SEAL)

ATTEST:

- -----------------------------------
[ASSISTANT] SECRETARY
THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION)

By
--------------------------------------------
VICE PRESIDENT

(CORPORATE SEAL)

ATTEST:

- ----------------------------------
ASSISTANT SECRETARY

B-2-6

<PAGE>

STATE OF SOUTH DAKOTA )
) SS
COUNTY OF BEADLE )

IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed my
official seal on the day and year last above written.

(NOTARIAL SEAL)
--------------------------------------------
Notary Public
[NAME]
Notary Public, Beadle County, S.D.
My Commission expires __________, _____

<PAGE>

STATE OF NEW YORK )
) SS
COUNTY OF KINGS )

BE IT REMEMBERED, that on this _____th day of __________, 1995, before me,
___________, a Notary Public within and for the County and State aforesaid,
personally came _________, Vice President, and __________, Assistant Secretary
of The Chase Manhattan Bank (National Association), a national banking
association, who are personally known to me to be such officers, and who are
personally known to me to be the same persons who executed as such officers the
within instrument of writing, and such persons duly acknowledged that they
signed, sealed and delivered the said instrument as their free and voluntary act
as such Vice President and Assistant Secretary, respectively, and as the free
and voluntary act of The Chase Manhattan Bank (National Association) for the
uses and purposes therein set forth.

IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed my
official seal on the day and year last above written.

(NOTARIAL SEAL)
--------------------------------------------
Notary Public

Notary Public, State of New York
No. __________
Qualified in Kings County
Commission expires __________, ____

<PAGE>

EXHIBIT B-3
TO CONSENT

WHEREAS, the Company desires to create a new series of Bonds to be issued
under the Indenture, to be known as New Mortgage Bonds, 6.99% Series due 2002
(the "New Mortgage Bonds of the 6.99% Series"), which New Mortgage Bonds of the
6.99% Series are to be issued in exchange for certain other bonds of the Company
of like tenor and amount that were issued pursuant to a supplemental indenture
to the Company's Indenture dated August 1, 1940; and

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

ARTICLE I
DESCRIPTION OF BONDS OF THE 6.99% SERIES DUE 2002

Section 1. The Company hereby creates a new series of Bonds to be known as
"New Mortgage Bonds, 6.99% Series due 2002." The New Mortgage Bonds of the
6.99% Series shall be executed, authenticated and delivered in accordance with
the provisions of, and shall in all respects be subject to, all of the terms,
conditions and covenants of the Indenture, as supplemented and modified.

<PAGE>

The commencement of the first interest period for the New Mortgage Bonds of
the 6.99% Series shall be [March 1] [September 1], 1995. The New Mortgage Bonds
of the 6.99% Series shall mature September 1, 2002, and shall bear interest at
the rate of 6.99% per annum, payable semi-annually on the first day of March and
the first day of September in each year. The person in whose name any of the
New Mortgage Bonds of the 6.99% Series are registered at the close of business
on any record date (as hereinafter defined) with respect to any interest payment
date shall be entitled to receive the interest payable on such interest payment
date notwithstanding the cancellation of such New Mortgage Bonds of the 6.99%
Series upon any transfer or exchange subsequent to the record date and prior to
such interest payment date; PROVIDED, HOWEVER, that if and to the extent the
Company shall default in the payment of the interest due on such interest
payment date, such defaulted interest shall be paid as provided in Section
3.07(b) of the Indenture.

The term "record date" as used in this Section with respect to any interest
payment date shall mean February 15 or August 15, as the case may be, next
preceding the semi-annual interest payment date, or, if such February 15 or
August 15 shall be a legal holiday or a day on which banking institutions in the
Borough of Manhattan, The City of New York, State of New York, are authorized by
law to close, then the next preceding day which shall not be a legal holiday or
a day on which such institutions are so authorized to close.

Section 2. The New Mortgage Bonds of the 6.99% Series shall be issued only
as registered Bonds without coupons of the denomination of $1,000, or any
integral multiple of $1,000, appropriately numbered. The New Mortgage Bonds of
the 6.99% Series may be exchanged, upon surrender thereof, at the agency of the
Company in the Borough of Manhattan, The City of New York, State of New York,
for one or more new New Mortgage Bonds of the 6.99% Series of other authorized
denominations, for the same aggregate principal amount, subject to the terms and
conditions set forth in the Indenture.

New Mortgage Bonds of the 6.99% Series may be exchanged or transferred
without expense to the registered owner thereof except that any taxes or other
governmental charges required to be paid with respect to such transfer or
exchange shall be paid by the registered owner requesting such transfer or
exchange as a condition precedent to the exercise of such privilege.

Section 3. The New Mortgage Bonds of the 6.99% Series and the Trustee's
Certificate of Authentication shall be substantially in the following forms
respectively:

[FORM OF BOND OF THE 6.99% SERIES DUE 2002]

NORTHWESTERN PUBLIC SERVICE COMPANY
(Incorporated under the laws of the State of South Dakota)
NEW MORTGAGE BOND, 6.99% SERIES DUE 2002

No. R- $______________

Northwestern Public Service Company, a corporation organized and existing
under the laws of the State of Delaware (the "Company", which term shall include
any successor corporation as defined in the Indenture hereinafter referred to),
for value received, hereby promises to pay to __________ or registered assigns,
the sum of __________ dollars on the first day of September, 2002, in any coin
or currency of the United States of America which at the time of payment is
legal tender for public and private debts, and to pay interest thereon in like
coin or currency from [March 1] [September 1], 1995, payable semi-annually, on
the first days of March and September in each year, at the rate of 6.99% per
annum, until the Company's obligation with respect to the payment of such
principal shall be discharged as provided in the Indenture hereinafter
mentioned. The interest so payable on any March 1 or September 1 will, subject
to certain exceptions provided in the Supplemental

B-3-2

<PAGE>

Indenture dated as of__________, 1995, be paid to the person in whose name this
Bond is registered at the close of business on the immediately preceding
February 15 or August 15, as the case may be. Both principal of, and interest
on, this Bond are payable at the agency of the Company in the Borough of
Manhattan, The City of New York, State of New York.

The provisions of this New Mortgage Bond are continued on the reverse
hereof and such continued provisions shall for all purposes have the same effect
as though fully set forth at this place.

Dated: NORTHWESTERN PUBLIC SERVICE COMPANY

By
--------------------------------------------
AUTHORIZED EXECUTIVE OFFICER
ATTEST:

- ---------------------------------
AUTHORIZED EXECUTIVE OFFICER

[FORM OF TRUSTEE'S CERTIFICATE]

This is one of the Bonds of the series designated therein referred to in
the within-mentioned Indenture and Supplemental Indenture dated as of _________,
1995.

THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION),
AS TRUSTEE

By
--------------------------------------------
AUTHORIZED OFFICER

[FORM OF REVERSE OF BOND]

This New Mortgage Bond of the 6.99% Series is one of a duly authorized
issue of Bonds of the Company (the "Bonds"), of the series hereinafter
specified, all issued and to be issued under and equally secured by a General
Mortgage Indenture and Deed of Trust (the "Indenture"), dated as of August 1,
1993, executed by the Company to The Chase Manhattan Bank (National Association)
(the "Trustee"), as Trustee, to which Indenture and all indentures supplemental
thereto reference is hereby made for a description to the properties mortgaged

B-3-3

<PAGE>

and pledged, the nature and extent of the security, the rights of registered
owners of the Bonds and of the Trustee in respect thereof, and the terms and
conditions upon which the Bonds are, and are to be, secured. The Bonds may be
issued in series, for various principal sums, may mature at different times, may
bear interest at different rates and may otherwise vary as provided in the
Indenture. This New Mortgage Bond of the 6.99% Series is one of a series
designated as the "New Mortgage Bonds, 6.99% Series Due 2002" (the "New Mortgage
Bonds of the 6.99% Series") of the Company issued under and secured by the
Indenture and described in the supplemental indenture dated as of __________,
1995 (the "Supplemental Indenture dated as of __________, 1995"), between the
Company and the Trustee, supplemental to the Indenture.

New Mortgage Bonds of the 6.99% Series, of which this is one, are subject
to redemption as follows:

(I) At the option of the Company and upon the notice and in the manner and
with the effect provided in the Indenture, all, but not less than all, of the
New Mortgage Bonds of the 6.99% Series may be redeemed by the Company at any
time, on or after September 1, 1997 and prior to maturity, upon payment of the
Make-Whole Amount (as defined in Section 1 of Article III of the Supplemental
Indenture dated as of __________, 1995) for each of the New Mortgage Bonds of
the 6.99% Series to be redeemed, together in each case with principal and
accrued interest to the redemption date.

(II) New Mortgage Bonds of the 6.99% Series shall be redeemed by the
Company in the amounts required by the Supplemental Indenture dated as of
__________, 1995 on September 1 of each year, commencing in 1998, through the
operation of the sinking fund for such bonds, upon payment of the principal
amount thereof together with accrued interest to the redemption date.

In case an Event of Default, as defined in the Indenture, shall occur, the
principal of all the New Mortgage Bonds of the 6.99% Series at any such time
outstanding under the Indenture may be declared or may become due and payable,
upon the conditions and in the manner and with the effect provided in the
Indenture. The Indenture provides that such declaration may be rescinded under
certain circumstances.

ARTICLE II
ISSUE OF NEW MORTGAGE BONDS OF THE 6.99% SERIES

Section 1. The Company hereby exercises the right to obtain the
authentication of $25,000,000 principal amount of Bonds pursuant to the terms of
Section 4.03 of the Indenture. All such Bonds shall be New Mortgage Bonds of
the 6.99% Series.

Section 2. Such New Mortgage Bonds of the 6.99% Series may be
authenticated and delivered prior to the filing for recordation of this
Supplemental Indenture.

B-3-4

<PAGE>

ARTICLE III
REDEMPTION

Section 1. The New Mortgage Bonds of the 6.99% Series shall, upon the
notice and in the manner and with the effect provided in Article Five of the
Original Indenture, as amended by Section 3 of this Article III, be redeemable
(otherwise than out of moneys specified in Section 2 of this Article III), at
any time, on or after September 1, 1997 and prior to maturity, at the option of
the Company, as a whole, upon payment of the principal amount of each of the New
Mortgage Bonds of the 6.99% Series to be redeemed, and accrued interest thereon
to the redemption date, together with the applicable Make-Whole Amount (as
hereinafter defined).

On or before the redemption date specified in the notice of redemption
given by the Company as provided in the Indenture, the Company shall deliver to
each holder of the New Mortgage Bonds of the 6.99% Series to be redeemed, a
certificate signed by a principal financial officer of the Company setting forth
the Make-Whole Amount (determined in good faith by the Company as of the date
five business days prior to the date of such redemption), if any, applicable to
the New Mortgage Bonds of the 6.99% Series held by such holder so to be
redeemed. In the event the Company shall incorrectly compute the Make-Whole
Amount payable in connection with any New Mortgage Bond of the 6.99% Series, the
holder of such Bond shall not be bound by such incorrect computation, but shall
instead be entitled to receive an amount equal to the correct Make-Whole Amount,
if any, computed in compliance with the terms hereof.

As used in this Section 1:

"Make-Whole Amount" shall mean the excess, if any, of (i) the aggregate
present value as of the date of such redemption of each dollar of principal
being prepaid and the amount of interest (exclusive of interest accrued to the
date of redemption) that would have been payable in respect of such dollar if
such redemption had not been made, determined by discounting such amounts at the
Reinvestment Rate from the respective dates on which they would have been
payable, over (ii) 100% of the principal amount of the outstanding New Mortgage
Bonds of the 6.99% Series being redeemed. If the Reinvestment Rate is equal to
or higher than 6.99%, the Make-Whole Amount shall be zero. For purposes of any
determination of the Make-Whole Amount:

"Reinvestment Rate" shall mean the arithmetic mean of the yields under
the respective headings "This Week" and "Last Week" published in the
Statistical Release under the caption "Treasury Constant Maturities" for
the maturity (rounded to the nearest month) corresponding to the Weighted
Average Life to Maturity of the principal amount of the New Mortgage Bonds
of the 6.99% Series being redeemed. If no maturity exactly corresponds to
such Weighted Average Life to Maturity, yields for the two published
maturities most closely corresponding to such Weighted Average Life to
Maturity shall be calculated pursuant to the immediately preceding sentence
and the Reinvestment Rate shall be interpolated or extrapolated from such
yields on a straightline basis, rounding in each of such relevant periods
to the nearest month. For the purposes of calculating the Reinvestment
Rate, the most recent Statistical Release published prior to the date of
determination of the Make-Whole Amount shall be used.

"Statistical Release" shall mean the then most recently published
statistical release designated "H.15(519)" or any successor publication
which is published weekly by the Federal Reserve System and which
establishes yields on actively traded U.S. Government Securities adjusted
to constant maturities or, if such statistical release is not published at
the time of any determination hereunder, then such other reasonably
comparable index which shall be designated by the holders of 66-2/3% in
aggregate principal amount of the outstanding New Mortgage Bonds of the
6.99% Series.

B-3-5

<PAGE>

"Weighted Average Life to Maturity" of any of the New Mortgage Bonds
of the 6.99% Series to be redeemed shall mean the number of years (rounded
to the nearest one-twelfth of a year) obtained by dividing the then
Remaining Dollar-Years of the New Mortgage Bonds of the 6.99% Series by the
then outstanding principal amount of such Bonds. For the purposes of this
definition, "Remaining Dollar-Years" means the sum of the amounts obtained
by multiplying the amount of each then remaining sinking fund or other
required repayment, including repayment at final maturity, by the number of
years (calculated to the nearest one-twelfth of a year) which will elapse
between the time of such determination and the date of such repayment.

Section 2. Upon the notice and in the manner and with the effect provided
in Article Five of the Original Indenture, as amended by Section 3 of this
Article III, any of the New Mortgage Bonds of the 6.99% Series shall be
redeemable on the first day of September in each year, commencing in 1998, by
operation of the sinking fund provided for by Section 1 of Article IV hereof,
upon payment of the principal amount thereof together with accrued interest to
the redemption date.

Section 3. Whenever the Company shall propose to redeem less than all of
the outstanding New Mortgage Bonds of the 6.99% Series on any redemption date,
the Trustee, instead of selecting by lot, shall select the serial numbers of the
New Mortgage Bonds of the 6.99% Series to be redeemed (in whole or in part) by
prorating, as nearly as may be, the aggregate principal amount of the New
Mortgage Bonds of the 6.99% Series to be redeemed among the registered owners of
the New Mortgage Bonds of the 6.99% Series according to the principal amount
thereof registered in their respective names. In any such proration, the
Trustee shall make such adjustments, reallocations and eliminations as it shall
deem proper to the end that the principal amount of the New Mortgage Bonds of
the 6.99% Series so prorated to any registered owner of the New Mortgage Bonds
of the 6.99% Series shall be $1,000 or a multiple thereof, by increasing or
decreasing or eliminating the amount which would be allocable to any such
registered owner on the basis of exact proportion by an amount not exceeding
$1,000. The Trustee in its discretion may determine the particular New Mortgage
Bonds of the 6.99% Series (if there are more than one) registered in the name of
any registered owner which are to be redeemed, in whole or in part. In any
determination by proration pursuant to this Section, New Mortgage Bonds of the
6.99% Series held by the Company shall not be considered outstanding and shall
be excluded in making the determination of the New Mortgage Bonds of the 6.99%
Series to be redeemed.

Notice of redemption of any New Mortgage Bonds of the 6.99% Series shall be
given as provided in Section 5.04 of the Original Indenture, except that, in the
case of redemption by operation of the sinking fund for such bonds, the notice
shall state that the redemption is for the account of the sinking fund. If
given by mail, the mailing of such notice shall be a condition precedent to
redemption, provided that any notice which is mailed in the manner provided in
Section 5.04 of the Original Indenture shall be conclusively presumed to have
been duly given whether or not the holders receive such notice, and failure to
give such notice by mall, or any defect in such notice, to the holder of any
such bond designated for redemption in whole or in part shall not affect the
validity of the redemption of any other such bond.

Except for the determination of the serial numbers of the New Mortgage
Bonds of the 6.99% Series to be redeemed (in whole or in part) by proration as
provided in this Section when less than all of the New Mortgage Bonds of the
6.99% Series are to be redeemed on any redemption date and except for the
changes in the giving of notice of redemption as provided in this Section, the
procedures for redemption of the New Mortgage Bonds of the 6.99% Series shall be
as provided in Article Five of the Original Indenture.

Section 4. The Company, with the approval of the Trustee, may enter into a
written agreement with the holder of any New Mortgage Bonds of the 6.99% Series
providing that payment of such bonds called for

B-3-6

<PAGE>

redemption in part only be made directly by mail, wire transfer or in any other
manner to the holder thereof without presentation or surrender thereof if there
shall be delivered to the Trustee an agreement (which may be a composite with
other such agreements) between the Company and such holder (or other person
acting as agent for such holder or for whom such holder is a nominee) that
payment shall be so made, and that in the event the holder thereof shall sell or
transfer any such bonds (a) it will, prior to the delivery of such bonds, either
(i) surrender such bonds to the Trustee to make a proper notation of the amount
of principal paid thereon or (ii) surrender such bonds to the Trustee against
receipt of one or more New Mortgage Bonds of the 6.99% Series in an aggregate
principal amount equal to the unpaid principal portion of the bonds so
surrendered, and (b) it will promptly notify the Company of the name and address
of the transferee of any New Mortgage Bonds of the 6.99% Series so transferred.
The Trustee shall not be liable or responsible to any such holder or transferee
or to the Company or to any other person for any act or omission to act on the
part of the Company or any such holder in connection with any such agreement.
The Company will indemnify and save the Trustee harmless against any liability
resulting from any such act or omission and against any liability resulting from
any action taken by the Trustee in accordance with the provisions of any such
agreement.

ARTICLE IV
ADDITIONAL COVENANTS

The Company covenants and agrees, subject to the terms and of this Section,
that it will pay to the Trustee on or before the last day of August, 1998 and on
or before the last day of August in each calendar year thereafter so long as any
New Mortgage Bonds of the 6.99% Series shall be outstanding (each such last day
of August being referred to herein as a "sinking fund payment date") as and for
a cash sinking fund for the retirement of New Mortgage Bonds of the 6.99%
Series, a sum in cash sufficient to redeem on the first day of September next
following such sinking fund payment date, at the redemption price for the
redemption of New Mortgage Bonds of the 6.99% Series by operation of the sinking
fund, a principal amount of bonds of said series at least equal to twenty per
centum of the greatest principal amount of bonds of said series outstanding at
any time (determined as in this Section provided) between September 1, 1992, and
the end of the calendar year immediately preceding such sinking fund payment
date. Cash paid to the Trustee by the Company pursuant to this Section shall be
applied by the Trustee to the redemption on the next following the first day of
September of the specified principal amount of New Mortgage Bonds of the 6.99%
Series in accordance with provisions of this Section; and the Company shall
carry out the procedures required of it for such redemption.

On or before the first day of July in each year beginning with the calendar
year 1998, so long as any New Mortgage Bonds of the 6.99% Series shall be
outstanding, the Company shall deliver to the Trustee a certificate, signed in
the name of the Company by its President or one of its Vice Presidents and by
its Treasurer or an Assistant Treasurer, containing the statements required by
Section 1.05 of the Original Indenture, and showing the greatest principal
amount of New Mortgage Bonds of the 6.99% Series outstanding at any time between
September 1, 1992 and the end of the preceding calendar year, determined in
accordance with the provisions of this Section, which certificate shall include,
or be accompanied by, the notice from the Company to the Trustee pursuant to
Section 5.04 of the Original Indenture, as amended by Section 3 of Article III
hereof, specifying the principal amount of the New Mortgage Bonds of the 6.99%
Series to be redeemed on the first day of September next following by operation
of the sinking fund provided for by this Section.

In determining under the provisions of this Section the principal amount of
New Mortgage Bonds of the 6.99% Series outstanding under the Indenture, there
shall be excluded the principal amount of any bonds of said series authenticated
under the Indenture which are owned by the Company.

B-3-7

<PAGE>

Any and all New Mortgage Bonds of the 6.99% Series received by the Trustee
pursuant to any provision of this Section shall thereupon be canceled and
destroyed by the Trustee.

If the first day of September in the calendar year 1998, or in any calendar
year thereafter so long as any New Mortgage Bonds of the 6.99% Series shall be
outstanding, is a legal holiday or day on which banking institutions which act
as paying agents hereunder are authorized by law to close, then payment of the
redemption price (including interest payable upon redemption) for purposes of
redemption of New Mortgage Bonds of the 6.99% Series by operation of the sinking
fund provided for by this Section may be made on the next succeeding day which
is not a legal holiday or a day on which such banking institutions are
authorized by law to close with the same force and effect as if made on the
nominal redemption date, and no interest shall accrue for the period after the
nominal redemption date.

ARTICLE V
THE TRUSTEE

The Trustee hereby accepts the trusts hereby declared provided, and agrees
to perform the same upon the terms and conditions in the Indenture set forth and
upon the following terms and conditions:

ARTICLE VI
MISCELLANEOUS PROVISIONS

B-3-8

<PAGE>

and its corporate seal to be hereto affixed and said seal and this Indenture to
be attested by its Secretary or one of its Assistant
Secretaries; all as of the _____ day of __________, 1995.

NORTHWESTERN PUBLIC SERVICE COMPANY

By
--------------------------------------------
VICE PRESIDENT

(CORPORATE SEAL)

ATTEST:

- -----------------------------------
[ASSISTANT] SECRETARY
THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION)

By
--------------------------------------------
VICE PRESIDENT

(CORPORATE SEAL)

ATTEST:

- -----------------------------------
ASSISTANT SECRETARY

B-3-9

<PAGE>

STATE OF SOUTH DAKOTA )
) SS
COUNTY OF BEADLE )

IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed my
official seal on the day and year last above written.

(NOTARIAL SEAL)
--------------------------------------------
Notary Public
[NAME]
Notary Public, Beadle County, S.D.
My Commission expires __________, _____

<PAGE>

STATE OF NEW YORK )
) SS
COUNTY OF KINGS )

BE IT REMEMBERED, that on this _____th day of __________, 1995, before me,
___________, a Notary Public within and for the County and State aforesaid,
personally came _________, Vice President, and __________, Assistant Secretary
of The Chase Manhattan Bank (National Association), a national banking
association, who are personally known to me to be such officers, and who are
personally known to me to be the same persons who executed as such officers the
within instrument of writing, and such persons duly acknowledged that they
signed, sealed and delivered the said instrument as their free and voluntary act
as such Vice President and Assistant Secretary, respectively, and as the free
and voluntary act of The Chase Manhattan Bank (National Association) for the
uses and purposes therein set forth.

IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed my
official seal on the day and year last above written.

(NOTARIAL SEAL)
--------------------------------------------
Notary Public
Notary Public, State of New York
No. __________
Qualified in Kings County
Commission expires __________, ____

<PAGE>

SUPPLEMENTAL INDENTURE, dated as of August 1, 1995 (the "Supplemental
Indenture"), made by and between NORTHWESTERN PUBLIC SERVICE COMPANY, a
corporation organized and existing under the laws of the State of Delaware (the
"Company"), the post office address of which is 33 Third Street, S.E., Huron,
South Dakota 57350, and THE CHASE MANHATTAN BANK (National Association), a
national banking association organized and existing under the laws of the United
States of America (the "Trustee"), as Trustee under the General Mortgage
Indenture and Deed of Trust dated as of August 1, 1993, hereinafter mentioned,
the post office address of which is 4 Chase MetroTech Center, 3rd Floor,
Brooklyn, New York 11245;

WHEREAS, the Company desires to create a new series of Bonds to be issued
under the Indenture, to be known as New Mortgage Bonds, 7.10% Series due 2005
(the "New Mortgage Bonds of the 7.10% Series"), and to modify the Original
Indenture in certain respects; and

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

THAT Northwestern Public Service Company, in consideration of the purchase
and ownership from time to time of the Bonds and the service by the Trustee, and
its successors, under the Indenture and of One Dollar to it duly paid by the
Trustee at or before the ensealing and delivery of these presents, the receipt
whereof is hereby acknowledged, hereby covenants and agrees to and with the
Trustee and its successors in the trust under the Indenture, for the benefit of
those who shall hold the Bonds as follows:

ARTICLE I
DESCRIPTION OF BONDS OF THE 7.10% SERIES DUE 2005

Section 1. The Company hereby creates a new series of Bonds to be known as
"New Mortgage Bonds, 7.10% Series due 2005." The New Mortgage Bonds of the
7.10% Series shall be executed, authenticated and delivered in accordance with
the provisions of, and shall in all respects be subject to, all of the terms,
conditions and covenants of the Indenture, as supplemented and modified.

The commencement of the first interest period for the New Mortgage Bonds of
the 7.10% Series shall be August 1, 1995. The New Mortgage Bonds of the 7.10%
Series shall mature August 1, 2005, and shall bear interest at the rate of 7.10%
per annum, payable semi-annually on the first day of February and the first day
of August in each year. The person in whose name any of the New Mortgage Bonds
of the 7.10% Series are registered at the close of business on any record date
(as hereinafter defined) with respect to any interest payment date shall be
entitled to receive the interest payable on such interest payment date
notwithstanding the cancellation of such New Mortgage Bonds of the 7.10% Series
upon any transfer or exchange subsequent to the record date and prior to such
interest payment date; PROVIDED, HOWEVER, that if and to the extent the Company
shall default

<PAGE>

in the payment of the interest due on such interest payment date, such defaulted
interest shall be paid as provided in Section 3.07(b) of the Indenture.

The term "record date" as used in this Section with respect to any interest
payment date shall mean the February 1 or August 1, as the case may be, next
preceding the semi-annual interest payment date, or, if such February 1 or
August 1 shall be a legal holiday or a day on which banking institutions in the
Borough of Manhattan, The City of New York, State of New York, are authorized by
law to close, then the next preceding day which shall not be a legal holiday or
a day on which such institutions are so authorized to close.

Section 2. The New Mortgage Bonds of the 7.10% Series shall be issued only
as registered Bonds without coupons of the denomination of $1,000, or any
integral multiple of $1,000, appropriately numbered. The New Mortgage Bonds of
the 7.10% Series may be exchanged, upon surrender thereof, at the agency of the
Company in the Borough of Manhattan, The City of New York, State of New York,
for one or more new New Mortgage Bonds of the 7.10% Series of other authorized
denominations, for the same aggregate principal amount, subject to the terms and
conditions set forth in the Indenture.

New Mortgage Bonds of the 7.10% Series may be exchanged or transferred
without expense to the registered owner thereof except that any taxes or other
governmental charges required to be paid with respect to such transfer or
exchange shall be paid by the registered owner requesting such transfer or
exchange as a condition precedent to the exercise of such privilege.

Section 3. The New Mortgage Bonds of the 7.10% Series and the Trustee's
Certificate of Authentication shall be substantially in the following forms
respectively:

[FORM OF BOND OF THE 7.10% SERIES DUE 2005]

NORTHWESTERN PUBLIC SERVICE COMPANY
(Incorporated under the laws of the State of South Dakota)
NEW MORTGAGE BOND, 7.10% SERIES DUE 2005

No. R- $60,000,000

Northwestern Public Service Company, a corporation organized and existing
under the laws of the State of Delaware (the "Company", which term shall include
any successor corporation as defined in the Indenture hereinafter referred to),
for value received, hereby promises to pay to __________ or registered assigns,
the sum of __________ dollars on the first day of August 2005, in any coin or
currency of the United States of America which at the time of payment is legal
tender for public and private debts, and to pay interest thereon in like coin or
currency from August 1, 1995, payable semi-annually, on the first days of
February and August in each year, at the rate of 7.10% per annum, until the
Company's obligation with respect to the payment of such principal shall be
discharged as provided in the Indenture hereinafter mentioned. The interest so
payable on any February 1 or August 1 will, subject to certain exceptions
provided in the Supplemental Indenture dated as of August 1, 1995, be paid to
the person in whose name this Bond is registered at the close of business on the
immediately preceding January 15 or July 15, as the case may be. Both principal
of, and interest on, this Bond are payable at the agency of the Company in the
Borough of Manhattan, The City of New York, State of New York.

-2-
<PAGE>

The provisions of this New Mortgage Bond are continued on the reverse
hereof and such continued provisions shall for all purposes have the same effect
as though fully set forth at this place.

Dated: NORTHWESTERN PUBLIC SERVICE COMPANY

By
-------------------------------------------
AUTHORIZED EXECUTIVE OFFICER
ATTEST:

- -----------------------------------
AUTHORIZED EXECUTIVE OFFICER

[FORM OF TRUSTEE'S CERTIFICATE]

This is one of the Bonds of the series designated therein referred to in
the within-mentioned Indenture and Supplemental Indenture dated as of August 1,
1995.

THE CHASE MANHATTAN BANK (NATIONAL
ASSOCIATION), AS TRUSTEE

By
--------------------------------------
AUTHORIZED OFFICER

[FORM OF REVERSE OF BOND]

This New Mortgage Bond of the 7.10% Series is one of a duly authorized
issue of Bonds of the Company (the "Bonds"), of the series hereinafter
specified, all issued and to be issued under and equally secured by a General
Mortgage Indenture and Deed of Trust (the "Indenture"), dated as of August 1,
1993, executed by the Company to The Chase Manhattan Bank (National Association)
(the "Trustee"), as Trustee, to which Indenture and all indentures supplemental
thereto reference is hereby made for a description to the properties mortgaged
and pledged, the nature and extent of the security, the rights of registered
owners of the Bonds and of the Trustee in respect thereof, and the terms and
conditions upon which the Bonds are, and are to be, secured. The Bonds may be
issued in series, for various principal sums, may mature at different times, may
bear interest at different rates and may otherwise vary as provided in the
Indenture. This New Mortgage Bond of the 7.10% Series is one of a series
designated as the "New Mortgage Bonds, 7.10% Series Due 2005" (the "New Mortgage
Bonds of the 7.10% Series") of the Company issued under and secured by the
Indenture and described in the supplemental indenture dated as of August 1, 1995
(the "Supplemental Indenture dated as of August 1, 1995"), between the Company
and the Trustee, supplemental to the Indenture.

New Mortgage Bonds of the 7.10% Series, of which this is one, shall not be
redeemable at any time prior to maturity.

-3-
<PAGE>

majority in aggregate principal amount of the Bonds entitled to vote then
outstanding, at a meeting of the holders of the Bonds called and held as
provided in the Indenture, and by an affirmative vote of the holders of a
majority in aggregate principal amount of the Bonds of any series or any tranche
or tranches of any series entitled to vote then outstanding and affected by such
modification or alteration, in case one or more but less than all of the series
of Bonds or of any tranche or tranches of any series of Bonds then outstanding
under the Indenture are so affected; PROVIDED, HOWEVER, that no such
modification or alteration shall be made which will affect the terms of payment
of the principal of, or interest or premium, if any, on this Bond.

In case an Event of Default, as defined in the Indenture, shall occur, the
principal of all the New Mortgage Bonds of the 7.10% Series at any such time
outstanding under the Indenture may be declared or may become due and payable,
upon the conditions and in the manner and with the effect provided in the
Indenture. The Indenture provides that such declaration may be rescinded under
certain circumstances.

ARTICLE II
ISSUE OF NEW MORTGAGE BONDS OF THE 7.10% SERIES

Section 1. The Company hereby exercises the right to obtain the
authentication of $60,000,000 principal amount of Bonds pursuant to the terms of
Section 4.02 of the Indenture. All such Bonds shall be New Mortgage Bonds of
the 7.10% Series.

Section 2. Such New Mortgage Bonds of the 7.10% Series may be
authenticated and delivered prior to the filing for recordation of this
Supplemental Indenture.

ARTICLE III
REDEMPTION

New Mortgage Bonds of the 7.10% Series shall not be redeemable at any time
prior to maturity.

ARTICLE IV
AMENDMENT OF ORIGINAL INDENTURE; CONVEYANCE OF ADDITIONAL PROPERTY

Section 1. Section 4.02(b)(i) of the Original Indenture is hereby amended
by deleting it in its entirety and by inserting in lieu thereof the following:

(i) Class "A" Bonds (A) maturing on such dates and in such principal
amounts that, at each Stated Maturity of the Bonds of such series (or the
Tranche thereof then to be authenticated and delivered) that are to be
authenticated and delivered pursuant to this Section 4.02 (which may be
less than the entire amount of the series or Tranche then to be issued),
there shall mature Class "A" Bonds equal in principal amount to the
principal amount of the Bonds of such series or Tranche so authenticated
and delivered then to mature, and (B) containing, in addition to any
mandatory redemption provisions applicable to all Class "A" Bonds
Outstanding under the related Class "A" Mortgage, mandatory redemption
provisions correlative to the provisions, if any, for the mandatory
redemption (pursuant to a sinking fund or otherwise) of the Bonds of such
series or Tranche so authenticated and delivered or for the redemption
thereof at the option of the Holder; it being expressly understood that
such Class "A" Bonds (1) may, but need not, bear interest, any such
interest to be payable at the same times as interest on the Bonds of such
series or Tranche so authenticated and delivered, (2) may, but need not,
contain provisions for the redemption thereof at the option of the Company,
any such redemption to be made at a redemption price or prices not less
than the principal amount thereof, and (3) shall be held by the Trustee in
accordance with Article Seven;

Section 2. To secure the payment of the principal of, premium, if any, and
interest, if any, on all Bonds issued under the Indenture and Outstanding (as
defined in the Indenture), when payable in accordance with the

-4-
<PAGE>

provisions thereof, and to secure the performance by the Company of, and its
compliance with, the covenants and conditions of the Indenture, the Company
hereby grants, bargains, sells, conveys, assigns, transfers, mortgages, pledges,
sets over and confirms to The Chase Manhattan Bank (National Association), as
Trustee, and grants to the Trustee a security interest in, all right, title and
interest of the Company in and to the property described in Exhibit A to this
Supplemental Indenture.

TO HAVE AND TO HOLD all said property hereby granted, bargained, sold,
conveyed, assigned, transferred, mortgaged, pledged, set over and confirmed, or
in which a security interest has been granted by the Company in this
Supplemental Indenture, unto the Trustee, and its successors and assigns
forever, but in trust nevertheless upon the trusts, for the purposes, and
subject to all the exceptions and reservations, terms, conditions, provisions
and restrictions of the Indenture, and for the equal and proportionate benefit
and security of all present and future holders of the Bonds, without any
preference, priority or distinction of any one Bond over any other Bond by
reason of priority in the issue or negotiation thereof or otherwise, except as
may otherwise be expressly provided in the Indenture, but subject, however, to
all the conditions, agreements, covenants, exceptions, limitations, restrictions
and reservations expressed or provided in the deeds or other instruments of
record affecting the property, or any part or portion thereof, hereinbefore
described, insofar as the same are at the time of execution hereof in force and
effect and permitted by laws.

ARTICLE V
THE TRUSTEE

The Trustee hereby accepts the trusts hereby declared provided, and agrees
to perform the same upon the terms and conditions in the Indenture set forth and
upon the following terms and conditions:

ARTICLE VI
MISCELLANEOUS PROVISIONS

-5-
<PAGE>

and its corporate seal to be hereto affixed and said seal and this Indenture to
be attested by its Secretary or one of its Assistant Secretaries; all as of the
first day of August, 1995.

NORTHWESTERN PUBLIC SERVICE COMPANY

By /s/ Richard R. Hylland
-------------------------------------------
VICE PRESIDENT

(CORPORATE SEAL)

ATTEST:

/s/ Alan D. Dretrich
- --------------------------------
CORPORATE SECRETARY
THE CHASE MANHATTAN BANK (NATIONAL
ASSOCIATION)

By /s/ James D. Heaney
-------------------------------------------
VICE PRESIDENT

(CORPORATE SEAL)

ATTEST:

/s/ Kathleen Perry
- -------------------------------
ASSISTANT SECRETARY

-6-
<PAGE>

STATE OF SOUTH DAKOTA )
) SS
COUNTY OF BEADLE )

BE IT REMEMBERED, that on this 1st day of August, 1995, before me, SUSAN M.
ANDERSON, a Notary Public within and for the County and State aforesaid,
personally came R.R. HYLLAND, Vice President, and ALAN D. DIETRICH, Corporate
Secretary of Northwestern Public Service Company, a Delaware corporation, who
are personally known to me to be such officers, and who are personally known to
me to be the same persons who executed as such officers the within instrument of
writing, and such persons duly acknowledged that they signed, sealed and
delivered the said instrument as their free and voluntary act as such Vice
President and Corporate Secretary, respectively, and as the free and voluntary
act of Northwestern Public Service Company for the uses and purposes therein set
forth.

IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed my
official seal on the day and year last above written.

(NOTARIAL SEAL) /s/ Susan M. Anderson
-----------------------------------------------
SUSAN M. ANDERSON
NOTARY PUBLIC, BEADLE COUNTY, S.D.
My Commission expires June 8, 2000

<PAGE>

STATE OF NEW YORK )
) SS
COUNTY OF KINGS )

BE IT REMEMBERED, that on this 31st day of July, 1995, before me,
Denis Kelly, a Notary Public within and for the County and State aforesaid,
personally came James Heaney, Vice President, and Kathleen Perry,
Assistant Secretary of The Chase Manhattan Bank (National Association), a
national banking association, who are personally known to me to be such
officers, and who are personally known to me to be the same persons who executed
as such officers the within instrument of writing, and such persons duly
acknowledged that they signed, sealed and delivered the said instrument as their
free and voluntary act as such Vice President and Assistant Secretary,
respectively, and as the free and voluntary act of The Chase Manhattan Bank
(National Association) for the uses and purposes therein set forth.

IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed my
official seal on the day and year last above written.

(NOTARIAL SEAL) /s/ Denis Kelly
-----------------------------------------
NOTARY PUBLIC, STATE OF NEW YORK
No. __________
Qualified in Kings County
Commission expires __________, ____

<PAGE>

SUPPLEMENTAL INDENTURE, dated the first day of August, nineteen hundred and
ninety-five (1995), made by and between NORTHWESTERN PUBLIC SERVICE COMPANY, a
corporation organized and existing under the laws of the State of Delaware
(hereinafter called the "Company"), party of the first part, and THE CHASE
MANHATTAN BANK (National Association), a national banking association organized
and existing under the laws of the United States of America and having its
principal office or place of business in the Borough of Manhattan, The City of
New York, State of New York, successor to The Chase National Bank of the City of
New York (hereinafter called the "Trustee"), and C. J. HEINZELMANN, of Nassau
County, New York, successor to Carl E. Buckley (the Trustee and said C. J.
HEINZELMANN being hereinafter called the "Trustees," which term where the
context requires may also designate their respective predecessors in trust, the
post office address of the Trustees being Corporate Trust Administration
Division, 4 Chase MetroTech Center - 3rd Floor, Brooklyn, New York 11245), as
Trustees under the Indenture dated August 1, 1940, hereinafter mentioned,
parties of the second part.

WHEREAS pursuant to the terms and provisions of the Original Indenture and
a Supplemental Indenture dated October 1, 1946 (hereinafter referred to as the
"Supplemental Indenture dated October 1, 1946"), the Company created a new
series of bonds, to be issued under the Original Indenture, and to be known as
First Mortgage Bonds, 3% Series due 1973, of which Bonds of the Series due 1973
there were heretofore issued $549,000 principal amount, all of which were paid
in full at or after maturity and are no longer outstanding; and

WHEREAS pursuant to the terms and provisions of the Original Indenture and
a Supplemental Indenture dated June 1, 1948, the Company created a new series of
bonds, to be issued under the Original Indenture, and to be known as First
Mortgage Bonds, 3-3/8% Series due 1978, of which Bonds of the 3-3/8% Series
there were heretofore issued $600,000 principal amount, all of which were paid
in full at or after maturity and are no longer outstanding; and

WHEREAS pursuant to the terms and provisions of the Original Indenture and
a Supplemental Indenture dated September 1, 1948, the Company created a new
series of bonds, to be issued under the Original Indenture, and to be known as
First Mortgage Bonds, 3 1/2% Series due 1978, of which Bonds of the 3 1/2%
Series there were heretofore issued $700,000 principal amount, all of which were
paid in full at or after maturity and are no longer outstanding; and

WHEREAS pursuant to the terms and provisions of the Original Indenture and
a Supplemental Indenture dated June 1, 1949, the Company created a new series of
bonds, to be issued under the Original Indenture, and to be known as First
Mortgage Bonds, 3 1/4% Series due 1978, of which Bonds of the 3 1/4% Series
there were heretofore issued $700,000 principal amount, all of which were paid
in full at or after maturity and are no longer outstanding; and

WHEREAS pursuant to the terms and provisions of the Original Indenture and
a Supplemental Indenture dated March 1, 1952, the Company created a new series
of bonds, to be issued under the Original Indenture, and

<PAGE>

to be known as First Mortgage Bonds, 3-5/8% Series due 1978, of which Bonds of
the 3-5/8% Series there were heretofore issued $1,000,000 principal amount, all
of which were paid in full at or after maturity and are no longer outstanding;
and

WHEREAS pursuant to the terms and provisions of the Original Indenture and
a Supplemental Indenture dated May 1, 1953, the Company created a new series of
bonds, to be issued under the Original Indenture, and to be known as First
Mortgage Bonds, 3.80% Series due 1983, of which Bonds of the 3.80% Series there
were heretofore issued $700,000 principal amount, all of which were paid in full
at or after maturity and are no longer outstanding; and

WHEREAS pursuant to the terms and provisions of the Original Indenture and
a Supplemental Indenture dated February 1, 1955, the Company created a new
series of bonds, to be issued under the Original Indenture, and to be known as
First Mortgage Bonds, 3.30% Series due 1983, of which Bonds of the 3.30% Series
there were heretofore issued $800,000 principal amount, all of which were paid
in full at or after maturity and are no longer outstanding; and

WHEREAS pursuant to the terms and provisions of the Original Indenture and
a Supplemental Indenture dated October 1, 1956, the Company created a new series
of bonds, to be issued under the Original Indenture, and to be known as First
Mortgage Bonds, 4-7/8% Series due 1983, of which Bonds of the 4-7/8% Series
there were heretofore issued $1,300,000 principal amount, all of which were paid
in full at or after maturity and are no longer outstanding; and

WHEREAS pursuant to the terms and provisions of the Original Indenture and
a Supplemental Indenture dated July 1, 1957, the Company created a new series of
bonds, to be issued under the Original Indenture, and to be known as First
Mortgage Bonds, 5-7/8% Series due 1987, of which Bonds of the 5-7/8% Series
there were heretofore issued $1,500,000 principal amount, all of which were paid
in full at or after maturity and are no longer outstanding; and

WHEREAS pursuant to the terms and provisions of the Original Indenture and
a Supplemental Indenture dated August 1, 1959, the Company created a new series
of bonds, to be issued under the Original Indenture, and to be known as First
Mortgage Bonds, 5.40% Series due 1987, of which Bonds of the 5.40% Series there
were heretofore issued $975,000 principal amount, all of which were paid in full
at or after maturity and are no longer outstanding; and

WHEREAS pursuant to the terms and provisions of the Original Indenture and
a Supplemental Indenture dated July 1, 1961, the Company created a new series of
bonds, to be issued under the Original Indenture, and to be known as First
Mortgage Bonds, 5 1/4% Series due 1987, of which Bonds of the 5 1/4% Series
there were heretofore issued $4,000,000 principal amount, all of which were paid
in full at or after maturity and are no longer outstanding; and

WHEREAS pursuant to the terms and provisions of the Original Indenture and
a Supplemental Indenture dated July 1, 1966, the Company created a new series of
bonds, to be issued under the Original Indenture, and to be known as First
Mortgage Bonds, 6 1/4% Series due 1996, of which Bonds of the 6 1/4% Series
there were heretofore issued $3,500,000 principal amount, all of which have been
redeemed and are no longer outstanding; and

WHEREAS pursuant to the terms and provisions of the Original Indenture and
a Supplemental Indenture dated September 1, 1970, the Company created a new
series of bonds, to be issued under the Original Indenture, and to be known as
First Mortgage Bonds, 9 1/4% Series due 1975, of which Bonds of the 9 1/4%
Series there were

-2-
<PAGE>

heretofore issued $6,000,000 principal amount, all of which were paid in full at
or after maturity and are no longer outstanding; and

WHEREAS pursuant to the terms and provisions of the Original Indenture and
a Supplemental Indenture dated August 1, 1972, the Company created a new series
of bonds, to be issued under the Original Indenture, and to be known as First
Mortgage Bonds, 8% Series due 2002, of which Bonds of the 8% Series there were
heretofore issued $6,000,000 principal amount, all of which have been redeemed
and are no longer outstanding; and

WHEREAS pursuant to the terms and provisions of the Original Indenture and
a Supplemental Indenture dated July 1, 1973, the Company created a new series of
bonds, to be issued under the Original Indenture, and to be known as First
Mortgage Bonds, 8 1/4% Series due 2003, of which Bonds of the 8 1/4% Series
there were heretofore issued $15,000,000 principal amount, all of which have
been redeemed and are no longer outstanding; and

WHEREAS pursuant to the terms and provisions of the Original Indenture and
a Supplemental Indenture dated May 1, 1975, the Company created a new series of
bonds, to be issued under the Original Indenture, and to be known as First
Mortgage Bonds, 11% Series due 1995, of which Bonds of the 11% Series there were
heretofore issued $15,000,000 principal amount, all of which have been redeemed
and are no longer outstanding; and

WHEREAS pursuant to the terms and provisions of the Original Indenture and
a Supplemental Indenture dated June 1, 1977, the Company created a new series of
bonds, to be issued under the Original Indenture, and to be known as First
Mortgage Bonds, 8.80% Series due 2007, of which Bonds of the 8.80% Series there
were heretofore issued $12,000,000 principal amount, all of which have been
redeemed and are no longer outstanding; and

WHEREAS pursuant to the terms and provisions of the Original Indenture and
a Supplemental Indenture dated July 1, 1978, the Company created a new series of
bonds, to be issued under the Original Indenture, and to be known as First
Mortgage Bonds, 9-5/8% Series due 2008, of which Bonds of the 9-5/8% Series
there were heretofore issued $10,000,000 principal amount, all of which have
been redeemed and are no longer outstanding; and

WHEREAS pursuant to the terms and provisions of the Original Indenture and
a Supplemental Indenture dated December 1, 1978, the Company created a new
series of bonds, to be issued under the Original Indenture, and to be known as
First Mortgage Bonds, 9.85% Series due 1998, of which Bonds of the 9.85% Series
there were heretofore issued $12,000,000 principal amount, all of which have
been redeemed and are no longer outstanding; and

-3-

<PAGE>

WHEREAS the Company desires to create a new series of bonds to be issued
under the Indenture, to be known as First Mortgage Bonds, 7.10% Series due 2005
(hereinafter called "Bonds of the Series due 2005"), and to modify the Original
Indenture in certain respects, and proposes forthwith to issue additional bonds
under the Indenture in the principal amount of $60,000,000, for a consideration
of $59,524,800, exclusive of accrued interest (which consideration is to
received upon the issuance of the New Mortgage Bonds of the 2005 Series referred
to below); and

WHEREAS by Sections 11 and 12 of Article III of the Original Indenture, the
Company has covenanted, upon the terms and in the manner therein set forth, to
execute such further instruments and to do such further acts as might be
appropriate to subject to the lien of the Original Indenture all property which
the Original Indenture, as amended and supplemented, provided should be subject
to the lien thereof and to make effective and maintain the lien intended to be
created thereby; and

WHEREAS the Bonds of the Series due 2005 are to be issued to The Chase
Manhattan Bank (National Association), as trustee (the "New Mortgage Trustee")
under the Company's General Mortgage Indenture and Deed of Trust dated as of
August 1, 1993 (the "New Mortgage") and are to be owned and held by the New
Trustee as "Pledged Bonds" (as defined in the New Mortgage) in accordance with
the terms of the New Mortgage; and

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

THAT Northwestern Public Service Company, in consideration of the premises
and of One Dollar to it duly paid by the Trustees at or before the unsealing and
delivery of these presents, the receipt whereof is hereby acknowledged, hereby
covenants and agrees to and with the Trustees and their successors in the trust
under the Original Indenture, for the benefit of those who shall hold the bonds
and coupons, or any of them, to be issued hereunder or thereunder as hereinafter
provided, as follows:

-4-
<PAGE>

ARTICLE I
DESCRIPTION OF BONDS OF THE SERIES DUE 2005

Section 1. The Company hereby creates a new series of bonds to be known as
"First Mortgage Bonds, 7.10% Series due 2005." The Bonds of the Series due 2005
shall be executed, authenticated and delivered in accordance with the provisions
of, and shall in all respects be subject to, all of the terms, conditions and
covenants of the Indenture. The aggregate principal amount of the Bonds of the
Series due 2005 is unlimited except as the principal amount of all bonds is
limited by the Indenture. The initial issuance of the Bonds of the Series due
2005 will be issued only to the New Mortgage Trustee as security for the series
of bonds being issued under the New Mortgage (the "New Mortgage Bonds of the
2005 Series").

Each of the Bonds of the Series due 2005 shall be dated as of the interest
payment date thereof on which interest was paid next preceding the date of
issue, unless (a) issued on an interest payment date thereof on which interest
was paid, in which event it shall be dated as of the date of issue, or (b)
issued prior to the occurrence of any interest payment date thereof on which
interest was paid, in which event it shall be dated August 1, 1995; shall mature
August 1, 2005; and shall bear interest at a rate of 7.10% per annum, payable
semi-annually on the first day of February and the first day of February in each
year commencing February 1, 1996. The Bonds of the Series due 2005 shall be
payable as to principal and interest in any coin or currency of the United
States of America which at the time of payment is legal tender for public and
private debts, and shall be payable (as to the interest thereon as well as the
principal thereof) at the office or agency of the Company in the Borough of
Manhattan, The City of New York, State of New York.

Section 2. The Bonds of the Series due 2005 shall be issued only as
registered bonds without coupons of the denomination of $1,000, or any multiple
of $1,000, numbered R-1 and consecutively upwards, without regard to the
denomination thereof.

Section 3. The Bonds of the Series due 2005 and the Trustee's Certificate
shall be substantially in the following forms respectively (and any of the
provisions of the Bonds of the Series due 2005 may be set forth on the reverse
side thereof):

[FORM OF BOND OF THE SERIES DUE 2005]

No. R- $60,000,000

NORTHWESTERN PUBLIC SERVICE COMPANY
FIRST MORTGAGE BOND, 7.10% SERIES DUE 2005

Northwestern Public Service Company, a Delaware corporation (hereinafter
called the "Company"), for value received, hereby promises to pay to The Chase
Manhattan Bank (National Association), as trustee (the "New Mortgage Trustee")
under the Company's General Mortgage Indenture and Deed of Trust dated as of
August 1, 1993 (the "New Mortgage") or registered assigns, the principal sum of
___________________ Dollars on the first day of August, 2005, and to pay
interest on said sum from the date hereof, at the rate of 7.10% per centum per
annum, payable half-yearly on the first day of February and the first day of
August in each year, until said principal sum is paid. Both the principal of
and the interest on this bond shall be payable at the office or agency of the
Company in the Borough of Manhattan, The City of New York, State of New York, in
any coin or currency of the United States of America which at the time of
payment is legal tender for public and private debts.

This bond is one of the bonds issued and to be issued from time to time
under and in accordance with and all secured by the indenture of mortgage or
deed of trust dated August 1, 1940, executed and delivered by the Company to The
Chase National Bank of the City of New York (to which The Chase Manhattan Bank
(National Association), hereinafter sometimes referred to as the "Trustee," is
the successor) and Carl E. Buckley (C.J. Heinzelmann being his successor), as
Trustees, as supplemented and amended by certain indentures

-5-
<PAGE>

supplemental thereto, including a Supplemental Indenture dated October 1, 1946,
and a Supplemental Indenture dated August 1, 1995 (the Supplemental Indenture
dated August 1, 1995, being herein referred to as the "Supplemental Indenture,"
and said indenture of mortgage as so supplemented and amended being herein
sometimes referred to as the "Indenture"), to which Indenture reference is
hereby made for a description of the property mortgaged and pledged, the nature
and extent of the security and the rights of the holders and registered owners
of said bonds and of the Trustees and of the Company in respect of such
security. By the terms of the Indenture the bonds to be secured thereby are
issuable in series which may vary as to date, amount, date of maturity, rate of
interest, redemption provisions, medium of payment and in other respects as in
the Indenture provided. To the extent permitted by, and as provided in, the
Indenture, modifications or alterations of the Indenture, or of any indenture
supplemental thereof, and of the rights and obligations of the Company and of
the holders of the bonds and coupons may be made with the consent of the Company
by an affirmative vote of the holders of not less than 66-2/3% in aggregate
principal amount of the bonds entitled to vote then outstanding, at a meeting of
bondholders called and held as provided in the Indenture, and by an affirmative
vote of the holders of not less than 66-2/3% in aggregate principal amount of
the bonds of any series entitled to vote then outstanding and affected by such
modification or alteration, in case one or more but less than all of the series
of bonds then outstanding under the Indenture are so affected; PROVIDED,
HOWEVER, that no such modification or alteration shall be made which will affect
the terms of payment of the principal of, or interest or premium, if any, on
this bond.

Bonds of the Series due 2005, of which this is one, shall not be redeemable
at any time prior to maturity.

In case of certain events of default specified in the Indenture, the
principal of this bond may be declared or may become due and payable, in the
manner and with the effect provided in the Indenture.

No recourse shall be had for the payment of the principal of, interest or
premium, if any, on this bond, or for any claim based hereon, or otherwise in
respect hereof or of the Indenture or any indenture supplemental thereto, to or
against any incorporator, stockholder, officer or director, past, present or
future, of the Company, or of any predecessor or successor company, either
directly or through the Company, or such predecessor successor company, under
any constitution or statute or rule of law, or by the enforcement of any
assessment or penalty, or otherwise, all such liability of incorporators,
stockholders, directors and officers being waived and released by the registered
owner hereof by the acceptance of this bond and being likewise waived and
released by the terms of the Indenture.

Notwithstanding any provision in the Indenture, the Supplemental Indenture
or this bond to the contrary, any payment by the Company under the New Mortgage
of principal, premium or interest on bonds which shall have been authenticated
and delivered under the New Mortgage (being herein referred to as the "New
Mortgage Bonds of the 2005 Series") upon the basis of the issuance and delivery
to the New Mortgage Trustee of the Bonds of the Series due 2005 shall, to the
extent thereof, be deemed to satisfy and discharge the obligation of the Company
to make a payment of principal, premium or interest, as the case may be, in
respect of this bond which is then due.

This bond constitutes a "Pledged Bond" (as defined in the New Mortgage) and
is subject to all of the rights and restrictions applicable to Pledged Bonds as
set forth in the New Mortgage. Without limiting the generality of the
foregoing, this bond shall be subject to surrender by the New Mortgage Trustee
in accordance with the provisions of Section 7.03 of the New Mortgage. To the
extent that any provisions in the Indenture, the Supplemental Indenture or this
bond are inconsistent with the provisions relating to Pledged Bonds that are set
forth in the New Mortgage, the provisions of the New Mortgage shall apply.

-6-
<PAGE>

This bond shall not be valid or become obligatory for any purpose unless
and until it shall have been authenticated by the execution by the Trustee or
its successor in trust under the Indenture of the certificate endorsed hereon.

IN WITNESS WHEREOF, Northwestern Public Service Company has caused this
bond to be executed in its name by its President or one of its Vice Presidents,
by his manual or facsimile signature, and its corporate seal to be hereto
affixed, or a facsimile thereof to be printed, lithographed or engraved hereon,
and to be attested by its Corporate Secretary or one of its Assistant
Secretaries, by his manual or facsimile signature, on the date hereof.

Dated:

NORTHWESTERN PUBLIC SERVICE COMPANY

By
-----------------------------------------------
[Title]

ATTEST:

- ------------------------------
Corporate Secretary

[FORM OF TRUSTEE'S CERTIFICATE]

This bond is one of the bonds of the series designated therein, described
in the within mentioned Indenture.

THE CHASE MANHATTAN BANK (NATIONAL
ASSOCIATION), AS TRUSTEE

By
------------------------------------------------
Authorized Officer

Section 4. Notwithstanding any provision in the Original Indenture, this
Supplemental Indenture or the Bonds of the Series due 2005 to the contrary, any
payment by the Company under the New Mortgage of principal, premium or interest
on bonds which shall have been authenticated and delivered under the New
Mortgage (being herein referred to as the "New Mortgage Bonds of the 2005
Series") upon the basis of the issuance and delivery to the New Mortgage Trustee
of the Bonds of the Series due 2005 shall, to the extent thereof, be deemed to
satisfy and discharge the obligation of the Company to make a payment of
principal, premium or interest, as the case may be, in respect of the Bonds of
the Series due 2005 which is then due.

Section 5. The Bonds of the Series due 2005 constitute "Pledged Bonds" (as
defined in the New Mortgage) and are subject to all of the rights and
restrictions applicable to Pledged Bonds as set forth in the New Mortgage.
Without limiting the generality of the foregoing, the Bonds of the Series due
2005 shall be subject to surrender by the New Mortgage Trustee in accordance
with the provisions of Section 7.03 of the New Mortgage. To the extent that any
provisions in the Original Indenture, this Supplemental Indenture or the Bonds
of the Series due 2005 are inconsistent with the provisions relating to Pledged
Bonds that are set forth in the New Mortgage, the provisions of the New Mortgage
shall apply.

-7-
<PAGE>

ARTICLE II
ISSUE OF BONDS OF THE SERIES DUE 2005

Section 1. The Company hereby exercises the right to obtain the
authentication and delivery of additional bonds for or on account of the
payment, cancellation, redemption or other discharge at, before or after
maturity of bonds of other series previously authenticated under the Indenture,
pursuant to the terms of Section 2 of Article II of the Original Indenture.
Such additional bonds shall be initially issued in the principal amount of
$60,000,000 and shall be Bonds of the Series due 2005. Bonds of the Series due
2005 shall be executed on behalf of the Company by its President, or one of its
Vice Presidents, and its Corporate Secretary, or one of its Assistant
Secretaries, by their manual or facsimile signatures, and shall be sealed with
the corporate seal of the Company by causing the same to be affixed thereto or a
facsimile thereof to be printed, lithographed or engraved thereon.

Section 2. The Bonds of the Series due 2005 provided to be issued by
Section 1 of this Article may be authenticated and delivered prior to the filing
for recordation of this Supplemental Indenture.

ARTICLE III
REDEMPTION OF BONDS OF THE SERIES DUE 2005

The Bonds of the Series due 2005 shall not be redeemable at any time prior
to maturity.

ARTICLE IV
CONVEYANCE OF ADDITIONAL PROPERTY

The Company has given, granted, bargained, sold, transferred, assigned,
pledged, mortgaged and warranted the title to and conveyed, and by these
presents does give, grant, bargain, sell, transfer, assign, pledged, mortgage
and warrant the title to and convey, unto the Trustees, their successors and
assigns, in trust, all the right, title and interest of the Company in and to
all and singular the property described in Exhibit A to this Supplemental
Indenture.

TO HAVE AND TO HOLD all said property, rights, and interest hereby
conveyed, assigned, pledged or mortgaged, unto the Trustees, their successor or
successors in trust, and their assigns, forever, but in trust nevertheless upon
the trusts, for the purposes, and subject to all the exceptions and
reservations, terms, conditions, provisions and restrictions, of the Indenture,
and for the equal and proportionate benefit and security, except as may
otherwise be expressly provided in the Original Indenture, as amended and
supplemented by the Supplemental Indenture dated October 1, 1946, and the
Supplemental Indenture dated November 14, 1974, of the holders and owners of all
bonds at any time issued and outstanding under the Original Indenture, as
amended and supplemented, but subject, however, to all the conditions,
agreements, covenants, exceptions, limitations, restrictions and reservations
expressed or provided in the deeds or other instruments of record affecting the
property, or any part or portion thereof, hereinbefore described, insofar as the
same are at the time of execution hereof in force and effect and permitted by
law.

ARTICLE V
THE TRUSTEES

-8-
<PAGE>

recitals contained herein, all of which recitals are made by the Company solely.
In general each and every term and condition contained in Article XV of the
Original Indenture, as amended by Section 15 of Article IV of the Supplemental
Indenture dated October 1, 1946, shall apply to this Supplemental Indenture with
the same force and effect as if the same were herein set forth in full, with
such omissions, variations and modifications thereof as may be appropriate to
make the same conform to this Supplemental Indenture.

IN WITNESS WHEREOF, said Northwestern Public Service Company has caused
this instrument to be executed in its corporate name by its President or one of
its Vice Presidents, and its corporate seal to be hereunto affixed and to be
attested by its Corporate Secretary or an Assistant Secretary, and said The
Chase Manhattan Bank (National Association), to evidence its acceptance of the
trust hereby created, has caused this instrument to be executed in its corporate
name by its President or one of its Vice Presidents and its corporate seal to be
hereunto affixed and to be attested by one of its Assistant Secretaries, and
said C.J. Heinzelmann, to evidence his acceptance of the trust hereby created,
has signed this instrument, in several counterparts, all as of the day and year
first above written.

NORTHWESTERN PUBLIC SERVICE COMPANY

By /s/ Richard R. Hylland
------------------------------------------
Richard R. Hylland
VICE PRESIDENT

ATTEST:

By /s/ Alan D. Dietrich
------------------------------
CORPORATE SECRETARY

Executed by Northwestern Public
Service Company in the presence of:

/s/ Walda Benker
- --------------------------------

/s/ Joan Romsell
- --------------------------------
Witnesses

-9-
<PAGE>

(BANK SEAL) THE CHASE MANHATTAN BANK (NATIONAL
ASSOCIATION)

By /s/ James Heaney
--------------------------------------
James Heaney
VICE PRESIDENT
ATTEST:

By /s/ Kathleen Perry
---------------------------------
ASSISTANT SECRETARY

Executed by The Chase Manhattan
Bank (National Association) in the
presence of:

/s/ R. J. Halleran
- -----------------------------------

/s/ Mary Lemiecke
- -----------------------------------
Witnesses

By /s/ C. J. Heinzelmann
--------------------------------------
C. J. Heinzelmann

Executed by C. J. Heinzelmann in
the presence of:

/s/ R. J. Halleran
- -----------------------------------

/s/ Mary Lemiecke
- -----------------------------------
Witnesses

-10-
<PAGE>

STATE OF SOUTH DAKOTA )
) SS
COUNTY OF BEADLE )

On this 1st day of August, in the year 1995, before me, SUSAN M. ANDERSON,
a Notary Public in and for said County and State, personally appeared R.R.
HYLLAND and ALAN D. DIETRICH, known to me to be the Vice President and the
Corporate Secretary, respectively, of Northwestern Public Service Company, a
Delaware corporation, and one of the corporations that is described in and that
executed the within instrument, and to be officers of said corporation
authorized to execute said instrument on its behalf, and acknowledged to me that
said corporation executed the same, and further acknowledged to me that they had
executed said instrument as such officers and on behalf of said corporation,
thereunto duly authorized.

IN WITNESS WHEREOF, I have hereunto set my hand and affixed my seal of
office this 1st day of August, 1995.

/s/ Susan M. Anderson
(NOTARIAL SEAL) ---------------------------------------------
SUSAN M. ANDERSON
NOTARY PUBLIC, BEADLE COUNTY, S.D.
My Commission expires June 8, 2000

STATE OF SOUTH DAKOTA )
) SS
COUNTY OF BEADLE )

On this 1st day of August, in the year 1995, before me, SUSAN M. ANDERSON,
a Notary Public in and for said County and State, personally appeared R.R.
HYLLAND and ALAN D. DIETRICH, known to me to be the Vice President and the
Corporate Secretary, respectively, of the within named Northwestern Public
Service Company, a Delaware corporation, and to be the same persons whose names
are signed to the foregoing instrument as such Vice President and such Corporate
Secretary, respectively, of said corporation, and acknowledged said instrument
to be the voluntary act and deed of said corporation, and further acknowledged
that they had signed, sealed and delivered said instrument as their voluntary
act and deed as the Vice President and the Corporate Secretary, respectively, of
said corporation and that the seal of said corporation affixed to said
instrument is the common seal of said corporation.

IN WITNESS WHEREOF, I have hereunto set my hand and affixed my seal of
office this 1st day of August, 1995.

(NOTARIAL SEAL) /s/ Susan M. Anderson
----------------------------------------
SUSAN M. ANDERSON
NOTARY PUBLIC, BEADLE COUNTY, S.D.
My Commission expires June 8, 2000

<PAGE>

STATE OF NEW YORK )
) SS
COUNTY OF KINGS )

On this 31st day of July, in the year 1995, before me,
Denis Kelly, a Notary Public in and for said County and State,
personally appeared James Heaney and Kathleen Perry to
me personally known and known to me to be a Vice President and an Assistant
Secretary, respectively, of THE CHASE MANHATTAN BANK (National Association), a
national banking association organized and existing under the laws of the United
States of America and one of the corporations described in and which executed
the foregoing instrument, who, being by me severally duly sworn, each for
himself or herself did depose, and say and acknowledge that he, said
James Heaney, resides at 18 Choate Court, Langhorne, Pa 19047 and is a Vice
President of said Bank and that he, said Kathleen Perry, resides at
8050 Baxter Ave. Elmhurst, N.Y. 11373 and is an Assistant Secretary of said
Bank; that the respectively know the seal of said Bank and that the seal
affixed to said instrument is such corporate seal; that it was so affixed by
order of the Board of Directors of said Bank, and that they, respectively,
signed their names thereto by like order; and that said instrument is the
voluntary act and deed of said Bank, by it voluntarily executed.

IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed my
official seal this 31st day of July, 1995.

(NOTARIAL SEAL) /s/ Denis Kelly
----------------------------------------
NOTARY PUBLIC, STATE OF NEW YORK
No. __________
Qualified in Kings County
Commission expires __________, ____

<PAGE>

STATE OF NEW YORK )
) SS
COUNTY OF KINGS )

On this 31st day of July, in the year 1995, before me
Denis Kelly, a Notary Public in and for said County and State,
personally appeared C. J. HEINZELMANN, to me personally known and known by me to
be the person described in and who executed the foregoing instrument, who, being
by me duly sworn, did depose, say and acknowledge that he resides at
15 Boylston St. Gordon City, N.Y. 11530 and that said instrument is his
voluntary act and deed, by him voluntarily executed.

IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed my
official seal this 31st day of July, 1995.

(NOTARIAL SEAL) /s/ Denis Kelly
----------------------------------------
NOTARY PUBLIC, STATE OF NEW YORK
No. __________
Qualified in Kings County
Commission expires __________, ____

<PAGE>

ACKNOWLEDGMENT

The undersigned acknowledges the delivery to it and the receipt by it of a
full, true and complete copy of the foregoing Supplemental Indenture dated
August 1, 1995.

NORTHWESTERN PUBLIC SERVICE COMPANY

/s/ Richard R. Hylland
----------------------------------------
VICE PRESIDENT

(CORPORATE SEAL)

By /s/ Alan D. Dietrich
---------------------------------
CORPORATE SECRETARY

<PAGE>

DECLARATION OF TRUST
OF
NWPS CAPITAL FINANCING I

DECLARATION OF TRUST, dated as of June 19, 1995 (this "Declaration of
Trust"), among Northwestern Public Service Company, a Delaware corporation, as
Sponsor, and Merle D. Lewis, Richard R. Hylland, and Wilmington Trust Company, a
Delaware banking corporation, not in their individual capacities but solely as
trustees of the Trust, as defined below (collectively, the "Trustees"). The
Sponsor and the Trustees hereby agree as follows:

1. The trust created hereby shall be known as "NWPS Capital
Financing I" (the "Trust"), in which name the Trustees, or the Sponsor to the
extent provided herein, may conduct the business of the Trust, make and execute
contracts, and sue and be sued.

2. The Sponsor hereby assigns, transfers, conveys and sets over to
the Trustees the sum of $10. The Trustees hereby acknowledge receipt of such
amount in trust from the Sponsor, which amount shall constitute the initial
trust estate. The Trustees hereby declare that they will hold the trust estate
in trust for the benefit of the Sponsor. It is the intention of the parties
hereto that the Trust created hereby constitute a business trust under Chapter
38 of Title 12 of the Delaware Code, 12 DEL. C. Section 3801 ET SEQ. (the
"Business Trust Act"), and that this document constitute the governing
instrument of the Trust. The Trustees are hereby authorized and directed to
execute and file a certificate of trust with the Delaware Secretary of State in
the form attached hereto.

3. The Sponsor and the Trustees will enter into an amended and
restated Declaration of Trust, satisfactory to each such party and substantially
in the form included as an exhibit to the 1933 Act Registration Statement (as
defined below), to provide for the contemplated operation of the Trust created
hereby and the issuance of the Preferred Securities and Common Securities
referred to therein. Prior to the execution and delivery of such amended and
restated Declaration of Trust, the Trustees shall not have any duty or
obligation hereunder or with respect of the trust estate, except as otherwise
required by applicable law or as may be necessary to obtain prior to such
execution and delivery any licenses, consents or approvals required by
applicable law or otherwise.

4. The Sponsor and the Trustees hereby authorize and direct the
Sponsor, as the sponsor of the Trust, (i) to file with the Securities and
Exchange Commission (the "Commission") and execute, in each case on behalf of
the Trust (a) a Registration Statement on Form S-3 (the "1933 Act Registration
Statement"), including all pre-effective and post-effective amendments thereto,
relating to the registration of the Preferred Securities of the Trust under the
Securities Act of 1933, as amended, and (b) a Registration Statement on Form 8-A
(the "1934 Act Registration Statement"), including all pre-effective and post-
effective amendments thereto, relating to the registration of the Preferred
Securities of the Trust under Section 12(b) of the Securities Exchange Act of
1934, as amended; (ii) to file with the New York Stock Exchange and execute on
behalf of the Trust a listing application and all other applications,
statements, certificates, agreements and other instruments as shall be necessary
or desirable to cause

<PAGE>

the Preferred Securities to be listed on the New York Stock Exchange; (iii) to
file and execute on behalf of the Trust such applications, reports, surety
bonds, irrevocable consents, appointments of attorney for service of process and
other papers and documents as shall be necessary or desirable to register the
Preferred Securities under the securities or "Blue Sky" laws of such
jurisdictions as the Sponsor, on behalf of the Trust, may deem necessary or
desirable and (iv) to execute on behalf of the Trust that certain Underwriting
Agreement among the Trust, the Sponsor and Morgan Stanley & Co., Incorporated,
substantially in the form included as an exhibit to the 1933 Act Registration
Statement. In the event that any filing referred to in clauses (i)-(iii) above
is required by the rules and regulations of the Commission, the New York Stock
Exchange or state securities or blue sky laws, to be executed on behalf of the
Trust by the Trustees, Merle D. Lewis and Richard R. Hylland, in their
capacities as Trustees of the Trust, are hereby authorized and directed to join
in any such filing and to execute on behalf of the Trust any and all of the
foregoing, it being understood that Wilmington Trust Company, in its capacity as
Trustee of the Trust, shall not be required to join in any such filing or
execute on behalf of the Trust any such document unless required by the rules
and regulations of the Commission, the New York Stock Exchange or state
securities or blue sky laws. In connection with all of the foregoing, the
Sponsor and each Trustee, solely in its capacity as Trustee of the Trust, hereby
constitutes and appoints Merle D. Lewis, as his or its, as the case may be, true
and lawful attorney-in-fact, and agent, with full power of substitution and
resubstitution, for the Sponsor or such Trustee or in the Sponsor's or such
Trustee's name, place and stead, in any and all capacities, to sign any and all
amendments, including post-effective amendments, to the 1933 Act Registration
Statement and the 1934 Act Registration Statement, and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in connection therewith, as fully to all intents and purposes as the
Sponsor or such Trustee might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or his substitute or
substitutes, shall do or cause to be done by virtue hereof.

5. This Declaration of Trust may be executed in one or more
counterparts.

6. The number of Trustees initially shall be three (3) and
thereafter the number of Trustees shall be such number as shall be fixed from
time to time by a written instrument signed by the Sponsor which may increase or
decrease the number of Trustees; provided, however, that the number of Trustees
shall in no event be less than three (3); and provided, further that to the
extent required by the Business Trust Act, one Trustee shall either be a natural
person who is a resident of the State of Delaware or, if not a natural person,
an entity which has its principal place of business in the State of Delaware.
Subject to the foregoing, the Sponsor is entitled to appoint or remove without
cause any Trustee at any time. The Trustees may resign upon thirty (30) days
prior notice to the Sponsor.

<PAGE>

7. Notwithstanding any other provision of this Declaration of Trust,
Wilmington Trust Company, in its capacity as Trustee of the Trust, shall not be
entitled to exercise any of the powers, nor shall Wilmington Trust Company, in
its capacity as Trustee of the Trust, have any duties and responsibilities of
the other Trustees described in this Declaration of Trust. Wilmington Trust
Company, in its capacity as Trustee of the Trust, shall be a Trustee for the
sole and limited purpose of fulfilling the requirements of Section 3807 of the
Business Trust Act.

8. No Trustee, any affiliate of any Trustee or any officers,
directors, shareholders, members, partners, employees, representatives or agents
of any Trustee or any employee or agent of the Trust or its affiliates (each, an
"Indemnified Person" and collectively, the "Indemnified Persons"), shall be
liable, responsible or accountable, in damages or otherwise, to the Trust or any
other Indemnified Person for any loss, damage or claim incurred by reason of any
act or omission performed or omitted by such Indemnified Person in good faith on
behalf of the Trust and in a manner such Indemnified Person reasonably believed
to be within the scope of the authority conferred on such Indemnified Person by
this Declaration of Trust or by law, except that an Indemnified Person shall be
liable for any such loss, damage or claim incurred by reason of such Indemnified
Person's gross negligence or wilful misconduct with respect to such acts or
omissions.

9. To the fullest extent permitted by applicable law, the Sponsor
shall indemnify and hold harmless each Indemnified Person from and against any
loss, damage or claim incurred by such Indemnified Person by reason of any act
or omission performed or omitted by such Indemnified Person in good faith on
behalf of the Trust and in a manner such Indemnified Person reasonably believed
to be within the scope of the authority conferred on such Indemnified Person by
this Declaration of Trust, except that no Indemnified Person shall be entitled
to be indemnified in respect of any loss, damage or claim incurred by such
Indemnified Person by reason of gross negligence or wilful misconduct with
respect to such acts or omissions.

10. To the fullest extent permitted by applicable law, expenses
(including legal fees) incurred by an Indemnified Person in defending any claim,
demand, action, suit or proceeding shall, from time to time, be advanced by the
Sponsor prior to the final disposition of such claim, demand, action, suit or
proceeding upon receipt by the Sponsor of an undertaking by or on behalf of the
Indemnified Person to repay such amount if it shall be determined that the
Indemnified Person is not entitled to be indemnified as authorized in Section 9.

11. Wilmington Trust Company may engage in or possess an interest in
other business ventures of any nature or description, independently or with
others, similar or dissimilar to the business of the Trust, and the Trust, the
Sponsor and the other Trustees shall have no rights by virtue of this
Declaration of Trust in and to such independent ventures or the income or
profits derived therefrom, and the pursuit of any such venture, even if
competitive with the business of the Trust, shall not be deemed wrongful or
improper. Wilmington Trust Company shall not be obligated to present any
particular investment or other opportunity to the Trust

<PAGE>

even if such opportunity is of a character that, if presented to the Trust,
could be taken by the Trust, and Wilmington Trust Company shall have the right
to take for its own account (individually or as a partner or fiduciary) or to
recommend to others any such particular investment or other opportunity.
Wilmington Trust Company may engage or be interested in any financial or other
transactions with the Sponsor or any affiliate of the Sponsor, or may act on any
committee or body of holders of securities or other obligations of the Sponsor
or its affiliates.

12. This Declaration of Trust shall be governed by, and construed in
accordance with, the laws of the State of Delaware (without regard to conflict
of laws principles).

<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Declaration of
Trust to be duly executed as of the day and year first above written.

Northwestern Public Service Company,
as Sponsor

By: /s/ R. R. Hylland
-----------------------------------------------
Name: Richard R. Hylland
Title: Vice President Strategic Department

Wilmington Trust Company,
not in its individual capacity
but solely as Trustee

By: /s/ Emmett R. Harmon
-----------------------------------------------
Name: Emmett R. Harmon
Title: Vice President

/s/ Merle D. Lewis
--------------------------------------------------
Merle D. Lewis,
not in his individual capacity
but solely as Trustee

/s/ Richard R. Hylland
-------------------------------------------------
Richard R. Hylland,
not in his individual capacity
but solely as Trustee

<PAGE>

AMENDED AND RESTATED
DECLARATION OF TRUST
OF
NWPS CAPITAL FINANCING I

<PAGE>

NWPS CAPITAL FINANCING I

CROSS-REFERENCE TABLE FOR THE
AMENDED AND RESTATED DECLARATION OF TRUST

SECTION OF SECTION OF
TRUST INDENTURE AMENDED AND RESTATED
ACT OF 1939, AS AMENDED DECLARATION OF TRUST
- ----------------------- --------------------
Section 310(a)(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3
(a)(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3
(a)(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.6
(a)(4). . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5.3(c)
(c) . . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
Section 311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.2(b)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.2(b)
(c) . . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
Section 312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.2(a)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.2(b)
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.2(a)
Section 313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
Section 314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4, 3.6(j)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
(c)(1). . . . . . . . . . . . . . . . . . . . . . . . . . . .2.4, 2.5
(c)(2). . . . . . . . . . . . . . . . . . . . . . . . . . . .2.4, 2.5
(c)(3). . . . . . . . . . . . . . . . . . . . . . . . . . . .2.4, 2.5
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4
Section 315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9, 3.10
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.7(a)
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3.9(a)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3.9(b)
(e) . . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
Section 316(a) . . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
(a)(2). . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
(c) . . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
Section 317(a)(1). . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
(a)(2). . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3.8(h)

<PAGE>

Section 318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.1(c)

_____________

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

<PAGE>

TABLE OF CONTENTS

ARTICLE I

Interpretation and Definitions

SECTION 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Appointment Event . . . . . . . . . . . . . . . . . . . . . . . 2
Authorized Officer. . . . . . . . . . . . . . . . . . . . . . . 2
Book Entry Interest . . . . . . . . . . . . . . . . . . . . . . 2
Business Day. . . . . . . . . . . . . . . . . . . . . . . . . . 2
Business Trust Act. . . . . . . . . . . . . . . . . . . . . . . 2
Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Clearing Agency . . . . . . . . . . . . . . . . . . . . . . . . 2
Clearing Agency Participant . . . . . . . . . . . . . . . . . . 3
Code. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Commission. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Common Security . . . . . . . . . . . . . . . . . . . . . . . . 3
Common Securities Guarantee . . . . . . . . . . . . . . . . . . 3
Common Security Certificate . . . . . . . . . . . . . . . . . . 3
Covered Person. . . . . . . . . . . . . . . . . . . . . . . . . 3
Debenture Issuer. . . . . . . . . . . . . . . . . . . . . . . . 3
Debenture Trustee . . . . . . . . . . . . . . . . . . . . . . . 3
Debentures. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Delaware Trustee. . . . . . . . . . . . . . . . . . . . . . . . 3
Definitive Preferred Security Certificates. . . . . . . . . . . 3
Direction . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Distribution. . . . . . . . . . . . . . . . . . . . . . . . . . 4
DTC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Exchange Act. . . . . . . . . . . . . . . . . . . . . . . . . . 4
Event of Default. . . . . . . . . . . . . . . . . . . . . . . . 4
Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Global Certificate. . . . . . . . . . . . . . . . . . . . . . . 4
Holder. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Indemnified Person. . . . . . . . . . . . . . . . . . . . . . . 4
Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Investment Company. . . . . . . . . . . . . . . . . . . . . . . 4
Investment Company Act. . . . . . . . . . . . . . . . . . . . . 4
Investment Company Event. . . . . . . . . . . . . . . . . . . . 4
Legal Action. . . . . . . . . . . . . . . . . . . . . . . . . . 5
List of Holders . . . . . . . . . . . . . . . . . . . . . . . . 5
Majority in Liquidation Amount of the Securities. . . . . . . . 5
Ministerial Action. . . . . . . . . . . . . . . . . . . . . . . 5
Officers' Certificate . . . . . . . . . . . . . . . . . . . . . 5
Paying Agent. . . . . . . . . . . . . . . . . . . . . . . . . . 5
Person. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Preferred Securities Guarantee. . . . . . . . . . . . . . . . . 5
Preferred Security. . . . . . . . . . . . . . . . . . . . . . . 6
Preferred Security Beneficial Owner . . . . . . . . . . . . . . 6
Preferred Security Certificate. . . . . . . . . . . . . . . . . 6

<PAGE>

- ----------

Note: This table of contents shall not, for any purpose, be deemed to be a
part of this Declaration.

-i-

<PAGE>

Property Trustee. . . . . . . . . . . . . . . . . . . . . . . . 6
Property Trustee Account. . . . . . . . . . . . . . . . . . . . 6
Quorum. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Regular Trustee . . . . . . . . . . . . . . . . . . . . . . . . 6
Related Party . . . . . . . . . . . . . . . . . . . . . . . . . 6
Responsible Officer . . . . . . . . . . . . . . . . . . . . . . 6
Rule 3a-7 . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Securities Act. . . . . . . . . . . . . . . . . . . . . . . . . 6
66-2/3% in Liquidation Amount of the Securities.. . . . . . . . 6
Special Event . . . . . . . . . . . . . . . . . . . . . . . . . 7
Special Regular Trustee . . . . . . . . . . . . . . . . . . . . 7
Sponsor . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Successor Entity. . . . . . . . . . . . . . . . . . . . . . . . 7
Successor Securities. . . . . . . . . . . . . . . . . . . . . . 7
Tax Event . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
10% in Liquidation Amount of the Securities . . . . . . . . . . 8
Treasury Regulations. . . . . . . . . . . . . . . . . . . . . . 8
Trustee; Trustees . . . . . . . . . . . . . . . . . . . . . . . 8
Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . 8
Underwriting Agreement. . . . . . . . . . . . . . . . . . . . . 8

ARTICLE II

Trust Indenture Act

SECTION 2.1. Trust Indenture Act; Application. . . . . . . . . . . . . . . . 8

SECTION 2.2. Lists of Holders of Securities. . . . . . . . . . . . . . . . . 9

SECTION 2.3 Reports by the Property Trustee . . . . . . . . . . . . . . . . 9

SECTION 2.4 Periodic Reports to Property Trustee. . . . . . . . . . . . . . 9

SECTION 2.5. Evidence of Compliance with Conditions Precedent. . . . . . . .10

SECTION 2.6. Events of Default; Waiver . . . . . . . . . . . . . . . . . . .10

SECTION 2.7. Event of Default; Notice. . . . . . . . . . . . . . . . . . . .11

ARTICLE III

Organization

SECTION 3.1. Name. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12

SECTION 3.2. Office. . . . . . . . . . . . . . . . . . . . . . . . . . . . .12

SECTION 3.3. Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . .13

- ----------

<PAGE>

Note: This table of contents shall not, for any purpose, be deemed to be a
part of this Declaration.

-ii-

<PAGE>

SECTION 3.4. Authority . . . . . . . . . . . . . . . . . . . . . . . . . . .13

SECTION 3.5. Title to Property of the Trust. . . . . . . . . . . . . . . . .13

SECTION 3.6. Powers and Duties of the Regular Trustees . . . . . . . . . . .13

SECTION 3.7. Prohibition of Actions by the Trust and the
Trustees . . . . . . . . . . . . . . . . . . . . . . . . .16

SECTION 3.8. Powers and Duties of the Property Trustee . . . . . . . . . . .17

SECTION 3.9. Certain Duties and Responsibilities of the
Property Trustee . . . . . . . . . . . . . . . . . . . . .19

SECTION 3.10. Certain Rights of Property Trustee. . . . . . . . . . . . . . .21

SECTION 3.11. Delaware Trustee. . . . . . . . . . . . . . . . . . . . . . . .24

SECTION 3.12. Execution of Documents. . . . . . . . . . . . . . . . . . . . .24

SECTION 3.13. Not Responsible for Recitals or Issuance
of Securities. . . . . . . . . . . . . . . . . . . . . . .24

SECTION 3.14. Duration of Trust . . . . . . . . . . . . . . . . . . . . . . .24

SECTION 3.15 Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . .25

ARTICLE IV

Sponsor

SECTION 4.1. Sponsor's Purchase of Common Securities . . . . . . . . . . . .26

SECTION 4.2. Responsibilities of the Sponsor . . . . . . . . . . . . . . . .27

SECTION 4.3. Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . .27

ARTICLE V

Trustees

SECTION 5.1. Number of Trustees. . . . . . . . . . . . . . . . . . . . . . .28

SECTION 5.2. Delaware Trustee. . . . . . . . . . . . . . . . . . . . . . . .28

SECTION 5.3. Property Trustee; Eligibility . . . . . . . . . . . . . . . . .29

SECTION 5.4. Qualifications of Regular Trustees and
Delaware Trustee Generally . . . . . . . . . . . . . . . .30

- ----------

<PAGE>

Note: This table of contents shall not, for any purpose, be deemed to be a
part of this Declaration.

-iii-

<PAGE>

SECTION 5.5. Initial Trustees. . . . . . . . . . . . . . . . . . . . . . . .30

SECTION 5.6. Appointment, Removal and Resignation
of Trustees. . . . . . . . . . . . . . . . . . . . . . . .30

SECTION 5.7. Vacancies Among Trustees. . . . . . . . . . . . . . . . . . . .33

SECTION 5.8. Effect of Vacancies . . . . . . . . . . . . . . . . . . . . . .33

SECTION 5.9 Meetings. . . . . . . . . . . . . . . . . . . . . . . . . . . .33

SECTION 5.10. Delegation of Power . . . . . . . . . . . . . . . . . . . . . .33

ARTICLE VI

Distributions

SECTION 6.1. Distributions . . . . . . . . . . . . . . . . . . . . . . . . .34
ARTICLE VII

Issuance of Securities

SECTION 7.1. General Provisions Regarding Securities . . . . . . . . . . . .34

ARTICLE VIII

Termination of Trust

SECTION 8.1. Termination of Trust. . . . . . . . . . . . . . . . . . . . . .36

ARTICLE IX

Transfer of Securities

SECTION 9.1. Transfer of Securities. . . . . . . . . . . . . . . . . . . . .37

SECTION 9.2. Transfer of Certificates. . . . . . . . . . . . . . . . . . . .37

SECTION 9.3. Deemed Security Holders . . . . . . . . . . . . . . . . . . . .38

SECTION 9.4. Book Entry Interests. . . . . . . . . . . . . . . . . . . . . .38

SECTION 9.5. Notices to Clearing Agency. . . . . . . . . . . . . . . . . . .39

SECTION 9.6. Appointment of Successor Clearing Agency. . . . . . . . . . . .39

SECTION 9.7. Definitive Preferred Security Certificates. . . . . . . . . . .39

<PAGE>

- ----------

Note: This table of contents shall not, for any purpose, be deemed to be a
part of this Declaration.

-iv-

<PAGE>

SECTION 9.8. Mutilated, Destroyed, Lost or Stolen
Certificates. . . . . . . . . . . . . . . . . . . . . . . . . .40

ARTICLE X

Limitation of Liability of Holders
of Securities, Trustees and Others

SECTION 10.1. Liability . . . . . . . . . . . . . . . . . . . . . . . . . . .40

SECTION 10.2. Exculpation . . . . . . . . . . . . . . . . . . . . . . . . . .41

SECTION 10.3. Fiduciary Duty. . . . . . . . . . . . . . . . . . . . . . . . .42

SECTION 10.4. Indemnification . . . . . . . . . . . . . . . . . . . . . . . .43

SECTION 10.5. Outside Business. . . . . . . . . . . . . . . . . . . . . . . .43

ARTICLE XI

Accounting

SECTION 11.1. Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . .44

SECTION 11.2. Certain Accounting Matters. . . . . . . . . . . . . . . . . . .44

SECTION 11.3. Banking . . . . . . . . . . . . . . . . . . . . . . . . . . . .45

SECTION 11.4. Withholding . . . . . . . . . . . . . . . . . . . . . . . . . .45

ARTICLE XII

Amendments and Meetings

SECTION 12.1. Amendments. . . . . . . . . . . . . . . . . . . . . . . . . . .45

SECTION 12.2. Meetings of the Holders of Securities; Action
by Written Consent . . . . . . . . . . . . . . . . . . . .47

ARTICLE XIII

Representations of Property Trustee

SECTION 13.1. Representations and Warranties of Property
Trustee. . . . . . . . . . . . . . . . . . . . . . . . . .49

<PAGE>

- ----------

Note: This table of contents shall not, for any purpose, be deemed to be a
part of this Declaration.

-v-

<PAGE>

ARTICLE XIV

Miscellaneous

SECTION 14.1. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . .49

SECTION 14.2. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . .50

SECTION 14.3. Intention of the Parties. . . . . . . . . . . . . . . . . . . .51

SECTION 14.4 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . .51

SECTION 14.5 Successors and Assigns. . . . . . . . . . . . . . . . . . . . .51

SECTION 14.6 Partial Enforceability. . . . . . . . . . . . . . . . . . . . .51

SECTION 14.7 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . .51

TESTIMONIUM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52

SIGNATURE AND SEALS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52

EXHIBIT A: Form of Terms of 8 1/8% Trust Preferred Capital Securities and
8 1/8% Trust Common Capital Securities

EXHIBIT B: Specimen of Debenture

EXHIBIT C: Underwriting Agreement

<PAGE>

- ----------

Note: This table of contents shall not, for any purpose, be deemed to be a
part of this Declaration.

-vi-

<PAGE>

AMENDED AND RESTATED
DECLARATION OF TRUST
OF
NWPS CAPITAL FINANCING I

AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration") dated and
effective as of August 1, 1995, by the undersigned trustees (together with all
other Persons from time to time duly appointed and serving as trustees in
accordance with the provisions of this Declaration, the "Trustees"),
Northwestern Public Service Company, a Delaware corporation, as trust sponsor
(the "Sponsor"), and by the holders, from time to time, of undivided beneficial
interests in the assets of the Trust to be issued pursuant to this Declaration;

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

WHEREAS, all of the Trustees and the Sponsor, by this Declaration, amend and
restate each and every term and provision of the Original Declaration; and

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

ARTICLE I
INTERPRETATION AND DEFINITIONS

SECTION 1.1 Definitions.

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

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

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

<PAGE>

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

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

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

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

"Appointment Event" means an event defined in the terms of the Securities, as
set forth in Exhibit A, which entitles the Holders of a Majority in liquidation
amount of the Preferred Securities to appoint a Special Regular Trustee.

"Authorized Officer" of a Person means any Person that is authorized to bind
such Person.

"Book Entry Interest" means a beneficial interest in a Global Certificate,
ownership and transfers of which shall be maintained and made through book
entries by a Clearing Agency as described in Section 9.4.

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

"Business Trust Act" means Chapter 38 of Title 12 of the Delaware Code, 12 Del.
Code Section 3801 et seq., as it may be amended from time to time, or any
successor legislation.

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

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

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

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

"Commission" means the Securities and Exchange Commission.

"Common Security" has the meaning specified in Section 7.1.

"Common Securities Guarantee" means the guarantee agreement to be dated as of
August 1, 1995 of the Sponsor in respect of the Common Securities.

"Common Security Certificate" means a definitive certificate in fully registered
form representing a Common Security substantially in the form of Annex II to
Exhibit A.

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

"Debenture Issuer" means Northwestern Public Service Company, in its capacity as
issuer of the Debentures.

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

"Debentures" means the series of Debentures entitled "8 1/8% Junior Subordinated
Deferrable Interest Debentures due September 30, 2025" to be issued to the
Property Trustee by the Debenture Issuer under the Indenture, a specimen
certificate of which is attached as Exhibit B.

"Delaware Trustee" has the meaning set forth in Section 5.2.

"Definitive Preferred Security Certificates" has the meaning set forth in
Section 9.4.

"Direction" by a Person means a written direction signed:

(a) if the Person is a natural person, by that Person; or

(b) in any other case, in the name of such Person by one or more
Authorized Officers of that Person.

"Distribution" means a distribution payable to Holders of Securities in
accordance with Section 6.1.

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

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

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

"Fiscal Year" has the meaning set forth in Section 11.1.

"Global Certificate" has the meaning set forth in Section 9.4.

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

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

"Indenture" means the Indenture dated as of August 1, 1995, between the
Debenture Issuer and The Chase Manhattan Bank (N.A.), as trustee, and the
indenture supplemental thereto pursuant to which the Debentures are to be
issued.

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

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

"Investment Company Event" means that the Regular Trustees shall have received
an opinion of nationally recognized independent counsel experienced in practice
under the Investment Company Act, that as a result of the occurrence of a change
in law or regulation by any legislative body, court, governmental agency or
regulatory authority (a "Change in 1940 Act Law"), the Trust is or will be
considered an "investment company" which is required to be registered under the
1940 Act, which Change in 1940 Act Law becomes effective on or after the date of
the issuance of the Preferred Securities. In case of any uncertainty regarding
an Investment Company Event, the good faith determination of the Regular
Trustees, based on the advice of counsel, shall be conclusive.

"Legal Action" has the meaning set forth in Section 3.6(g).

"List of Holders" has the meaning set forth in Section 2.2.

"Majority in liquidation amount of the Securities" means, except as provided in
the Terms of Securities and by the Trust Indenture Act, a vote by Holder(s) of
Securities voting together as

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a single class or, as the context may require, a vote by Holder(s) of Preferred
Securities or Holder(s) of Common Securities voting separately as a class,
representing a majority of the liquidation amount (including the stated amount
that would be paid on redemption, liquidation or otherwise, plus accrued and
unpaid Distributions to the date upon which the voting percentages are
determined) of all Securities of such class.

"Ministerial Action" has the meaning set forth in the terms of the Securities as
set forth in Exhibit A.

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

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

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

"Paying Agent" has the meaning specified in Section 3.8(h).

"Preferred Securities Guarantee" means the guarantee agreement to be dated as of
August 1, 1995, of the Sponsor in respect of the Preferred Securities.

"Preferred Security" has the meaning specified in Section 7.1.

"Preferred Security Beneficial Owner" means, with respect to a Book Entry
Interest, a Person who is the beneficial owner of such Book Entry Interest, as
reflected on the books of the Clearing Agency, or on the books of a Person
maintaining an account with such Clearing

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Agency (directly as a Clearing Agency Participant or as an indirect participant,
in each case in accordance with the rules of such Clearing Agency).

"Preferred Security Certificate" means a certificate representing a Preferred
Security substantially in the form of Annex I to Exhibit A.

"Property Trustee" means the Trustee meeting the eligibility requirements set
forth in Section 5.3.

"Property Trustee Account" has the meaning set forth in Section 3.8(c).

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

"Regular Trustee" means any Trustee other than the Property Trustee and the
Delaware Trustee.

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

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

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

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

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

"66-2/3% in liquidation amount of the Securities" means, except as provided in
the Terms of Securities and by the Trust Indenture Act, a vote by Holder(s) of
Securities voting together as a single class or, as the context may require, a
vote by Holder(s) of Preferred Securities or Holder(s) of Common Securities
voting separately as a class, representing 66 2/3% of the liquidation amount
(including the stated amount that would be paid on redemption, liquidation

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or otherwise, plus accrued and unpaid Distributions to the date upon which the
voting percentages are determined) of all Securities of such class.

"Special Event" means an Investment Company Event or a Tax Event.

"Special Regular Trustee" means a Regular Trustee appointed by the Holders of a
Majority in liquidation amount of the Preferred Securities in accordance with
Section 5.6(a)(ii)(B).

"Sponsor" means Northwestern Public Service Company, a Delaware corporation, or
any successor entity in a merger, consolidation or amalgamation, in its capacity
as sponsor of the Trust.

"Successor Entity" has the meaning set forth in Section 3.15.

"Successor Securities" has the meaning set forth in Section 3.15.

"Tax Event" means that the Regular Trustees shall have received an opinion of
nationally recognized independent tax counsel experienced in such matters to the
effect that, as a result of (a) any amendment to, or change (including any
announced prospective change) in, the laws (or any regulations thereunder) of
the United States or any political subdivision or taxing authority thereof or
therein, (b) any amendment to or change in an interpretation or application of
any such laws or regulations by any legislative body, court, governmental agency
or regulatory authority (including the enactment of any legislation and the
publication of any judicial decision or regulatory determination on or after the
date of the issuance of the Preferred Securities), (c) any interpretation or
pronouncement that provides for a position with respect to such laws or
regulations that differs from the theretofore generally accepted position, or
(d) any action taken by any governmental agency or regulatory authority, which
amendment or change is enacted, promulgated or effective, or which
interpretation or pronouncement is issued or announced, or which action is
taken, in each case on or after the date of the issuance of the Preferred
Securities, there is more than an insubstantial risk that (i) the Trust is, or
will be within 90 days of the date thereof, subject to United States federal
income tax with respect to income accrued or received on the Debentures, (ii)
interest payable to the Trust on the Debentures is not, or within 90 days of the
date thereof will not be, deductible, in whole or in part, by the Debenture
Issuer for United States federal income tax purposes or (iii) the Trust is or
will be subject to more than a de minimis amount of other taxes, duties or other
governmental charges.

"10% in liquidation amount of the Securities" means, except as provided in the
Terms of Preferred Securities and by the Trust Indenture Act, the vote by
Holder(s) of Securities voting together as a single class or, as the context may
require, the vote by Holder(s) of Preferred Securities or Holder(s) of Common
Securities, voting separately as a class, representing 10% of the liquidation
amount (including the stated amount that would be paid on redemption,

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liquidation or otherwise, plus accrued and unpaid Distributions to the date upon
which the voting percentages are determined) of all Securities of such class.

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

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

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

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

ARTICLE II
TRUST INDENTURE ACT

SECTION 2.1 Trust Indenture Act; Application.

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

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

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

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

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SECTION 2.2 Lists of Holders of Securities.

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

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

SECTION 2.3 Reports by the Property Trustee.

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

SECTION 2.4 Periodic Reports to Property Trustee.

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

SECTION 2.5 Evidence of Compliance with Conditions Precedent.

Each of the Sponsor, the Debenture Issuer and the Regular Trustees on behalf of
the Trust shall provide to the Property Trustee such evidence of compliance with
any conditions precedent, if any, provided for in this Declaration that relate
to any of the matters set forth in

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Section 314(c) of the Trust Indenture Act. Any certificate or opinion required
to be given by an officer pursuant to Section 314(c)(1) may be given in the form
of an Officers' Certificate.

SECTION 2.6 Events of Default; Waiver.

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

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

(ii) which requires the consent or vote of all of the holders of the
Debentures to be waived under the Indenture, the Event of Default
under the Declaration may only be waived by the vote of all of
the Holders of the Preferred Securities.

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

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

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

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(ii) which requires the consent or vote of all of the Debentures to be
waived under the Indenture, except where the Holders of the
Common Securities are deemed to have waived such Event of Default
under the Declaration as provided below in this Section 2.6(b),
the Event of Default under the Declaration may only be waived by
the vote of all of the Holders of the Common Securities; provided
that, each Holder of Common Securities will be deemed to have
waived any such Event of Default and all Events of Default with
respect to the Common Securities and its consequences until all
Events of Default with respect to the Preferred Securities have
been cured, waived or otherwise eliminated, and until such Events
of Default have been so cured, waived or otherwise eliminated,
the Property Trustee will be deemed to be acting solely on behalf
of the Holders of the Preferred Securities and only the Holders
of the Preferred Securities will have the right to direct the
Property Trustee in accordance with the terms of the Securities.
Subject to the foregoing provisions of this Section 2.6(b), upon
such waiver, any such default shall cease to exist and any Event
of Default with respect to the Common Securities arising
therefrom shall be deemed to have been cured, for every purpose
of this Declaration, but no such waiver shall extend to any
subsequent or other default or Event of Default with respect to
the Common Securities or impair any right consequent thereon.

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

SECTION 2.7 Event of Default; Notice.

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

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committee of directors and/or Responsible Officers of the
Property Trustee in good faith determines that the withholding of
such notice is in the interests of the Holders of the Securities.

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

(i) a default under Sections 6.01(a)(1) and 6.01(a)(2) of the
Indenture; or

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

ARTICLE III
ORGANIZATION

SECTION 3.1 Name.

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

SECTION 3.2 Office.

The address of the principal office of the Trust is c/o Northwestern Public
Service Company, 33 Third Street, S.E., Huron, South Dakota 57350. On ten
Business Days written notice to the Holders of Securities, the Regular Trustees
may designate another principal office.

SECTION 3.3 Purpose.

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

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SECTION 3.4 Authority.

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

SECTION 3.5 Title to Property of the Trust.

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

SECTION 3.6 Powers and Duties of the Regular Trustees.

Subject to Section 4.2, any Regular Trustee shall have the power, duty and
authority to cause the Trust to engage in the following activities:

(a) to issue and sell the Preferred Securities and the Common Securities
in accordance with this Declaration; provided, however, that the Trust
may issue no more than one series of Preferred Securities and no more
than one series of Common Securities, and, provided further, that
there shall be no interests in the Trust other than the Securities,
and the issuance of Securities shall be limited to a one-time,
simultaneous issuance of both Preferred Securities and Common
Securities;

(b) in connection with the issue and sale of the Preferred Securities, to:

(i) execute and file with the Commission the registration statement
on Form S-3 prepared by the Sponsor, including any amendments
thereto, pertaining to the Preferred Securities;

(ii) execute and file any documents prepared by the Sponsor, or take
any acts as determined by the Sponsor to be necessary in order to
qualify or register all or part of the Preferred Securities in
any State in which the Sponsor has determined to qualify or
register such Preferred Securities for sale;

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

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

(v) execute and enter into the Underwriting Agreement providing for
the sale of the Preferred Securities;

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

(d) to give the Debenture Issuer, the Sponsor and the Property Trustee
prompt written notice of the occurrence of a Special Event; provided
that the Regular Trustees shall consult with the Debenture Issuer, the
Sponsor and the Property Trustee before taking or refraining from
taking any Ministerial Action in relation to a Special Event;

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

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

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

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

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

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

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

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

(m) to give prompt written notice to the Holders of the Securities of any
notice received from the Debenture Issuer of its election (i) to defer
payments of interest on the Debentures by extending the interest
payment period under the Indenture, or (ii) to extend the scheduled
maturity date on the Debentures;

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

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

(p) to take any action, not inconsistent with this Declaration or with
applicable law, that the Regular Trustees determine in their
discretion to be necessary or desirable in carrying out the activities
of the Trust as set out in this Section 3.6, including, but not
limited to:

(i) causing the Trust not to be deemed to be an Investment Company
required to be registered under the Investment Company Act;

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

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

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

The Regular Trustees must exercise the powers set forth in this Section 3.6 in a
manner that is consistent with the purposes and functions of the Trust set out
in Section 3.3, and the Regular Trustees shall not take any action that is
inconsistent with the purposes and functions of the Trust set forth in Section
3.3.

Subject to this Section 3.6, the Regular Trustees shall have none of the powers
or the authority of the Property Trustee set forth in Section 3.8.

SECTION 3.7 Prohibition of Actions by the Trust and the Trustees.

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

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

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

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

(iv) make any loans or incur any indebtedness other than loans
represented by the Debentures;

(v) possess any power or otherwise act in such a way as to vary the
Trust assets or the terms of the Securities in any way
whatsoever;

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

(vii) (A) direct the time, method and place of exercising any
trust or power conferred upon the Debenture Trustee with
respect to the Debentures,

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(B) waive any past default that is waivable under Section
513 of the Indenture, (C) exercise any right to rescind or
annul any declaration that the principal of all the
Debentures shall be due and payable or (D) consent to any
amendment, modification or termination of the Indenture or
the Debentures, where such consent shall be required, unless
the Trust shall have received an opinion of counsel to the
effect that such modification will not cause more than an
insubstantial risk that for United States federal income tax
purposes the Trust will be characterized as an association
taxable as a corporation or a partnership and that each
Holder of Securities will not be treated as owning an
undivided beneficial interest in the Debentures.

SECTION 3.8 Powers and Duties of the Property Trustee.

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

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

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

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

(iii) upon notice of distribution issued by the Regular Trustees in
accordance with the terms of the Preferred Securities and the
Common Securities, engage in such ministerial activities as shall
be necessary or appropriate to effect the distribution of the
Debentures to Holders of Securities upon the occurrence of
certain special events (as may be defined in the terms of the
Securities) arising from a change in law or a change in legal
interpretation or other specified circumstances pursuant to the
terms of the Securities;

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

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

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

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

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

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

(h) the Property Trustee may authorize one or more Persons (each, a
"Paying Agent") to pay Distributions, redemption payments or
liquidation payments on behalf of the Trust with respect to all
securities and any such Paying Agent shall comply with Section 317(b)
of the Trust Indenture Act. Any Paying Agent may be removed by the
Property Trustee at any time and a successor Paying Agent or
additional Paying Agents may be appointed at any time by the Property
Trustee; and

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

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

SECTION 3.9 Certain Duties and Responsibilities of the Property Trustee.

(a) The Property Trustee, before the occurrence of any Event of Default
and after the curing or waiver of all Events of Default that may have
occurred, shall undertake to perform only such duties as are
specifically set forth in this Declaration and no implied covenants
shall be read into this Declaration against the Property Trustee. In
case an Event of Default has occurred (that has not been cured or
waived pursuant to Section 2.6), the Property Trustee shall exercise
such of the rights and powers vested in it by this Declaration, and
use

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the same degree of care and skill in their exercise, as a prudent
person would exercise or use under the circumstances in the conduct of
his or her own affairs;

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

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

(A) the duties and obligations of the Property Trustee shall be
determined solely by the express provisions of this
Declaration and the Property Trustee shall not be liable
except for the performance of such duties and obligations as
are specifically set forth in this Declaration, and no
implied covenants or obligations shall be read into this
Declaration against the Property Trustee; and

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

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

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

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

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

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

(vii) the Property Trustee shall not be liable for any interest on
any money received by it except as it may otherwise agree
with the Sponsor. Money held by the Property Trustee need
not be segregated from other funds held by it except in
relation to the Property Trustee Account maintained by the
Property Trustee pursuant to Section 3.8(c)(i) and except to
the extent otherwise required by law;

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

SECTION 3.10 Certain Rights of Property Trustee.

(a) Subject to the provisions of Section 3.9:

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

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

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

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

(v) the Property Trustee may consult with counsel and the advice or
opinion of such counsel and the experts with respect to legal
matters or advice within the scope of such experts' area of
expertise shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted by it
hereunder in good faith and in accordance with such advice or
opinion such counsel may be counsel to the Sponsor or any of its
Affiliates, and may include any of its employees. The Property
Trustee shall have the right at any time to seek instructions
concerning the administration of this Declaration from any court
of competent jurisdiction;

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

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

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

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

(x) whenever in the administration of this Declaration the Property
Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other
action hereunder the Property Trustee (i) may request
instructions from the Holders of the Securities, which
instructions may only be given by the Holders of the same
proportion and liquidation amount of the Securities as would be
entitled to direct the Property Trustee under the terms of the
Securities in respect of such remedies, right or action, (ii) may
refrain from enforcing such remedy or right or taking such other
action until such instructions are received, and (iii) shall be
protected in acting in accordance with such instructions; and

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

(b) No provision of this Declaration shall be deemed to impose any duty or
obligation on the Property Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on
it, in any jurisdiction in which it shall be illegal, or in which the
Property Trustee shall be unqualified

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or incompetent, in accordance with applicable law, to perform any such
act or acts, or to exercise any such right, power, duty or obligation.
No permissive power or authority available to the Property Trustee
shall be construed to be a duty.

SECTION 3.11 Delaware Trustee.

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

SECTION 3.12 Execution of Documents.

Unless otherwise determined by the Regular Trustees, any Regular Trustee is
authorized to execute on behalf of the Trust any documents which the Regular
Trustees have the power and authority to execute pursuant to Section 3.6.
Notwithstanding anything to the contrary herein, the Sponsor is authorized to
execute on behalf of the Trust any documents referred to in Section 4.2.

SECTION 3.13 Not Responsible for Recitals or Issuance of Securities.

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

SECTION 3.14 Duration of Trust.

The Trust, unless terminated pursuant to the provisions of Article VIII hereof,
shall have existence for 55 years from the date of the Prospectus Supplement
relating to the Debentures.

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SECTION 3.15 Mergers.

(a) The Trust may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other body, except
as described in Section 3.15(b) and (c);

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

(i) such successor entity (the "Successor Entity") either:

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

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

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

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

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

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

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

(vii) prior to such merger, consolidation, amalgamation or replacement,
the Sponsor has received an opinion of a nationally recognized
independent counsel to the Trust experienced in such matters to
the effect that:

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

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

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

(c) notwithstanding Section 3.15(b), the Trust shall, except with the
consent of Holders of 100% in liquidation amount of the Securities,
not consolidate, amalgamate, merge with or into, or be replaced by any
other entity or permit any other entity to consolidate, amalgamate,
merge with or into, or replace it if such consolidation, amalgamation,
merger or replacement would cause the Trust or Successor Entity for
United States federal income tax purposes to be classified as an
association taxable as a corporation or a partnership and each Holder
of the Securities not to be treated as owning an undivided beneficial
interest in the Debentures.

ARTICLE IV
SPONSOR

SECTION 4.1 Sponsor's Purchase of Common Securities.

On August 8, 1995 the Sponsor will purchase all the Common Securities issued by
the Trust, in an amount equal to 3% of the capital of the Trust, at the same
time as the Preferred Securities are sold. The purchase price paid for the
Common Securities shall constitute a contribution to the capital of the Trust
and shall not constitute a loan to the Trust.

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SECTION 4.2 Responsibilities of the Sponsor.

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

(a) to prepare for filing by the Trust with the Commission a registration
statement on Form S-3 in relation to the Preferred Securities,
including any amendments thereto;

(b) to determine the States in which to take appropriate action to qualify
or register for sale all or part of the Preferred Securities and to
take any and all such acts, other than actions which must be taken by
the Trust, and advise the Trust of actions it must take, and prepare
for execution and filing any documents to be executed and filed by the
Trust, as the Sponsor deems necessary or advisable in order to comply
with the applicable laws of any such States;

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

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

(e) to execute on behalf of the Trust a letter of representation providing
for the deposit and delivery of a Global Preferred Certificate (as
such term is defined in Section 9.4 herein) with DTC; and

(f) to negotiate the terms of the Underwriting Agreement providing for
the sale of the Preferred Securities.

4.3 Expenses

(a) The Sponsor shall be directly responsible for and pay for all debts
and obligations (other than with respect to the Securities) and all
costs and expenses of the Trust, including, without limitation, the
costs and expenses relating to the organization of the Trust, the
issuance of the Preferred Securities, the fees and expenses of any
Special Regular Trustee, the Property Trustee and the Delaware
Trustee, the costs and expenses related to the operation of the Trust,
including, without limitation, the costs and expenses of accountants,
attorneys, statistical or bookkeeping services, expenses of printing
and engraving, paying agents(s),

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registrar(s), transfer agent(s), duplicating, travel, telephone and
costs and expenses incurred in connection with the disposition of
Trust assets.

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

ARTICLE V
TRUSTEES

SECTION 5.1 Number of Trustees.

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

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

(b) after the issuance of any Securities:

(i) and except as provided in Sections 5.1(b)(ii) and 5.6(a)(ii)(B)
with respect to the Special Regular Trustee, the number of
Trustees may be increased or decreased by vote of the Holders of
a Majority in liquidation amount of the Common Securities voting
as a class at a meeting of the Holders of the Common Securities;
and

(ii) the number of Trustees shall be increased automatically by one
(1) if an Appointment Event has occurred and is continuing and
the Holders of a Majority in liquidation amount of the Preferred
Securities appoint a Special Regular Trustee in accordance with
Section 5.6,

provided that in any case, the number of Trustees shall be at least three (3)
(the majority of which shall be Regular Trustees), and if there are only three
Trustees:

SECTION 5.2 Delaware Trustee.

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

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

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(b) if not a natural person, an entity which has its principal place of
business in the State of Delaware, and otherwise meets the
requirements of applicable law

provided that if the Property Trustee has its principal place of business in the
State of Delaware and otherwise meets the requirements of applicable law, then
the Property Trustee shall also be the Delaware Trustee and Section 3.11 shall
have no application.

SECTION 5.3 Property Trustee; Eligibility.

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

(i) not be an Affiliate of the Sponsor;

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

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

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

(c) If the Property Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture
Act, the Property Trustee and the Holder of the Common Securities (as
if it were the obligor referred to in Section 310(b) of the Trust
Indenture Act) shall in all respects comply with the provisions of
Section 310(b) of the Trust Indenture Act.

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

SECTION 5.4 Qualifications of Regular Trustees and Delaware Trustee
Generally.

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

SECTION 5.5 Initial Trustees.

The initial Regular Trustees shall be:

Merle D. Lewis
33 Third Street SE
P.O. Box 1318
Huron, South Dakota 57350-1318

Richard R. Hylland
33 Third Street SE
P.O. Box 1318
Huron, South Dakota 57350-1318

The initial Delaware Trustee shall be:

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

who shall also act as Property Trustee.

SECTION 5.6 Appointment, Removal and Resignation of Trustees.

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

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

(ii) after the issuance of any Securities;

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(A) other than in respect to a Special Regular Trustee by vote
of the Holders of a Majority in liquidation amount of the
Common Securities voting as a class at a meeting of the
Holders of the Common Securities; and

(B) if an Appointment Event has occurred and is continuing, one
(1) additional Regular Trustee (the "Special Regular
Trustee") may be appointed by vote of the Holders of a
Majority in liquidation amount of the Preferred Securities,
voting as a class at a meeting of the Holders of the
Preferred Securities and such Special Regular Trustee may
only be removed (otherwise than by the operation of Section
5.6(c)), by vote of the Holders of a Majority in liquidation
amount of the Preferred Securities voting as a class at a
meeting of the Holders of the Preferred Securities.

(b) (i) The Trustee that acts as Property Trustee shall not be removed in
accordance with Section 5.6(a) until a successor Property Trustee
has been appointed and has accepted such appointment by written
instrument executed by such successor Property Trustee and
delivered to the Regular Trustees and the Sponsor; and

(ii) the Trustee that acts as Delaware Trustee shall not be
removed in accordance with this Section 5.6(a) until a
successor Trustee possessing the qualifications to act
as Delaware Trustee under Sections 5.2 and 5.4 (a
"Successor Delaware Trustee") has been appointed and
has accepted such appointment by written instrument
executed by such Successor Delaware Trustee and
delivered to the Regular Trustees and the Sponsor.

(c) A Trustee appointed to office shall hold office until his successor
shall have been appointed or until his death, resignation, retirement,
removal, bankruptcy, dissolution, liquidation, incompetence or
incapacity to perform the duties of a Trustee, provided that a Special
Regular Trustee shall only hold office while an Appointment Event is
continuing and shall cease to hold office immediately after the
Appointment Event pursuant to which the Special Regular Trustee was
appointed and all other Appointment Events cease to be continuing.
Any Trustee may resign from office (without need for prior or
subsequent accounting) by an instrument in writing signed by the
Trustee and delivered to the Sponsor and the Trust, which resignation
shall take effect upon such delivery or upon such later date as is
specified therein; provided, however, that:

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

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

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

(ii) no such resignation of the Trustee that acts as the Delaware
Trustee shall be effective until a Successor Delaware Trustee has
been appointed and has accepted such appointment by instrument
executed by such Successor Delaware Trustee and delivered to the
Trust, the Sponsor and the resigning Delaware Trustee; and

(iii) no such resignation of a Special Regular Trustee shall be
effective until the 60th day following delivery of the instrument
of resignation of the Special Regular Trustee to the Sponsor and
the Trust or such later date specified in such instrument during
which period the Holders of the Preferred Securities shall have
the right to appoint a successor Special Regular Trustee as
provided in this Section 5.6; and

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

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

SECTION 5.7 Vacancies among Trustees.

If a Trustee ceases to hold office for any reason and the number of Trustees is
not reduced pursuant to Section 5.1, or if the number of Trustees is increased
pursuant to Section 5.1, a vacancy shall occur. A resolution certifying the
existence of such vacancy by a majority of the

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Regular Trustees shall be conclusive evidence of the existence of such vacancy.
The vacancy shall be filled with a Trustee appointed in accordance with Section
5.6.

SECTION 5.8 Effect of Vacancies.

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

SECTION 5.9 Meetings.

Meetings of the Regular Trustees shall be held from time to time upon the call
of any Regular Trustee. Regular meetings of the Regular Trustees may be held at
a time and place fixed by resolution of the Regular Trustees. Notice of any
in-person meetings of the Regular Trustees shall be hand delivered or otherwise
delivered in writing (including by facsimile, with a hard copy by overnight
courier) not less than 48 hours before such meeting. Notice of any telephonic
meetings of the Regular Trustees or any committee thereof shall be hand
delivered or otherwise delivered in writing (including by facsimile, with a hard
copy by overnight courier) not less than 24 hours before a meeting. Notices
shall contain a brief statement of the time, place and anticipated purposes of
the meeting. The presence (whether in person or by telephone) of a Regular
Trustee at a meeting shall constitute a waiver of notice of such meeting except
where a Regular Trustee attends a meeting for the express purpose of objecting
to the transaction of any activity on the ground that the meeting has not been
lawfully called or convened. Unless provided otherwise in this Declaration, any
action of the Regular Trustees may be taken at a meeting by vote of a majority
of the Regular Trustees present (whether in person or by telephone) and eligible
to vote with respect to such matter, provided that a Quorum is present, or
without a meeting by the unanimous written consent of the Regular Trustees.

SECTION 5.10 Delegation of Power.

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

(b) the Regular Trustees shall have power to delegate from time to time to
such of their number or to officers of the Trust the doing of such
things and the

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execution of such instruments either in the name of the Trust or the
names of the Regular Trustees or otherwise as the Regular Trustees may
deem expedient, to the extent such delegation is not prohibited by
applicable law or contrary to the provisions of the Trust, as set
forth herein.

ARTICLE VI
DISTRIBUTIONS

SECTION 6.1 Distributions.

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

ARTICLE VII
ISSUANCE OF SECURITIES

SECTION 7.1 General Provisions Regarding Securities.

(a) The Regular Trustees shall on behalf of the Trust issue one class of
preferred securities representing undivided beneficial interests in
the assets of the Trust having such terms as are set forth in Exhibit
A and incorporated herein by reference (the "Preferred Securities")
and one class of common securities representing undivided beneficial
interests in the assets of the Trust having such terms as are set
forth in Exhibit A (the "Common Securities"). The Trust shall have no
securities or other interests in the assets of the Trust other than
the Preferred Securities and the Common Securities.

(b) The Certificates shall be signed on behalf of the Trust by any two of
the Regular Trustees. Such signatures may be the manual or facsimile
signatures of the present or any future Regular Trustee.
Typographical and other minor errors or defects in any such
reproduction of any such signature shall not affect the validity of
any Certificate. In case any Regular Trustee of the Trust who shall
have signed any of the Securities shall cease to be such Regular
Trustee before the Certificates so signed shall be delivered by the
Trust, such

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Certificates nevertheless may be delivered as though the Person who
signed such Certificates had not ceased to be such Regular Trustee;
and any Certificate may be signed on behalf of the Trust by such
Persons who, at the actual date of execution of such Security, shall
be the Regular Trustees of the Trust, although at the date of the
execution and delivery of the Declaration any such Person was not
such a Regular Trustee. Certificates shall be printed, lithographed
or engraved or may be produced in any other manner as is reasonably
acceptable to the Regular Trustees, as evidenced by their execution
thereof, and may have such letters, numbers or other marks of
identification or designation and such legends or endorsements as the
Regular Trustees may deem appropriate, or as may be required to
comply with any law or with any rule or regulation of any stock
exchange on which Securities may be listed, or to conform to usage.

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

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

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

ARTICLE VIII
TERMINATION OF TRUST

SECTION 8.1 Termination of Trust.

(a) The Trust shall terminate:

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

(ii) upon the filing of a certificate of dissolution or its equivalent
with respect to the Holder of the Common Securities, the Sponsor
or the Debenture Issuer, the filing of a certificate of
cancellation with respect to the Trust or the revocation of the
charter of the Holder of the

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Common Securities, the Sponsor or the Debenture Issuer and the
expiration of 90 days after the date of revocation without a
reinstatement thereof;

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

(iv) when all of the Securities shall have been called for redemption
and the amounts necessary for redemption thereof shall have been
paid to the Holders in accordance with the terms of the
Securities;

(v) upon the occurrence and continuation of a Special Event pursuant
to which the Trust shall have been dissolved in accordance with
the terms of the Securities and all of the Debentures endorsed
thereon shall have been distributed to the Holders of Securities
in exchange for all of the Securities; or

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

(b) as soon as is practicable after the occurrence of an event referred to
in Section 8.1(a), the Trustees shall file a certificate of
cancellation with the Secretary of State of the State of Delaware; and

ARTICLE IX
TRANSFER OF INTERESTS

SECTION 9.1 Transfer of Securities.

(a) Securities may only be transferred, in whole or in part, in accordance
with the terms and conditions set forth in this Declaration and in the
terms of the Securities. Any transfer or purported transfer of any
Security not made in accordance with this Declaration shall be null
and void;

(b) subject to this Article IX, Preferred Securities shall be freely
transferable; and

(c) subject to this Article IX, to the fullest extent permitted by law,
the Sponsor and any Related Party may only transfer Common Securities
to the Sponsor or a Related Party of the Sponsor; provided that, any
such transfer is subject to the condition precedent that the
transferor obtain the written opinion of nationally

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recognized independent counsel experienced in such matters that such
transfer would not cause more than an insubstantial risk that:

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

(ii) the Trust or the transferee would be an Investment Company or
would be controlled by an Investment Company.

SECTION 9.2 Transfer of Certificates.

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

SECTION 9.3 Deemed Security Holders.

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

SECTION 9.4 Book Entry Interests.

Unless otherwise specified in the terms of the Preferred Securities, the
Preferred Securities Certificates, on original issuance, will be issued in the
form of one or more, fully registered, global Preferred Security Certificates
(each a "Global Certificate"), to be delivered to DTC, the initial Clearing
Agency, by, or on behalf of, the Trust. Such Global Certificates shall
initially be registered on the books and records of the Trust in the name of
Cede & Co., the

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nominee of DTC, and no Preferred Security Beneficial Owner will receive a
definitive Preferred Security Certificate representing such Preferred Security
Beneficial Owner's interests in such Global Certificates, except as provided in
Section 9.7. Unless and until definitive, fully registered Preferred Security
Certificates (the "Definitive Preferred Security Certificates") have been issued
to the Preferred Security Beneficial Owners pursuant to Section 9.7:

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

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

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

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

SECTION 9.5 Notices to Clearing Agency.

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

SECTION 9.6 Appointment of Successor Clearing Agency.

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

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SECTION 9.7 Definitive Preferred Security Certificates.

If:

(a) a Clearing Agency elects to discontinue its services as securities
depositary with respect to the Preferred Securities and a successor
Clearing Agency is not appointed within 90 days after such
discontinuance pursuant to Section 9.6; or

(b) the Regular Trustees elect after consultation with the Sponsor to
terminate the book entry system through the Clearing Agency with
respect to the Preferred Securities,

then:

(c) Definitive Preferred Security Certificates shall be prepared by the
Regular Trustees on behalf of the Trust with respect to such Preferred
Securities; and

(d) upon surrender of the Global Certificates by the Clearing Agency,
accompanied by registration instructions, the Regular Trustees shall
cause Definitive Certificates to be delivered to Preferred Security
Beneficial Owners in accordance with the instructions of the Clearing
Agency. Neither the Trustees nor the Trust shall be liable for any
delay in delivery of such instructions and each of them may
conclusively rely on and shall be protected in relying on, said
instructions of the Clearing Agency. The Definitive Preferred
Security Certificates shall be printed, lithographed or engraved or
may be produced in any other manner as is reasonably acceptable to the
Regular Trustees, as evidenced by their execution thereof in
accordance with Section 7.1(b), and may have such letters, numbers or
other marks of identification or designation and such legends or
endorsements as the Regular Trustees may deem appropriate, or as may
be required to comply with any law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange
on which Preferred Securities may be listed, or to conform to usage.

SECTION 9.8 Mutilated, Destroyed, Lost or Stolen Certificates.

If:

(a) any mutilated Certificates should be surrendered to the Regular
Trustees, or if the Regular Trustees shall receive evidence to their
satisfaction of the destruction, loss or theft of any Certificate; and

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

then:

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

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

SECTION 10.1 Liability.

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

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

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

(b) Pursuant to Section 3803(a) of the Business Trust Act, the Holder of
the Common Securities shall be liable for all of the debts and
obligations of the Trust (other than with respect to the Securities).

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

SECTION 10.2 Exculpation.

(a) No Indemnified Person shall be liable, responsible or accountable in
damages or otherwise to the Trust or any Covered Person for any loss,
damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith on behalf of the
Trust and in a manner such

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Indemnified Person reasonably believed to be within the scope of the
authority conferred on such Indemnified Person by this Declaration or
by law, except that an Indemnified Person shall be liable for any such
loss, damage or claim incurred by reason of such Indemnified Person's
gross negligence (or, in the case of the Property Trustee, except as
otherwise set forth in Section 3.9) or willful misconduct with respect
to such acts or omissions; and

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

SECTION 10.3 Fiduciary Duty.

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

(b) unless otherwise expressly provided herein:

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

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

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

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

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

(ii) in its "good faith" or under another express standard,

the Indemnified Person shall act under such express standard and shall
not be subject to any other or different standard imposed by this
Declaration or by applicable law.

SECTION 10.4 Indemnification.

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

(b) to the fullest extent permitted by applicable law, expenses (including
legal fees) incurred by an Indemnified Person in defending any claim,
demand, action, suit or proceeding shall, from time to time, be
advanced by the Sponsor prior to the final disposition of such claim,
demand, action, suit or proceeding upon receipt by the Sponsor of an
undertaking by or on behalf of the Indemnified Person to

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repay such amount if it shall be determined that the Indemnified
Person is not entitled to be indemnified as authorized in Section
10.4(a).

SECTION 10.5 Outside Businesses.

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

ARTICLE XI
ACCOUNTING

SECTION 11.1 Fiscal Year.

The fiscal year ("Fiscal Year") of the Trust shall be the calendar year, or such
other year as is required by the Code.

SECTION 11.2 Certain Accounting Matters.

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

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

(c) the Regular Trustees shall cause to be duly prepared and delivered to
each of the Holders of Securities any United States federal income tax
information statement required by the Code, containing such
information with regard to the Securities held by each Holder as is
required by the Code and the Treasury Regulations. Notwithstanding
any right under the Code to deliver any such statement at a later
date, the Regular Trustees shall endeavor to deliver all such
statements within 30 days after the end of each Fiscal Year of the
Trust; and

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

SECTION 11.3 Banking.

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

SECTION 11.4 Withholding.

The Trust and the Regular Trustees shall comply with all withholding
requirements under United States federal, state and local law. The Trust shall
request, and the Holders shall provide to the Trust, such forms or certificates
as are necessary to establish an exemption from withholding with respect to each
Holder, and any representations and forms as shall reasonably be requested by
the Trust to assist it in determining the extent of, and in fulfilling, its
withholding obligations. The Regular Trustees shall file required forms with
applicable jurisdictions and, unless an exemption from withholding is properly
established by a Holder, shall remit amounts withheld with respect to the Holder
to applicable jurisdictions. To the extent that the Trust is required to
withhold and pay over any amounts to any authority with respect to distributions
or allocations to any Holder, the amount withheld shall be deemed to be a
distribution in the amount of the withholding to the Holder. In the event of
any claimed overwithholding, to the fullest extent permitted by law, Holders
shall be limited to an action

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against the applicable jurisdiction. If the amount required to be withheld was
not withheld from actual Distributions made, the Trust may reduce subsequent
Distributions by the amount of such withholding.

ARTICLE XII
AMENDMENTS AND MEETINGS

SECTION 12.1 Amendments.

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

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

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

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

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

(ii) at such time after the Trust has issued any Securities that
remain outstanding, any amendment that would materially adversely
affect the rights, privileges or preferences of any Holder of
Securities may be effected only with such additional requirements
as may be set forth in the terms of such Securities;

(iii) Section 9.1(c) and this Section 12.1 shall not be amended without
the consent of all of the Holders of the Securities;

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

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

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

(i) cure any ambiguity;

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

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

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

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

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

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

(i) notice of any such meeting shall be given to all the Holders of
Securities having a right to vote thereat at least 7 days and not
more than 60 days before the date of such meeting. Whenever a
vote, consent or approval of the Holders of Securities is
permitted or required under this Declaration or the rules of any
stock exchange on which the Preferred Securities are listed or
admitted for trading, such vote, consent or approval may be given
at a meeting of the Holders of Securities. Any action that may
be taken at a meeting of the Holders of Securities may be taken
without a meeting if a consent in writing setting forth the
action so taken is signed by the Holders of Securities owning not
less than the minimum amount of Securities in liquidation amount
that would be necessary to authorize or take such action at a
meeting at which all Holders of Securities having a right to vote
thereon were present and voting. Prompt notice of the taking of
action without a meeting shall be given to the Holders of
Securities entitled to vote who have not consented in writing.
The Regular Trustees may specify that any written ballot
submitted to the Holder for the purpose of taking any action
without a meeting shall be returned to the Trust within the time
specified by the Regular Trustees;

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

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

(iv) unless the Business Trust Act, this Declaration, the terms of the
Securities or the listing rules of any stock exchange on which
the Preferred Securities are then listed or trading otherwise
provides, the

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<PAGE>

Regular Trustees, in their sole discretion, shall establish all other provisions
relating to meetings of Holders of Securities, including notice of the time,
place or purpose of any meeting at which any matter is to be voted on by any
Holders of Securities, waiver of any such notice, action by consent without a
meeting, the establishment of a record date, quorum requirements, voting in
person or by proxy or any other matter with respect to the exercise of any such
right to vote.

ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE

SECTION 13.1 Representations and Warranties of Property Trustee.

The Trustee which acts as initial Property Trustee represents and warrants to
the Trust and to the Sponsor at the date of this Declaration, and each Successor
Property Trustee represents and warrants to the Trust and the Sponsor at the
time of the Successor Property Trustee's acceptance of its appointment as
Property Trustee that:

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

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

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

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

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<PAGE>

ARTICLE XIV
MISCELLANEOUS

SECTION 14.1 Notices.

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

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

NWPS CAPITAL FINANCING I
33 Third Street, S.E.
Huron, South Dakota 57350
Attention: Richard R. Hylland

(b) if given to the Property Trustee or the Delaware Trustee, at the
mailing address set forth below (or such other address as the Property
Trustee or the Delaware Trustee may give notice of to the Holders of
the Securities):

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

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

NORTHWESTERN PUBLIC SERVICE COMPANY
33 Third Street, S.E.
Huron, South Dakota 57350
Attention: Richard R. Hylland

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

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<PAGE>

notice was given, such notice or other document shall be deemed to have been
delivered on the date of such refusal or inability to deliver.

SECTION 14.2 Governing Law.

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

SECTION 14.3 Intention of the Parties.

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

SECTION 14.4 Headings.

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

SECTION 14.5 Successors and Assigns

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

SECTION 14.6 Partial Enforceability.

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

SECTION 14.7 Counterparts.

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

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<PAGE>

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

NORTHWESTERN PUBLIC SERVICE COMPANY
as Sponsor

By: /s/ Richard R. Hylland
----------------------------------------------------
Richard R. Hylland
Vice President - Strategic Development

NWPS CAPITAL FINANCING I

/s/ Merle D. Lewis
-------------------------------------------------------
Merle D. Lewis, as Regular Trustee

/s/ Richard R. Hylland
-------------------------------------------------------
Richard R. Hylland, as Regular Trustee

WILMINGTON TRUST COMPANY
as Delaware Trustee and Property Trustee

By: /s/ Norma P. Closs
----------------------------------------------------
Name: Norma P. Closs
Title: Vice President

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<PAGE>

EXHIBIT A

TERMS OF SECURITIES

TERMS OF
8 1/8% TRUST PREFERRED CAPITAL SECURITIES
8 1/8% TRUST COMMON CAPITAL SECURITIES

Pursuant to Section 7.1 of the Amended and Restated Declaration of Trust, dated
as of August 1, 1995 (as amended from time to time, the "Declaration"), the
designation, rights, privileges, restrictions, preferences and other terms and
provisions of the Preferred Securities and the Common Securities are set out
below (each capitalized term used but not defined herein has the meaning set
forth in the Declaration or, if not defined in such Declaration, as defined in
the Prospectus referred to below):

1. DESIGNATION AND NUMBER.

(a) "Preferred Securities." Preferred Securities of the Trust with an
aggregate liquidation amount with respect to the assets of the Trust
of $32.5 million ($32,500,000) and a liquidation amount with respect
to the assets of the Trust of $25 per Preferred Security, are hereby
designated for the purposes of identification only as "8 1/8% Trust
Preferred Capital Securities" (the "Preferred Securities"). The
Preferred Security Certificates evidencing the Preferred Securities
shall be substantially in the form attached hereto as Annex I, with
such changes and additions thereto or deletions therefrom as may be
required by ordinary usage, custom or practice or to conform to the
rules of any stock exchange on which the Preferred Securities are
listed.

(b) "Common Securities." Common Securities of the Trust with an aggregate
liquidation amount with respect to the assets of the Trust of $1.005
million ($1,005,154) and a liquidation amount with respect to the
assets of the Trust of $25 per Common Security, are hereby designated
for the purposes of identification only as "8 1/8% Trust Common
Capital Securities" (the "Common Securities"). The Common Security
Certificates evidencing the Common Securities shall be substantially
in the form attached hereto as Annex II, with such changes and
additions thereto or deletions therefrom as may be required by
ordinary usage, custom or practice.

2. DISTRIBUTIONS.

(a) Distributions payable on each Security will be fixed at a rate per
annum of 8 1/8% (the "Coupon Rate") of the stated liquidation amount
of $25 per Security,

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<PAGE>

such rate being the rate of interest payable on the Debentures to be
held by the Property Trustee. Distributions in arrears for more than
one quarter will bear interest thereon compounded quarterly at the
Coupon Rate (to the extent permitted by applicable law). The term
"Distributions" as used herein includes such periodic cash
distributions and any such interest payable unless otherwise stated.
A Distribution is payable only to the extent that payments are made in
respect of the Debentures held by the Property Trustee. The amount of
Distributions payable for any period will be computed for any full
quarterly Distribution period on the basis of a 360-day year of twelve
30-day months, and for any period shorter than a full quarterly
Distribution period for which Distributions are computed,
Distributions will be computed on the basis of the actual number of
days elapsed in such a 30-day month.

(b) Distributions on the Securities will be cumulative, will accrue from
August 8, 1995 and will be payable quarterly in arrears, on March 31,
June 30, September 30, and December 31 of each year, commencing on
September 30, 1995, except as otherwise described below. The
Debenture Issuer has the right under the Indenture to defer payments
of interest by extending the interest payment period from time to time
on the Debentures for a period not exceeding 20 consecutive quarters
(each an "Extension Period") and, as a consequence of such extension,
Distributions will also be deferred. Despite such deferral, quarterly
Distributions will continue to accrue with interest thereon (to the
extent permitted by applicable law) at the Coupon Rate compounded
quarterly during any such Extension Period. Prior to the termination
of any such Extension Period, the Debenture Issuer may further extend
such Extension Period; provided that such Extension Period together
with all such previous and further extensions thereof may not exceed
20 consecutive quarters. Payments of accrued Distributions will be
payable to Holders as they appear on the books and records of the
Trust on the first record date after the end of the Extension Period.
Upon the termination of any Extension Period and the payment of all
amounts then due, the Debenture Issuer may commence a new Extension
Period, subject to the above requirements.

(c) Distributions on the Securities will be payable to the Holders thereof
as they appear on the books and records of the Trust on the relevant
record dates. While the Preferred Securities remain in book-entry
only form, the relevant record dates shall be one Business Day prior
to the relevant payment dates which payment dates correspond to the
interest payment dates on the Debentures. Subject to any applicable
laws and regulations and the provisions of the Declaration, each such
payment in respect of the Preferred Securities will be made as
described under the heading "Description of the Preferred Securities -
- Book-Entry Only Issuance -- The Depository Trust Company" in the
Prospectus Supplement dated August 3, 1995, to the Prospectus dated
August 3,

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<PAGE>

1995 (together, the "Prospectus"), of the Trust included in the
Registration Statement on Form S-3 of the Sponsor, the Debenture
Issuer and the Trust. The relevant record dates for the Common
Securities, and, if the Preferred Securities shall not continue to
remain in book-entry only form, the relevant record dates for the
Preferred Securities, shall conform to the rules of any securities
exchange on which the securities are listed and, if none, shall be
selected by the Regular Trustees, which dates shall be at least one
Business Day but less than 60 Business Days before the relevant
payment dates, which payment dates correspond to the interest payment
dates on the Debentures. Distributions payable on any Securities that
are not punctually paid on any Distribution payment date, as a result
of the Debenture Issuer having failed to make a payment under the
Debentures will cease to be payable to the Person in whose name such
Securities are registered on the relevant record date, and such
defaulted Distribution will instead be payable to the Person in whose
name such Securities are registered on the special record date or
other specified date determined in accordance with the Indenture. If
any date on which Distributions are payable on the Securities is not a
Business Day, then payment of the Distribution payable on such date
will be made on the next succeeding day that is a Business Day (and
without any interest or other payment in respect of any such delay)
except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business
Day, in each case with the same force and effect as if made on such
date.

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

3. LIQUIDATION DISTRIBUTION UPON DISSOLUTION.

In the event of any voluntary or involuntary dissolution, winding-up or
termination of the Trust, the Holders of the Securities on the date of the
dissolution, winding-up or termination, as the case may be, will be entitled to
receive out of the assets of the Trust available for distribution to Holders of
Securities after satisfaction of liabilities of creditors of the Trust an amount
equal to the aggregate of the stated liquidation amount of $25 per Security plus
accrued and unpaid Distributions thereon to the date of payment (such amount
being the "Liquidation Distribution"), unless, in connection with such
dissolution, winding-up or termination, Debentures in an aggregate principal
amount equal to the aggregate stated liquidation amount of such Securities, with
an interest rate equal to the Coupon Rate of, and bearing accrued and unpaid
interest in an amount equal to the accrued and unpaid Distributions on, such
Securities, shall be distributed on a Pro Rata basis to the Holders of the
Securities in exchange for such Securities.

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<PAGE>

If, upon any such dissolution, winding-up or termination of the Trust, the
Liquidation Distribution can be paid only in part because the Trust has
insufficient assets available to pay in full the aggregate Liquidation
Distribution, then the amounts payable directly by the Trust on the Securities
shall be paid on a Pro Rata basis.

4. REDEMPTION AND DISTRIBUTION.

(a) Upon the repayment of the Debentures in whole or in part, whether at
maturity or upon redemption, the proceeds from such repayment or
payment shall be thereupon applied to redeem Securities having an
aggregate liquidation amount equal to the aggregate principal amount
of the Debentures so repaid or redeemed at a redemption price of $25
per Security plus an amount equal to accrued and unpaid Distributions
thereon at the date of the redemption, payable in cash (the
"Redemption Price"). Holders will be given not less than 30 nor more
than 60 days notice of such redemption.

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

(c) If a Tax Event (as defined below) or an Investment Company Event (as
defined below) (each, a "Special Event"), shall occur and be
continuing, the Regular Trustees shall dissolve the Trust except in
the limited circumstances described below, and, after satisfaction of
liabilities to creditors of the Trust, cause Debentures held by the
Property Trustee, having an aggregate principal amount equal to the
aggregate stated liquidation amount of, with an interest rate
identical to the Coupon Rate of, and accrued and unpaid interest equal
to accrued and unpaid Distributions on and having the same record date
for payment as the Securities, to be distributed to the Holders of the
Securities in liquidation of such Holders' interests in the Trust on a
Pro Rata basis, within 90 days following the occurrence of such
Special Event (the "90-Day Period"); provided, however, that in the
case of the occurrence of a Tax Event, such dissolution and
distribution shall be conditioned on the Regular Trustees' receipt of
an opinion of a nationally recognized independent tax counsel
experienced in such matters (a "No Recognition Opinion"), which
opinion may rely on published revenue rulings of the Internal Revenue
Service, to the effect that the Holders of the Securities will not
recognize any gain or loss for United States federal income tax
purposes as a result of the dissolution of the Trust and the
distribution of Debentures; and provided, further, that, if at the
time there is available to the Trust the opportunity to eliminate,
within the 90-Day Period, the Special Event by taking some ministerial
action, such as filing a form or making an election or pursuing some
other similar reasonable measure that has

A-4

<PAGE>

no adverse effect on the Trust, the Debenture Issuer, the Sponsor or
the Holders of the Securities ("Ministerial Action"), the Trust will
pursue such Ministerial Action in lieu of dissolution and distribution
as described therein. Furthermore, if in the case of the occurrence
of a Tax Event, after receipt of a Dissolution Tax Opinion (as defined
below) by the Regular Trustees (i) the Debenture Issuer has received
an opinion (a "Redemption Tax Opinion") of a nationally recognized
independent tax counsel experienced in such matters that, as a result
of a Tax Event, there is more than an insubstantial risk that the
Debenture Issuer would be precluded from deducting the interest on the
Debentures for United States federal income tax purposes even if the
Debentures were distributed to the Holders of Securities in
liquidation of such Holders' interests in the Trust as described in
this paragraph 4(c), or (ii) the Regular Trustees shall have been
informed by such tax counsel that a No Recognition Opinion cannot be
delivered to the Trust, the Debenture Issuer shall have the right at
any time, upon not less than 30 nor more than 60 days notice, to
redeem the Debentures in whole or in part for cash within 90 days
following the occurrence of such Tax Event, and, following such
redemption, Securities with an aggregate liquidation amount equal to
the aggregate principal amount of the Debentures so redeemed shall be
redeemed by the Trust at the Redemption Price on a Pro Rata basis;
provided, however, that, if at the time there is available to the
Trust the opportunity to eliminate, within such 90-day period, the Tax
Event by taking some Ministerial Action, the Trust or the Debenture
Issuer will pursue such Ministerial Action in lieu of redemption.

"Tax Event" means that the Regular Trustees shall have received an
opinion of a nationally recognized independent tax counsel experienced
in such matters (a "Dissolution Tax Opinion") to the effect that on or
after the date of the Prospectus Supplement, as a result of (a) any
amendment to, or change (including any announced prospective change)
in, the laws (or any regulations thereunder) of the United States or
any political subdivision or taxing authority thereof or therein, (b)
any amendment to or change in an interpretation or application of any
such laws or regulations by any legislative body, court, governmental
agency or regulatory authority (including the enactment of any
legislation and the publication of any judicial decision or regulatory
determination on or after the date of the issuance of the Preferred
Securities), (c) any interpretation or pronouncement that provides for
a position with respect to such laws or regulations that differs from
the theretofore generally accepted position, or (d) any action taken
by any governmental agency or regulatory authority, which amendment or
change is enacted, promulgated or effective, or which interpretation
or pronouncement is issued or announced, or which action is taken, in
each case on or after the date of the issuance of the Preferred
Securities, there is more than an insubstantial risk that (i) the
Trust is, or will be within 90 days of the date thereof, subject to
United States federal income

A-5

<PAGE>

tax with respect to interest accrued or received on the Debentures,
(ii) the Trust is, or will be within 90 days of the date thereof,
subject to more than a de minimis amount of taxes, duties or other
governmental charges, or (iii) interest payable by the Debenture
Issuer to the Trust on the Debentures is not, or within 90 days of the
date thereof will not be, deductible, in whole or in part, by the
Debenture Issuer for United States federal income tax purposes.

"Investment Company Event" means that the Regular Trustees shall have
received an opinion of nationally recognized independent counsel
experienced in practice under the Investment Company Act of 1940, as
amended (the "1940 Act"), that as a result of the occurrence of a
change in law or regulation by any legislative body, court,
governmental agency or regulatory authority (a "Change in 1940 Act
Law"), the Trust is or will be considered an "investment company"
which is required to be registered under the 1940 Act, which Change in
1940 Act Law becomes effective on or after the date of the issuance of
the Preferred Securities. In case of any uncertainty regarding an
Investment Company Event, the good faith determination of the Regular
Trustees, based on the advice of counsel, shall be conclusive.

On and from the date fixed by the Regular Trustees for any
distribution of Debentures and dissolution of the Trust: (i) the
Securities will no longer be deemed to be outstanding, (ii) The
Depository Trust Company (the "Depository") or its nominee (or any
successor Clearing Agency or its nominee), as the record Holder of the
Preferred Securities, will receive a registered global certificate or
certificates representing the Debentures to be delivered upon such
distribution and (iii) any certificates representing Securities,
except for certificates representing Preferred Securities held by the
Depository or its nominee (or any successor Clearing Agency or its
nominee), will be deemed to represent beneficial interests in the
Debentures having an aggregate principal amount equal to the aggregate
stated liquidation amount of, with an interest rate identical to the
Coupon Rate of, and accrued and unpaid interest equal to accrued and
unpaid Distributions, on such Securities until such certificates are
presented to the Debenture Issuer or its agent for transfer or
reissue.

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

(e) If the Debentures are distributed to holders of the Securities,
pursuant to the terms of the Indenture, the Debenture Issuer will use
its best efforts to have the Debentures listed on the New York Stock
Exchange or on such other exchange

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<PAGE>

as the Preferred Securities were listed immediately prior to the
distribution of the Debentures.

(f) "Redemption or Distribution Procedures."

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

(ii) In the event that fewer than all the outstanding Securities are
to be redeemed, the Securities to be redeemed shall be redeemed
Pro Rata from each Holder of Preferred Securities, it being
understood that, in respect of Preferred Securities registered in
the name of and held of record by the Depository (or any
successor Clearing Agency) or any nominee, the distribution of
the proceeds of such redemption will be made to such Clearing
Agency Participant (or Person on whose behalf such nominee holds
such Securities) in accordance with the procedures applied by
such offering or nominee.

(iii) If Securities are to be redeemed and the Trust gives a
Redemption/Distribution Notice, which notice may only be issued
if the Debentures are redeemed as set out in this paragraph 4
(which notice will be irrevocable), then (A) while the Preferred
Securities are in book-entry only form, with respect to the
Preferred Securities, by 12:00 noon, New York City time, on the
redemption date, provided that the Debenture Issuer has paid the
Property Trustee a sufficient amount of cash in connection with
the related redemption or maturity of the Debentures, the
Property Trustee will deposit irrevocably with the Depositary (or
successor Clearing Agency) funds sufficient to pay the applicable
Redemption Price with respect to the Preferred Securities and

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<PAGE>

will give the Depository irrevocable instructions and authority
to pay the Redemption Price to the Holders of the Preferred
Securities, and (B) with respect to Preferred Securities issued
in definitive form and Common Securities, provided that the
Debenture Issuer has paid the Property Trustee a sufficient
amount of cash in connection with the related redemption or
maturity of the Debentures, the Property Trustee will pay the
relevant Redemption Price to the Holders of such Securities by
check mailed to the address of the relevant Holder appearing on
the books and records of the Trust on the redemption date. If a
Redemption/ Distribution Notice shall have been given and funds
deposited as required, if applicable, then immediately prior to
the close of business on the date of such deposit, or on the
redemption date, as applicable, distributions will cease to
accrue on the Securities so called for redemption and all rights
of Holders of such Securities so called for redemption will
cease, except the right of the Holders of such Securities to
receive the Redemption Price, but without interest on such
Redemption Price. Neither the Regular Trustees nor the Trust
shall be required to register or cause to be registered the
transfer of any Securities that have been so called for
redemption. If any date fixed for redemption of Securities is
not a Business Day, then payment of the Redemption Price payable
on such date will be made on the next succeeding day that is a
Business Day (and without any interest or other payment in
respect of any such delay) except that, if such Business Day
falls in the next calendar year, such payment will be made on the
immediately preceding Business Day, in each case with the same
force and effect as if made on such date fixed for redemption.
If payment of the Redemption Price in respect of any Securities
is improperly withheld or refused and not paid either by the
Property Trustee or by the Sponsor as guarantor pursuant to the
relevant Preferred Securities Guarantee or Common Securities
Guarantee, Distributions on such Securities will continue to
accrue from the original redemption date to the actual date of
payment, in which case the actual payment date will be considered
the date fixed for redemption for purposes of calculating the
Redemption Price.

(iv) Redemption/Distribution Notices shall be sent by the Regular
Trustees on behalf of the Trust to (A) in respect of the
Preferred Securities, the Depositary or its nominee (or any
successor Clearing Agency or its nominee) if the Global
Certificates have been issued or, if Definitive Preferred
Security Certificates have been issued, to the Holder thereof,
and (B) in respect of the Common Securities to the Holder
thereof.

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<PAGE>

(v) Subject to the foregoing and applicable law (including, without
limitation, United States federal securities laws), provided the
acquiror is not the Holder of the Common Securities or the
obligor under the Indenture, the Sponsor or any of its
subsidiaries may at any time and from time to time purchase
outstanding Preferred Securities by tender, in the open market or
by private agreement.

5. VOTING RIGHTS -- PREFERRED SECURITIES.

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

(b) If (i) the Trust fails to pay Distributions in full on the Preferred
Securities for six (6) consecutive quarterly Distribution periods, or
(ii) an Event of Default occurs and is continuing (each of (i) and
(ii) being an "Appointment Event"), then the Holders of the Preferred
Securities, acting as a single class, will be entitled by the vote of
a Majority in liquidation amount of the Preferred Securities to
appoint a Special Regular Trustee in accordance with Section
5.6(a)(ii)(B) of the Declaration. Any Holder of Preferred Securities
(other than the Sponsor, or any Person directly or indirectly
controlling or controlled by or under direct or indirect common
control with the Sponsor) will be entitled to nominate any Person to
be appointed as Special Regular Trustee. For purposes of determining
whether the Trust has failed to make Distributions in full for six (6)
consecutive quarterly Distribution periods, Distributions shall be
deemed to remain in arrears, notwithstanding any payments in respect
thereof, until full cumulative Distributions have been or
contemporaneously are paid with respect to all quarterly Distribution
periods terminating on or prior to the date of payment of such
cumulative Distributions. Not later than 30 days after such right to
appoint a Special Regular Trustee arises, the Regular Trustees will
convene a meeting for the purpose of appointing a Special Regular
Trustee. If the Regular Trustees fail to convene such meeting within
such 30-day period, the Holders of 10% in liquidation amount of the
Preferred Securities will be entitled to convene such meeting in
accordance with Section 12.2 of the Declaration. The record date for
such meeting will be the close of business on the Business Day that is
one Business Day before the day on which notice of the meeting is sent
to the Holders. The provisions of the Declaration relating to the
convening and conduct of the meetings of the Holders will apply with
respect to any such meeting.

A Special Regular Trustee may be removed without cause at any time by
vote of the Holders of a Majority in liquidation amount of the
Preferred Securities at a meeting of the Holders of the Preferred
Securities in accordance with Section

A-9

<PAGE>

5.6(a)(ii)(B) of the Declaration. The Holders of 10% in liquidation
amount of the Preferred Securities will be entitled to convene such a
meeting in accordance with Section 12.2 of the Declaration. The
record date for such meeting will be the close of business on the
Business Day which is one Business Day before the day on which the
notice of meeting is sent to Holders. Notwithstanding the appointment
of a Special Regular Trustee, the Debenture Issuer shall retain all
rights under the Indenture, including the right to extend the interest
payment period on the Debentures.

Subject to the requirements set forth in this paragraph, the Holders
of a majority in liquidation amount of the Preferred Securities,
voting separately as a class, may direct the time, method, and place
of conducting any proceeding for any remedy available to the Property
Trustee, or the exercise of any trust or power conferred upon the
Property Trustee under the Declaration as holder of the Debentures,
including (i) directing the time, method, place of conducting any
proceeding for any remedy available to the Property Trustee, or
exercising any trust or power conferred on the Property Trustee with
respect to the Debentures, (ii) waive any past default and its
consequences that is waivable under Section 513 of the Indenture, or
(iii) exercise any right to rescind or annul a declaration that the
principal of all the Debentures shall be due and payable; provided,
however, that, where a consent under the Indenture would require the
consent of all Holders of Debentures affected thereby, the Property
Trustee may only give such consent at the direction of all holders of
the Preferred Securities. The Property Trustee shall not revoke any
action previously authorized or approved by a vote of the Holders of
the Preferred Securities. Other than with respect to directing the
time, method and place of conducting any remedy available to the
Property Trustee or the Debenture Trustee as set forth above, the
Property Trustee shall not take any action in accordance with the
directions of the Holders of the Preferred Securities under this
paragraph unless the Property Trustee has obtained an opinion of tax
counsel to the effect that, as a result of such action, for the
purposes of United States federal income tax the Trust will not fail
to be classified as a grantor trust. If the Property Trustee fails to
enforce its rights under the Declaration, to the fullest extent
permitted by law, any Holder of Preferred Securities may, after such
Holder's written request to the Property Trustee to enforce such
rights, institute a legal proceeding directly against any Person to
enforce the Property Trustee's rights under the Declaration without
first instituting a legal proceeding against the Property Trustee or
any other Person.

Any approval or direction of Holders of Preferred Securities may be
given at a separate meeting of Holders of Preferred Securities
convened for such purpose, at a meeting of all of the Holders of
Securities in the Trust or pursuant to written consent. The Regular
Trustees will cause a notice of any meeting at

A-10

<PAGE>

which Holders of Preferred Securities are entitled to vote, or of any
matter upon which action by written consent of such Holders is to be
taken, to be mailed to each Holder of record of Preferred Securities.
Each such notice will include a statement setting forth (i) the date
of such meeting or the date by which such action is to be taken, (ii)
a description of any resolution proposed for adoption at such meeting
on which such Holders are entitled to vote or of such matter upon
which written consent is sought and (iii) instructions for the
delivery of proxies or consents.

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

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

6. VOTING RIGHTS -- COMMON SECURITIES.

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

(b) The Holders of the Common Securities are entitled, in accordance with
Article V of the Declaration, to vote to appoint, remove or replace
any Trustee or to increase or decrease the number of Trustees, subject
to the exclusive right of the Holders of the Preferred Securities to
appoint, remove or replace a Special Regular Trustee.

(c) Subject to Section 2.6 of the Declaration and only after the Event of
Default with respect to the Preferred Securities has been cured,
waived, or otherwise eliminated, and subject to the requirements of
the second to last sentence of this paragraph, the Holders of a
Majority in liquidation amount of the Common Securities, voting
separately as a class, may direct the time, method, and place of
conducting any proceeding for any remedy available to the Property
Trustee, or the exercise of any trust or power conferred upon the
Property Trustee under the Declaration as holder of the Debentures,
including (i) directing the time, method, place of conducting any
proceeding for any remedy available to the Property Trustee, or
exercising any trust or power conferred on the Property Trustee with
respect to the Debentures, (ii) waive any past default and its
consequences that is waivable under Section 513 of the Indenture, or
(iii)

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<PAGE>

exercise any right to rescind or annul a declaration that the
principal of all the Debentures shall be due and payable; provided,
however, that, where a consent under the Indenture would require the
consent of all Holders of Debentures, the Property Trustee may only
give such consent at the direction of all Holders of the Common
Securities. Pursuant to this paragraph 6(c), the Property Trustee
shall not revoke any action previously authorized or approved by a
vote of the Holders of the Common Securities. Other than with respect
to directing the time, method and place of conducting any remedy
available to the Property Trustee or the Debenture Trustee as set
forth above, the Property Trustee shall not take any action in
accordance with the directions of the Holders of the Common Securities
under this paragraph unless the Property Trustee has obtained an
opinion of tax counsel to the effect that for the purposes of United
States federal income tax the Trust will not be classified as an
association taxable as a corporation or a partnership and that each
Holder of the Securities will be treated as owning an undivided
beneficial interest in the Debentures on account of such action. If
the Property Trustee fails to enforce its rights under the
Declaration, to the fullest extent permitted by law, any Holder of
Common Securities may, after such Holder's written request to the
Property Trustee to enforce such rights, institute a legal proceeding
directly against any Person to enforce the Property Trustee's rights
under the Declaration, without first instituting a legal proceeding
against the Property Trustee or any other Person.

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

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

7. AMENDMENTS TO DECLARATION AND INDENTURE.

(a) In addition to any requirements under Section 12.1 of the Declaration,
if any proposed amendment to the Declaration provides for, or the
Regular Trustees

A-12

<PAGE>

otherwise propose to effect, (i) any action that would materially
adversely affect the powers, preferences or special rights of the
Securities, whether by way of amendment to the Declaration or
otherwise, or (ii) the dissolution, winding-up or termination of the
Trust, other than as described in Section 8.1 of the Declaration, then
the Holders of outstanding Securities, voting together as a class,
will be entitled to vote on such amendment or proposal (but not on any
other amendment or proposal) and such amendment or proposal shall not
be effective except with the approval of the Holders of at least 66
2/3% in liquidation amount of the Securities affected thereby;
provided, however, that, the rights of Holders of Preferred Securities
under Article V of the Declaration to appoint, remove or replace a
Special Regular Trustee shall not be amended without the consent of
each Holder of Preferred Securities; provided, further however, if any
amendment or proposal referred to in clause (i) above would materially
adversely affect only the Preferred Securities or the Common
Securities, then only the affected class will be entitled to vote on
such amendment or proposal and such amendment or proposal shall not be
effective except with the approval of 66 2/3% in liquidation amount of
such class of securities.

(b) In the event the consent of the Property Trustee as the holder of the
Debentures and the Preferred Securities Guarantee is required under
the Indenture with respect to any amendment, modification or
termination of the Indenture, the Debentures or the Preferred
Securities Guarantee, the Property Trustee shall request the direction
of the Holders of the Securities with respect to such amendment,
modification or termination and shall vote with respect to such
amendment, modification or termination as directed by a Majority in
liquidation amount of the Securities voting together as a single
class; provided, however, that where a consent under the Indenture
would require the consent of all Holders of the Debentures, the
Property Trustee may only give such consent at the direction of all
Holders of the Debentures; provided, further, that the Property
Trustee shall not take any action in accordance with the directions of
the Holders of the Securities under this paragraph 7(b) unless the
Property Trustee has obtained an opinion of tax counsel to the effect
that for the purposes of United States federal income tax the Trust
will not be classified as other than a grantor trust.

8. PRO RATA.

A reference in these terms of the Securities to any payment, distribution or
treatment as being "Pro Rata" shall mean pro rata to each Holder of Securities
according to the aggregate liquidation amount of the Securities held by the
relevant Holder in relation to the aggregate liquidation amount of all
Securities outstanding unless, in relation to a payment, an Event of Default
under the Indenture has occurred and is continuing, in which case any funds
available

A-13

<PAGE>

to make such payment shall be paid first to each Holder of the Preferred
Securities pro rata according to the aggregate liquidation amount of Preferred
Securities held by the relevant Holder relative to the aggregate liquidation
amount of all Preferred Securities outstanding, and only after satisfaction of
all amounts owed to the Holders of the Preferred Securities, to each Holder of
Common Securities pro rata according to the aggregate liquidation amount of
Common Securities held by the relevant Holder relative to the aggregate
liquidation amount of all Common Securities outstanding.

9. RANKING.

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

10. LISTING.

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

11. ACCEPTANCE OF SECURITIES GUARANTEE AND INDENTURE.

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

12. NO PREEMPTIVE RIGHTS.

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

13. MISCELLANEOUS.

These terms constitute a part of the Declaration.

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

A-14

<PAGE>

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

A-15

<PAGE>

ANNEX I

IF THE PREFERRED SECURITY IS TO BE A GLOBAL CERTIFICATE, INSERT: This
Preferred Security is a Global Certificate within the meaning of the Declaration
hereinafter referred to and is registered in the name of The Depository Trust
Company (the "Depositary") or a nominee of the Depositary. This Preferred
Security is exchangeable for Preferred Securities registered in the name of a
person other than the Depositary or its nominee only in the limited
circumstances described in the Declaration and no transfer of this Preferred
Security (other than a transfer of this Preferred Security as a whole by the
Depositary to a nominee of the Depository or by a nominee of the Depository to
the Depositary or another nominee of the Depositary) may be registered except in
limited circumstances.

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

Certificate Number Number of Preferred Securities

1 1,300,000
CUSIP NO. 629470204

Certificate Evidencing Preferred Securities

NWPS CAPITAL FINANCING I

Preferred Securities.
(liquidation amount $25 per Preferred Security)

NWPS CAPITAL FINANCING I, a business trust formed under the laws of the State of
Delaware (the "Trust"), hereby certifies that Cede & Co. (the "Holder") is the
registered owner of 1,300,000 preferred securities of the Trust representing
undivided beneficial interests in the assets of the Trust designated the 8 1/8%
Trust Preferred Capital Securities (liquidation amount $25 per Preferred
Security) (the "Preferred Securities"). The Preferred Securities are
transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer. THE DESIGNATION, RIGHTS, PRIVILEGES, RESTRICTIONS
(INCLUDING RESTRICTIONS

A-16

<PAGE>

ON TRANSFER), PREFERENCES AND OTHER TERMS AND PROVISIONS OF THE PREFERRED
SECURITIES REPRESENTED HEREBY ARE ISSUED AND SHALL IN ALL RESPECTS BE SUBJECT TO
THE PROVISIONS OF THE AMENDED AND RESTATED DECLARATION OF TRUST OF THE TRUST
DATED AS OF AUGUST 1, 1995, AS THE SAME MAY BE AMENDED FROM TIME TO TIME (THE
"DECLARATION"), INCLUDING THE DESIGNATION OF THE TERMS OF THE SECURITIES AS SET
FORTH IN EXHIBIT A TO THE DECLARATION. Capitalized terms used herein but not
defined shall have the meaning given them in the Declaration. The Holder is
entitled to the benefits of the Preferred Securities Guarantee to the extent
provided therein. The Sponsor will provide a copy of the Declaration, the
Preferred Securities Guarantee and the Indenture to a Holder without charge upon
written request to the Trust at its principal place of business.

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

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

IN WITNESS WHEREOF, the Trust has executed this certificate this day of August
8, 1995.

NWPS Capital Financing I

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

A-17

<PAGE>

ASSIGNMENT

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

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

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

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

Date:
--------------------------------

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

A-18

<PAGE>

ANNEX II

Certificate Number Number of Common Securities

1 40,206

Certificate Evidencing Common Securities

NWPS CAPITAL FINANCING I

Common Securities.
(liquidation amount $25 per Common Security)

NWPS CAPITAL FINANCING I, a business trust formed under the laws of the State of
Delaware (the "Trust"), hereby certifies that Northwestern Public Service
Company (the "Holder") is the registered owner of 40,206 common securities of
the Trust representing undivided beneficial interests in the assets of the Trust
designated the 8 1/8% Trust Common Capital Securities (liquidation amount $25
per Common Security) (the "Common Securities"). The Common Securities are
transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer. THE DESIGNATION, RIGHTS, PRIVILEGES, RESTRICTIONS
(INCLUDING RESTRICTIONS ON TRANSFER), PREFERENCES AND OTHER TERMS AND PROVISIONS
OF THE COMMON SECURITIES REPRESENTED HEREBY ARE ISSUED AND SHALL IN ALL RESPECTS
BE SUBJECT TO THE PROVISIONS OF THE AMENDED AND RESTATED DECLARATION OF TRUST OF
THE TRUST DATED AS OF AUGUST 1, 1995, AS THE SAME MAY BE AMENDED FROM TIME TO
TIME (THE "DECLARATION"), INCLUDING THE DESIGNATION OF THE TERMS OF THE
SECURITIES AS SET FORTH IN EXHIBIT A TO THE DECLARATION. Capitalized terms used
herein but not defined shall have the meaning given them in the Declaration.

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

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

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<PAGE>

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

IN WITNESS WHEREOF, the Trust has executed this certificate this day of August
8, 1995.

NWPS Capital Financing I

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

ASSIGNMENT

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

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

(Insert address and zip code of assignee) and irrevocably appoints______________

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

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

A-20

<PAGE>

B-1

<PAGE>

EXHIBIT B

SPECIMEN OF DEBENTURE

B-2

<PAGE>

EXHIBIT C
UNDERWRITING AGREEMENT

C-1

<PAGE>

SUBORDINATED DEBT SECURITIES INDENTURE
BETWEEN NORTHWESTERN PUBLIC SERVICE COMPANY AND
THE CHASE MANHATTAN BANK (N.A.) AS TRUSTEE

<PAGE>

CROSS-REFERENCE TABLE FOR THE
SUBORDINATED DEBT SECURITIES INDENTURE

SECTION OF
TRUST INDENTURE
ACT OF 1939, AS AMENDED SECTION OF INDENTURE
- ----------------------- --------------------

SECTION 310(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . 607
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . 607
(a)(3) . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
(a)(4) . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . 608

SECTION 311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . 612
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . 612

SECTION 312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . 701
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . 701
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . 701

SECTION 313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . 702
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . 702
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . 702
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . 702

SECTION 314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . 703
(b) . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . 102
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . 102
(c)(3) . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
(d) . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . 102

SECTION 315(a) . . . . . . . . . . . . . . . . . . . . . . . . . 601, 602
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . 601
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . 602
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . 602
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . 514

SECTION 316(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . 502, 512
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . 513
(a)(2) . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . 508
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . 104(d)

SECTION 317(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . 503
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . 504
(b) . . . . . . . . . . . . . . . . . . . . . . . . . .1003

SECTION 318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . 107

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

Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
a part of the Indenture.

<PAGE>

TABLE OF CONTENTS
Page
----

Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Recitals of the Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE ONE

Definitions and Other Provisions of
General Application

SECTION 101. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Additional Amounts. . . . . . . . . . . . . . . . . . . . . . . 2
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Authenticating Agent. . . . . . . . . . . . . . . . . . . . . . 2
Authorized Newspaper. . . . . . . . . . . . . . . . . . . . . . 2
Board of Directors. . . . . . . . . . . . . . . . . . . . . . . 2
Board Resolution. . . . . . . . . . . . . . . . . . . . . . . . 2
Business Day. . . . . . . . . . . . . . . . . . . . . . . . . . 2
CEDEL S.A.. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Commission. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Common Depositary . . . . . . . . . . . . . . . . . . . . . . . 3
Common Securities . . . . . . . . . . . . . . . . . . . . . . . 3
Common Securities Guarantee . . . . . . . . . . . . . . . . . . 3
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Company Request; Company Order. . . . . . . . . . . . . . . . . 3
Conversion Date . . . . . . . . . . . . . . . . . . . . . . . . 3
Conversion Event. . . . . . . . . . . . . . . . . . . . . . . . 3
Corporate Trust Office. . . . . . . . . . . . . . . . . . . . . 3
Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Currency. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Declaration . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Defaulted Interest. . . . . . . . . . . . . . . . . . . . . . . 4
Dollar; $ . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Dollar Equivalent of the Currency Unit. . . . . . . . . . . . . 4
Dollar Equivalent of the Foreign Currency . . . . . . . . . . . 4
ECU . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Election Date . . . . . . . . . . . . . . . . . . . . . . . . . 4
Euroclear . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
European Communities. . . . . . . . . . . . . . . . . . . . . . 4
European Monetary System. . . . . . . . . . . . . . . . . . . . 4
Event of Default. . . . . . . . . . . . . . . . . . . . . . . . 4
Exchange Date . . . . . . . . . . . . . . . . . . . . . . . . . 4
Exchange Rate Agent . . . . . . . . . . . . . . . . . . . . . . 4
Exchange Rate Officer's Certificate . . . . . . . . . . . . . . 4
Federal Bankruptcy Code . . . . . . . . . . . . . . . . . . . . 5

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

Note: This table of contents shall not, for any purpose, be deemed to be a
part of this Indenture.

-i-
<PAGE>

Page
----

Foreign Currency. . . . . . . . . . . . . . . . . . . . . . . . 5
Government Obligations. . . . . . . . . . . . . . . . . . . . . 5
Guarantor . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Holder. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Indexed Security. . . . . . . . . . . . . . . . . . . . . . . . 5
Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Interest Payment Date . . . . . . . . . . . . . . . . . . . . . 6
Market Exchange Rate. . . . . . . . . . . . . . . . . . . . . . 6
Maturity. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
NWPS Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Officers' Certificate . . . . . . . . . . . . . . . . . . . . . 6
Opinion of Counsel. . . . . . . . . . . . . . . . . . . . . . . 6
Original Issue Discount Security. . . . . . . . . . . . . . . . 7
Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Paying Agent. . . . . . . . . . . . . . . . . . . . . . . . . . 8
Person. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Place of Payment. . . . . . . . . . . . . . . . . . . . . . . . 8
Predecessor Security. . . . . . . . . . . . . . . . . . . . . . 8
Preferred Securities. . . . . . . . . . . . . . . . . . . . . . 8
Preferred Securities Guarantee. . . . . . . . . . . . . . . . . 8
Redemption Date . . . . . . . . . . . . . . . . . . . . . . . . 8
Redemption Price. . . . . . . . . . . . . . . . . . . . . . . . 8
Registered Security . . . . . . . . . . . . . . . . . . . . . . 8
Regular Record Date . . . . . . . . . . . . . . . . . . . . . . 9
Repayment Date. . . . . . . . . . . . . . . . . . . . . . . . . 9
Repayment Price . . . . . . . . . . . . . . . . . . . . . . . . 9
Responsible Officer . . . . . . . . . . . . . . . . . . . . . . 9
Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Security Register; Security Registrar . . . . . . . . . . . . . 9
Special Record Date . . . . . . . . . . . . . . . . . . . . . . 9
Stated Maturity . . . . . . . . . . . . . . . . . . . . . . . . 9
Subsidiary. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . 9
Trust Securities. . . . . . . . . . . . . . . . . . . . . . . .10
Trust Securities Guarantees . . . . . . . . . . . . . . . . . .10
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
United States . . . . . . . . . . . . . . . . . . . . . . . . .10
United States Person. . . . . . . . . . . . . . . . . . . . . .10
Valuation Date. . . . . . . . . . . . . . . . . . . . . . . . .10
Vice President. . . . . . . . . . . . . . . . . . . . . . . . .10
Voting Stock. . . . . . . . . . . . . . . . . . . . . . . . . .10
Yield to Maturity . . . . . . . . . . . . . . . . . . . . . . .10

SECTION 102. Compliance Certificates and Opinions. . . . . . . . . . . . . .10

SECTION 103. Form of Documents Delivered to Trustee. . . . . . . . . . . . .11

SECTION 104. Acts of Holders . . . . . . . . . . . . . . . . . . . . . . . .11
- -----------------

Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
a part of the Indenture.

-ii-
<PAGE>
Page
----

SECTION 105. Notices, etc. to Trustee and Company. . . . . . . . . . . . . .13

SECTION 106. Notice to Holders; Waiver . . . . . . . . . . . . . . . . . . .13

SECTION 107. Conflict with Trust Indenture Act . . . . . . . . . . . . . . .13

SECTION 108. Effect of Headings and Table of Contents. . . . . . . . . . . .14

SECTION 109. Successors and Assigns. . . . . . . . . . . . . . . . . . . . .14

SECTION 110. Separability Clause . . . . . . . . . . . . . . . . . . . . . .14

SECTION 111. Benefits of Indenture . . . . . . . . . . . . . . . . . . . . .14

SECTION 112. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . .14

SECTION 113. Legal Holidays. . . . . . . . . . . . . . . . . . . . . . . . .14

ARTICLE TWO

Security Forms

SECTION 201. Forms Generally . . . . . . . . . . . . . . . . . . . . . . . .15

SECTION 202. Form of Trustee's Certificate of Authentication . . . . . . . .15

SECTION 203. Securities Issuable in Global Form. . . . . . . . . . . . . . .15

ARTICLE THREE

The Securities

SECTION 301. Amount Unlimited; Issuable in Series. . . . . . . . . . . . . .16

SECTION 302. Denominations . . . . . . . . . . . . . . . . . . . . . . . . .19

SECTION 303. Execution, Authentication, Delivery and Dating. . . . . . . . .20

SECTION 304. Temporary Securities. . . . . . . . . . . . . . . . . . . . . .21

SECTION 305. Registration of Transfer and Exchange . . . . . . . . . . . . .23

SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities. . . . . . . .25

SECTION 307. Payment of Interest; Interest Rights Preserved;
Optional Interest Reset . . . . . . . . . . . . . . . . . . . .26

SECTION 308. Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . .28

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

Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
a part of the Indenture.

-iii-
<PAGE>

Page
----

SECTION 309. Cancellation. . . . . . . . . . . . . . . . . . . . . . . . . .28

SECTION 310. Computation of Interest . . . . . . . . . . . . . . . . . . . .29

SECTION 311. Currency and Manner of Payments in Respect of
Securities. . . . . . . . . . . . . . . . . . . . . . . . . . .29

SECTION 312. Appointment and Resignation of Successor Exchange
Rate Agent. . . . . . . . . . . . . . . . . . . . . . . . . . .32

ARTICLE FOUR

Satisfaction and Discharge

SECTION 401. Satisfaction and Discharge of Indenture . . . . . . . . . . . .33

SECTION 402. Application of Trust Money. . . . . . . . . . . . . . . . . . .34

ARTICLE FIVE

Remedies

SECTION 501. Events of Default . . . . . . . . . . . . . . . . . . . . . . .35

SECTION 502. Acceleration of Maturity; Rescission and Annulment. . . . . . .36

SECTION 503. Collection of Indebtedness and Suits for Enforcement
by Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . .37

SECTION 504. Trustee May File Proofs of Claim. . . . . . . . . . . . . . . .38

SECTION 505. Trustee May Enforce Claims Without Possession of
Securities. . . . . . . . . . . . . . . . . . . . . . . . . . .39

SECTION 506. Application of Money Collected. . . . . . . . . . . . . . . . .39

SECTION 507. Limitation on Suits . . . . . . . . . . . . . . . . . . . . . .39

SECTION 508. Unconditional Right of Holders to Receive Principal,
Premium and Interest. . . . . . . . . . . . . . . . . . . . . .40

SECTION 509. Restoration of Rights and Remedies. . . . . . . . . . . . . . .40

SECTION 510. Rights and Remedies Cumulative. . . . . . . . . . . . . . . . .41

SECTION 511. Delay or Omission Not Waiver. . . . . . . . . . . . . . . . . .41

SECTION 512. Control by Holders. . . . . . . . . . . . . . . . . . . . . . .41

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

Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
a part of the Indenture.

-iv-
<PAGE>

Page
----

SECTION 513. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . .41

SECTION 514. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . .42

SECTION 515. Waiver of Stay or Extension Laws. . . . . . . . . . . . . . . .42

ARTICLE SIX

The Trustee

SECTION 601. Notice of Defaults. . . . . . . . . . . . . . . . . . . . . . .42

SECTION 602. Certain Rights of Trustee . . . . . . . . . . . . . . . . . . .43

SECTION 603. Trustee Not Responsible for Recitals or Issuance
of Securities . . . . . . . . . . . . . . . . . . . . . . . . .44

SECTION 604. May Hold Securities . . . . . . . . . . . . . . . . . . . . . .44

SECTION 605. Money Held in Trust . . . . . . . . . . . . . . . . . . . . . .44

SECTION 606. Compensation and Reimbursement. . . . . . . . . . . . . . . . .44

SECTION 607. Corporate Trustee Required; Eligibility . . . . . . . . . . . .45

SECTION 608. Resignation and Removal; Appointment of Successor . . . . . . .45

SECTION 609. Acceptance of Appointment by Successor. . . . . . . . . . . . .47

SECTION 610. Merger, Conversion, Consolidation or Succession
to Business . . . . . . . . . . . . . . . . . . . . . . . . . .48

SECTION 611. Appointment of Authenticating Agent . . . . . . . . . . . . . .48

SECTION 612. Preferential Collection of Claims Against Company . . . . . . .50

ARTICLE SEVEN

Holders' Lists and Reports by Trustee and Company

SECTION 701. Disclosure of Names and Addresses of Holders. . . . . . . . . .50

SECTION 702. Reports by Trustee. . . . . . . . . . . . . . . . . . . . . . .50

SECTION 703. Reports by Company. . . . . . . . . . . . . . . . . . . . . . .50

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

Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
a part of the Indenture.

-v-
<PAGE>

ARTICLE EIGHT

Consolidation, Merger, Conveyance, Transfer or Lease

Page
----

SECTION 801. Company May Consolidate, etc., Only on Certain
Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51

SECTION 802. Successor Person Substituted. . . . . . . . . . . . . . . . . .52

SECTION 803. Assignment of Rights. . . . . . . . . . . . . . . . . . . . . .52

ARTICLE NINE

Supplemental Indentures

SECTION 901. Supplemental Indentures Without Consent of Holders. . . . . . .52

SECTION 902. Supplemental Indentures with Consent of Holders . . . . . . . .53

SECTION 903. Execution of Supplemental Indentures. . . . . . . . . . . . . .54

SECTION 904. Effect of Supplemental Indentures . . . . . . . . . . . . . . .54

SECTION 905. Conformity with Trust Indenture Act . . . . . . . . . . . . . .55

SECTION 906. Reference in Securities to Supplemental Indentures. . . . . . .55

SECTION 907. Notice of Supplemental Indentures . . . . . . . . . . . . . . .55

ARTICLE TEN

Covenants

SECTION 1001. Payment of Principal, Premium, if any, and Interest . . . . . .55

SECTION 1002. Maintenance of Office or Agency . . . . . . . . . . . . . . . .55

SECTION 1003. Money for Securities Payments to Be Held in Trust . . . . . . .56

SECTION 1004. Statement as to Compliance. . . . . . . . . . . . . . . . . . .57

SECTION 1005. Additional Amounts. . . . . . . . . . . . . . . . . . . . . . .57

SECTION 1006. Payment of Taxes and Other Claims . . . . . . . . . . . . . . .58

SECTION 1007. Maintenance of Properties . . . . . . . . . . . . . . . . . . .59

SECTION 1008. Corporate Existence . . . . . . . . . . . . . . . . . . . . . .59

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

Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
a part of the Indenture.

-vi-
<PAGE>

Page
----

SECTION 1009. Limitation on Dividends; Transactions with
Affiliates. . . . . . . . . . . . . . . . . . . . . . . . . . .59

SECTION 1010. Covenants as to NWPS Trusts . . . . . . . . . . . . . . . . . .60

ARTICLE ELEVEN

Redemption of Securities

SECTION 1101. Applicability of Article. . . . . . . . . . . . . . . . . . . .60

SECTION 1102. Election to Redeem; Notice to Trustee . . . . . . . . . . . . .60

SECTION 1103. Selection by Trustee of Securities to Be Redeemed . . . . . . .60

SECTION 1104. Notice of Redemption. . . . . . . . . . . . . . . . . . . . . .61

SECTION 1105. Deposit of Redemption Price . . . . . . . . . . . . . . . . . .61

SECTION 1106. Securities Payable on Redemption Date . . . . . . . . . . . . .62

SECTION 1107. Securities Redeemed in Part . . . . . . . . . . . . . . . . . .62

ARTICLE TWELVE

Sinking Funds

SECTION 1201. Applicability of Article. . . . . . . . . . . . . . . . . . . .62

SECTION 1202. Satisfaction of Sinking Fund Payments with
Securities. . . . . . . . . . . . . . . . . . . . . . . . . . .63

SECTION 1203. Redemption of Securities for Sinking Fund . . . . . . . . . . .63

ARTICLE THIRTEEN

Repayment at Option of Holders

SECTION 1301. Applicability of Article. . . . . . . . . . . . . . . . . . . .64

SECTION 1302. Repayment of Securities . . . . . . . . . . . . . . . . . . . .64

SECTION 1303. Exercise of Option. . . . . . . . . . . . . . . . . . . . . . .65

SECTION 1304. When Securities Presented for Repayment Become Due
and Payable . . . . . . . . . . . . . . . . . . . . . . . . . .65

SECTION 1305. Securities Repaid in Part . . . . . . . . . . . . . . . . . . .66

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

Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
a part of the Indenture.

-vii-
<PAGE>

ARTICLE FOURTEEN

Defeasance and Covenant Defeasance
Page
----

SECTION 1401. Company's Option to Effect Defeasance or Covenant
Defeasance. . . . . . . . . . . . . . . . . . . . . . . . . . .66

SECTION 1402. Defeasance and Discharge. . . . . . . . . . . . . . . . . . . .66

SECTION 1403. Covenant Defeasance . . . . . . . . . . . . . . . . . . . . . .66

SECTION 1404. Conditions to Defeasance or Covenant Defeasance . . . . . . . .67

SECTION 1405. Deposited Money and Government Obligations to Be
Held in Trust; Other Miscellaneous Provisions . . . . . . . . .69

SECTION 1406. Reinstatement.. . . . . . . . . . . . . . . . . . . . . . . . .69

TESTIMONIUM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .71

SIGNATURES AND SEAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .71

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

Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
a part of the Indenture.

-viii-
<PAGE>

SUBORDINATED DEBT SECURITIES INDENTURE
BETWEEN NORTHWESTERN PUBLIC SERVICE COMPANY AND
THE CHASE MANHATTAN BANK (N.A.) AS TRUSTEE

INDENTURE, dated as of August 1, 1995, between Northwestern Public Service
Company, a corporation duly organized and existing under the laws of the State
of Delaware (the "Company") having its principal office at 33 Third Street,
S.E., Huron, South Dakota 57350, and The Chase Manhattan Bank (N.A.), a
national banking association duly organized and existing under the laws of the
United States, as Trustee (the "Trustee").

RECITALS OF THE COMPANY

The Company has duly authorized the execution and delivery of this Indenture to
provide for the issuance from time to time of its unsecured debentures, notes or
other evidences of indebtedness (the "Securities"), to be issued in one or more
series as in this Indenture provided. This Indenture is subject to the
provisions of the Trust Indenture Act of 1939, as amended, that are required to
be part of this Indenture and shall, to the extent applicable, be governed by
such provisions. All things necessary to make this Indenture a valid agreement
of the Company, in accordance with its terms, have been done.

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

For and in consideration of the premises and the purchase of the Securities by
the Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Securities or of any series thereof,
as follows:

ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

SECTION 101. Definitions.

For all purposes of this Indenture, except as otherwise expressly provided or
unless the context otherwise requires:

(1) the terms defined in this Article have the meanings assigned to them
in this Article and include the plural as well as the singular;

(2) all other terms used herein which are defined in the Trust Indenture
Act, either directly or by reference therein, have the meanings
assigned to them therein, and the terms "cash transaction" and
"self-liquidating paper", as used in TIA Section 311, shall have the
meanings assigned to them in the rules of the Commission adopted under
the Trust Indenture Act;

(3) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with United States generally accepted
accounting principles, and, except as otherwise herein expressly
provided, the term "generally accepted accounting principles" with
respect to any computation required or permitted hereunder shall mean

<PAGE>

such accounting principles as are generally accepted at the date of
such computation; and

(4) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision.

Certain terms, used principally in Article Three, are defined in that Article.

"Act", when used with respect to any Holder, has the meaning specified in
Section 104.

"Additional Amounts" has the meaning specified in Section 1005.

"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" of any specified Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.

"Authenticating Agent" means any Person authorized by the Trustee pursuant to
Section 611 to act on behalf of the Trustee to authenticate Securities.

"Authorized Newspaper" means a newspaper, in the English language or in an
official language of the country of publication, customarily published on each
Business Day, whether or not published on Saturdays, Sundays or holidays, and of
general circulation in each place in connection with which the term is used or
in the financial community of each such place. Where successive publications
are required to be made in Authorized Newspapers, such publications may be made
in the same or in different newspapers in the same city meeting the foregoing
requirements and in each case on any Business Day.

"Board of Directors" means either the board of directors of the Company or any
duly authorized committee of such board.

"Board Resolution" means a copy of a resolution certified by the Secretary or an
Assistant Secretary of the Company to have been duly adopted by the Board of
Directors and to be in full force and effect on the date of such certification,
and delivered to the Trustee.

"Business Day", when used with respect to any Place of Payment or any other
particular location referred to in this Indenture or in the Securities, means,
unless otherwise specified with respect to any Securities pursuant to Section
301, each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on
which banking institutions in that Place of Payment or other location are
authorized or obligated by law or executive order to close.

"CEDEL S.A." means Cedel, S.A., or its successor.

-2-
<PAGE>

"Commission" means the Securities and Exchange Commission, as from time to time
constituted, created under the Securities Exchange Act of 1934, as amended, or,
if at any time after the execution of this Indenture such Commission is not
existing and performing the duties now assigned to it under the Trust Indenture
Act, then the body performing such duties at such time.

"Common Depositary" has the meaning specified in Section 304.

"Common Securities" means undivided beneficial interests in the assets of a
NWPS Trust which rank pari passu with Preferred Securities issued by such NWPS
Trust; provided, however, that upon the occurrence of an Event of Default, the
rights of holders of Common Securities to payment in respect to distributions
and payments upon liquidation, redemption and otherwise are subordinated to the
rights of holders of Preferred Securities.

"Common Securities Guarantee" means any Guarantee that the Company enters into
that operates directly or indirectly for the benefit of holders of Common
Securities of a NWPS Trust.

"Company" means the Person named as the "Company" in the first paragraph of this
Indenture until a successor Person shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor Person.

"Company Request" or "Company Order" means a written request or order signed in
the name of the Company by its Chairman, its President, any Vice President, its
Treasurer or an Assistant Treasurer, and delivered to the Trustee.

"Conversion Date" has the meaning specified in Section 312(d).

"Conversion Event" means the cessation of use of (i) a Foreign Currency both by
the government of the country which issued such Currency and by a central bank
or other public institution of or within the international banking community for
the settlement of transactions, (ii) the ECU both within the European Monetary
System and for the settlement of transactions by public institutions of or
within the European Communities or (iii) any currency unit (or composite
currency) other than the ECU for the purposes for which it was established.

"Corporate Trust Office" means the principal corporate trust office of the
Trustee at which at any particular time its corporate trust business shall be
administered, which office on the date of execution of this Indenture is located
at 4 Chase MetroTech Center, Brooklyn, New York 11245, except that with respect
to presentation of Securities for payment or for registration of transfer or
exchange, such term shall mean the office or agency of the Trustee at which, at
any particular time, its corporate agency business shall be conducted.

"Corporation" includes corporations, associations, companies and business
trusts.

"Currency" means any currency or currencies, composite currency or currency unit
or currency units, including, without limitation, the ECU, issued by the
government of one or more countries or by any recognized confederation or
association of such governments.

-3-
<PAGE>

"Debt" means notes, bonds, debentures or other similar evidences of indebtedness
for money borrowed.

"Declaration" means, in respect of a NWPS Trust, the amended and restated
declaration of trust of such NWPS Trust or any other governing instrument of
such NWPS Trust.

"Default" means any event which is, or after notice or passage of time or both
would be, an Event of Default.

"Defaulted Interest" has the meaning specified in Section 307.

"Dollar" or "$" means a dollar or other equivalent unit in such coin or currency
of the United States of America as at the time shall be legal tender for the
payment of public and private debts.

"Dollar Equivalent of the Currency Unit" has the meaning specified in
Section 312(g).

"Dollar Equivalent of the Foreign Currency" has the meaning specified in
Section 312(f).

"ECU" means the European Currency Unit as defined and revised from time to time
by the Council of the European Communities.

"Election Date" has the meaning specified in Section 312(h).

"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels Office, or
its successor as operator of the Euroclear System.

"European Communities" means the European Economic Community, the European Coal
and Steel Community and the European Atomic Energy Community.

"European Monetary System" means the European Monetary System established by the
Resolution of December 5, 1978 of the Council of the European Communities.

"Event of Default" has the meaning specified in Section 501.

"Exchange Date" has the meaning specified in Section 304.

"Exchange Rate Agent" means, with respect to Securities of or within any series,
unless otherwise specified with respect to any Securities pursuant to
Section 301, a New York Clearing House bank, designated pursuant to Section 301
or Section 313.

"Exchange Rate Officer's Certificate" means a tested telex or a certificate
setting forth (i) the applicable Market Exchange Rate and (ii) the Dollar or
Foreign Currency amounts of principal (and premium, if any) and interest, if any
(on an aggregate basis and on the basis of a Security having the lowest
denomination principal amount determined in accordance with Section 302 in the
relevant Currency), payable with respect to a Security of any series on the
basis of such Market Exchange Rate, sent (in the case of a telex) or signed (in
the case of a certificate) by the Treasurer, any Vice President or any Assistant
Treasurer of the Company.

-4-
<PAGE>

"Federal Bankruptcy Code" means the Bankruptcy Act of Title 11 of the United
States Code, as amended from time to time.

"Foreign Currency" means any Currency other than Currency of the United States.

"Government Obligations" means, unless otherwise specified with respect to any
series of Securities pursuant to Section 301, securities which are (i) direct
obligations of the government which issued the Currency in which the Securities
of a particular series are payable or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the government which
issued the Currency in which the Securities of such series are payable, the
payment of which is unconditionally guaranteed by such government, which, in
either case, are full faith and credit obligations of such government payable in
such Currency and are not callable or redeemable at the option of the issuer
thereof and shall also include a depository receipt issued by a bank or trust
company as custodian with respect to any such Government Obligation or a
specific payment of interest on or principal of any such Government Obligation
held by such custodian for the account of the holder of a depository receipt;
provided that (except as required by law) such custodian is not authorized to
make any deduction from the amount payable to the holder of such depository
receipt from any amount received by the custodian in respect of the Government
Obligation or the specific payment of interest or principal of the Government
Obligation evidenced by such depository receipt.

"Guarantor" means Northwestern Public Service Company, a Delaware corporation.

"Holder" means, in the case of a Registered Security, the Person in whose name a
Security is registered in the Security Register.

"Indenture" means this instrument as originally executed and as it may from time
to time be supplemented or amended by one or more indentures supplemental hereto
entered into pursuant to the applicable provisions hereof, and shall include the
terms of particular series of Securities established as contemplated by Section
301; provided, however, that, if at any time more than one Person is acting as
Trustee under this instrument, "Indenture" shall mean, with respect to any one
or more series of Securities for which such Person is Trustee, this instrument
as originally executed or as it may from time to time be supplemented or amended
by one or more indentures supplemental hereto entered into pursuant to the
applicable provisions hereof and shall include the terms of particular series of
Securities for which such Person is Trustee established as contemplated by
Section 301, exclusive, however, of any provisions or terms which relate solely
to other series of Securities for which such Person is not Trustee, regardless
of when such terms or provisions were adopted, and exclusive of any provisions
or terms adopted by means of one or more indentures supplemental hereto executed
and delivered after such Person had become such Trustee but to which such
Person, as such Trustee, was not a party.

"Indexed Security" means a Security the terms of which provide that the
principal amount thereof payable at Stated Maturity may be more or less than the
principal face amount thereof at original issuance.

"Interest", when used with respect to an Original Issue Discount Security which
by its terms bears interest only after Maturity, means interest payable after
Maturity at the rate prescribed in such Original Issue Discount Security.

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"Interest Payment Date", when used with respect to any Security, means the
Stated Maturity of an installment of interest on such Security.

"Market Exchange Rate" means, unless otherwise specified with respect to any
Securities pursuant to Section 301, (i) for any conversion involving a currency
unit on the one hand and Dollars or any Foreign Currency on the other, the
exchange rate between the relevant currency unit and Dollars or such Foreign
Currency calculated by the method specified pursuant to Section 301 for the
Securities of the relevant series, (ii) for any conversion of Dollars into any
Foreign Currency, the noon (New York City time) buying rate for such Foreign
Currency for cable transfers quoted in New York City as certified for customs
purposes by the Federal Reserve Bank of New York and (iii) for any conversion of
one Foreign Currency into Dollars or another Foreign Currency, the spot rate at
noon local time in the relevant market at which, in accordance with normal
banking procedures, the Dollars or Foreign Currency into which conversion is
being made could be purchased with the Foreign Currency from which conversion is
being made from major banks located in either New York City, London or any other
principal market for Dollars or such purchased Foreign Currency, in each case
determined by the Exchange Rate Agent. Unless otherwise specified with respect
to any Securities pursuant to Section 301, in the event of the unavailability of
any of the exchange rates provided for in the foregoing clauses (i), (ii) and
(iii), the Exchange Rate Agent shall use, in its sole discretion and without
liability on its part, such quotation of the Federal Reserve Bank of New York as
of the most recent available date, or quotations from one or more major banks in
New York City, London or another principal market for the Currency in question,
or such other quotations as the Exchange Rate Agent shall deem appropriate.
Unless otherwise specified by the Exchange Rate Agent, if there is more than one
market for dealing in any Currency by reason of foreign exchange regulations or
otherwise, the market to be used in respect of such Currency shall be that upon
which a non-resident issuer of securities designated in such Currency would
purchase such Currency in order to make payments in respect of such securities.

"Maturity", when used with respect to any Security, means the date on which the
principal of such Security or an installment of principal becomes due and
payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, notice of redemption, notice of option to elect
repayment or otherwise.

"NWPS Trust" means each of NWPS Capital Financing I, NWPS Capital Financing II,
NWPS Capital Financing III, each a Delaware statutory business trust.

"Officers' Certificate" means a certificate signed by the Chairman, the
President or a Vice President, and by the Treasurer, an Assistant Treasurer, the
Secretary or an Assistant Secretary of the Company, and delivered to the
Trustee.

"Opinion of Counsel" means a written opinion of counsel, who may be counsel for
the Company, including an employee of the Company.

"Original Issue Discount Security" means any Security which provides for an
amount less than the principal amount thereof to be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section 502.

"Outstanding", when used with respect to Securities, means, as of the date of
determination, all Securities theretofore authenticated and delivered under this
Indenture except:

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(i) Securities theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;

(ii) Securities, or portions thereof, for whose payment or redemption or
repayment at the option of the Holder money in the necessary amount
has been theretofore deposited with the Trustee or any Paying Agent
(other than the Company) in trust or set aside and segregated in
trust by the Company (if the Company shall act as its own Paying
Agent) for the Holders of such Securities and any coupons
appertaining thereto; provided that, if such Securities are to be
redeemed, notice of such redemption has been duly given pursuant to
this Indenture or provision therefor satisfactory to the Trustee has
been made;

(iii) Securities, except to the extent provided in Sections 1402 and 1403,
with respect to which the Company has effected defeasance and/or
covenant defeasance as provided in Article Fourteen; and

(iv) Securities which have been paid pursuant to Section 306 or in
exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this Indenture, other than
any such Securities in respect of which there shall have been
presented to the Trustee proof satisfactory to it that such
Securities are held by a bona fide purchaser in whose hands such
Securities are valid obligations of the Company;

provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder or are present at
a meeting of Holders for quorum purposes, and for the purpose of making the
calculations required by TIA Section 313, (i) the principal amount of an
Original Issue Discount Security that may be counted in making such
determination or calculation and that shall be deemed to be Outstanding for such
purpose shall be equal to the amount of principal thereof that would be (or
shall have been declared to be) due and payable, at the time of such
determination, upon a declaration of acceleration of the maturity thereof
pursuant to Section 502, (ii) the principal amount of any Security denominated
in a Foreign Currency that may be counted in making such determination or
calculation and that shall be deemed Outstanding for such purpose shall be equal
to the Dollar equivalent, determined as of the date such Security is originally
issued by the Company as set forth in an Exchange Rate Officer's Certificate
delivered to the Trustee, of the principal amount (or, in the case of an
Original Issue Discount Security, the Dollar equivalent as of such date of
original issuance of the amount determined as provided in clause (i) above), of
such Security, (iii) the principal amount of any Indexed Security that may be
counted in making such determination or calculation and that shall be deemed
outstanding for such purpose shall be equal to the principal face amount of such
Indexed Security at original issuance, unless otherwise provided with respect to
such Security pursuant to Section 301, and (iv) Securities owned by the Company
or any other obligor upon the Securities or any Affiliate of the Company or of
such other obligor shall be disregarded and deemed not to be Outstanding, except
that, in determining whether the Trustee shall be protected in making such
calculation or in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Securities which the Trustee knows to
be so owned shall be so disregarded. Securities so owned which have been
pledged in good faith may be regarded as Outstanding if the pledgee establishes
to the satisfaction of the Trustee the pledgee's right so to act with respect to
such Securities

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and that the pledgee is not the Company or any other obligor upon the Securities
or any Affiliate of the Company or such other obligor.

"Paying Agent" means any Person (including the Company acting as Paying Agent)
authorized by the Company to pay the principal of (or premium, if any, on) or
interest on any Securities on behalf of the Company.

"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.

"Place of Payment" means, when used with respect to the Securities of or within
any series, the place or places where the principal of (and premium, if any, on)
and interest on such Securities are payable as specified as contemplated by
Sections 301 and 1002.

"Predecessor Security" of any particular Security means every previous Security
evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 306 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.

"Preferred Securities" means undivided beneficial interests in the assets of a
NWPS Trust which rank pari passu with Common Securities issued by such NWPS
Trust; provided, however, that upon the occurrence of an Event of Default, the
rights of holders of Common Securities to payment in respect of distributions
and payments upon liquidation, redemption and otherwise are subordinated to the
rights of holders of Preferred Securities.

"Preferred Securities Guarantee" means any Guarantee that the Guarantor may
enter into with Wilmington Trust Company, as trustee of a NWPS Trust, or other
Persons, that operate directly or indirectly for the benefit of holders of
Preferred Securities of such NWPS Capital Trust.

"Redemption Date", when used with respect to any Security to be redeemed, in
whole or in part, means the date fixed for such redemption by or pursuant to
this Indenture.

"Redemption Price", when used with respect to any Security to be redeemed, means
the price at which it is to be redeemed pursuant to this Indenture.

"Registered Security" means any Security registered in the Security Register.

"Regular Record Date" for the interest payable on any Interest Payment Date on
the Registered Securities of or within any series means the date specified for
that purpose as contemplated by Section 301.

"Repayment Date" means, when used with respect to any Security to be repaid at
the option of the Holder, the date fixed for such repayment pursuant to this
Indenture.

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"Repayment Price" means, when used with respect to any Security to be repaid at
the option of the Holder, the price at which it is to be repaid pursuant to this
Indenture.

"Responsible Officer", when used with respect to the Trustee, means the chairman
or any vice-chairman of the board of directors, the chairman or any
vice-chairman of the executive committee of the board of directors, the chairman
of the trust committee, the president, or any vice president, secretary, any
assistant secretary, treasurer, any assistant treasurer, cashier, any assistant
cashier, any trust officer or assistant trust officer, the controller or any
assistant controller within the corporate trust administration division or any
other officer of the Trustee customarily performing functions similar to those
performed by any of the above-designated officers, and also means, with respect
to a particular corporate trust matter, any other officer to whom such matter is
referred because of his knowledge of and familiarity with the particular
subject.

"Securities" has the meaning stated in the first recital of this Indenture and
more particularly means any Securities authenticated and delivered under this
Indenture; provided, however, that if at any time there is more than one Person
acting as Trustee under this Indenture, "Securities" with respect to the
Indenture as to which such Person is Trustee shall have the meaning stated in
the first recital of this Indenture and shall more particularly mean Securities
authenticated and delivered under this Indenture, exclusive, however, of
Securities of any series as to which such Person is not Trustee.

"Security Register" and "Security Registrar" have the respective meanings
specified in Section 305.

"Special Record Date" for the payment of any Defaulted Interest on the
Registered Securities of or within any series means a date fixed by the Trustee
pursuant to Section 307.

"Stated Maturity", when used with respect to any Security or any installment of
principal thereof or interest thereon, means the date specified in such Security
as the fixed date on which the principal of such Security or such installment of
principal or interest is due and payable, as such date may be extended pursuant
to the provisions of Section 308.

"Subsidiary" means any corporation of which at the time of determination the
Company, directly and/or indirectly through one or more Subsidiaries, owns 50%
or more of the shares of Voting Stock.

"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939 as in force
at the date as of which this Indenture was executed, except as provided in
Section 905.

"Trust Securities" means Common Securities and Preferred Securities.

"Trust Securities Guarantees" means the Common Securities Guarantee and the
Preferred Securities Guarantee.

"Trustee" means the Person named as the "Trustee" in the first paragraph of this
Indenture until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean or
include each Person who is then a Trustee hereunder; provided, however, that if
at any time there is more than one such Person, "Trustee" as used with respect
to the Securities of any series shall mean only the Trustee with respect to
Securities of that series.

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"United States" means, unless otherwise specified with respect to any Securities
pursuant to Section 301, the United States of America (including the states and
the District of Columbia), its territories, its possessions and other areas
subject to its jurisdiction.

"United States person" means, unless otherwise specified with respect to any
Securities pursuant to Section 301, an individual who is a citizen or resident
of the United States, a corporation, partnership or other entity created or
organized in or under the laws of the United States or an estate or trust the
income of which is subject to United States federal income taxation regardless
of its source.

"Valuation Date" has the meaning specified in Section 312(c).

"Vice President", when used with respect to the Company or the Trustee, means
any vice president, whether or not designated by a number or a word or words
added before or after the title "vice president".

"Voting Stock" means stock of the class or classes having general voting power
under ordinary circumstances to elect at least a majority of the board of
directors, managers or trustees of a corporation (irrespective of whether or not
at the time stock of any other class or classes shall have or might have voting
power by reason of the happening of any contingency).

"Yield to Maturity" means the yield to maturity, computed at the time of
issuance of a Security (or, if applicable, at the most recent redetermination of
interest on such Security) and as set forth in such Security in accordance with
generally accepted United States bond yield computation principles.

SECTION 102. Compliance Certificates and Opinions.

Upon any application or request by the Company to the Trustee to take any action
under any provision of this Indenture, the Company shall furnish to the Trustee
an Officers' Certificate stating that all conditions precedent, if any, provided
for in this Indenture (including any covenant compliance with which constitutes
a condition precedent) relating to the proposed action have been complied with
and an Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, except that in the case
of any such application or request as to which the furnishing of such documents
is specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate or opinion need be
furnished. Every certificate or opinion with respect to compliance with a
covenant or condition provided for in this Indenture (other than pursuant to
Section 1004) shall include: (1) a statement that each individual signing such
certificate or opinion has read such covenant or condition and the definitions
herein relating thereto; (2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based; (3) a statement that, in the opinion of
each such individual, he has made such examination or investigation as is
necessary to enable him to express an informed opinion as to whether or not such
covenant or condition has been complied with; and (4) a statement as to whether,
in the opinion of each such individual, such covenant or condition has been
complied with.

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SECTION 103. Form of Documents Delivered to Trustee.

In any case where several matters are required to be certified by, or covered by
an opinion of, any specified Person, it is not necessary that all such matters
be certified by, or covered by the opinion of, only one such Person, or that
they be so certified or covered by only one document, but one such Person may
certify or give an opinion with respect to some matters and one or more other
such Persons as to other matters, and any such Person may certify or give an
opinion as to such matters in one or several documents. Any certificate or
opinion of an officer of the Company may be based, insofar as it relates to
legal matters, upon a certificate or opinion of, or representations by, counsel,
unless such officer knows, or in the exercise of reasonable care should know,
that the certificate or opinion or representations with respect to the matters
upon which his certificate or opinion is based are erroneous. Any such
certificate or Opinion of Counsel may be based, insofar as it relates to factual
matters, upon a certificate or opinion of, or representations by, an officer or
officers of the Company stating that the information with respect to such
factual matters is in the possession of the Company, unless such counsel knows,
or in the exercise of reasonable care should know, that the certificate or
opinion or representations with respect to such matters are erroneous. Where any
Person is required to make, give or execute two or more applications, requests,
consents, certificates, statements, opinions or other instruments under this
Indenture, they may, but need not, be consolidated and form one instrument.

SECTION 104. Acts of Holders.

(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or
taken by Holders of the Outstanding Securities of all series or one
or more series, as the case may be, may be embodied in and evidenced
by one or more instruments of substantially similar tenor signed by
such Holders in person or by agents duly appointed in writing.
Except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the
Company. Such instrument or instruments (and the action embodied
therein and evidenced thereby) are herein sometimes referred to as
the "Act" of the Holders signing such instrument or instruments.
Proof of execution of any such instrument or of a writing appointing
any such agent, or of the holding by any Person of a Security, shall
be sufficient for any purpose of this Indenture and conclusive in
favor of the Trustee and the Company, if made in the manner provided
in this Section.

(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of
such execution or by a certificate of a notary public or other
officer authorized by law to take acknowledgments of deeds,
certifying that the individual signing such instrument or writing
acknowledged to him the execution thereof. Where such execution is
by a signer acting in a capacity other than his individual capacity,
such certificate or affidavit shall also constitute sufficient proof
of authority. The fact and date of the execution of any such
instrument or writing, or the authority of the Person executing the
same, may also be proved in any other manner which the Trustee deems
sufficient.

(c) The principal amount and serial numbers of Registered Securities
held by any Person, and the date of holding the same, shall be
proved by the Security Register.

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(d) If the Company shall solicit from the Holders of Registered
Securities any request, demand, authorization, direction, notice,
consent, waiver or other Act, the Company may, at its option, by or
pursuant to a Board Resolution, fix in advance a record date for the
determination of Holders entitled to give such request, demand,
authorization, direction, notice, consent, waiver or other Act, but
the Company shall have no obligation to do so. Notwithstanding TIA
Section 316(c), such record date shall be the record date specified
in or pursuant to such Board Resolution, which shall be a date not
earlier than the date thirty (30) days prior to the first
solicitation of Holders generally in connection therewith and not
later than the date such solicitation is completed. If such a record
date is fixed, such request, demand, authorization, direction,
notice, consent, waiver or other Act may be given before or after
such record date, but only the Holders of record at the close of
business on such record date shall be deemed to be Holders for the
purposes of determining whether Holders of the requisite proportion
of Outstanding Securities have authorized or agreed or consented to
such request, demand, authorization, direction, notice, consent,
waiver or other Act, and for that purpose the Outstanding Securities
shall be computed as of such record date; provided that no such
authorization, agreement or consent by the Holders on such record
date shall be deemed effective unless it shall become effective
pursuant to the provisions of this Indenture not later than eleven
months after the record date.

(e) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every
future Holder of the same Security and the Holder of every Security
issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof in respect of anything done, omitted or
suffered to be done by the Trustee or the Company in reliance
thereon, whether or not notation of such action is made upon such
Security.

SECTION 105. Notices, etc. to Trustee and Company.

Any request, demand, authorization, direction, notice, consent, waiver or Act of
Holders or other documents provided or permitted by this Indenture to be made
upon, given or furnished to, or filed with, (1) the Trustee by any Holder or by
the Company shall be sufficient for every purpose hereunder if made, given,
furnished or filed in writing to or with the Trustee at its Corporate Trust
Office, Attention: Corporate Trust Administration Division, or (2) the Company
by the Trustee or by any Holder shall be sufficient for every purpose hereunder
(unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to the Company addressed to it at the address of
its principal office specified in the first paragraph of this Indenture or at
any other address previously furnished in writing to the Trustee by the Company.

SECTION 106. Notice to Holders; Waiver.

Where this Indenture provides for notice of any event to Holders of Registered
Securities by the Company or the Trustee, such notice shall be sufficiently
given (unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to each such Holder affected by such event, at his
address as it appears in the Security Register, not later than the latest date,
and not earlier than the earliest date, prescribed for the giving of such
notice. In any case where notice to Holders of Registered Securities is given by
mail, neither the failure to mail such notice, nor any defect in any

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notice so mailed, to any particular Holder shall affect the sufficiency of such
notice with respect to other Holders of Registered Securities. Any notice
mailed to a Holder in the manner herein prescribed shall be conclusively deemed
to have been received by such Holder, whether or not such Holder actually
receives such notice. In case, by reason of the suspension of or irregularities
in regular mail service or by reason of any other cause, it shall be impractical
to mail notice of any event to Holders of Registered Securities when such notice
is required to be given pursuant to any provision of this Indenture, then any
manner of giving such notice as shall be satisfactory to the Trustee shall be
deemed to be sufficient giving of such notice for every purpose hereunder. Any
request, demand, authorization, direction, notice, consent or waiver required or
permitted under this Indenture shall be in the English language, except that any
published notice may be in an official language of the country of publication.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by the Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Holders shall be filed with the Trustee, but such filing
shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.

SECTION 107. Conflict with Trust Indenture Act.

If any provision hereof limits, qualifies or conflicts with a provision of the
Trust Indenture Act that is required under such Act to be a part of and govern
this Indenture, the latter provision shall control. If any provision of this
Indenture modifies or excludes any provision of the Trust Indenture Act that may
be so modified or excluded, the latter provision shall be deemed to apply to
this Indenture as so modified or to be excluded, as the case may be.

SECTION 108. Effect of Headings and Table of Contents.

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

SECTION 109. Successors and Assigns.

All covenants and agreements in this Indenture by the Company shall bind its
successors and assigns, whether so expressed or not.

SECTION 110. Separability Clause.

In case any provision in this Indenture or in any Security or coupon shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.

SECTION 111. Benefits of Indenture.

Nothing in this Indenture or in the Securities, express or implied, shall give
to any Person, other than the parties hereto, any Authenticating Agent, any
Paying Agent, any Securities Registrar and their successors hereunder and the
Holders of Securities, any benefit or any legal or equitable right, remedy or
claim under this Indenture.

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SECTION 112. Governing Law.

THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. THIS INDENTURE IS SUBJECT TO
THE PROVISIONS OF THE TRUST INDENTURE ACT OF 1939, AS AMENDED, THAT ARE REQUIRED
TO BE PART OF THIS INDENTURE AND SHALL, TO THE EXTENT APPLICABLE, BE GOVERNED BY
SUCH PROVISIONS.

SECTION 113. Legal Holidays.

In any case where any Interest Payment Date, Redemption Date or Stated Maturity
or Maturity of any Security shall not be a Business Day at any Place of Payment,
then (notwithstanding any other provision of this Indenture or of any Security
other than a provision in the Securities of any series which specifically states
that such provision shall apply in lieu of this Section) payment of interest or
principal (and premium, if any) need not be made at such Place of Payment on
such date, but may be made on the next succeeding Business Day at such Place of
Payment with the same force and effect as if made on the Interest Payment Date
or Redemption Date, or at the Stated Maturity or Maturity; provided that no
interest shall accrue for the period from and after such Interest Payment Date,
Redemption Date, Stated Maturity or Maturity, as the case may be.

ARTICLE TWO
SECURITY FORMS

SECTION 201. Forms Generally.

The Registered Securities, if any, of each series shall be in substantially the
form as shall be established by or pursuant to a Board Resolution or in one or
more indentures supplemental hereto, in each case with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture, and may have such letters, numbers or other marks
of identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or as may,
consistently herewith, be determined by the officers executing such Securities.
If the forms of Securities of any series are established by action taken
pursuant to a Board Resolution, a copy of an appropriate record of such action
shall be certified by the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Company Order
contemplated by Section 303 for the authentication and delivery of such
Securities. Any portion of the text of any Security may be set forth on the
reverse thereof, with an appropriate reference thereto on the face of the
Security. The Trustee's certificate of authentication on all Securities shall
be in substantially the form set forth in this Article. The definitive
Securities shall be printed, lithographed or engraved on steel-engraved borders
or may be produced in any other manner, all as determined by the officers of the
Company executing such Securities, as evidenced by their execution of such
Securities.

SECTION 202. Form of Trustee's Certificate of Authentication.

Subject to Section 611, the Trustee's certificate of authentication shall be in
substantially the following form:

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This is one of the Securities of the series designated therein referred to in
the within-mentioned Indenture.

The Chase Manhattan Bank (N.A.),
as Trustee

By:
Authorized Officer

SECTION 203. Securities Issuable in Global Form.

If Securities of or within a series are issuable in global form, as specified as
contemplated by Section 301, then, notwithstanding clause (10) of Section 301,
any such Security shall represent such of the Outstanding Securities of such
series as shall be specified therein and may provide that it shall represent the
aggregate amount of Outstanding Securities of such series from time to time
endorsed thereon and that the aggregate amount of Outstanding Securities of such
series represented thereby may from time to time be increased or decreased to
reflect exchanges. Any endorsement of a Security in global form to reflect the
amount, or any increase or decrease in the amount, of Outstanding Securities
represented thereby shall be made by the Trustee in such manner and upon
instructions given by such Person or Persons as shall be specified therein or in
the Company Order to be delivered to the Trustee pursuant to Section 303 or
Section 304. Subject to the provisions of Section 303 and, if applicable,
Section 304, the Trustee shall deliver and redeliver any Security in permanent
global form in the manner and upon instructions given by the Person or Persons
specified therein or in the applicable Company Order. If a Company Order
pursuant to Section 303 or Section 304 has been, or simultaneously is,
delivered, any instructions by the Company with respect to endorsement or
delivery or redelivery of a Security in global form shall be in writing but need
not comply with Section 102 and need not be accompanied by an Opinion of
Counsel. The provisions of the last sentence of Section 303 shall apply to any
Security represented by a Security in global form if such Security was never
issued and sold by the Company and the Company delivers to the Trustee the
Security in global form together with written instructions (which need not
comply with Section 102 and need not be accompanied by an Opinion of Counsel)
with regard to the reduction in the principal amount of Securities represented
thereby, together with the written statement contemplated by the last sentence
of Section 303. Notwithstanding the provisions of Section 307, unless otherwise
specified as contemplated by Section 301, payment of principal of and any
premium and interest on any Security in permanent global form shall be made to
the Person or Persons specified therein. Notwithstanding the provisions of
Section 309 and except as provided in the preceding paragraph, the Company, the
Trustee and any agent of the Company and the Trustee shall treat as the Holder
of such principal amount of Outstanding Securities represented by a permanent
global Security in the case of a permanent global Security in registered form,
the Holder of such permanent global Security in registered form.

ARTICLE THREE
THE SECURITIES

SECTION 301. Amount Unlimited; Issuable in Series.

The aggregate principal amount of Securities which may be authenticated and
delivered under this Indenture is unlimited. The Securities may be issued in one
or more series. There shall be established in

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one or more Board Resolutions or pursuant to authority granted by one or more
Board Resolutions and, subject to Section 303, set forth in, or determined in
the manner provided in, an Officers' Certificate, or established in one or more
indentures supplemental hereto, prior to the issuance of Securities of any
series, any or all of the following, as applicable (each of which (except for
the matters set forth in clauses (1), (2) and (19) below), if so provided, may
be determined from time to time by the Company with respect to unissued
Securities of the series and set forth in such Securities of the series when
issued from time to time):

(1) the title of the Securities of the series (which shall distinguish
the Securities of the series from all other series of Securities);

(2) any limit upon the aggregate principal amount of the Securities of
the series that may be authenticated and delivered under this
Indenture (except for Securities authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of,
other Securities of the series pursuant to Section 304, 305, 306,
906, 1107 or 1305);

(3) the date or dates, or the method by which such date or dates will be
determined or extended, on which the principal of the Securities of
the series is payable;

(4) the rate or rates at which the Securities of the series shall bear
interest, if any, or the method by which such rate or rates shall be
determined, the date or dates from which such interest shall accrue,
or the method by which such date or dates shall be determined, the
Interest Payment Dates on which such interest shall be payable and
the Regular Record Date, if any, for the interest payable on any
Registered Security on any Interest Payment Date, or the method by
which such date or dates shall be determined, and the basis upon
which interest shall be calculated if other than on the basis of a
360-day year of twelve 30-day months;

(5) the rights, if any, to defer payments of interest on the Securities
by extending the interest payment periods and the duration of such
extension;

(6) the security and subordination terms of the Securities of the
series;

(7) the place or places, if any, other than or in addition to The City
of New York, where the principal of (and premium, if any, on) and
any interest on Securities of the series shall be payable, any
Registered Securities of the series may be surrendered for
registration of transfer, Securities of the series may be
surrendered for exchange and, if different than the location
specified in Section 106, the place or places where notices or
demands to or upon the Company in respect of the Securities of the
series and this Indenture may be served;

(8) the period or periods within which, the price or prices at which,
the Currency in which, and other terms and conditions upon which
Securities of the series may be redeemed, in whole or in part, at
the option of the Company, if the Company is to have that option;

(9) the obligation, if any, of the Company to redeem, repay or purchase
Securities of the series pursuant to any sinking fund or analogous
provision or at the option of a Holder thereof, and the period or
periods within which, the price or prices at which, the Currency

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in which, and other terms and conditions upon which Securities of
the series shall be redeemed, repaid or purchased, in whole or in
part, pursuant to such obligation;

(10) if other than denominations of $25 and any integral multiple
thereof, the denomination or denominations in which any Registered
Securities of the series shall be issuable;

(11) if other than the Trustee, the identity of each Security Registrar
and/or Paying Agent;

(12) if other than the principal amount thereof, the portion of the
principal amount of Securities of the series that shall be payable
upon declaration of acceleration of the Maturity thereof pursuant to
Section 502 or the method by which such portion shall be determined;

(13) if other than Dollars, the Currency in which payment of the
principal of (and premium, if any, on) or interest, if any, on the
Securities of the series shall be payable or in which the Securities
of the series shall be denominated and the particular provisions
applicable thereto in accordance with, in addition to or in lieu of
any of the provisions of Section 312;

(14) whether the amount of payments of principal of (and premium, if any,
on) or interest on the Securities of the series may be determined
with reference to an index, formula or other method (which index,
formula or method may be based, without limitation, on one or more
Currencies, commodities, equity indices or other indices), and the
manner in which such amounts shall be determined;

(15) whether the principal of (and premium, if any, on) and interest, if
any, on the Securities of the series are to be payable, at the
election of the Company or a Holder thereof, in a Currency other
than that in which such Securities are denominated or stated to be
payable, the period or periods within which (including the Election
Date), and the terms and conditions upon which, such election may be
made, and the time and manner of determining the exchange rate
between the Currency in which such Securities are denominated or
stated to be payable and the Currency in which such Securities are
to be so payable, in each case in accordance with, in addition to or
in lieu of any of the provisions of Section 312;

(16) the designation of the initial Exchange Rate Agent, if any;

(17) any provisions in modification of, in addition to or in lieu of the
provisions of Article Fourteen that shall be applicable to the
Securities of the series;

(18) provisions, if any, granting special rights to the Holders of
Securities of the series upon the occurrence of such events as may
be specified;

(19) any deletions from, modifications of or additions to the Events of
Default or covenants of the Company with respect to Securities of
the series, whether or not such Events of Default or covenants are
consistent with the Events of Default or covenants set forth herein;

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(20) whether any Securities of the series are to be issuable initially in
temporary global form and whether any Securities of the series are
to be issuable in permanent global form and, if so, whether
beneficial owners of interests in any such permanent global Security
may exchange such interests for Securities of such series and of
like tenor of any authorized form and denomination and the
circumstances under which any such exchanges may occur, if other
than in the manner provided in Section 305, and if Securities of the
series are to be issuable in global form, the identity of any
initial depository therefor; provided, that, unless otherwise
provided, Securities shall be issued as Registered Securities;

(21) the date as of which and any temporary global Security representing
Outstanding Securities of the series shall be dated if other than
the date of original issuance of the first Security of the series to
be issued;

(22) the Person to whom any interest on any Registered Security of the
series shall be payable, if other than the Person in whose name that
Security (or one or more Predecessor Securities) is registered at
the close of business on the Regular Record Date for such interest,
and the extent to which, or the manner in which, any interest
payable on a temporary global Security on an Interest Payment Date
will be paid if other than in the manner provided in Section 304;

(23) if Securities of the series are to be issuable in definitive form
(whether upon original issue or upon exchange of a temporary
Security of such series) only upon receipt of certain certificates
or other documents or satisfaction of other conditions, the form
and/or terms of such certificates, documents or conditions;

(24) whether and under what circumstances the Company will pay Additional
Amounts as contemplated by Section 1005 on the Securities of the
series to any Holder who is not a United States person (including
any modification to the definition of such term) in respect of any
tax, assessment or governmental charge and, if so, whether the
Company will have the option to redeem such Securities rather than
pay such Additional Amounts (and the terms of any such option);

(25) if the Securities of the series are to be convertible into or
exchangeable for any securities of any Person (including the
Company), the terms and conditions upon which such Securities will
be so convertible or exchangeable; and

(26) any other terms, conditions, rights and preferences (or limitations
on such rights and preferences) relating to the series (which terms
shall not be inconsistent with the requirements of the Trust
Indenture Act or the provisions of this Indenture). All Securities
of any one series shall be substantially identical except as to
denomination and except as may otherwise be provided in or pursuant
to such Board Resolution (subject to Section 303) and set forth in
such Officers' Certificate or in any such indenture supplemental
hereto. Not all Securities of any one series need be issued at the
same time, and, unless otherwise provided, a series may be reopened
for issuances of additional Securities of such series. If any of
the terms of the series are established by action taken pursuant to
one or more Board Resolutions, a copy of an appropriate record of
such action(s) shall be certified by the Secretary or an Assistant
Secretary of the Company and such Board

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Resolutions shall be delivered to the Trustee at or prior to the
delivery of the Officers' Certificate setting forth the terms of the
series.

SECTION 302. Denominations.

The Securities of each series shall be issuable in such denominations as shall
be specified as contemplated by Section 301. With respect to Securities of any
series denominated in Dollars, in the absence of any such provisions, the
Registered Securities of such series, other than Registered Securities issued in
global form (which may be of any denomination), shall be issuable in
denominations of $25 and any integral multiple thereof.

SECTION 303. Execution, Authentication, Delivery and Dating.

The Securities shall be executed on behalf of the Company by its Chairman, its
President or a Vice President, under its corporate seal reproduced thereon
attested by its Secretary or an Assistant Secretary. The signature of any of
these officers on the Securities may be the manual or facsimile signatures of
the present or any future such authorized officer and may be imprinted or
otherwise reproduced on the Securities.

Securities bearing the manual or facsimile signatures of individuals who were at
any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.

At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Securities of any series executed by the
Company to the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities, and the Trustee in accordance
with such Company Order shall authenticate and deliver such Securities. If not
all the Securities of any series are to be issued at one time and if the Board
Resolution or supplemental indenture establishing such series shall so permit,
such Company Order may set forth procedures acceptable to the Trustee for the
issuance of such Securities and determining terms of particular Securities of
such series such as interest rate, maturity date, date of issuance and date from
which interest shall accrue.

In authenticating such Securities, and accepting the additional responsibilities
under this Indenture in relation to such Securities, the Trustee shall be
entitled to receive, and (subject to TIA Sections 315(a) through 315(d)) shall
be fully protected in relying upon, an Opinion of Counsel stating:

(a) that the form or forms of such Securities have been established in
conformity with the provisions of this Indenture;

(b) that the terms of such Securities have been established in
conformity with the provisions of this Indenture;

(c) that such Securities, when completed by appropriate insertions and
executed and delivered by the Company to the Trustee for
authentication in accordance with this Indenture, authenticated and
delivered by the Trustee in accordance with this Indenture and
issued by the Company in the manner and subject to any conditions
specified in such Opinion of

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<PAGE>

Counsel, will constitute the legal, valid and binding obligations of
the Company, enforceable in accordance with their terms, subject to
applicable bankruptcy, insolvency, reorganization and other similar
laws of general applicability relating to or affecting the
enforcement of creditors' rights, to general equitable principles
and to such other customary qualifications;

(d) that all laws and requirements in respect of the execution and
delivery by the Company of such Securities, and of the supplemental
indentures, if any, have been complied with and that authentication
and delivery of such Securities and the execution and delivery of
the supplemental indenture, if any, by the Trustee will not violate
the terms of the Indenture;

(e) that the Company has the corporate power to issue such Securities,
and has duly taken all necessary corporate action with respect to
such issuance; and

(f) that the issuance of such Securities will not contravene the
articles of incorporation or by-laws of the Company or result in any
violation of any of the terms or provisions of any law or regulation
or of any indenture, mortgage or other agreement known to such
Counsel by which the Company is bound.

Notwithstanding the provisions of Section 301 and of the preceding two
paragraphs, if not all the Securities of any series are to be issued at one
time, it shall not be necessary to deliver the Officers' Certificate otherwise
required pursuant to Section 301 or the Company Order and Opinion of Counsel
otherwise required pursuant to the preceding two paragraphs prior to or at the
time of issuance of each Security, but such documents shall be delivered prior
to or at the time of issuance of the first Security of such series.

The Trustee shall not be required to authenticate and deliver any such
Securities if the issue of such Securities pursuant to this Indenture will
affect the Trustee's own rights, duties or immunities under the Securities and
this Indenture or otherwise in a manner which is not reasonably acceptable to
the Trustee. Each Registered Security shall be dated the date of its
authentication.

No Security shall be entitled to any benefit under this Indenture or be valid or
obligatory for any purpose unless there appears on such Security a certificate
of authentication substantially in the form provided for herein duly executed by
the Trustee by manual signature of an authorized officer, and such certificate
upon any Security shall be conclusive evidence, and the only evidence, that such
Security has been duly authenticated and delivered hereunder and is entitled to
the benefits of this Indenture. Notwithstanding the foregoing, if any Security
shall have been authenticated and delivered hereunder but never issued and sold
by the Company, and the Company shall deliver such Security to the Trustee for
cancellation as provided in Section 310 together with a written statement (which
need not comply with Section 102 and need not be accompanied by an Opinion of
Counsel) stating that such Security has never been issued and sold by the
Company, for all purposes of this Indenture such Security shall be deemed never
to have been authenticated and delivered hereunder and shall never be entitled
to the benefits of this Indenture.

SECTION 304. Temporary Securities.

Pending the preparation of definitive Securities of any series, the Company may
execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Securities which are printed, lithographed, typewritten, mimeographed
or otherwise produced, in any authorized denomination,

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<PAGE>

substantially of the tenor of the definitive Securities in lieu of which they
are issued, in registered form, and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Securities may
determine, as conclusively evidenced by their execution of such Securities.
Such temporary Securities may be in global form.

Except in the case of temporary Securities in global form (which shall be
exchanged in accordance with the provisions of the following paragraphs), if
temporary Securities of any series are issued, the Company will cause definitive
Securities of that series to be prepared without unreasonable delay. After the
preparation of definitive Securities of such series, the temporary Securities of
such series shall be exchangeable for definitive Securities of such series, upon
surrender of the temporary securities of such series at the office or agency of
the Company in a Place of Payment for that series, without charge to the Holder.
Upon surrender for cancellation of any one or more temporary Securities of any
series, the Company shall execute and the Trustee shall authenticate and deliver
in exchange therefor a like principal amount of definitive Securities of the
same series of authorized denominations. Until so exchanged the temporary
Securities of any series shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities of such series.

If temporary Securities of any series are issued in global form, any such
temporary global Security shall, unless otherwise provided therein, be delivered
to the London office of a depositary or common depositary (the "Common
Depositary"), for the benefit of Euroclear and CEDEL S.A., for credit to the
respective accounts of the beneficial owners of such Securities (or to such
other accounts as they may direct).

Without unnecessary delay but in any event not later than the date specified in,
or determined pursuant to the terms of, any such temporary global Security (the
"Exchange Date"), the Company shall deliver to the Trustee definitive
Securities, in aggregate principal amount equal to the principal amount of such
temporary global Security, executed by the Company. On or after the Exchange
Date such temporary global Security shall be surrendered by the Common
Depositary to the Trustee, as the Company's agent for such purpose, to be
exchanged, in whole or from time to time in part, for definitive Securities
without charge and the Trustee shall authenticate and deliver, in exchange for
each portion of such temporary global Security, an equal aggregate principal
amount of definitive Securities of the same series of authorized denominations
and of like tenor as the portion of such temporary global Security to be
exchanged. The definitive Securities to be delivered in exchange for any such
temporary global Security shall be in registered form or permanent global
registered form, or any combination thereof, as specified as contemplated by
Section 301, and, if any combination thereof is so specified, as requested by
the beneficial owner thereof; provided, however, that, unless otherwise
specified in such temporary global Security, upon such presentation by the
Common Depositary, such temporary global Security is accompanied by a
certificate dated the Exchange Date or a subsequent date and signed by Euroclear
as to the portion of such temporary global Security held for its account then to
be exchanged and a certificate dated the Exchange Date or a subsequent date and
signed by CEDEL S.A. as to the portion of such temporary global Security held
for its account then to be exchanged, each in such other form as may be
established pursuant to Section 301.

Unless otherwise specified in such temporary global Security, the interest of a
beneficial owner of Securities of a series in a temporary global Security shall
be exchanged for definitive Securities of the same series and of like tenor
following the Exchange Date when the account holder instructs Euroclear or CEDEL
S.A., as the case may be, to request such exchange on his behalf and delivers to
Euroclear or CEDEL S.A., as the case may be, a certificate in such form as may
be established pursuant to Section 301, dated no earlier than 15 days prior to
the Exchange Date, copies of which certificate shall be available from

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the offices of Euroclear and CEDEL S.A., the Trustee, any Authenticating Agent
appointed for such series of Securities and each Paying Agent. Unless otherwise
specified in such temporary global Security, any such exchange shall be made
free of charge to the beneficial owners of such temporary global Security,
except that a Person receiving definitive Securities must bear the cost of
insurance, postage, transportation and the like in the event that such Person
does not take delivery of such definitive Securities in person at the offices of
Euroclear or CEDEL S.A.

Until exchanged in full as hereinabove provided, the temporary Securities of any
series shall in all respects be entitled to the same benefits under this
Indenture as definitive Securities of the same series and of like tenor
authenticated and delivered hereunder, except that, unless otherwise specified
as contemplated by Section 301, interest payable on a temporary global Security
on an Interest Payment Date for Securities of such series occurring prior to the
applicable Exchange Date shall be payable to Euroclear and CEDEL S.A. on such
Interest Payment Date upon delivery by Euroclear and CEDEL S.A. to the Trustee
of a certificate or certificates in such form as may be established pursuant to
Section 301, for credit without further interest on or after such Interest
Payment Date to the respective accounts of the Persons who are the beneficial
owners of such temporary global Security on such Interest Payment Date and who
have each delivered to Euroclear or CEDEL S.A., as the case may be, a
certificate dated no earlier than 15 days prior to the Interest Payment Date
occurring prior to such Exchange Date in such form as may be established
pursuant to Section 301. Notwithstanding anything to the contrary herein
contained, the certifications made pursuant to this paragraph shall satisfy the
certification requirements of the preceding two paragraphs of this Section and
of the third paragraph of Section 303 of this Indenture and the interests of the
Persons who are the beneficial owners of the temporary global Security with
respect to which such certification was made will be exchanged for definitive
Securities of the same series and of like tenor on the Exchange Date or the date
of certification if such date occurs after the Exchange Date, without further
act or deed by such beneficial owners. Except as otherwise provided in this
paragraph, no payments or principal or interest owing with respect to a
beneficial interest in a temporary global Security will be made unless and until
such interest in such temporary global Security shall have been exchanged for an
interest in a definitive Security. Any interest so received by Euroclear and
CEDEL S.A. and not paid as herein provided shall be returned to the Trustee
immediately prior to the expiration of two years after such Interest Payment
Date in order to be repaid to the Company in accordance with Section 1003.

SECTION 305. Registration of Transfer and Exchange.

The Company shall cause to be kept at the Corporate Trust Office of the Trustee
a register for each series of Securities (the registers maintained in the
Corporate Trust Office of the Trustee and in any other office or agency of the
Company in a Place of Payment being herein sometimes collectively referred to as
the "Security Register") in which, subject to such reasonable regulations as it
may prescribe, the Company shall provide for the registration of Registered
Securities and of transfers of Registered Securities. The Security Register
shall be in written form or any other form capable of being converted into
written form within a reasonable time. At all reasonable times, the Security
Register shall be open to inspection by the Trustee. The Trustee is hereby
initially appointed as security registrar (the "Security Registrar") for the
purpose of registering Registered Securities and transfers of Registered
Securities as herein provided.

Upon surrender for registration of transfer of any Registered Security of any
series at the office or agency in a Place of Payment for that series, the
Company shall execute, and the Trustee shall authenticate and deliver, in the
name of the designated transferee, one or more new Registered Securities of the
same series, of any authorized denominations and of a like aggregate principal
amount and tenor.

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At the option of the Holder, Registered Securities of any series may be
exchanged for other Registered Securities of the same series, of any authorized
denomination and of a like aggregate principal amount, upon surrender of the
Registered Securities to be exchanged at such office or agency. Whenever any
Registered Securities are so surrendered for exchange, the Company shall
execute, and the Trustee shall authenticate and deliver, the Registered
Securities which the Holder making the exchange is entitled to receive.

Notwithstanding the foregoing, except as otherwise specified as contemplated by
Section 301, any permanent global Security shall be exchangeable only as
provided in this paragraph. If any beneficial owner of an interest in a
permanent global Security is entitled to exchange such interest for Securities
of such series and of like tenor and principal amount of another authorized form
and denomination, as specified as contemplated by Section 301 and provided that
any applicable notice provided in the permanent global Security shall have been
given, then without unnecessary delay but in any event not later than the
earliest date on which such interest may be so exchanged, the Company shall
deliver to the Trustee definitive Securities in aggregate principal amount equal
to the principal amount of such beneficial owner's interest in such permanent
global Security, executed by the Company. On or after the earliest date on
which such interests may be so exchanged, such permanent global Security shall
be surrendered by the Common Depositary or such other depositary as shall be
specified in the Company Order with respect thereto to the Trustee, as the
Company's agent for such purpose, to be exchanged, in whole or from time to time
in part, for definitive Securities without charge, and the Trustee shall
authenticate and deliver, in exchange for each portion of such permanent global
Security, an equal aggregate principal amount of definitive Securities of the
same series of authorized denominations and of like tenor as the portion of such
permanent global Security to be exchanged which shall be in the form of
Registered Securities; provided, however, that no such exchanges may occur
during a period beginning at the opening of business 15 days before any
selection of Securities to be redeemed and ending on the relevant Redemption
Date if the Security for which exchange is requested may be among those selected
for redemption. If a Registered Security is issued in exchange for any portion
of a permanent global Security after the close of business at the office or
agency where such exchange occurs on (i) any Regular Record Date and before the
opening of business at such office or agency on the relevant Interest Payment
Date, or (ii) any Special Record Date and before the opening of business at such
office or agency on the related proposed date for payment of Defaulted Interest,
interest or Defaulted Interest, as the case may be, will not be payable on such
Interest Payment Date or proposed date for payment, as the case may be, in
respect of such Registered Security, but will be payable on such Interest
Payment Date or proposed date of payment, as the case may be, only to the Person
to whom interest in respect of such portion of such permanent global Security is
payable in accordance with the provisions of this Indenture.

All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.

Every Registered Security presented or surrendered for registration of transfer
or for exchange shall (if so required by the Company or the Security Registrar)
be duly endorsed, or be accompanied by a written instrument of transfer, in form
satisfactory to the Company and the Security Registrar, duly executed by the
Holder thereof or his attorney duly authorized in writing.

No service charge shall be made for any registration of transfer or exchange of
Securities, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge that may

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be imposed in connection with any registration of transfer or exchange of
Securities, other than exchanges pursuant to Section 304, 906, 1107 or 1305 not
involving any transfer.

The Company shall not be required (i) to issue, register the transfer of or
exchange Securities of any series during a period beginning at the opening of
business 15 days before the day of the selection for redemption of Securities of
that series under Section 1103 or 1203 and ending at the close of business on
the date of the mailing of the relevant notice of redemption, or (ii) to
register the transfer of or exchange any Registered Security so selected for
redemption in whole or in part, except the unredeemed portion of any Security
being redeemed in part, or (iii) to issue, register the transfer of or exchange
any Security which has been surrendered for repayment at the option of the
Holder, except the portion, if any, of such Security not to be so repaid.

SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.

If any mutilated Security is surrendered to the Trustee, the Company shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
new Security of the same series and of like tenor and principal amount and
bearing a number not contemporaneously outstanding, or, in case any such
mutilated Security has become or is about to become due and payable, the Company
in its discretion may, instead of issuing a new Security, pay such Security.

If there shall be delivered to the Company and to the Trustee (i) evidence to
their satisfaction of the destruction, loss or theft of any Security and (ii)
such security or indemnity as may be required by them to save each of them and
any agent of either of them harmless, then, in the absence of notice to the
Company or the Trustee that such Security has been acquired by a bona fide
purchaser, the Company shall execute and upon Company Order the Trustee shall
authenticate and deliver, in lieu of any such destroyed, lost or stolen
Security, a new Security of the same series and of like tenor and principal
amount and bearing a number not contemporaneously outstanding, or, in case any
such destroyed, lost or stolen Security has become or is about to become due and
payable, the Company in its discretion may, instead of issuing a new Security,
pay such Security. Upon the issuance of any new Security under this Section,
the Company may require the payment of a sum sufficient to cover any tax or
other government charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.

Every new Security of any series issued pursuant to this Section in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities of that series duly issued hereunder.

The provisions of this Section are exclusive and shall preclude (to the extent
lawful) all other rights and remedies with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Securities.

SECTION 307. Payment of Interest; Interest Rights Preserved; Optional Interest
Reset.

(a) Unless otherwise provided as contemplated by Section 301 with respect
to any series of Securities, interest on any Registered Security which is
payable, and is punctually paid or duly provided for, on any Interest Payment
Date shall be paid to the Person in whose name such Security (or one or more

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Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest at the office or agency of the Company maintained
for such purpose pursuant to Section 1002; provided, however, that each
installment of interest on any Registered Security may at the Company's option
be paid by (i) mailing a check for such interest, payable to or upon the written
order of the Person entitled thereto pursuant to Section 309, to the address of
such Person as it appears on the Security Register or (ii) transfer to an
account maintained by the payee located in the United States.

Any interest on any Registered Security of any series which is payable, but is
not punctually paid or duly provided for, on any Interest Payment Date shall
forthwith cease to be payable to the Holder on the relevant Regular Record Date
by virtue of having been such Holder, and such defaulted interest and, if
applicable, interest on such defaulted interest (to the extent lawful) at the
rate specified in the Securities of such series (such defaulted interest and, if
applicable, interest thereon herein collectively called "Defaulted Interest")
may be paid by the Company, at its election in each case, as provided in clause
(1) or (2) below:

(1) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Registered
Securities of such series (or their respective Predecessor
Securities) are registered at the close of business on a
Special Record Date for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The
Company shall notify the Trustee in writing of the amount of
Defaulted Interest proposed to be paid on each Registered
Security of such series and the date of the proposed payment,
and at the same time the Company shall deposit with the
Trustee an amount of money in the Currency in which the
Securities of such series are payable (except as otherwise
specified pursuant to Section 301 for the Securities of such
series and except, if applicable, as provided in Sections
312(b), 312(d) and 312(e)) equal to the aggregate amount
proposed to be paid in respect of such Defaulted Interest or
shall make arrangements satisfactory to the Trustee for such
deposit on or prior to the date of the proposed payment, such
money when deposited to be held in trust for the benefit of
the Persons entitled to such Defaulted Interest as in this
clause provided. Thereupon the Trustee shall fix a Special
Record Date for the payment of such Defaulted Interest which
shall be not more than 15 days and not less than 10 days
prior to the date of the proposed payment and not less than
10 days after the receipt by the Trustee of the notice of the
proposed payment. The Trustee shall promptly notify the
Company of such Special Record Date and, in the name and at
the expense of the Company, shall cause notice of the
proposed payment of such Defaulted Interest and the Special
Record Date therefor to be given in the manner provided in
Section 106, not less than 10 days prior to such Special
Record Date. Notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor
having been so given, such Defaulted Interest shall be paid
to the Persons in whose name the Registered Securities of
such series (or their respective Predecessor Securities) are
registered at the close of business on such Special Record
Date and shall no longer be payable pursuant to the following
clause (2).

(2) The Company may make payment of any Defaulted Interest on the
Registered Securities of any series in any other lawful
manner not inconsistent with the requirements of any
securities exchange on which such Securities may be listed,

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and upon such notice as may be required by such exchange, if,
after notice given by the Company to the Trustee of the
proposed payment pursuant to this clause, such manner of
payment shall be deemed practicable by the Trustee.

(b) The provisions of this Section 307(b) may be made applicable to any
series of Securities pursuant to Section 301 (with such
modifications, additions or substitutions as may be specified
pursuant to such Section 301). The interest rate (or the spread or
spread multiplier used to calculate such interest rate, if
applicable) on any Security of such series may be reset by the
Company on the date or dates specified on the face of such Security
(each an "Optional Reset Date"). The Company may exercise such
option with respect to such Security by notifying the Trustee of
such exercise at least 50 but not more than 60 days prior to an
Optional Reset Date for such Note. Not later than 40 days prior to
each Optional Reset Date, the Trustee shall transmit, in the manner
provided for in Section 106, to the Holder of any such Security a
notice (the "Reset Notice") indicating whether the Company has
elected to reset the interest rate (or the spread or spread
multiplier used to calculate such interest rate, if applicable), and
if so (i) such new interest rate (or such new spread or spread
multiplier, if applicable) and (ii) the provisions, if any, for
redemption during the period from such Optional Reset Date to the
next Optional Reset Date or if there is no such next Optional Reset
Date, to the Stated Maturity Date of such Security (each such period
a "Subsequent Interest Period"), including the date or dates on
which or the period or periods during which and the price or prices
at which such redemption may occur during the Subsequent Interest
Period.

Notwithstanding the foregoing, not later than 20 days prior to the Optional
Reset Date, the Company may, at its option, revoke the interest rate (or the
spread or spread multiplier used to calculate such interest rate, if applicable)
provided for in the Reset Notice and establish an interest rate (or a spread or
spread multiplier used to calculate such interest rate, if applicable) that is
higher than the interest rate (or the spread or spread multiplier, if
applicable) provided for in the Reset Notice, for the Subsequent Interest Period
by causing the Trustee to transmit, in the manner provided for in Section 106,
notice of such higher interest rate (or such higher spread or spread multiplier,
if applicable) to the Holder of such Security. Such notice shall be
irrevocable. All Securities with respect to which the interest rate (or the
spread or spread multiplier used to calculate such interest rate, if applicable)
is reset on an Optional Reset Date, and with respect to which the Holders of
such Securities have not tendered such Securities for repayment (or have validly
revoked any such tender) pursuant to the next succeeding paragraph, will bear
such higher interest rate (or such higher spread or spread multiplier, if
applicable).

The Holder of any such Security will have the option to elect repayment by the
Company of the principal of such Security on each Optional Reset Date at a price
equal to the principal amount thereof plus interest accrued to such Optional
Reset Date. In order to obtain repayment on an Optional Reset Date, the Holder
must follow the procedures set forth in Article Thirteen for repayment at the
Option of Holders except that the period for delivery or notification to the
Trustee shall be at least 25 but not more than 35 days prior to such Optional
Reset Date and except that, if the Holder has tendered any Security for
repayment pursuant to the Reset Notice, the Holder may, by written notice to the
Trustee, revoke such tender or repayment until the close of business on the
tenth day before such Optional Reset Date.

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SECTION 308. Persons Deemed Owners.

Prior to due presentment of a Registered Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name such Registered Security is registered as the owner of
such Registered Security for the purpose of receiving payment of principal of
(and premium, if any, on) and (subject to Sections 305 and 307) interest on such
Security and for all other purposes whatsoever, whether or not such Security be
overdue, and none of the Company, the Trustee or any agent of the Company or the
Trustee shall be affected by notice to the contrary.

None of the Company, the Trustee, any Paying Agent or the Security Registrar
will have any responsibility or liability for any aspect of the records relating
to or payments made on account of beneficial ownership interests of a Security
in global form or for maintaining, supervising or reviewing any records relating
to such beneficial ownership interests.

Notwithstanding the foregoing, with respect to any global Security, nothing
herein shall prevent the Company, the Trustee, or any agent of the Company or
the Trustee, from giving effect to any written certification, proxy or other
authorization furnished by any depositary, as a Holder, with respect to such
global Security or impair, as between such depositary and owners of beneficial
interests in such global Security, the operation of customary practices
governing the exercise of the rights of such depositary (or its nominee) as
Holder of such global Security.

SECTION 309. Cancellation.

All Securities surrendered for payment, redemption, repayment at the option of
the Holder, registration of transfer or exchange or for credit against any
current or future sinking fund payment shall, if surrendered to any Person other
than the Trustee, be delivered to the Trustee. All Securities so delivered to
the Trustee shall be promptly canceled by it. The Company may at any time
deliver to the Trustee for cancellation any Securities previously authenticated
and delivered hereunder which the Company may have acquired in any manner
whatsoever, and may deliver to the Trustee (or to any other Person for delivery
to the Trustee) for cancellation any Securities previously authenticated
hereunder which the Company has not issued and sold, and all Securities so
delivered shall be promptly canceled by the Trustee. If the Company shall so
acquire any of the Securities, however, such acquisition shall not operate as a
redemption or satisfaction of the indebtedness represented by such Securities
unless and until the same are surrendered to the Trustee for cancellation. No
Securities shall be authenticated in lieu of or in exchange for any Securities
canceled as provided in this Section, except as expressly permitted by this
Indenture. All canceled Securities held by the Trustee shall be disposed of by
the Trustee in accordance with its customary procedures and certification of
their disposal delivered to the Company unless by Company Order the Company
shall direct that canceled Securities be returned to it.

SECTION 310. Computation of Interest.

Except as otherwise specified as contemplated by Section 301 with respect to any
Securities, interest, if any, on the Securities of each series shall be computed
on the basis of a 360-day year of twelve 30-day months.

SECTION 311. Currency and Manner of Payments in Respect of Securities.

(a) With respect to Registered Securities of any series not permitting
the election provided for in paragraph (b) below or the Holders of
which have not made the election provided for

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in paragraph (b) below, payment of the principal of (and premium, if
any, on) and interest, if any, on any Registered Security of such
series will be made in the Currency in which such Registered
Security is payable. The provisions of this Section 311 may be
modified or superseded with respect to any Securities pursuant to
Section 301.

(b) It may be provided pursuant to Section 301 with respect to
Registered Securities of any series that Holders shall have the
option, subject to paragraphs (d) and (e) below, to receive payments
of principal of (and premium, if any, on) or interest, if any, on
such Registered Securities in any of the Currencies which may be
designated for such election by delivering to the Trustee a written
election with signature guarantees and in the applicable form
established pursuant to Section 301, not later than the close of
business on the Election Date immediately preceding the applicable
payment date. If a Holder so elects to receive such payments in any
such Currency, such election will remain in effect for such Holder
or any transferee of such Holder until changed by such Holder or
such transferee by written notice to the Trustee (but any such
change must be made not later than the close of business on the
Election Date immediately preceding the next payment date to be
effective for the payment to be made on such payment date and no
such change of election may be made with respect to payments to be
made on any Registered Security of such series with respect to which
an Event of Default has occurred or with respect to which the
Company has deposited funds pursuant to Article Four or Fourteen or
with respect to which a notice of redemption has been given by the
Company or a notice of option to elect repayment has been sent by
such Holder or such transferee). Any Holder of any such Registered
Security who shall not have delivered any such election to the
Trustee not later than the close of business on the applicable
Election Date will be paid the amount due on the applicable payment
date in the relevant Currency as provided in Section 311(a). The
Trustee shall notify the Exchange Rate Agent as soon as practicable
after the Election Date of the aggregate principal amount of
Registered Securities for which Holders have made such written
election.

(c) Unless otherwise specified pursuant to Section 301, if the election
referred to in paragraph (b) above has been provided for pursuant to
Section 301, then, unless otherwise specified pursuant to Section
301, not later than the fourth Business Day after the Election Date
for each payment date for Registered Securities of any series, the
Exchange Rate Agent will deliver to the Company a written notice
specifying, in the Currency in which Registered Securities of such
series are payable, the respective aggregate amounts of principal of
(and premium, if any, on) and interest, if any, on the Registered
Securities to be paid on such payment date, specifying the amounts
in such Currency so payable in respect of the Registered Securities
as to which the Holders of Registered Securities of such series
shall have elected to be paid in another Currency as provided in
paragraph (b) above. If the election referred to in paragraph (b)
above has been provided for pursuant to Section 301 and if at least
one Holder has made such election, then, unless otherwise specified
pursuant to Section 301, on the second Business Day preceding such
payment date the Company will deliver to the Trustee for such series
of Registered Securities an Exchange Rate Officer's Certificate in
respect of the Dollar or Foreign Currency payments to be made on
such payment date. Unless otherwise specified pursuant to Section
301, the Dollar or Foreign Currency amount receivable by Holders of
Registered Securities who have elected payment in a Currency as
provided in paragraph (b) above shall be determined by the

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Company on the basis of the applicable Market Exchange Rate in
effect on the third Business Day (the "Valuation Date") immediately
preceding each payment date and such determination shall be
conclusive and binding for all purposes, absent manifest error.

(d) If a Conversion Event occurs with respect to a Foreign Currency in
which any of the Securities are denominated or payable other than
pursuant to an election provided for pursuant to paragraph (b)
above, then with respect to each date for the payment of principal
of (and premium, if any, on) and interest, if any, on the applicable
Securities denominated or payable in such Foreign Currency occurring
after the last date on which such Foreign Currency was used (the
"Conversion Date"), the Dollar shall be the Currency of payment for
use on each such payment date. Unless otherwise specified pursuant
to Section 301, the Dollar amount to be paid by the Company to the
Trustee and by the Trustee or any Paying Agent to the Holders of
such Securities with respect to such payment date shall be, in the
case of a Foreign Currency other than a currency unit, the Dollar
Equivalent of the Foreign Currency or, in the case of a currency
unit, the Dollar Equivalent of the Currency Unit, in each case as
determined by the Exchange Rate Agent in the manner provided in
paragraph (f) or (g) below.

(e) Unless otherwise specified pursuant to Section 301, if the Holder of
a Registered Security denominated in any Currency shall have elected
to be paid in another Currency as provided in paragraph (b) above,
and a Conversion Event occurs with respect to such elected Currency,
such Holder shall receive payment in the Currency in which payment
would have been made in the absence of such election; and if a
Conversion Event occurs with respect to the Currency in which
payment would have been made in the absence of such election, such
Holder shall receive payment in Dollars as provided in paragraph (d)
above.

(f) The "Dollar Equivalent of the Foreign Currency" shall be determined
by the Exchange Rate Agent and shall be obtained for each subsequent
payment date by converting the specified Foreign Currency into
Dollars at the Market Exchange Rate on the Conversion Date.

(g) The "Dollar Equivalent of the Currency Unit" shall be determined by
the Exchange Rate Agent and subject to the provisions of paragraph
(h) below shall be the sum of each amount obtained by converting the
Specified Amount of each Component Currency into Dollars at the
Market Exchange Rate for such Component Currency on the Valuation
Date with respect to each payment.

(h) For purposes of this Section 311 the following terms shall have the
following meanings:

A "Component Currency" shall mean any Currency which, on the
Conversion Date, was a component currency of the relevant currency
unit, including, but not limited to, the ECU. A "Specified Amount"
of a Component Currency shall mean the number of units of such
Component Currency or fractions thereof which were represented in
the relevant currency unit, including, but not limited to, the ECU,
on the Conversion Date. If after the Conversion Date the official
unit of any Component Currency is altered by way of combination or
subdivision, the Specified Amount of such Component Currency shall
be

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divided or multiplied in the same proportion. If after the
Conversion Date two or more Component Currencies are consolidated
into a single currency, the respective Specified Amounts of such
Component Currencies shall be replaced by an amount in such single
Currency equal to the sum of the respective Specified Amounts of
such consolidated Component Currencies expressed in such single
Currency, and such amount shall thereafter be a Specified Amount and
such single Currency shall thereafter be a Component Currency. If
after the Conversion Date any Component Currency shall be divided
into two or more currencies, the Specified Amount of such Component
Currency shall be replaced by amounts of such two or more
currencies, having an aggregate Dollar Equivalent value at the
Market Exchange Rate on the date of such replacement equal to the
Dollar Equivalent value of the Specified Amount of such former
Component Currency at the Market Exchange Rate immediately before
such division and such amounts shall thereafter be Specified Amounts
and such currencies shall thereafter be Component Currencies. If,
after the Conversion Date of the relevant currency unit, including,
but not limited to, the ECU, a Conversion Event (other than any
event referred to above in this definition of "Specified Amount")
occurs with respect to any Component Currency of such currency unit
and is continuing on the applicable Valuation Date, the Specified
Amount of such Component Currency shall, for purposes of calculating
the Dollar Equivalent of the Currency Unit, be converted into
Dollars at the Market Exchange Rate in effect on the Conversion Date
of such Component Currency.

"Election Date" shall mean the date for any series of Registered
Securities as specified pursuant to clause (13) of Section 301 by
which the written election referred to in paragraph (b) above may be
made.

All decisions and determinations of the Exchange Rate Agent regarding the Dollar
Equivalent of the Foreign Currency, the Dollar Equivalent of the Currency Unit,
the Market Exchange Rate and changes in the Specified Amounts as specified above
shall be in its sole discretion and shall, in the absence of manifest error, be
conclusive for all purposes and irrevocably binding upon the Company, the
Trustee and all Holders of such Securities denominated or payable in the
relevant Currency. The Exchange Rate Agent shall promptly give written notice
to the Company and the Trustee of any such decision or determination.

In the event that the Company determines in good faith that a Conversion Event
has occurred with respect to a Foreign Currency, the Company will immediately
give written notice thereof to the Trustee and to the Exchange Rate Agent (and
the Trustee will promptly thereafter give notice in the manner provided for in
Section 106 to the affected Holders) specifying the Conversion Date. In the
event the Company so determines that a Conversion Event has occurred with
respect to the ECU or any other currency unit in which Securities are
denominated or payable, the Company will immediately give written notice thereof
to the Trustee and to the Exchange Rate Agent (and the Trustee will promptly
thereafter give notice in the manner provided for in Section 106 to the affected
Holders) specifying the Conversion Date and the Specified Amount of each
Component Currency on the Conversion Date. In the event the Company determines
in good faith that any subsequent change in any Component Currency as set forth
in the definition of Specified Amount above has occurred, the Company will
similarly give written notice to the Trustee and the Exchange Rate Agent.

The Trustee shall be fully justified and protected in relying and acting upon
information received by it from the Company and the Exchange Rate Agent and
shall not otherwise have any duty or obligation to

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<PAGE>

determine the accuracy or validity of such information independent of the
Company or the Exchange Rate Agent.

SECTION 312. Appointment and Resignation of Successor Exchange Rate Agent.

(a) Unless otherwise specified pursuant to Section 301, if and so long
as the Securities of any series (i) are denominated in a Currency
other than Dollars or (ii) may be payable in a Currency other than
Dollars, or so long as it is required under any other provision of
this Indenture, then the Company will maintain with respect to each
such series of Securities, or as so required, at least one Exchange
Rate Agent. The Company will cause the Exchange Rate Agent to make
the necessary foreign exchange determinations at the time and in the
manner specified pursuant to Section 301 for the purpose of
determining the applicable rate of exchange and, if applicable, for
the purpose of converting the issued Currency into the applicable
payment Currency for the payment of principal (and premium, if any)
and interest, if any, pursuant to Section 311.

(b) No resignation of the Exchange Rate Agent and no appointment of a
successor Exchange Rate Agent pursuant to this Section shall become
effective until the acceptance of appointment by the successor
Exchange Rate Agent as evidenced by a written instrument delivered
to the Company and the Trustee.

(c) If the Exchange Rate Agent shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of
the Exchange Rate Agent for any cause with respect to the Securities
of one or more series, the Company, by or pursuant to a Board
Resolution, shall promptly appoint a successor Exchange Rate Agent
or Exchange Rate Agents with respect to the Securities of that or
those series (it being understood that any such successor Exchange
Rate Agent may be appointed with respect to the Securities of one or
more or all of such series and that, unless otherwise specified
pursuant to Section 301, at any time there shall only be one
Exchange Rate Agent with respect to the Securities of any particular
series that are originally issued by the Company on the same date
and that are initially denominated and/or payable in the same
Currency).

ARTICLE FOUR
SATISFACTION AND DISCHARGE

SECTION 401. Satisfaction and Discharge of Indenture.

This Indenture shall upon Company Request cease to be of further effect with
respect to any series of Securities specified in such Company Request (except as
to any surviving rights of registration of transfer or exchange of Securities of
such series herein expressly provided for and the obligation of the Company to
pay any Additional Amounts as contemplated by Section 1005) and the Trustee, at
the expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture as to such series when

(1) either

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(A) all Securities of such series theretofore authenticated and
delivered (other than (i) Securities which have been
destroyed, lost or stolen and which have been replaced or
paid as provided in Section 306, and (ii) Securities of such
series for whose payment money has theretofore been deposited
in trust with the Trustee or any Paying Agent or segregated
and held in trust by the Company and thereafter repaid to the
Company, as provided in Section 1003) have been delivered to
the Trustee for cancellation; or

(B) all Securities of such series not theretofore delivered to
the Trustee for cancellation

(i) have become due and payable, or

(ii) will become due and payable at their Stated Maturity
within one year, or

(iii) if redeemable at the option of the Company, are to be
called for redemption within one year under
arrangements satisfactory to the Trustee for the
giving of notice of redemption by the Trustee in the
name, and at the expense, of the Company, and the
Company,

in the case of (i), (ii) or (iii) above, has irrevocably
deposited or caused to be deposited with the Trustee as trust
funds in trust for such purpose an amount in the Currency in
which the Securities of such series are payable, sufficient
to pay and discharge the entire indebtedness on such
Securities not theretofore delivered to the Trustee for
cancellation, for principal (and premium, if any) and
interest to the date of such deposit (in the case of
Securities which have become due and payable) or to the
Stated Maturity or Redemption Date, as the case may be;

(2) the Company has paid or caused to be paid all other
sums payable hereunder by the Company; and

(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating
that all conditions precedent herein provided for
relating to the satisfaction and discharge of this
Indenture as to such series have been complied with.

Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 606, the obligations of
the Trustee to any Authenticating Agent under Section 611 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of clause (1) of
this Section, the obligations of the Trustee under Section 402 and the last
paragraph of Section 1003 shall survive.

SECTION 402. Application of Trust Money.

Subject to the provisions of the last paragraph of Section 1003, all money
deposited with the Trustee pursuant to Section 401 shall be held in trust and
applied by it, in accordance with the provisions of the Securities, and this
Indenture, to the payment either directly or through any Paying Agent (including
the

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Company acting as its own Paying Agent) as the Trustee may determine, to the
Persons entitled thereto, of the principal (and premium, if any) and interest
for whose payment such money has been deposited with the Trustee; but such money
need not be segregated from other funds except to the extent required by law.

ARTICLE FIVE
REMEDIES

SECTION 501. Events of Default.

"Event of Default", wherever used herein with respect to Securities of any
series, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):

(1) default in the payment of any interest on any Security of that
series when such interest becomes due and payable, and continuance
of such default for a period of 30 days; provided, that, if
Securities are issued to a NWPS Trust or a trustee of such trust in
connection with the issuance of Trust Securities by such trust, such
thirty (30) day period will be replaced by a ten (10) day period;
and provided, further, that a valid extension of the interest
payment period by the Company in accordance with the terms of any
indenture supplemental hereto shall not constitute a default in the
payment of interest for this purpose; or

(2) default in the payment of the principal of (or premium, if any, on)
any Security of that series at its Maturity; provided, however, that
a valid extension of the maturity of such Securities in accordance
with the terms of any indenture supplemental hereto shall not
constitute a default in the payment of principal or premium, if any;
or

(3) default in the deposit of any sinking fund payment, when and as due
by the terms of the Securities of that series and Article 12; or

(4) default in the performance, or breach, of any covenant or agreement
of the Company in this Indenture which affects or is applicable to
the Securities of that series (other than a default in the
performance, or breach of a covenant or agreement which is
specifically dealt with elsewhere in this Section or which has
expressly been included in this Indenture solely for the benefit of
one or more series of Securities other than that series), and
continuance of such default or breach for a period of 60 days after
there has been given, by registered or certified mail, to the
Company by the Trustee or to the Company and the Trustee by the
Holders of at least 25% in principal amount of all Outstanding
Securities of that series a written notice specifying such default
or breach and requiring it to be remedied and stating that such
notice is a "Notice of Default" hereunder; or

(5) the entry of a decree or order by a court having jurisdiction in the
premises adjudging the Company a bankrupt or insolvent, or approving
as properly filed a petition seeking reorganization, arrangement,
adjustment or composition of or in respect of the Company under the
Federal Bankruptcy Code or any other applicable federal or state
law, or

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<PAGE>

appointing a receiver, liquidator, assignee, trustee, sequestrator
(or other similar official) of the Company or of any substantial
part of its property, or ordering the winding up or liquidation of
its affairs, and the continuance of any such decree or order
unstayed and in effect for a period of 90 consecutive days; or

(6) in the event Securities are issued and sold to a NWPS Trust or a
trustee of such trust in connection with the issuance of Trust
Securities by such NWPS Trust, such NWPS Trust shall have
voluntarily or involuntarily dissolved, wound-up its business or
otherwise terminated its existence except in connection with (i) the
distribution of Securities to holders of Trust Securities in
liquidation or redemption of their interests in such NWPS Trust,
(ii) the redemption of all of the outstanding Trust Securities of
such NWPS Trust or (iii) certain mergers, consolidations or
amalgamations, each as permitted by the Declaration of such NWPS
Trust.

(7) the institution by the Company of proceedings to be adjudicated a
bankrupt or insolvent, or the consent by it to the institution of
bankruptcy or insolvency proceedings against it, or the filing by it
of a petition or answer or consent seeking reorganization or relief
under the Federal Bankruptcy Code or any other applicable federal or
state law, or the consent by it to the filing of any such petition
or to the appointment of a receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of the Company or of any
substantial part of its property, or the making by it of an
assignment for the benefit of creditors, or the admission by it in
writing of its inability to pay its debts generally as they become
due; or

(8) any other Event of Default provided with respect to Securities of
that series.

SECTION 502. Acceleration of Maturity; Rescission and Annulment.

If an Event of Default described in clause (1), (2), (3), (4) or (7) of Section
501 with respect to Securities of any series at the time Outstanding occurs and
is continuing, then in every such case the Trustee or the Holders of not less
than 25% in principal amount of the Outstanding Securities of that series may
declare the principal amount (or, if the Securities of that series are Original
Issue Discount Securities or Indexed Securities, such portion of the principal
amount as may be specified in the terms of that series) of all of the Securities
of that series to be due and payable immediately, by a notice in writing to the
Company (and to the Trustee if given by Holders), and upon any such declaration
such principal amount (or specified portion thereof) shall become immediately
due and payable. If an Event of Default specified in Section 501(5) or 501(6)
occurs and is continuing, then the principal amount of all the Securities shall
ipso facto become and be immediately due and payable without any declaration or
other act on the part of the Trustee or any Holder.

At any time after a declaration of acceleration with respect to Securities of
any series (or of all series, as the case may be) has been made and before a
judgment or decree for payment of the money due has been obtained by the Trustee
as hereinafter provided in this Article, the Holders of a majority in principal
amount of the Outstanding Securities of that series (or of all series, as the
case may be), by written notice to the Company and the Trustee, may rescind and
annul such declaration and its consequences if:

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<PAGE>

(1) the Company has paid or deposited with the Trustee a sum sufficient
to pay in the Currency in which the Securities of such series are
payable (except as otherwise specified pursuant to Section 301 for
the Securities of such series and except, if applicable, as provided
in Sections 312(b), 312(d) and 312(e)),

(A) all overdue interest on all Outstanding Securities of that
series (or of all series, as the case may be),

(B) all unpaid principal of (and premium, if any, on) any
Outstanding Securities of that series (or of all series, as
the case may be) which has become due otherwise than by such
declaration of acceleration, and interest on such unpaid
principal at the rate or rates prescribed therefor in such
Securities,

(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel; and

(2) all Events of Default with respect to Securities of that series (or
of all series, as the case may be), other than the non-payment of
amounts of principal of (or premium, if any, on) or interest on
Securities of that series (or of all series, as the case may be)
which have become due solely by such declaration of acceleration,
have been cured or waived as provided in Section 513.

No such rescission shall affect any subsequent default or impair any right
consequent thereon.

SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee.

The Company covenants that if:

(1) default is made in the payment of any installment of interest on any
Security when such interest becomes due and payable and such default
continues for a period of 30 days or 10 days in the case of
Securities issued to a NWPS Trust or a trustee of such trust, or

(2) default is made in the payment of the principal of (or premium, if
any, on) any Security at the Maturity thereof,

then the Company will, upon demand of the Trustee, pay to the Trustee for the
benefit of the Holders of such Securities, the whole amount then due and payable
on such Securities for principal (and premium, if any) and interest, and
interest on any overdue principal (and premium, if any) and on any overdue
interest, at the rate or rates prescribed therefor in such Securities, and, in
addition thereto, such further amount as shall be sufficient to cover the costs
and expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.

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<PAGE>

If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon such Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon such Securities, wherever
situated.

If an Event of Default with respect to Securities of any series (or of all
series, as the case may be) occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
Holders of Securities of such series (or of all series, as the case may be) by
such appropriate judicial proceedings as the Trustee shall deem most effectual
to protect and enforce any such rights, whether for the specific enforcement of
any covenant or agreement in this Indenture or in aid of the exercise of any
power granted herein, or to enforce any other proper remedy.

SECTION 504. Trustee May File Proofs of Claim.

In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Securities
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of overdue principal, premium, if any, or interest)
shall be entitled and empowered, by intervention in such proceeding or
otherwise,

(i) to file and prove a claim for the whole amount of principal (and
premium, if any), or such portion of the principal amount of any
series of Original Issue Discount Securities or Indexed Securities
as may be specified in the terms of such series, and interest owing
and unpaid in respect of the Securities and to file such other
papers or documents as may be necessary or advisable in order to
have the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel) and of the Holders allowed in such
judicial proceeding, and

(ii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 606.

Nothing herein contained shall be deemed to authorize the Trustee to authorize
or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.

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SECTION 505. Trustee May Enforce Claims Without Possession of Securities.

All rights of action and claims under this Indenture or the Securities may be
prosecuted and enforced by the Trustee without the possession of any of the
Securities or the production thereof in any proceeding relating thereto, and any
such proceeding instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment shall, after provision
for the payment of the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, be for the ratable benefit of
the Holders of the Securities in respect of which such judgment has been
recovered.

SECTION 506. Application of Money Collected.

Any money collected by the Trustee pursuant to this Article shall be applied in
the following order, at the date or dates fixed by the Trustee and, in case of
the distribution of such money on account of principal (or premium, if any) or
interest, upon presentation of the Securities, and the notation thereon of the
payment if only partially paid and upon surrender thereof if fully paid:

First: To the payment of all amounts due the Trustee under Section
606;

Second: To the payment of the amounts then due and unpaid for
principal of (and premium, if any, on) and interest on the
Securities in respect of which or for the benefit of which
such money has been collected, ratably, without preference or
priority of any kind, according to the amounts due and
payable on such Securities for principal (and premium, if
any) and interest, respectively; and

Third: The balance, if any, to the Company or any other Person or
Persons entitled thereto.

SECTION 507. Limitation on Suits.

No Holder of any Security of any series shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless

(1) such Holder has previously given written notice to the Trustee of a
continuing Event of Default with respect to the Securities of that
series;

(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series in the case of any Event of
Default described in clause (1), (2), (3), (4) or (7) of Section
501, or, in the case of any Event of Default described in clause (5)
or (6) of Section 501, the Holders of not less than 25% in principal
amount of all Outstanding Securities, shall have made written
request to the Trustee to institute proceedings in respect of such
Event of Default in its own name as Trustee hereunder;

(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred
in compliance with such request;

(4) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding;
and

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(5) no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Holders of a
majority or more in principal amount of the Outstanding Securities
of that series in the case of any Event of Default described in
clause (1), (2), (3), (4) or (7) of Section 501, or, in the case of
any Event of Default described in clause (5) or (6) of Section 501,
by the Holders of a majority or more in principal amount of all
Outstanding Securities;

it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders of Securities of the same series, in the case of any Event of Default
described in clause (1), (2), (3), (4) or (7) of Section 501, or of Holders of
all Securities in the case of any Event of Default described in clause (5) or
(6) of Section 501, or to obtain or to seek to obtain priority or preference
over any other of such Holders or to enforce any right under this Indenture,
except in the manner herein provided and for the equal and ratable benefit of
all Holders of Securities of the same series, in the case of any Event of
Default described in clause (1), (2), (3), (4) or (7) of Section 501, or of
Holders of all Securities in the case of any Event of Default described in
clause (5) or (6) of Section 501.

SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and
Interest.

Notwithstanding any other provision in this Indenture, the Holder of any
Security shall have the right, which is absolute and unconditional, to receive
payment, as provided herein (including, if applicable, Article Fourteen) and in
such Security, of the principal of (and premium, if any, on) and (subject to
Section 307) interest on, such Security on the respective Stated Maturities
expressed in such Security (or, in the case of redemption, on the Redemption
Date) and to institute suit for the enforcement of any such payment, and such
rights shall not be impaired without the consent of such Holder.

SECTION 509. Restoration of Rights and Remedies.

If the Trustee or any Holder has instituted any proceeding to enforce any right
or remedy under this Indenture and such proceeding has been discontinued or
abandoned for any reason, or has been determined adversely to the Trustee or to
such Holder, then and in every such case, subject to any determination in such
proceeding, the Company, the Trustee and the Holders of Securities shall be
restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.

SECTION 510. Rights and Remedies Cumulative.

Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities in the last paragraph of Section
306, no right or remedy herein conferred upon or reserved to the Trustee or to
the Holders of Securities is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.

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SECTION 511. Delay or Omission Not Waiver.

No delay or omission of the Trustee or of any Holder of any Security to exercise
any right or remedy accruing upon any Event of Default shall impair any such
right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law to
the Trustee or to the Holders may be exercised from time to time, and as often
as may be deemed expedient, by the Trustee or by the Holders, as the case may
be.

SECTION 512. Control by Holders.

With respect to the Securities of any series, the Holders of not less than a
majority in principal amount of the Outstanding Securities of such series shall
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee, or exercising any trust or power
conferred on the Trustee relating to or arising under clause (1), (2), (3), (4)
or (7) of Section 501, and, with respect to all Securities, the Holders of not
less than a majority in principal amount of all Outstanding Securities shall
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee, or exercising any trust or power
conferred on the Trustee, not relating to or arising under clause (1), (2), (3),
(4) or (7) of Section 501, provided that in each case

(1) such direction shall not be in conflict with any rule of law or with
this Indenture,

(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction, and

(3) the Trustee need not take any action which might involve it in
personal liability or be unjustly prejudicial to the Holders of
Securities of such series not consenting.

SECTION 513. Waiver of Past Defaults.

Subject to Section 502, the Holders of not less than a majority in principal
amount of the Outstanding Securities of any series may on behalf of the Holders
of all the Securities of such series waive any past default described in clause
(1), (2), (3), (4) or (7) of Section 501 (or, in the case of a default described
in clause (5) or (6) of Section 501, the Holders of not less than a majority in
principal amount of all Outstanding Securities may waive any such past default),
and its consequences, except a default

(1) in respect of the payment of the principal of (or premium, if any,
on) or interest on any Security, or

(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder
of each Outstanding Security of such series affected.

Upon any such waiver, any such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
default or Event of Default or impair any right consequent thereon.

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SECTION 514. Undertaking for Costs.

In any suit for the enforcement of any right or remedy under this Indenture, or
in any suit against the Trustee for any action taken, suffered or omitted by it
as Trustee, a court may require any party litigant in such suit to file an
undertaking to pay the costs of such suit, and may assess costs against any such
party litigant, in the manner and to the extent provided in the Trust Indenture
Act; provided, that neither this Section nor the Trust Indenture Act shall be
deemed to authorize any court to require such an undertaking or to make such an
assessment in any suit instituted by the Company or the Trustee or in any suit
for the enforcement of the right to receive the principal of and interest on any
Security.

SECTION 515. Waiver of Stay or Extension Laws.

The Company covenants (to the extent that it may lawfully do so) that it will
not at any time insist upon, or plead, or in any manner whatsoever claim or take
the benefit or advantage of, any stay or extension law wherever enacted, now or
at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.

ARTICLE SIX
THE TRUSTEE

SECTION 601. Notice of Defaults.

Within 90 days after the occurrence of any Default hereunder with respect to the
Securities of any series, the Trustee shall transmit in the manner and to the
extent provided in TIA Section 313(c), notice of such default hereunder known to
the Trustee, unless such Default shall have been cured or waived; provided,
however, that, except in the case of a Default in the payment of the principal
of (or premium, if any, on) or interest on any Security of such series or in the
payment of any sinking fund installment with respect to Securities of such
series, the Trustee shall be protected in withholding such notice if and so long
as the board of directors, the executive committee or a trust committee of
directors and/or Responsible Officers of the Trustee in good faith determine
that the withholding of such notice is in the interest of the Holders of
Securities of such series; and provided, further, that in the case of any
Default of the character specified in Section 501(3) with respect to Securities
of such series, no such notice to Holders shall be given until at least 30 days
after the occurrence thereof.

SECTION 602. Certain Rights of Trustee.

Subject to the provisions of TIA Sections 315(a) through 315(d):

(1) the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or

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document believed by it to be genuine and to have been signed or
presented by the proper party or parties;

(2) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors may be sufficiently evidenced
by a Board Resolution;

(3) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee
(unless other evidence be herein specifically prescribed) may, in
the absence of bad faith on its part, rely upon an Officers'
Certificate;

(4) the Trustee may consult with counsel and the written advice of such
counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance
thereon;

(5) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or
direction of any of the Holders of Securities of any series pursuant
to this Indenture, unless such Holders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses
and liabilities which might be incurred by it in compliance with
such request or direction;

(6) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or
other paper or document, but the Trustee, in its discretion, may
make such further inquiry or investigation into such facts or
matters as it may see fit, and, if the Trustee shall determine to
make such further inquiry or investigation, it shall be entitled to
examine the books, records and premises of the Company, personally
or by agent or attorney;

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

(8) the Trustee shall not be liable for any action taken, suffered or
omitted by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this
Indenture. The Trustee shall not be required to expend or risk its
own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of
any of its rights or powers if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it.

SECTION 603. Trustee Not Responsible for Recitals or Issuance of Securities.

The recitals contained herein and in the Securities, except for the Trustee's
certificates of authentication, shall be taken as the statements of the Company,
and neither the Trustee nor any Authenticating Agent

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assumes any responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Securities, except that the Trustee represents that it is duly authorized to
execute and deliver this Indenture, authenticate the Securities and perform its
obligations hereunder and that the statements made by it in a Statement of
Eligibility on Form T-1 supplied to the Company are true and accurate, subject
to the qualifications set forth therein. Neither the Trustee nor any
Authenticating Agent shall be accountable for the use or application by the
Company of Securities or the proceeds thereof.

SECTION 604. May Hold Securities.

The Trustee, any Authenticating Agent, any Paying Agent, any Security Registrar
or any other agent of the Company or of the Trustee, in its individual or any
other capacity, may become the owner or pledgee of Securities and, subject to
TIA Sections 310(b) and 311, may otherwise deal with the Company with the same
rights it would have if it were not Trustee, Authenticating Agent, Paying Agent,
Security Registrar or such other agent.

SECTION 605. Money Held in Trust.

Money held by the Trustee in trust hereunder need not be segregated from other
funds except to the extent required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed with the Company.

SECTION 606. Compensation and Reimbursement.

The Company agrees:

(1) to pay to the Trustee from time to time reasonable compensation for
all services rendered by it hereunder (which compensation shall not
be limited by any provision of law in regard to the compensation of
a trustee of an express trust);

(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements
and advances incurred or made by the Trustee in accordance with any
provision of this Indenture (including the reasonable compensation
and the expenses and disbursements of its agents and counsel),
except any such expense, disbursement or advance as may be
attributable to its negligence or bad faith; and

(3) to indemnify the Trustee for, and to hold it harmless against, any
loss, liability or expense incurred without negligence or bad faith
on its part, arising out of or in connection with the acceptance or
administration of the trust or trusts hereunder, including the costs
and expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or
duties hereunder. The obligations of the Company under this Section
to compensate the Trustee, to pay or reimburse the Trustee for
expenses, disbursements and advances and to indemnify and hold
harmless the Trustee shall constitute additional indebtedness
hereunder and shall survive the satisfaction and discharge of this
Indenture. As security for the performance of such obligations of
the Company, the Trustee shall have a claim prior to the Securities
upon all property and

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funds held or collected by the Trustee as such, except funds held in
trust for the payment of principal of (and premium, if any, on) or
interest on particular Securities.

SECTION 607. Corporate Trustee Required; Eligibility.

There shall at all times be a Trustee hereunder which shall be eligible to act
as Trustee under TIA Section 310(a)(1) and shall have a combined capital and
surplus of at least $50,000,000. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of Federal,
State, territorial or District of Columbia supervising or examining authority,
then for the purposes of this Section, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. If at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section, it
shall resign immediately in the manner and with the effect hereinafter specified
in this Article.

SECTION 608. Resignation and Removal; Appointment of Successor.

(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective
until the acceptance of appointment by the successor Trustee in
accordance with the applicable requirements of Section 609.

(b) The Trustee may resign at any time with respect to the Securities of
one or more series by giving written notice thereof to the Company.
If the instrument of acceptance by a successor Trustee required by
Section 609 shall not have been delivered to the Trustee within 30
days after the giving of such notice of resignation, the resigning
Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Securities of
such series.

(c) The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of not less than a
majority in principal amount of the Outstanding Securities of such
series, delivered to the Trustee and to the Company.

(d) If at any time:

(1) the Trustee shall fail to comply with the provisions of TIA
Section 310(b) after written request therefor by the Company
or by any Holder who has been a bona fide Holder of a
Security for at least six months, or

(2) the Trustee shall cease to be eligible under Section 607 and
shall fail to resign after written request therefor by the
Company or by any Holder who has been a bona fide Holder of a
Security for at least six months, or

(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee
or of its property shall be appointed or any public officer
shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation,
conservation or liquidation,

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then, in any such case, (i) the Company, by a Board
Resolution, may remove the Trustee with respect to all
Securities, or (ii) subject to TIA Section 315(e), any Holder
who has been a bona fide Holder of a Security for at least
six months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for
the removal of the Trustee with respect to all Securities and
the appointment of a successor Trustee or Trustees.

(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any
cause, with respect to the Securities of one or more series, the
Company, by a Board Resolution, shall promptly appoint a successor
Trustee or Trustees with respect to the Securities of that or those
series (it being understood that any such successor Trustee may be
appointed with respect to the Securities of one or more or all of
such series and that at any time there shall be only one Trustee
with respect to the Securities of any particular series). If,
within one year after such resignation, removal or incapability, or
the occurrence of such vacancy, a successor Trustee with respect to
the Securities of any series shall be appointed by Act of the
Holders of a majority in principal amount of the Outstanding
Securities of such series delivered to the Company and the retiring
Trustee, the successor Trustee so appointed shall, forthwith upon
its acceptance of such appointment, become the successor Trustee
with respect to the Securities of such series and to that extent
supersede the successor Trustee appointed by the Company. If no
successor trustee with respect to the Securities of any series shall
have been so appointed by the Company or the Holders and accepted
appointment in the manner hereinafter provided, any Holder who has
been a bona fide Holder of a Security of such series for at least
six months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Securities of
such series.

(f) The Company shall give notice of each resignation and each removal
of the Trustee with respect to the Securities of any series and each
appointment of a successor Trustee with respect to the Securities of
any series to the Holders of Securities of such series in the manner
provided for in Section 106. Each notice shall include the name of
the successor Trustee with respect to the Securities of such series
and the address of its Corporate Trust Office.

SECTION 609. Acceptance of Appointment by Successor.

(a) In case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee so appointed
shall execute, acknowledge and deliver to the Company and to the
retiring Trustee an instrument accepting such appointment, and
thereupon the resignation or removal of the retiring Trustee shall
become effective and such successor Trustee, without any further
act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee; but, on the
request of the Company or the successor Trustee, such retiring
Trustee shall, upon payment of its charges, execute and deliver an
instrument transferring to such successor Trustee all the rights,
powers and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor Trustee all property and
money held by such retiring Trustee hereunder.

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(b) In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the
Company, the retiring Trustee and each successor Trustee with
respect to the Securities of one or more series shall execute and
deliver an indenture supplemental hereto wherein each successor
Trustee shall accept such appointment and which (1) shall contain
such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor Trustee all the rights,
powers, trusts and duties of the retiring Trustee with respect to
the Securities of that or those series to which the appointment of
such successor Trustee relates, (2) if the retiring Trustee is not
retiring with respect to all Securities, shall contain such
provisions as shall be deemed necessary or desirable to confirm that
all the rights, powers, trusts and duties of the retiring Trustee
with respect to the Securities of that or those series as to which
the retiring Trustee is not retiring shall continue to be vested in
the retiring Trustee, and (3) shall add to or change any of the
provisions of this Indenture as shall be necessary to provide for or
facilitate the administration of the trusts hereunder by more than
one Trustee, it being understood that nothing herein or in such
supplemental indenture shall constitute such Trustees co-trustees of
the same trust and that each such Trustee shall be trustee of a
trust or trusts hereunder separate and apart from any trust or
trusts hereunder administered by any other such Trustee; and upon
the execution and delivery of such supplemental indenture the
resignation or removal of the retiring Trustee shall become
effective to the extent provided therein and each such successor
Trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Securities of that or those
series to which the appointment of such successor Trustee relates;
but, on request of the Company or any successor Trustee, such
retiring Trustee shall duly assign, transfer and deliver to such
successor Trustee all property and money held by such retiring
Trustee hereunder with respect to the Securities of that or those
series to which the appointment of such successor Trustee relates.
Whenever there is a successor Trustee with respect to one or more
(but less than all) series of securities issued pursuant to this
Indenture, the terms "Indenture" and "Securities" shall have the
meanings specified in the provisos to the respective definitions of
those terms in Section 101 which contemplate such situation.

(c) Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting
in and confirming to such successor Trustee all rights, powers and
trusts referred to in paragraph (a) or (b) of this Section, as the
case may be.

(d) No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and
eligible under this Article.

SECTION 610. Merger, Conversion, Consolidation or Succession to Business.

Any corporation into which the Trustee may be merged or converted or with which
it may be consolidated, or any corporation resulting from any merger, conversion
or consolidation to which the Trustee shall be a party, or any corporation
succeeding to all or substantially all the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been authenticated,
but not delivered, by the Trustee

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then in office, any successor by merger, conversion or consolidation to such
authenticating Trustee may adopt such authentication and deliver the Securities
so authenticated with the same effect as if such successor Trustee had itself
authenticated such Securities; and in case at that time any of the Securities
shall not have been authenticated, any successor Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of the
successor Trustee; and in all such cases such certificates shall have the full
force which it is anywhere in the Securities or in this Indenture provided that
the certificate of the Trustee shall have; provided, however, that the right to
adopt the certificate of authentication of any predecessor Trustee or to
authenticate Securities in the name of any predecessor Trustee shall apply only
to its successor or successors by merger, conversion or consolidation.

SECTION 611. Appointment of Authenticating Agent.

At any time when any of the Securities remain Outstanding, the Trustee may
appoint an Authenticating Agent or Agents with respect to one or more series of
Securities which shall be authorized to act on behalf of the Trustee to
authenticate Securities of such series and the Trustee shall give written notice
of such appointment to all Holders of Securities of the series with respect to
which such Authenticating Agent will serve, in the manner provided for in
Section 106. Securities so authenticated shall be entitled to the benefits of
this Indenture and shall be valid and obligatory for all purposes as if
authenticated by the Trustee hereunder. Any such appointment shall be evidenced
by an instrument in writing signed by a Responsible Officer of the Trustee, and
a copy of such instrument shall be promptly furnished to the Company. Wherever
reference is made in this Indenture to the authentication and delivery of
Securities by the Trustee or the Trustee's certificate of authentication, such
reference shall be deemed to include authentication and delivery on behalf of
the Trustee by an Authenticating Agent and a certificate of authentication
executed on behalf of the Trustee by an Authenticating Agent. Each
Authenticating Agent shall be acceptable to the Company and shall at all times
be a corporation organized and doing business under the laws of the United
States of America, any state thereof or the District of Columbia, authorized
under such laws to act as Authenticating Agent, having a combined capital and
surplus of not less than $50,000,000 and subject to supervision or examination
by federal or state authority. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. If at any time an Authenticating Agent shall cease to be eligible
in accordance with the provisions of this Section, it shall resign immediately
in the manner and with the effect specified in this Section.

Any corporation into which an Authenticating Agent may be merged or converted or
with which it may be consolidated, or any corporation to which such
Authenticating Agent shall be a party, or any corporation succeeding to the
corporate agency or corporate trust business of an Authenticating Agent, shall
continue to be an Authenticating Agent, provided such corporation shall be
otherwise eligible under this Section, without the execution or filing of any
paper or any further act on the part of the Trustee or the Authenticating Agent.

An Authenticating Agent may resign at any time by giving written notice thereof
to the Trustee and to the Company. The Trustee may at any time terminate the
agency of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall give written notice of
such

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appointment to all Holders of Securities of the series with respect to which
such Authenticating Agent will serve, in the manner provided for in Section 106.
Any successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section.

The Trustee agrees to pay to each Authenticating Agent from time to time
reasonable compensation for its services under this Section, and the Trustee
shall be entitled to be reimbursed for such payments, subject to the provisions
of Section 606.

If an appointment with respect to one or more series is made pursuant to this
Section, the Securities of such series may have endorsed thereon, in addition to
the Trustee's certificate of authentication, an alternate certificate of
authentication in the following form:

This is one of the Securities of the series designated therein referred to in
the within-mentioned Indenture.

The Chase Manhattan Bank (N.A.),
as Trustee

By:
Authenticating Agent

By:
Authorized Officer

SECTION 612. Preferential Collection of Claims Against Company.

If and when the Trustee shall be or become a creditor of the Company (or
any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor).

ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY

SECTION 701. Disclosure of Names and Addresses of Holders.

Every Holder of Securities, by receiving and holding the same, agrees with the
Company and the Trustee that none of the Company or the Trustee or any agent of
either of them shall be held accountable by reason of the disclosure of any such
information as to the names and addresses of the Holders in accordance with TIA
Section 312, regardless of the source from which such information was derived,
and that the Trustee shall not be held accountable by reason of mailing any
material pursuant to a request made under TIA Section 312(b).

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SECTION 702. Reports by Trustee.

Within 60 days after May 15 of each year commencing with the first May 15 after
the first issuance of Securities pursuant to this Indenture, the Trustee shall
transmit to the Holders of Securities, in the manner and to the extent provided
in TIA Section 313(c), a brief report dated as of such May 15 if required by TIA
Section 313. A copy of each such report shall, at the time of such transmission
to Holders, be filed by the Trustee with each stock exchange upon which the
Securities are listed, with the Commission and with the Company. The Company
will notify the Trustee when the Securities are listed on any stock exchange.

SECTION 703. Reports by Company.

The Company shall:

(1) file with the Trustee, within 15 days after the Company is required
to file the same with the Commission, copies of the annual reports
and of the information, documents and other reports (or copies of
such portions of any of the foregoing as the Commission may from
time to time by rules and regulations prescribe) which the Company
may be required to file with the Commission pursuant to Section 13
or Section 15(d) of the Securities Exchange Act of 1934; or, if the
Company is not required to file information, documents or reports
pursuant to either of such Sections, then it shall file with the
Trustee and the Commission, in accordance with rules and regulations
prescribed from time to time by the Commission, such of the
supplementary and periodic information, documents and reports which
may be required pursuant to Section 13 of the Securities Exchange
Act of 1934 in respect of a security listed and registered on a
national securities exchange as may be prescribed from time to time
in such rules and regulations;

(2) file with the Trustee and the Commission, in accordance with rules
and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to
compliance by the Company with the conditions and covenants of this
Indenture as may be required from time to time by such rules and
regulations; and

(3) transmit to all Holders, in the manner and to the extent provided in
TIA Section 313(c), within 30 days after the filing thereof with the
Trustee, such summaries of any information, documents and reports
required to be filed by the Company pursuant to paragraphs (1) and
(2) of this Section as may be required by rules and regulations
prescribed from time to time by the Commission.

ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

SECTION 801. Company May Consolidate, etc., Only on Certain Terms.

The Company shall not consolidate with or merge into any other corporation or
convey, transfer or lease, or permit one or more of its Subsidiaries to convey,
transfer or lease, all or substantially all of the property and assets of the
Company and its Subsidiaries on a consolidated basis, to any Person, unless:

(1) the corporation formed by such consolidation or into which the
Company is merged or the Person which acquires by conveyance or
transfer, or which leases, the properties and

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assets of the Company and its Subsidiaries on a consolidated basis
(A) shall be a corporation, partnership or trust organized and
validly existing under the laws of the United States of America, any
state thereof or the District of Columbia and (B) shall expressly
assume, by an indenture supplemental hereto, executed and delivered
to the Trustee, in form satisfactory to the Trustee, the Company's
obligation for the due and punctual payment of the principal of (and
premium, if any, on) and interest on all the Securities and the
performance and observance of every covenant of this Indenture on
the part of the Company to be performed or observed;

(2) immediately after giving effect to such transaction, no Default or
Event of Default shall have occurred and be continuing; and

(3) the Company or such Person shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that
such consolidation, merger, conveyance, transfer or lease and such
supplemental indenture comply with this Article and that all
conditions precedent herein provided for relating to such
transaction have been complied with.

This Section shall only apply to a merger or consolidation in which the Company
is not the surviving corporation and to conveyances, leases and transfers by the
Company as transferor or lessor.

SECTION 802. Successor Person Substituted.

Upon any consolidation by the Company with or merger by the Company into any
other corporation or any conveyance, transfer or lease of the properties and
assets of the Company and its Subsidiaries on a consolidated basis to any Person
in accordance with Section 801, the successor Person formed by such
consolidation or into which the Company is merged or to which such conveyance,
transfer or lease is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Indenture with the
same effect as if such successor Person had been named as the Company herein,
and in the event of any such conveyance or transfer, the Company (which term
shall for this purpose mean the Person named as the "Company" in the first
paragraph of this Indenture or any successor Person which shall theretofore
become such in the manner described in Section 801), except in the case of a
lease, shall be discharged of all obligations and covenants under this Indenture
and the Securities and may be dissolved and liquidated.

SECTION 803. Assignment of Rights.

The Company will have the right at all times to assign any of its respective
rights or obligations under this Indenture to a direct or indirect wholly-owned
Subsidiary of the Company; provided, that in the event of any such assignment,
the Company will remain liable for all of its respective obligations. Subject
to the foregoing, this Indenture will be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns. This
Indenture may not otherwise be assigned by the parties hereto.

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ARTICLE NINE
SUPPLEMENTAL INDENTURES

SECTION 901. Supplemental Indentures Without Consent of Holders.

Without the consent of any Holders, the Company, when authorized by or pursuant
to a Board Resolution, and the Trustee, at any time and from time to time, may
enter into one or more indentures supplemental hereto, in form satisfactory to
the Trustee, for any of the following purposes:

(1) to evidence the succession of another Person to the Company and the
assumption by any such successor of the covenants of the Company
contained herein and in the Securities; or

(2) to add to the covenants of the Company for the benefit of the
Holders of all or any series of Securities (and if such covenants
are to be for the benefit of less than all series of Securities,
stating that such covenants are being included solely for the
benefit of such series) or to surrender any right or power herein
conferred upon the Company; or

(3) to add any additional Events of Default (and if such Events of
Default are to be for the benefit of less than all series of
Securities, stating that such Events of Default are being included
solely for the benefit of such series); or

(4) to change or eliminate any of the provisions of this Indenture;
provided that any such change or elimination shall become effective
only when there is no Security Outstanding of any series created
prior to the execution of such supplemental indenture which is
entitled to the benefit of such provision; or

(5) to secure the Securities; or

(6) to establish the form or terms of Securities of any series as
permitted by Sections 201 and 301; or

(7) to evidence and provide for the acceptance of appointment hereunder
by a successor Trustee with respect to the Securities of one or more
series and to add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee,
pursuant to the requirements of Section 609(b); or

(8) to close this Indenture with respect to the authentication and
delivery of additional series of Securities, to cure any ambiguity,
to correct or supplement any provision herein which may be
inconsistent with any other provision herein, or to make any other
provisions with respect to matters or questions arising under this
Indenture; provided such action shall not adversely affect the
interests of the Holders of Securities of any series in any material
respect.

SECTION 902. Supplemental Indentures with Consent of Holders.

With the consent of the Holders of not less than a majority in principal amount
of all Outstanding Securities of any series, by Act of said Holders delivered to
the Company and the Trustee, the Company, when authorized by or pursuant to a
Board Resolution, and the Trustee may enter into an indenture or indentures

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supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture which affect
such series of Securities or of modifying in any manner the rights of the
Holders of Securities of such series under this Indenture; provided, however,
that no such supplemental indenture shall, without the consent of the Holder of
each Outstanding Security of such series,

(1) change the Stated Maturity of the principal of, or any installment
of interest on, any Security of such series, or reduce the principal
amount thereof or the rate of interest thereon or any premium
payable upon the redemption thereof, or change any obligation of the
Company to pay Additional Amounts contemplated by Section 1005
(except as contemplated by Section 801(1) and permitted by Section
901(1)), or reduce the amount of the principal of an Original Issue
Discount Security of such series that would be due and payable upon
a declaration of acceleration of the Maturity thereof pursuant to
Section 502 or the amount thereof provable in bankruptcy pursuant to
Section 504, or change the redemption provisions of any Security, or
adversely affect any right of repayment at the option of any Holder
of any Security of such series, or change any Place of Payment
where, or the Currency in which, any Security of such series or any
premium or interest thereon is payable, or impair the right to
institute suit for the enforcement of any such payment on or after
the Stated Maturity thereof (or, in the case of redemption or
repayment at the option of the Holder, on or after the Redemption
Date or Repayment Date, as the case may be), or

(2) reduce the percentage in principal amount of the Outstanding
Securities of such series required for any such supplemental
indenture, for any waiver of compliance with certain provisions of
this Indenture which affect such series or certain defaults
applicable to such series hereunder and their consequences provided
for in this Indenture, or

(3) modify any of the provisions of this Section or Section 513, except
to increase any such percentage or to provide that certain other
provisions of this Indenture which affect such series cannot be
modified or waived without the consent of the Holder of each
Outstanding Security of such series.

Any such supplemental indenture adding any provisions to or changing in any
manner or eliminating any of the provisions of this Indenture, or modifying in
any manner the rights of the Holders of Securities of such series, shall not
affect the rights under this Indenture of the Holders of Securities of any other
series.

It shall not be necessary for any Act of Holders under this Section to approve
the particular form of any proposed supplemental indenture, but it shall be
sufficient if such Act shall approve the substance thereof.

SECTION 903. Execution of Supplemental Indentures.

In executing, or accepting the additional trusts created by, any supplemental
indenture permitted by this Article or the modifications thereby of the trusts
created by this Indenture, the Trustee shall be entitled to receive, and shall
be fully protected in relying upon, an Opinion of Counsel stating that the
execution of such supplemental indenture is authorized or permitted by this
Indenture. The Trustee may, but shall not be obligated to, enter into any such
supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.

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SECTION 904. Effect of Supplemental Indentures.

Upon the execution of any supplemental indenture under this Article, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.

SECTION 905. Conformity with Trust Indenture Act.

Every supplemental indenture executed pursuant to this Article shall conform to
the requirements of the Trust Indenture Act as then in effect.

SECTION 906. Reference in Securities to Supplemental Indentures.

Securities of any series authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities of any series so modified as to conform, in the opinion of the
Trustee and the Company, to any such supplemental indenture may be prepared and
executed by the Company and authenticated and delivered by the Trustee in
exchange for Outstanding Securities of such series.

SECTION 907. Notice of Supplemental Indentures.

Promptly after the execution by the Company and the Trustee of any supplemental
indenture pursuant to the provisions of Section 902, the Company shall give
notice thereof to the Holders of each Outstanding Security affected, in the
manner provided for in Section 106, setting forth in general terms the substance
of such supplemental indenture.

ARTICLE TEN
COVENANTS

SECTION 1001. Payment of Principal, Premium, if any, and Interest.

The Company covenants and agrees for the benefit of the Holders of each series
of Securities that it will duly and punctually pay the principal of (and
premium, if any, on) and interest on the Securities of that series in accordance
with the terms of the Securities and this Indenture.

SECTION 1002. Maintenance of Office or Agency.

If the Securities of a series are issuable only as Registered Securities, the
Company will maintain in each Place of Payment for any series of Securities an
office or agency where Securities of that series may be presented or surrendered
for payment, where Securities of that series may be surrendered for registration
of transfer or exchange and where notices and demands to or upon the Company in
respect of the Securities of that series and this Indenture may be served.

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The Company will give prompt written notice to the Trustee of the location, and
any change in the location, of such office or agency.

If at any time the Company shall fail to maintain any such required office or
agency or shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee.

The Company may also from time to time designate one or more other offices or
agencies where the Securities of one or more series may be presented or
surrendered for any or all such purposes and may from time to time rescind any
such designation; provided, however, that no such designation or rescission
shall in any manner relieve the Company of its obligation to maintain an office
or agency in accordance with the requirements set forth above for Securities of
any series for such purposes. The Company will give prompt written notice to
the Trustee of any such designation or rescission and of any change in the
location of any such other office or agency. Unless otherwise specified with
respect to any Securities as contemplated by Section 301 with respect to a
series of Securities, the Company hereby designates as a Place of Payment for
each series of Securities the office or agency of the Company in The City of New
York, and initially appoints the Trustee at its Corporate Trust Office as Paying
Agent in such city and as its agent to receive all such presentations,
surrenders, notices and demands.

Unless otherwise specified with respect to any Securities pursuant to Section
301, if and so long as the Securities of any series (i) are denominated in a
Currency other than Dollars or (ii) may be payable in a Currency other than
Dollars, or so long as it is required under any other provision of the
Indenture, then the Company will maintain with respect to each such series of
Securities, or as so required, at least one Exchange Rate Agent.

SECTION 1003. Money for Securities Payments to Be Held in Trust.

If the Company shall at any time act as its own Paying Agent with respect to any
series of Securities, it will, on or before each due date of the principal of
(and premium, if any, on) or interest on any of the Securities of that series,
segregate and hold in trust for the benefit of the Persons entitled thereto a
sum in the Currency in which the Securities of such series are payable (except
as otherwise specified pursuant to Section 301 for the Securities of such series
and except, if applicable, as provided in Sections 312(b), 312(d) and 312(e))
sufficient to pay the principal (and premium, if any) or interest so becoming
due until such sums shall be paid to such Persons or otherwise disposed of as
herein provided and will promptly notify the Trustee of its action or failure so
to act.

Whenever the Company shall have one or more Paying Agents for any series of
Securities, it will, prior to or on each due date of the principal of (and
premium, if any, on) or interest on any Securities of that series, deposit with
a Paying Agent a sum (in the Currency described in the preceding paragraph)
sufficient to pay the principal (and premium, if any) or interest so becoming
due, such sum to be held in trust for the benefit of the Persons entitled to
such principal, premium or interest, and (unless such Paying Agent is the
Trustee) the Company will promptly notify the Trustee of its action or failure
so to act.

The Company will cause each Paying Agent (other than the Trustee) for any series
of Securities to execute and deliver to the Trustee an instrument in which such
Paying Agent shall agree with the Trustee, subject to the provisions of this
Section, that such Paying Agent will:

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(1) hold all sums held by it for the payment of the principal of (and
premium, if any, on) and interest on Securities of such series in
trust for the benefit of the Persons entitled thereto until such
sums shall be paid to such Persons or otherwise disposed of as
herein provided;

(2) give the Trustee notice of any default by the Company (or any other
obligor upon the Securities of such series) in the making of any
payment of principal of (or premium, if any, on) or interest on the
Securities of such series; and

(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all
sums so held in trust by such Paying Agent.

The Company may at any time, for the purpose of obtaining the satisfaction and
discharge of this Indenture or for any other purpose, pay, or by Company Order
direct any Paying Agent to pay, to the Trustee all sums held in trust by the
Company or such Paying Agent, such sums to be held by the Trustee upon the same
trusts as those upon which sums were held by the Company or such Paying Agent;
and, upon such payment by any Paying Agent to the Trustee, such Paying Agent
shall be released from all further liability with respect to such sums.

Except as provided in the Securities of any series, any money deposited with the
Trustee or any Paying Agent, or then held by the Company, in trust for the
payment of the principal of (and premium, if any, on) or interest on any
Security of any series, and remaining unclaimed for two years after such
principal (and premium, if any) or interest has become due and payable shall be
paid to the Company on Company Request, or (if then held by the Company) shall
be discharged from such trust; and the Holder of such Security or coupon shall
thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in an Authorized Newspaper,
notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such publication,
any unclaimed balance of such money then remaining will be repaid to the
Company.

SECTION 1004. Statement as to Compliance.

The Company will deliver to the Trustee, within 120 days after the end of each
fiscal year, a brief certificate from the principal executive officer, principal
financial officer or principal accounting officer as to his or her knowledge of
the Company's compliance with all conditions and covenants under this Indenture.
For purposes of this Section 1004, such compliance shall be determined without
regard to any period of grace or requirement of notice under this Indenture.

SECTION 1005. Additional Amounts.

If any Securities of a series provide for the payment of additional amounts to
any Holder who is not a United States person in respect of any tax, assessment
or governmental charge ("Additional Amounts"), the Company will pay to the
Holder of any Security of such series such Additional Amounts as may be
specified as contemplated by Section 301. Whenever in this Indenture there is
mentioned, in any context, the payment of the principal (or premium, if any, on)
or interest on, or in respect of, any Security of a series or the net proceeds
received on the sale or exchange of any Security of a series, such mention shall

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be deemed to include mention of the payment of Additional Amounts provided for
by the terms of such series established pursuant to Section 301 to the extent
that, in such context, Additional Amounts are, were or would be payable in
respect thereof pursuant to such terms and express mention of the payment of
Additional Amounts (if applicable) in any provisions hereof shall not be
construed as excluding Additional Amounts in those provisions hereof where such
express mention is not made.

Except as otherwise specified as contemplated by Section 301, if the Securities
of a series provide for the payment of Additional Amounts, at least 10 days
prior to the first Interest Payment Date with respect to that series of
Securities (or if the Securities of that series will not bear interest prior to
Maturity, the first day on which a payment or principal (and premium, if any) is
made), and at least 10 days prior to each date of payment of principal (and
premium, if any) or interest if there has been any change with respect to the
matters set forth in the below-mentioned Officers' Certificate, the Company will
furnish the Trustee and the Company's principal Paying Agent or Paying Agents,
if other than the Trustee, with an Officers' Certificate instructing the Trustee
and such Paying Agent or Paying Agents whether such payment of principal of (and
premium, if any, on) or interest on the Securities of that series shall be made
to Holders of Securities of that series who are not United States persons
without withholding for or on account of any tax, assessment or other
governmental charge described in the Securities of the series. If any such
withholding shall be required, then such Officers' Certificate shall specify by
country the amount, if any, required to be withheld on such payments to such
Holders of Securities of that series and the Company will pay to the Trustee or
such Paying Agent the Additional Amounts required by the terms of such
Securities. In the event that the Trustee or any Paying Agent, as the case may
be, shall not so receive the above-mentioned certificate, then the Trustee or
such Paying Agent shall be entitled to (i) assume that no such withholding or
deduction is required with respect to any payment of principal (and premium, if
any) or interest with respect to any Securities of a series until it shall have
received a certificate advising otherwise and (ii) to make all payments of
principal (and premium, if any) and interest with respect to the Securities of a
series without withholding or deductions until otherwise advised. The Company
covenants to indemnify the Trustee and any Paying Agent for, and to hold them
harmless against, any loss, liability or expense reasonably incurred without
negligence or bad faith on their part arising out of or in connection with
actions taken or omitted by any of them in reliance on any Officers' Certificate
furnished pursuant to this Section.

SECTION 1006. Payment of Taxes and Other Claims.

The Company will pay or discharge or cause to be paid or discharged, before the
same shall become delinquent, all material taxes, assessments and governmental
charges levied or imposed upon the Company or any Subsidiary or upon the income,
profits or property of the Company or any Subsidiary; provided, however, that
the Company shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim whose amount, applicability
or validity is being contested in good faith by appropriate proceedings.

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SECTION 1007. Maintenance of Properties.

The Company will cause all property necessary for the operation of the business
of the Company and its Subsidiaries as a whole to be maintained and kept in good
condition, repair and working order and supplied with all necessary equipment
and will cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of the Company may
be necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; provided, however, that
nothing in this Section shall prevent or restrict the sale, abandonment or other
disposition of any of such property if such action is, in the judgment of the
Company, desirable in the conduct of the business of the Company and its
Subsidiaries as a whole and not disadvantageous in any material respect to the
Holders.

SECTION 1008. Corporate Existence.

Subject to Article Eight, the Company will do or cause to be done all things
necessary to preserve and keep in full force and effect its corporate existence
and the rights (charter and statutory) and franchises of the Company and any
Subsidiary; provided, however, that the Company shall not be required to
preserve any such right or franchise if the Company shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and its Subsidiaries as a whole.

SECTION 1009. Limitation on Dividends; Transactions with Affiliates.

(a) If Securities are issued to a NWPS Trust or a trustee of such trust
in connection with the issuance of Trust Securities by such NWPS
Trust and (i) there shall have occurred any event that would
constitute an Event of Default or (ii) the Company shall be in
default with respect of its payment or any other obligations under
the Preferred Securities Guarantee or Common Securities Guarantee
relating to such NWPS Trust, then (A) the Company shall not declare
or pay any dividend on, make any distributions with respect to, or
redeem, purchase, acquire or make a liquidation payment with respect
to, any of its capital stock, and (B) the Company shall not make any
payment of interest, principal or premium, if any, on or repay,
repurchase or redeem any debt securities issued by the Company which
rank pari passu with or junior to such Securities, provided that the
foregoing restriction in paragraph (A) does not apply to any stock
dividends paid by the Company where the dividend stock is the same
stock as that on which the dividend is being paid.

(b) If Securities are issued to a NWPS Trust or a trustee of such a
trust in connection with the issuance of Trust Securities by such
NWPS Trust and the Company shall have given notice of its election
to defer payments of interest on such Securities by extending the
interest payment period as provided in the Indenture and such
period, or any extension thereof, shall be continuing, then (A) the
Company shall not declare or pay any dividend or, make any
distributions with respect to, or redeem, purchase, acquire or make
a liquidation payment with respect to, any of its capital stock, and
(B) the Company shall not make any payment of interest, principal or
premium, if any, on or repay, repurchase or redeem any debt
securities issued by the Company which rank pari passu with or
junior to such Securities, provided that the foregoing restriction
in paragraph (A) does not apply to any stock dividends paid by the
Company where the dividend stock is the same as that on which the
dividend is being paid.

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SECTION 1010. Covenants as to NWPS Trusts.

In the event Securities are issued and sold to a NWPS Trust or a trustee of such
trust in connection with the issuance of Trust Securities by such NWPS Trust,
for so long as such Trust Securities remain outstanding, the Company will (i)
maintain 100% direct or indirect ownership of the Common Securities of such NWPS
Trust; provided, however, that any permitted successor of the Company under the
Indenture may succeed to the Company's ownership of the Common Securities, and
(ii) use its reasonable efforts to cause such NWPS Trust (a) to remain a
statutory business trust, except in connection with a distribution of Securities
as provided in the Declaration of such NWPS Trust, the redemption of all of the
Trust Securities and in connection with certain mergers, consolidations or
amalgamation permitted by the Declaration of such NWPS Trust, and (b) otherwise
continue to be treated as a grantor trust for United States federal income tax
purposes.

ARTICLE ELEVEN
REDEMPTION OF SECURITIES

SECTION 1101. Applicability of Article.

Securities of any series which are redeemable before their Stated Maturity shall
be redeemable in accordance with the terms of such Securities and (except as
otherwise specified as contemplated by Section 301 for Securities of any series)
in accordance with this Article.

SECTION 1102. Election to Redeem; Notice to Trustee.

The election of the Company to redeem any Securities shall be evidenced by or
pursuant to a Board Resolution. In case of any redemption at the election of
the Company, the Company shall, at least 60 days prior to the Redemption Date
fixed by the Company (unless a shorter notice shall be satisfactory to the
Trustee), notify the Trustee of such Redemption Date and of the principal amount
of Securities of such series to be redeemed and shall deliver to the Trustee
such documentation and records as shall enable the Trustee to select the
Securities to be redeemed pursuant to Section 1103. In the case of any
redemption of Securities prior to the expiration of any restriction on such
redemption provided in the terms of such Securities or elsewhere in this
Indenture, the Company shall furnish the Trustee with an Officers' Certificate
evidencing compliance with such restriction.

SECTION 1103. Selection by Trustee of Securities to Be Redeemed.

If less than all the Securities of any series are to be redeemed, the particular
Securities to be redeemed shall be selected not more than 60 days prior to the
Redemption Date by the Trustee, from the Outstanding Securities of such series
not previously called for redemption, by such method as the Trustee shall deem
fair and appropriate and which may provide for the selection for redemption of
portions of the principal of Securities of such series; provided, however, that
no such partial redemption shall reduce the portion of the principal amount of a
Security not redeemed to less than the minimum authorized denomination for
Securities of such series established pursuant to Section 301.

The Trustee shall promptly notify the Company in writing of the Securities
selected for redemption and, in the case of any Securities selected for partial
redemption, the principal amount thereof to be redeemed.

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For all purposes of this Indenture, unless the context otherwise requires, all
provisions relating to the redemption of Securities shall relate, in the case of
any Security redeemed or to be redeemed only in part, to the portion of the
principal amount of such Security which has been or is to be redeemed.

SECTION 1104. Notice of Redemption.

Except as otherwise specified as contemplated by Section 301, notice of
redemption shall be given in the manner provided for in Section 106 not less
than 30 nor more than 60 days prior to the Redemption Date, to each Holder of
Securities to be redeemed.

All notices of redemption shall state:

(1) the Redemption Date,

(2) the Redemption Price,

(3) if less than all the Outstanding Securities of any series are to be
redeemed, the identification (and, in the case of partial
redemption, the principal amounts) of the particular Securities to
be redeemed,

(4) that on the Redemption Date the Redemption Price (together with
accrued interest, if any, to the Redemption Date payable as provided
in Section 1106) will become due and payable upon each such
Security, or the portion thereof, to be redeemed and, if applicable,
that interest thereon will cease to accrue on and after said date,

(5) the place or places where such Securities are to be surrendered for
payment of the Redemption Price, and

(6) that the redemption is for a sinking fund, if such is the case.

Notice of redemption of Securities to be redeemed at the election of the Company
shall be given by the Company or, at the Company's request, by the Trustee in
the name and at the expense of the Company.

SECTION 1105. Deposit of Redemption Price.

Prior to any Redemption Date, the Company shall deposit with the Trustee or with
a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate
and hold in trust as provided in Section 1003) an amount of money in the
Currency in which the Securities of such series are payable (except as otherwise
specified pursuant to Section 301 for the Securities of such series and except,
if applicable as provided in Sections 312(b), 312(d) and 312(e)) sufficient to
pay the Redemption Price of, and accrued interest on, all the Securities which
are to be redeemed on that date.

SECTION 1106. Securities Payable on Redemption Date.

Notice of redemption having been given as aforesaid, the Securities so to be
redeemed shall, on the Redemption Date, become due and payable at the Redemption
Price therein specified in the Currency in which the Securities of such series
are payable (except as otherwise specified pursuant to Section 301 for

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the Securities of such series and except, if applicable as provided in Sections
312(b), 312(d) and 312(e)) (together with accrued interest, if any, to the
Redemption Date), and from and after such date (unless the Company shall default
in the payment of the Redemption Price and accrued interest) such Securities
shall, if the same were interest-bearing, cease to bear interest. Upon
surrender of any such Security for redemption in accordance with said notice,
such Security shall be paid by the Company at the Redemption Price, together
with accrued interest, if any, to the Redemption Date; provided, however, that
installments of interest on Registered Securities whose Stated Maturity is on or
prior to the Redemption Date shall be payable to the Holders of such Securities,
or one or more Predecessor Securities, registered as such at the close of
business on the relevant Record Dates according to their terms and the
provisions of Section 307.

If any Security called for redemption or portion thereof shall not be so paid
upon surrender thereof for redemption, the principal (and premium, if any)
shall, until paid, bear interest from the Redemption Date at the rate of
interest or Yield to Maturity (in the case of Original Issue Discount
Securities) set forth in the Security.

SECTION 1107. Securities Redeemed in Part.

Any Security which is to be redeemed only in part (pursuant to the provisions of
this Article or of Article Twelve) shall be surrendered at a Place of Payment
therefor (with, if the Company or the Trustee so requires, due endorsement by,
or a written instrument of transfer in form satisfactory to the Company and the
Trustee duly executed by, the Holder thereof or such Holder's attorney duly
authorized in writing), and the Company shall execute, and the Trustee shall
authenticate and deliver to the Holder of such Security without service charge,
a new Security or Securities of the same series, of any authorized denomination
as requested by such Holder, in aggregate principal amount equal to and in
exchange for the unredeemed portion of the principal of the Security so
surrendered.

ARTICLE TWELVE
SINKING FUNDS

SECTION 1201. Applicability of Article.

Retirements of Securities of any series pursuant to any sinking fund shall be
made in accordance with the terms of such Securities and (except as otherwise
specified as contemplated by Section 301 for Securities of any series) in
accordance with this Article.

The minimum amount of any sinking fund payment provided for by the terms of
Securities of any series is herein referred to as a "mandatory sinking fund
payment", and any payment in excess of such minimum amount provided for by the
terms of Securities of any series is herein referred to as an "optional sinking
fund payment". If provided for by the terms of Securities of any series, the
cash amount of any mandatory sinking fund payment may be subject to reduction as
provided in Section 1202. Each sinking fund payment shall be applied to the
redemption of Securities of any series as provided for by the terms of
Securities of such series.

SECTION 1202. Satisfaction of Sinking Fund Payments with Securities.

Subject to Section 1203, in lieu of making all or any part of any mandatory
sinking fund payment with respect to any Securities of a series in cash, subject
to the limitations set forth at Section 1001, the

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Company may at its option (1) deliver to the Trustee Outstanding Securities of a
series (other than any previously called for redemption) theretofore purchased
or otherwise acquired by the Company and/or (2) receive credit for the principal
amount of Securities of such series which have been previously delivered to the
Trustee by the Company or for Securities of such series which have been redeemed
either at the election of the Company pursuant to the terms of such Securities
or through the application of permitted optional sinking fund payments pursuant
to the terms of such Securities, in each case in satisfaction of all or any part
of any mandatory sinking fund payment with respect to the Securities of the same
series required to be made pursuant to the terms of such Securities as provided
for by the terms of such series; provided, however, that such Securities have
not been previously so credited. Such Securities shall be received and credited
for such purpose by the Trustee at the Redemption Price specified in such
Securities for redemption through operation of the sinking fund and the amount
of such mandatory sinking fund payment shall be reduced accordingly.

SECTION 1203. Redemption of Securities for Sinking Fund.

Not less than 60 days prior to each sinking fund payment date for any series of
Securities, the Company will deliver to the Trustee an Officers' Certificate
specifying the amount of the next ensuing sinking fund payment for that series
pursuant to the terms of that series, the portion thereof, if any, which is to
be satisfied by payment of cash in the Currency in which the Securities of such
series are payable (except as otherwise specified pursuant to Section 301 for
the Securities of such series and except, if applicable, as provided in Sections
312(b), 312(d) and 312(e)) and the portion thereof, if any, which is to be
satisfied by delivering or crediting Securities of that series pursuant to
Section 1202 (which Securities will, if not previously delivered, accompany such
certificate) and whether the Company intends to exercise its right to make a
permitted optional sinking fund payment with respect to such series. Such
certificate shall be irrevocable and upon its delivery the Company shall be
obligated to make the cash payment or payments therein referred to, if any, on
or before the next succeeding sinking fund payment date. In the case of the
failure of the Company to deliver such certificate, the sinking fund payment due
on the next succeeding sinking fund payment date for that series shall be paid
entirely in cash and shall be sufficient to redeem the principal amount of such
Securities subject to a mandatory sinking fund payment without the option to
deliver or credit Securities as provided in Section 1202 and without the right
to make any optional sinking fund payment, if any, with respect to such series.

Not more than 60 days before each such sinking fund payment date the Trustee
shall select the Securities to be redeemed upon such sinking fund payment date
in the manner specified in Section 1103 and cause notice of the redemption
thereof to be given in the name of and at the expense of the Company in the
manner provided in Section 1104. Such notice having been duly given, the
redemption of such Securities shall be made upon the terms and in the manner
stated in Sections 1106 and 1107.

Prior to any sinking fund payment date, the Company shall pay to the Trustee or
a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate
and hold in trust as provided in Section 1103) in cash a sum equal to any
interest that will accrue to the date fixed for redemption of Securities or
portions thereof to be redeemed on such sinking fund payment date pursuant to
this Section 1203.

Notwithstanding the foregoing, with respect to a sinking fund for any series of
Securities, if at any time the amount of cash to be paid into such sinking fund
on the next succeeding sinking fund payment date, together with any unused
balance of any preceding sinking fund payment or payments for such series, does
not exceed in the aggregate $100,000, the Trustee, unless requested by the
Company, shall not give the

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next succeeding notice of the redemption of Securities of such series through
the operation of the sinking fund. Any such unused balance of moneys deposited
in such sinking fund shall be added to the sinking fund payment for such series
to be made in cash on the next succeeding sinking fund payment date or, at the
request of the Company, shall be applied at any time or from time to time to the
purchase of Securities of such series, by public or private purchase, in the
open market or otherwise, at a purchase price for such Securities (excluding
accrued interest and brokerage commissions, for which the Trustee or any Paying
Agent will be reimbursed by the Company) not in excess of the principal amount
thereof.

ARTICLE THIRTEEN
REPAYMENT AT OPTION OF HOLDERS

SECTION 1301. Applicability of Article.

Repayment of Securities of any series before their Stated Maturity at the option
of Holders thereof shall be made in accordance with the terms of such Securities
and (except as otherwise specified as contemplated by Section 301 for Securities
of any series) in accordance with this Article.

SECTION 1302. Repayment of Securities.

Securities of any series subject to repayment in whole or in part at the option
of the Holders thereof will, unless otherwise provided in the terms of such
Securities, be repaid at a price equal to the principal amount thereof, together
with interest, if any, thereon accrued to the Repayment Date specified in or
pursuant to the terms of such Securities. The Company covenants that on or
before the Repayment Date it will deposit with the Trustee or with a Paying
Agent (or, if the Company is acting as its own Paying Agent, segregate and hold
in trust as provided in Section 1003) an amount of money in the Currency in
which the Securities of such series are payable (except as otherwise specified
pursuant to Section 301 for the Securities of such series and except, if
applicable, as provided in Sections 312(b), 312(d) and 312(e)) sufficient to pay
the principal (or, if so provided by the terms of the Securities of any series,
a percentage of the principal) of, and (except if the Repayment Date shall be an
Interest Payment Date) accrued interest on, all the Securities or portions
thereof, as the case may be, to be repaid on such date.

SECTION 1303. Exercise of Option.

Securities of any series subject to repayment at the option of the Holders
thereof will contain an "Option to Elect Repayment" form on the reverse of such
Securities. To be repaid at the option of the Holder, any Security so providing
for such repayment, with the "Option to Elect Repayment" form on the reverse of
such Security duly completed by the Holder (or by the Holder's attorney duly
authorized in writing), must be received by the Company at the Place of Payment
therefor specified in the terms of such Security (or at such other place or
places or which the Company shall from time to time notify the Holders of such
Securities) not earlier than 45 days nor later than 30 days prior to the
Repayment Date. If less than the entire principal amount of such Security is to
be repaid in accordance with the terms of such Security, the principal amount of
such Security to be repaid, in increments of the minimum denomination for
Securities of such series, and the denomination or denominations of the Security
or Securities to be issued to the Holder for the portion of the principal amount
of such Security surrendered that is not to be repaid, must be specified. The
principal amount of any Security providing for repayment at the option of the
Holder thereof may not be repaid in part if, following such repayment, the
unpaid principal amount of such

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Security would be less than the minimum authorized denomination of Securities of
the series of which such Security to be repaid is a part. Except as otherwise
may be provided by the terms of any Security providing for repayment at the
option of the Holder thereof, exercise of the repayment option by the Holder
shall be irrevocable unless waived by the Company.

SECTION 1304. When Securities Presented for Repayment Become Due and Payable.

If Securities of any series providing for repayment at the option of the Holders
thereof shall have been surrendered as provided in this Article and as provided
by or pursuant to the terms of such Securities, such Securities or the portions
thereof, as the case may be, to be repaid shall become due and payable and shall
be paid by the Company on the Repayment Date therein specified, and on and after
such Repayment Date (unless the Company shall default in the payment of such
Securities on such Repayment Date) such Securities shall, if the same were
interest-bearing, cease to bear interest. Upon surrender of any such Security
for repayment in accordance with such provisions, the principal amount of such
Security so to be repaid shall be paid by the Company, together with accrued
interest, if any, to the Repayment Date; provided, however, that in the case of
Registered Securities, installments of interest, if any, whose Stated Maturity
is on or prior to the Repayment Date shall be payable to the Holders of such
Securities, or one or more Predecessor Securities, registered as such at the
close of business on the relevant Record Dates according to their terms and the
provisions of Section 307.

If the principal amount of any Security surrendered for repayment shall not be
so repaid upon surrender thereof, such principal amount (together with interest,
if any, thereon accrued to such Repayment Date) shall, until paid, bear interest
from the Repayment Date at the rate of interest Yield to Maturity (in the case
of Original Issue Discount Securities) set forth in such Security.

SECTION 1305. Securities Repaid in Part.

Upon surrender of any Registered Security which is to be repaid in part only,
the Company shall execute and the Trustee shall authenticate and deliver to the
Holder of such Security, without service charge and at the expense of the
Company, a new Registered Security or Securities of the same series, of any
authorized denomination specified by the Holder, in an aggregate principal
amount equal to and in exchange for the portion of the principal of such
Security so surrendered which is not to be repaid.

ARTICLE FOURTEEN
DEFEASANCE AND COVENANT DEFEASANCE

SECTION 1401. Company's Option to Effect Defeasance or Covenant Defeasance.

Except as otherwise specified as contemplated by Section 301 for Securities of
any series of this Section 1401, the provisions of this Article Fourteen shall
apply to each series of Securities, and the Company may, at its option, effect
(i) defeasance of the Securities of or within a series under Section 1402,
except that the Company shall not effect any such defeasance under Section 1402
in respect of any Securities of which a NWPS Trust or a trustee of such trust is
the Holder, or (ii) covenant defeasance of or within a

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series under Section 1403 in accordance with the terms of such Securities and in
accordance with this Article.

SECTION 1402. Defeasance and Discharge.

Upon the Company's exercise of the above option applicable to this Section with
respect to any Securities of or within a series, the Company shall be deemed to
have been discharged from its obligations with respect to such Outstanding
Securities on the date the conditions set forth in Section 1404 are satisfied
(hereinafter, "defeasance"). For this purpose, such defeasance means that the
Company shall be deemed to have paid and discharged the entire indebtedness
represented by such Outstanding Securities, which shall thereafter be deemed to
be "Outstanding" only for the purposes of Section 1405 and the other Sections of
this Indenture referred to in (A) and (B) below, and to have satisfied all its
other obligations under such Securities and this Indenture insofar as such
Securities are concerned (and the Trustee, at the expense of the Company, shall
execute proper instruments acknowledging the same), except for the following
which shall survive until otherwise terminated or discharged hereunder: (A) the
rights of Holders of such Outstanding Securities to receive, solely from the
trust fund described in Section 1404 and as more fully set forth in such
Section, payments in respect of the principal of (and premium, if any, on) and
interest on such Securities (B) the Company's obligations with respect to such
Securities under Sections 304, 305, 306, 1002 and 1003 and with respect to the
payment of Additional Amounts, if any, on such Securities as contemplated by
Section 1005, (C) the rights, powers, trusts, duties and immunities of the
Trustee hereunder and (D) this Article Fourteen. Subject to compliance with
this Article Fourteen, the Company may exercise its option under this Section
1402 notwithstanding the prior exercise of its option under Section 1403 with
respect to such Securities.

SECTION 1403. Covenant Defeasance.

Upon the Company's exercise of the above option applicable to this Section with
respect to any Securities of or within a series, the Company shall be released
from its obligations under Section 803 and Sections 1006 through 1008, and, if
specified pursuant to Section 301, its obligations under any other covenant,
with respect to such Outstanding Securities on and after the date the conditions
set forth in Section 1404 are satisfied (hereinafter, "covenant defeasance"),
and such Securities shall thereafter be deemed not to be "Outstanding" for the
purposes of any direction, waiver, consent or declaration or Act of Holders (and
the consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "Outstanding" for all other purposes hereunder. For this
purpose, such covenant defeasance means that, with respect to such Outstanding
Securities, the Company may omit to comply with and shall have no liability in
respect of any term, condition or limitation set forth in any such covenant,
whether directly or indirectly, by reason of any reference elsewhere herein to
any such covenant or by reason of reference in any such covenant to any other
provision herein or in any other document and such omission to comply shall not
constitute a Default or an Event of Default under Section 501(4) or otherwise,
as the case may be, but, except as specified above, the remainder of this
Indenture and such Securities shall be unaffected thereby.

SECTION 1404. Conditions to Defeasance or Covenant Defeasance.

The following shall be the conditions to application of either Section 1402 or
Section 1403 to any Outstanding Securities of or within a series:

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(1) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the
requirements of Section 607 who shall agree to comply with the
provisions of this Article Fourteen applicable to it) as trust funds
in trust for the purpose of making the following payments,
specifically pledged as security for, and dedicated solely to, the
benefit of the Holders of such Securities, (A) an amount (in such
Currency in which such Securities are then specified as payable at
Stated Maturity), or (B) Government Obligations applicable to such
Securities (determined on the basis of the Currency in which such
Securities are then specified as payable at Stated Maturity) which
through the scheduled payment of principal and interest in respect
thereof in accordance with their terms will provide, not later than
one day before the due date of any payment of principal (including
any premium) and interest, if any, under such Securities, money in
an amount, or (C) a combination thereof, sufficient, in the opinion
of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the
Trustee, to pay and discharge, and which shall be applied by the
Trustee (or other qualifying trustee) to pay and discharge, (i) the
principal of (and premium, if any, on) and interest on such
Outstanding Securities on the Stated Maturity (or Redemption Date,
if applicable) of such principal (and premium, if any) or
installment or interest and (ii) any mandatory sinking fund payments
or analogous payments applicable to such Outstanding Securities on
the day on which such payments are due and payable in accordance
with the terms of this Indenture and of such Securities; provided
that the Trustee shall have been irrevocably instructed to apply
such money or the proceeds of such Government Obligations to said
payments with respect to such Securities. Before such a deposit,
the Company may give to the Trustee, in accordance with Section 1102
hereof, a notice of its election to redeem all or any portion of
such Outstanding Securities at a future date in accordance with the
terms of the Securities of such series and Article Eleven hereof,
which notice shall be irrevocable. Such irrevocable redemption
notice, if given, shall be given effect in applying the foregoing.

(2) No Default or Event of Default with respect to such Securities shall
have occurred and be continuing on the date of such deposit or,
insofar as paragraphs (5) and (7) of Section 501 are concerned, at
any time during the period ending on the 91st day after the date of
such deposit (it being understood that this condition shall not be
deemed satisfied until the expiration of such period).

(3) Such defeasance or covenant defeasance shall not result in a breach
or violation of, or constitute a default under, this Indenture or
any other material agreement or instrument to which the Company is a
party or by which it is bound.

(4) In the case of an election under Section 1402, the Company shall
have delivered to the Trustee an Opinion of Counsel stating that (x)
the Company has received from, or there has been published by, the
Internal Revenue Service a ruling, or (y) since the date of
execution of this Indenture, there has been a change in the
applicable United States federal income tax law, in either case to
the effect that, and based thereon such opinion shall confirm that,
the Holders of such Outstanding Securities will not recognize
income, gain or loss for United States federal income tax purposes
as a result of such defeasance and will be subject to United States
federal income tax on the same amounts, in the same

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manner and at the same times as would have been the case if such
defeasance had not occurred.

(5) In the case of an election under Section 1403, the Company shall
have delivered to the Trustee an Opinion of Counsel to the effect
that the Holders of such Outstanding Securities will not recognize
income, gain or loss for United States federal income tax purposes
as a result of such covenant defeasance and will be subject to
United States federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such
covenant defeasance had not occurred.

(6) Notwithstanding any other provisions of this Section, such
defeasance or covenant defeasance shall be effected in compliance
with any additional or substitute terms, conditions or limitations
in connection therewith pursuant to Section 301.

(7) The Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that the deposit contemplated by subsection
(1) shall not result in the Company, the Trustee or the defeasance
trust being deemed an "investment company" under the Investment
Company Act of 1940, as amended.

(8) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for relating to either the defeasance
under Section 1402 or the covenant defeasance under Section 1403 (as
the case may be) have been complied with.

SECTION 1405. Deposited Money and Government Obligations to Be Held in Trust;
Other Miscellaneous Provisions.

Subject to the provisions of the last paragraph of Section 1003, all money and
Government Obligations (or other property as may be provided pursuant to Section
301) (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee -- collectively for purposes of this Section 1405, the
"Trustee") pursuant to Section 1404 in respect of such Outstanding Securities
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Securities and this Indenture, to the payment, either
directly or through any Paying Agent (including the Company acting as its own
Paying Agent) as the Trustee may determine, to the Holders of such Securities of
all sums due and to become due thereon in respect of principal (and premium, if
any) and interest, but such money need not be segregated from other funds except
to the extent required by law.

Unless otherwise specified with respect to any Security pursuant to Section 301,
if, after a deposit referred to in Section 1404(1) has been made, (a) the Holder
of a Security in respect of which such deposit was made is entitled to, and
does, elect pursuant to Section 312(b) or the terms of such Security to receive
payment in a Currency other than that in which the deposit pursuant to Section
1404(1) has been made in respect of such Security, or (b) a Conversion Event
occurs as contemplated in Section 312(d) or 312(e) or by the terms of any
Security in respect of which the deposit pursuant to Section 1404(1) has been
made, the indebtedness represented by such Security shall be deemed to have
been, and will be, fully discharged and satisfied through the payment of the
principal of (premium, if any, on), and interest, if any, on such Security as
they become due out of the proceeds yielded by converting (from time to time as
specified below in the case of any such election) the amount or other property
deposited in respect of such Security

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into the Currency in which such Security becomes payable as a result of such
election or Conversion Event based on the applicable Market Exchange Rate for
such Currency in effect on the third Business Day prior to each payment date,
except, with respect to a Conversion Event, for such Currency in effect (as
nearly as feasible) at the time of the Conversion Event.

The Company shall pay and indemnify the Trustee against any tax, fee or other
charge imposed on or assessed against the Government Obligations deposited
pursuant to Section 1404 or the principal and interest received in respect
thereof other than any such tax, fee or other charge which by law is for the
account of the Holders of such Outstanding Securities.

Anything in this Article Fourteen to the contrary notwithstanding, the Trustee
shall deliver or pay to the Company from time to time upon Company Request any
money or Government Obligations (or other property and any proceeds therefrom)
held by it as provided in Section 1404 which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee, are in excess of the amount
thereof which would then be required to be deposited to effect an equivalent
defeasance or covenant defeasance, as applicable, in accordance with this
Article.

SECTION 1406. Reinstatement.

If the Trustee or any Paying Agent is unable to apply any money in accordance
with Section 1405 by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and such
Securities shall be revived and reinstated as though no deposit had occurred
pursuant to Section 1402 or 1403, as the case may be, until such time as the
Trustee or Paying Agent is permitted to apply all such money in accordance with
Section 1405; provided, however, that if the Company makes any payment of
principal of (or premium, if any, on) or interest on any such Security following
the reinstatement of its obligations, the Company shall be subrogated to the
rights of the Holders of such Securities to receive such payment from the money
held by the Trustee or Paying Agent.

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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly
executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.

Seal
NORTHWESTERN PUBLIC SERVICE COMPANY

By: /s/ Richard R. Hylland
----------------------------------------------
Richard R. Hylland
Vice President - Strategic Development

Attest: /s/ Alan D. Dietrich
----------------
Alan D. Dietrich
Corporate Secretary

Seal
THE CHASE MANHATTAN BANK (N.A.)

By: /s/ James Heaney
----------------------------------------------
Name: James Heaney
Title: Vice President

Attest: /s/ Kathleen Perry
-------------------
Assistant Secretary
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<PAGE>

STATE OF SOUTH DAKOTA )
) SS
COUNTY OF BEADLE )

On the day of August 1, 1995, before me personally Richard R. Hylland came
to be known, who, being by me duly sworn, did depose and say that he is the Vice
President - Strategic Development of Northwestern Public Service Company, one of
the corporations described in and which executed the above instrument; that he
knows the corporate seal of said corporation; that the seal affixed to the said
instrument is such corporation seal; that it was so affixed by authority of the
Board of Directors of said corporation, and that he signed his name thereto by
like authority.

IN WITNESS WHEREOF, I have hereunto set my hand and affixed my seal of
office this 1st day of August, 1995.

/s/ Susan M. Anderson
----------------------------------------
(Notarial Seal) Susan M. Anderson
NOTARY PUBLIC, BEADLE COUNTY, S.D.
My Commission Expires June 8, 2000

STATE OF NEW YORK )
) SS
COUNTY OF KINGS )

On the day of August 1, 1995, before me personally James Heaney
came to be known, who, being by me duly sworn, did depose and say that he is the
Vice President of The Chase Manhattan Bank, one of the corporations
described in and which executed the above instrument; that he knows the
corporate seal of said corporation; that the seal affixed to the said instrument
is such corporation seal; that it was so affixed by authority of the Board of
Directors of said corporation, and that he signed his name thereto by like
authority.

IN WITNESS WHEREOF, I have hereunto set my hand and affixed my seal of
office this 1st day of August, 1995.

(Notarial Seal) /s/ Denis Kelly
----------------------------------
NOTARY PUBLIC
COMMISSION EXPIRES

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<PAGE>

SUPPLEMENTAL INDENTURE
TO BE USED IN CONNECTION WITH THE ISSUANCE OF
SUBORDINATED DEBT SECURITIES AND PREFERRED SECURITIES

FIRST SUPPLEMENTAL INDENTURE, dated as of August 1, 1995 (this "First
Supplemental Indenture"), between Northwestern Public Service Company, a
Delaware corporation (the "Company") and The Chase Manhattan Bank (N.A.), as
trustee (the "Trustee") under the Indenture dated as of August 1, 1995 between
the Company and the Trustee (the "Indenture").

WHEREAS, the Company executed and delivered the Indenture to the Trustee to
provide for the future issuance of the Company's subordinated debt securities to
be issued from time to time in one or more series as might be determined by the
Company under the Indenture, in an unlimited aggregate principal amount which
may be authenticated and delivered as provided in the Indenture;

WHEREAS, pursuant to the terms of the Indenture, the Company desires to provide
for the establishment of a new series of its Securities to be known as its
8-1/8% Junior Subordinated Deferrable Interest Debentures due September 30, 2025
(the "Debentures"), the form and substance of such Debentures and the terms,
provisions and conditions thereof to be set forth as provided in the Indenture
and this First Supplemental Indenture;

WHEREAS, NWPS Capital Financing I, a Delaware statutory business trust (the
"Trust"), has offered to the public $32,500,000 aggregate liquidation amount of
its 8-1/8% Trust Preferred Capital Securities (the "Preferred Securities"),
representing undivided beneficial interests in the assets of the Trust, and
proposes to invest the proceeds from such offering in $32,500,000 aggregate
principal amount of the Debentures; and

WHEREAS, the Company has requested that the Trustee execute and deliver this
First Supplemental Indenture and all requirements necessary to make this First
Supplemental Indenture a valid instrument in accordance with its terms and to
make the Debentures, when executed by the Company and authenticated and
delivered by the Trustee, the valid obligations of the Company have been
performed, and the execution and delivery of this First Supplemental Indenture
has been duly authorized in all respects;

NOW THEREFORE, in consideration of the purchase and acceptance of the Debentures
by the Holders thereof, and for the purpose of setting forth, as provided in the
Indenture, the form and substance of the Debentures and the terms, provisions
and conditions thereof, the Company covenants and agrees with the Trustee as
follows:

<PAGE>

ARTICLE I
DEFINITIONS

SECTION 1.1. Definition of Terms.

Unless the context otherwise requires:

(a) a term defined in the Indenture has the same meaning when used in this
First Supplemental Indenture;

(b) a term defined anywhere in this First Supplemental Indenture has the
same meaning throughout;

(d) a reference to a Section or Article is to a Section or Article of this
First Supplemental Indenture;

(e) headings are for convenience of reference only and do not affect
interpretation;

(f) the following terms have the meanings given to them in the
Declaration: (i) Business Day; (ii) Clearing Agency; (iii) Delaware
Trustee; (iv) Dissolution Tax Opinion; (v) Investment Company Event;
(vi) No Recognition Opinion; (vii) Property Trustee; (viii) Preferred
Security Certificate; (ix) Regular Trustees; (x) Special Event; and
(xi) Tax Event; and

(g) the following terms have the meanings given to them in this Section
1.1(g):

"Additional Interest" has the meaning specified in Section 2.5(c).

"Declaration" means the Amended and Restated Declaration of Trust of NWPS
Capital Financing I, a Delaware statutory business trust, dated as of August 1,
1995, as amended or restated from time to time.

"Dissolution Event" means that as a result of the occurrence and continuation of
a Special Event, the Trust is to be dissolved in accordance with the
Declaration, and the Debentures held by the Property Trustee are to be
distributed to the holders of the Trust Securities issued by the Trust pro rata
in accordance with the Declaration.

"Extended Maturity Date" means, if the Company elects to extend the Maturity
Date in accordance with Section 2.2(b), the date selected by the Company which
is after the Scheduled Maturity Date but before September 30, 2044.

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<PAGE>

"Maturity Date" means the date on which the Debentures mature and on which the
principal shall be due and payable together with all accrued and unpaid interest
thereon including Compounded Interest and Additional Interest, if any.

"Scheduled Maturity Date" means September 30, 2025.

"Senior Indebtedness" means with respect to the Company, (i) the principal,
premium, if any, and interest in respect of (A) indebtedness of such obligor for
money borrowed and (B) indebtedness evidenced by securities, debentures, bonds
or other similar instruments issued by such obligor, including, without
limitation, all obligations under its General Mortgage and Deed of Trust dated
as of August 1, 1993 (the "New Mortgage") between the Company and The Chase
Manhattan Bank (National Association), and the Indenture dated August 1, 1940
(the "First Mortgage") between the Company and The Chase Manhattan Bank
(National Association) and C.J. Heinzelmann; (ii) all capital lease obligations
of such obligor; (iii) all obligations of such obligor issued or assumed as the
deferred purchase price of property, all conditional sale obligations of such
obligor and all obligations of such obligor under any title retention agreement
(but excluding trade accounts payable arising in the ordinary course of
business); (iv) all obligations of such obligor for the reimbursement on any
letter of credit, banker's acceptance, security purchase facility or similar
credit transaction; (v) all obligations of the type referred to in clauses (i)
through (iv) of other persons for the payment of which such obligor is
responsible or liable as obligor, guarantor or otherwise; and (vi) all
obligations of the type referred to in clauses (i) through (v) of other persons
secured by any lien on any property or asset of such obligor (whether or not
such obligation is assumed by such obligor), except for (1) any such
indebtedness that is by its terms subordinated to or pari passu with the
Debentures, as the case may be, and (2) any indebtedness between or among any
obligor and its Affiliates, including all other debt securities and guarantees
in respect of those debt securities, issued to (a) any other NWPS Trust, or a
trustee of such trust, and (b) any other trust or a trustee of such trust,
partnership or other entity affiliated with the Company which is a financing
vehicle of the Company ("Financing Entity") in connection with an issuance of
preferred securities by such Financing Entity of preferred securities or other
securities which rank pari passu with or junior to the Preferred Securities.

ARTICLE II
GENERAL TERMS AND CONDITIONS OF THE DEBENTURES

SECTION 2.1. Designation and Principal Amount.

There is hereby authorized a series of Securities designated the "8-1/8% Junior
Subordinated Deferrable Interest Debentures due September 30, 2025", limited in
aggregate principal amount to $33,505,154 million, which amount shall be as set
forth in any written Company Order for the authentication and delivery of
Debentures pursuant to Section 303 of the Indenture.

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<PAGE>

SECTION 2.2. Maturity.

(a) The Maturity Date will be either:

(i) the Scheduled Maturity Date; or

(ii) if the Company elects to extend the Maturity Date beyond the
Scheduled Maturity Date in accordance with Section 2.2(b), the
Extended Maturity Date;

(b) the Company may at any time before the day which is 90 days before the
Scheduled Maturity Date, elect to extend the Maturity Date only once
to the Extended Maturity Date, provided that the following conditions
in this Section 2.2(b) are satisfied both at the date the Company
gives notice in accordance with Section 2.2(c) of its election to
extend the Maturity Date and at the Scheduled Maturity Date:

(i) the Company is not in bankruptcy or otherwise insolvent;

(ii) the Company is not in default on any Securities issued to the
Trust or any trustee of the Trust in connection with the
issuance of Trust Securities by the Trust;

(iii) the Company has made timely payments on the Debentures for the
immediately preceding 18 months without deferrals;

(iv) the Trust is not in arrears on payments of Distributions on
the Trust Securities issued by it; and

(v) the Debentures are rated investment grade or the equivalent by
any one of Standard & Poor's Ratings Group, Moody's Investors
Service, Inc., Fitch Investor Services, Duff & Phelps Credit
Rating Company or any other nationally recognized statistical
rating organization; and

(c) if the Company elects to extend the Maturity Date in accordance with
Section 2.2(b), the Company shall give notice to Holders of the
Debentures, the Property Trustee, the Trust and the Trustee of the
extension of the Maturity Date and the Extended Maturity Date at
least 90 days before the Scheduled Maturity Date.

SECTION 2.3. Form and Payment.

Except as provided in Section 2.4, the Debentures shall be issued as Registered
Securities in fully registered certificated form without interest coupons.
Principal of and interest on the Debentures issued in certificated form will be
payable, the transfer of such Debentures will be registrable and such Debentures
will be exchangeable for Debentures bearing identical terms and provisions at

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<PAGE>

the office or agency of the Trustee; provided, however, that payment of interest
may be made at the option of the Company by check mailed to the Holder at such
address as shall appear in the Security Register. Notwithstanding the
foregoing, so long as the Holder of any Debentures is the Property Trustee, the
payment of the principal of and interest (including Compounded Interest and
Additional Interest, if any) on such Debentures held by the Property Trustee
will be made at such place and to such account as may be designated by the
Property Trustee.

SECTION 2.4. Global Debenture.

(a) In connection with a Dissolution Event:

(i) the Debentures in certificated form may be presented to the
Trustee by the Property Trustee in exchange for a global
Debenture in an aggregate principal amount equal to all
Outstanding Debentures (a "Global Debenture"), to be
registered in the name of the Depository, or its nominee, and
delivered by the Trustee to the Depository for crediting to
the accounts of its participants pursuant to the instructions
of the Regular Trustees. The Company upon any such
presentation shall execute a Global Debenture in such
aggregate principal amount and deliver the same to the Trustee
for authentication and delivery in accordance with the
Indenture and this First Supplemental Indenture. Payments on
the Debentures issued as a Global Debenture will be made to
the Depository; and

(ii) if any Preferred Securities are held in non book-entry
certificated form, the Debentures in certificated form may be
presented to the Trustee by the Property Trustee and any
Preferred Security Certificate which represents Preferred
Securities other than Preferred Securities held by the
Clearing Agency or its nominee ("Non Book-Entry Preferred
Securities") will be deemed to represent beneficial interests
in Debentures presented to the Trustee by the Property Trustee
having an aggregate principal amount equal to the aggregate
liquidation amount of the Non Book-Entry Preferred Securities
until such Preferred Security Certificates presented to the
Security Registrar for transfer or reissuance at which time
such Preferred Security Certificates will be cancelled and a
Debenture registered in the name of the holder of the
Preferred Security Certificate or the transferee of the holder
of such Preferred Security Certificate, as the case may be,
with an aggregate principal amount equal to the aggregate
liquidation amount of the Preferred Security Certificate
cancelled will be executed by the Company and delivered to the
Trustee for authentication and delivery in accordance with the
Indenture and this First Supplemental Indenture. On issue of
such Debentures, Debentures with an equivalent aggregate
principal amount that were presented by the Property Trustee
to the Trustee will be deemed to have been cancelled.

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<PAGE>

(b) A Global Debenture may be transferred, in whole but not in part, only
to another nominee of the Depositary, or to a successor Depositary
selected or approved by the Company or to a nominee of such successor
Depositary.

(c) If at any time the Depositary notifies the Company that it is
unwilling or unable to continue as Depositary or if at any time the
Depositary for such series shall no longer be registered or in good
standing under the Securities Exchange Act of 1934, as amended, or
other applicable statute or regulation, and a successor Depositary for
such series is not appointed by the Company within 90 days after the
Company receives such notice or becomes aware of such condition, as
the case may be, the Company will execute, and, subject to Article Two
of the Indenture, the Trustee will authenticate and deliver the
Debentures in definitive registered form without coupons, in
authorized denominations, and in an aggregate principal amount equal
to the principal amount of the Global Debenture in exchange for such
Global Debenture. In addition, the Company may at any time determine
that the Debentures shall no longer be represented by a Global
Debenture. In such event the Company will execute and subject to a
certificate evidencing such determination by the Company, will
authenticate and deliver the Debentures in definitive registered form
without coupons, in authorized denominations, and in an aggregate
principal amount equal to the principal amount of the Global Debenture
in exchange for such Global Debenture. Upon the exchange of the
Global Debenture for such Debentures in definitive registered form
without coupons, in authorized denominations, the Global Debenture
shall be cancelled by the Trustee. Such Debentures in definitive
registered form issued in exchange for the Global Debenture shall be
registered in such names and in such authorized denominations as the
Depositary, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee. The Trustee
shall deliver such Securities to the Depositary for delivery to the
Persons in whose names such Securities are so registered.

SECTION 2.5. Interest.

(a) Each Debenture will bear interest at the rate of 8-1/8% per annum (the
"Coupon Rate") from the original date of issuance until the principal
thereof becomes due and payable, and on any overdue principal and (to
the extent that payment of such interest is enforceable under
applicable law) on any overdue installment of interest at the Coupon
Rate, compounded quarterly, payable (subject to the provisions of
Article Four) quarterly in arrears on March 31, June 30, September 30
and December 31 of each year (each, an "Interest Payment Date"),
commencing on September 30, 1995, to the Person in whose name such
Debenture or any predecessor Debenture is registered, at the close of
business on the regular record date for such interest installment,
which, in respect of any Debentures of which the Property Trustee is
the Holder of or a Global Debenture, shall be the close of

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<PAGE>

business on the Business Day next preceding that Interest Payment
Date. Notwithstanding the foregoing sentence, if the Preferred
Securities are no longer in book-entry only form or if pursuant to the
Indenture the Debentures are not represented by a Global Debenture,
the Company may select a regular record date for such interest
installment which shall be any date at least one Business Day before
an Interest Payment Date.

(b) The amount of interest payable for any period will be computed on the
basis of a 360-day year of twelve 30-day months. Except as provided in
the following sentence, the amount of interest payable for any period
shorter than a full quarterly period for which interest in computed,
will be computed on the basis of the actual number of days elapsed in
such a 30-day month. In the event that any date on which interest is
payable on the Debentures is not a Business Day, then payment of
interest payable on such date will be made on the next succeeding day
which is a Business Day (and without any interest or other payment in
respect of any such delay), except that, if such Business Day is in
the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force
and effect as if made on such date.

(c) If at any time while the Property Trustee is the Holder of any
Debentures, the Trust or the Property Trustee is required to pay any
taxes, duties, assessments or governmental charges of whatever nature
(other than withholding taxes) imposed by the United States, or any
other taxing authority, then, in any case, the Company will pay as
additional interest ("Additional Interest") on the Debentures held by
the Property Trustee, such additional amounts as shall be required so
that the net amounts received and retained by the Trust and the
Property Trustee after paying such taxes, duties, assessments or other
governmental charges will be equal to the amounts the Trust and the
Property Trustee would have received had no such taxes, duties,
assessments or other government charges been imposed.

ARTICLE III
REDEMPTION OF THE DEBENTURES

SECTION 3.1. Special Event Redemption.

If a Tax Event has occurred and is continuing and:

(a) the Company has received a Redemption Tax Opinion; or

(b) after receiving a Dissolution Tax Opinion, the Regular Trustees shall
have been informed by tax counsel rendering the Dissolution Tax
Opinion that a No Recognition Opinion cannot be delivered to the
Trust,

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<PAGE>

then, notwithstanding Section 3.2(a) but subject to Section 3.2(b), the Company
shall have the right upon not less than 30 days nor more than 60 days notice to
the Holders of the Debentures to redeem the Debentures in whole or in part for
cash within 90 days following the occurrence of such Tax Event (the "90-Day
Period"), provided that, if at the time there is available to the Company the
opportunity to eliminate within the 90-Day Period, the Tax Event by taking some
ministerial action ("Ministerial Action"), such as filing a form or making an
election or pursuing some other similar reasonable measure which has no adverse
effect on the Company, the Trust or the Holders of the Trust Securities issued
by the Trust, the Company shall pursue such Ministerial Action in lieu of
redemption; and provided, further, that the Company shall have no right to
redeem the Debentures while the Trust is pursuing any Ministerial Action
pursuant to its obligations under the Declaration. The Redemption Price shall
be paid prior to 12:00 noon, New York time, on the date of such redemption or
such earlier time as the Company determines provided that the Company shall
deposit with the Trustee an amount sufficient to pay the Redemption Price by
10:00 a.m. on the date such Redemption Price is to be paid.

SECTION 3.2. Optional Redemption by Company.

(a) Subject to the provisions of Section 3.2(b) and to the provisions of
Article Eleven of the Indenture, except as otherwise may be specified
in this First Supplemental Indenture, the Company shall have the right
to redeem the Debentures, in whole or in part, from time to time, on
or after September 30, 2000, at a redemption price equal to 100% of
the principal amount to be redeemed plus any accrued and unpaid
interest thereon to the date of such redemption (the "Optional
Redemption Price"). Any redemption pursuant to this paragraph will be
made upon not less than 30 nor more than 60 days' notice to the Holder
of the Debentures, at the Optional Redemption Price. If the
Debentures are only partially redeemed pursuant to this Section 3.2,
the Debentures will be redeemed pro rata or by lot or by any other
method utilized by the Trustee; provided that, if at the time of
redemption the Debentures are registered as a Global Debenture, the
Depository shall determine by lot the principal amount of such
Debentures held by each Holder of Debenture to be redeemed. The
Optional Redemption Price shall be paid prior to 12:00 noon, New York
time, on the date of such redemption or at such earlier time as the
Company determines provided that the Company shall deposit with the
Trustee an amount sufficient to pay the Optional Redemption Price by
10:00 a.m. on the date such Optional Redemption Price is to be paid.

(b) If a partial redemption of the Debentures would result in the
delisting of the Preferred Securities issued by the Trust from any
national securities exchange or other organization on which the
Preferred Securities are then listed, the Company shall not be
permitted to effect such partial redemption and may only redeem the
Debentures in whole.

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<PAGE>

SECTION 3.3. No Sinking Fund.

The Debentures are not entitled to the benefit of any sinking fund.

ARTICLE IV
EXTENSION OF INTEREST PAYMENT PERIOD

SECTION 4.1. Extension of Interest Payment Period.

The Company shall have the right, at any time during the term of the Debentures,
from time to time to defer payments of interest by extending the interest
payment period of such Debentures for up to 20 consecutive quarters (the
"Extended Interest Payment Period"). To the extent permitted by applicable law,
interest, the payment of which has been deferred because of the extension of the
interest payment period pursuant to this Section 4.1, will bear interest thereon
at the Coupon Rate compounded quarterly for each quarter of the Extended
Interest Payment Period ("Compounded Interest"). At the end of the Extended
Interest Payment Period the Company shall pay all interest accrued and unpaid on
the Debentures, including any Additional Interest and Compounded Interest
("Deferred Interest") that shall be payable, to the Holders of the Debentures in
whose names the Debentures are registered in the Security Register on the first
record date after the end of the Extended Interest Payment Period. Before the
termination of any Extended Interest Payment Period, the Company may further
extend such period, provided that such period together with all such further
extensions thereof shall not exceed 20 consecutive quarters. Upon the
termination of any Extended Interest Payment Period and upon the payment of all
Deferred Interest then due, the Company may commence a new Extended Interest
Payment Period, subject to the foregoing requirements. No interest shall be due
and payable during an Extended Interest Payment Period, except at the end
thereof.

SECTION 4.2. Notice of Extension.

(a) If the Property Trustee is the only registered Holder of the
Debentures at the time the Company selects an Extended Interest
Payment Period, the Company shall give written notice to the Regular
Trustees, the Property Trustee and the Trustee of its selection of
such Extended Interest Payment Period one Business Day before the
earlier of (a) the next succeeding date on which Distributions on the
Trust Securities issued by the Trust are payable, or (b) the date the
Trust is required to give notice of the record date or the date such
Distributions are payable to the New York Stock Exchange or other
applicable self-regulatory organization or to holders of the Preferred
Securities issued by the Trust, but in any event at least one Business
Day before such record date.

(b) If the Property Trustee is not the only Holder of the Debentures at
the time the Company selects an Extended Interest Payment Period, the
Company shall give the Holders of the Debentures and the Trustee
written notice of its selection of such Extended Interest Payment
Period 10 Business Days before the earlier of (i) the next succeeding
Interest Payment Date, or (ii) the date the Company is required to

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<PAGE>

give notice of the record or payment date of such interest payment to
the New York Stock Exchange or other applicable self-regulatory
organization or to Holders of the Debentures.

(c) The quarter in which any notice is given pursuant to paragraphs (a) or
(b) of this Section 4.2 shall be counted as one of the 20 quarters
permitted in the maximum Extended Interest Payment Period permitted
under Section 4.1.

ARTICLE V
EXPENSES

SECTION 5.1. Payment of Expenses.

In connection with the offering, sale and issuance of the Debentures to the
Property Trustee in connection with the sale of the Trust Securities by the
Trust, the Company shall:

(a) pay for all costs and expenses relating to the offering, sale and
issuance of the Debentures, including commissions to the underwriters
payable pursuant to the Underwriting Agreement and the Pricing
Agreement and compensation of the Trustee under the Indenture in
accordance with the provisions of Section 7.06 of the Indenture; and

(b) pay for all costs and expenses of the Trust (including, but not
limited to, costs and expenses relating to the organization of the
Trust, the offering, sale and issuance of the Trust Securities
(including commissions to the underwriters in connection therewith),
the fees and expenses of the Property Trustee and the Delaware
Trustee, the costs and expenses relating to the operation of the
Trust, including without limitation, costs and expenses of
accountants, attorneys, statistical or bookkeeping services, expenses
for printing and engraving and computing or accounting equipment,
paying agent(s), registrar(s), transfer agent(s), duplicating, travel
and telephone and other telecommunications expenses and costs and
expenses incurred in connection with the acquisition, financing, and
disposition of Trust assets); and (c) pay any and all taxes (other
than United States withholding taxes attributable to the Trust or its
assets) and all liabilities, costs and expenses with respect to such
taxes of the Trust.

ARTICLE VI
SUBORDINATION

SECTION 6.1. Agreement to Subordinate.

The Company covenants and agrees, and each Holder of Debentures issued hereunder
by such Holder's acceptance thereof likewise covenants and agrees, that all
Debentures shall be issued

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<PAGE>

subject to the provisions of this Article Six; and each Holder of a Debenture,
whether upon original issue or upon transfer or assignment thereof, accepts and
agrees to be bound by such provisions. The payment by the Company of the
principal of, premium, if any, and interest on all Debentures issued hereunder
shall, to the extent and in the manner hereinafter set forth, be subordinated
and junior in right of payment to the prior payment in full of all Senior
Indebtedness of the Company, whether outstanding at the date of this Indenture
or thereafter incurred. No provision of this Article Six shall prevent the
occurrence of any default or Event of Default hereunder.

SECTION 6.2. Default on Senior Indebtedness.

In the event and during the continuation of any default by the Company in the
payment of principal, premium, interest or any other payment due on any Senior
Indebtedness of the Company, as the case may be, or in the event that the
maturity of any Senior Indebtedness of the Company, as the case may be, has been
accelerated because of a default, then, in either case, no payment shall be made
by the Company with respect to the principal (including redemption and sinking
fund payments) of, or premium, if any, or interest on the Debentures.

In the event that, notwithstanding the foregoing, any payment shall be received
by the Trustee when such payment is prohibited by the preceding paragraph of
this Section 6.2, such payment shall be held in trust for the benefit of, and
shall be paid over or delivered to, the holders of Senior Indebtedness or their
respective representatives, or to the trustee or trustees under any indenture
pursuant to which any of such Senior Indebtedness may have been issued, as their
respective interests may appear, but only to the extent that the holders of the
Senior Indebtedness (or their representative or representatives or a trustee)
notify the Trustee within 90 days of such payment of the amounts then due and
owing on the Senior Indebtedness and only the amounts specified in such notice
to the Trustee shall be paid to the holders of Senior Indebtedness.

SECTION 6.3. Liquidation; Dissolution; Bankruptcy.

Upon any payment by the Company or distribution of assets of the Company of any
kind or character, whether in cash, property or securities, to creditors upon
any dissolution or winding-up or liquidation or reorganization of the Company,
whether voluntary or involuntary or in bankruptcy, insolvency, receivership or
other proceedings, all amounts due upon all Senior Indebtedness of the Company
shall first be paid in full, or payment thereof provided for in money in
accordance with its terms, before any payment is made by the Company on account
of the principal (and premium, if any) or interest on the Debentures; and upon
any such dissolution or winding-up or liquidation or reorganization, any payment
by the Company, or distribution of assets of the Company of any kind or
character, whether in cash, property or securities, to which the Holders of the
Debenture or the Trustee would be entitled to receive from the Company, except
for the provisions of this Article Six, shall be paid by the Company or by any
receiver, trustee in bankruptcy, liquidating trustee, agent or other Person
making such payment or distribution, or by the Holders of the Debentures or by
the Trustee under this Indenture if

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<PAGE>

received by them or it, directly to the holders of Senior Indebtedness of the
Company (pro rata to such holders on the basis of the respective amounts of
Senior Indebtedness held by such holders, as calculated by the Company) or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing such Senior Indebtedness
may have been issued, as their respective interests may appear, to the extent
necessary to pay such Senior Indebtedness in full, in money or money's worth,
after giving effect to any concurrent payment or distribution to or for the
holders of such Senior Indebtedness, before any payment or distribution is made
to the Holders of Debentures or to the Trustee.

In the event that, notwithstanding the foregoing, any payment or distribution of
assets of the Company of any kind or character, whether in cash, property or
securities, prohibited by the foregoing, shall be received by the Trustee before
all Senior Indebtedness of the Company is paid in full, or provision is made for
such payment in money in accordance with its terms, such payment or distribution
shall be held in trust for the benefit of and shall be paid over or delivered to
the holders of such Senior Indebtedness or their representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing such Senior Indebtedness may have been issued,
and their respective interests may appear, as calculated by the Company, for
application to the payment of all Senior Indebtedness of the Company, as the
case may be, remaining unpaid to the extent necessary to pay such Senior
Indebtedness in full in money in accordance with its terms, after giving effect
to any concurrent payment or distribution to or for the holders of such Senior
Indebtedness.

For purposes of this Article Six, the words "cash, property or securities" shall
not be deemed to include shares of stock of the Company as reorganized or
readjusted, or securities of the Company or any other corporation provided for
by a plan of reorganization or readjustment, the payment of which is
subordinated at least to the extent provided in this Article Six with respect to
the Debentures to the payment of all Senior Indebtedness of the Company, as the
case may be, that may at the time be outstanding, provided that (i) such Senior
Indebtedness is assumed by the new corporation, if any, resulting from any such
reorganization or readjustment, and (ii) the rights of the holders of such
Senior Indebtedness are not, without the consent of such holders, altered by
such reorganization or readjustment. The consolidation of the Company with, or
the merger of the Company into, another corporation or the liquidation or
dissolution of the Company following the conveyance or transfer of its property
as an entirety, or substantially as an entirety, to another corporation upon the
terms and conditions provided for in Article Eight of the Indenture shall not be
deemed a dissolution, winding-up, liquidation or reorganization for the purposes
of this Section 6.3 if such other corporation shall, as a part of such
consolidation, merger, conveyance or transfer, comply with the conditions stated
in Article Eight of the Indenture. Nothing in Section 6.2 or in this Section
6.3 shall apply to claims of, or payments to, the Trustee under or pursuant to
Section 606 of the Indenture.

-12-
<PAGE>

SECTION 6.4. Subrogation.

Subject to the payment in full of all Senior Indebtedness of the Company, the
rights of the Holders of the Debentures shall be subrogated to the rights of the
holders of such Senior Indebtedness to receive payments or distributions of
cash, property or securities of the Company, as the case may be, applicable to
such Senior Indebtedness until the principal of (and premium, if any) and
interest on the Debentures shall be paid in full; and, for the purposes of such
subrogation, no payments or distributions to the holders of such Senior
Indebtedness of any cash, property or securities to which the Holders of the
Debentures or the Trustee would be entitled except for the provisions of this
Article Six, and no payment over pursuant to the provisions of this Article Six
to or for the benefit of the holders of such Senior Indebtedness by Holders of
the Debentures or the Trustee, shall, as between the Company, its creditors
other than Holders of Senior Indebtedness of the Company, and the holders of the
Debentures shall be deemed to be a payment by the Company to or on account of
such Senior Indebtedness. It is understood that the provisions of this Article
Six are and are intended solely for the purposes of defining the relative rights
of the Holders of the Debentures, on the one hand, and the holders of such
Senior Indebtedness on the other hand.

Nothing contained in this Article Six or elsewhere in this Indenture or in the
Debentures is intended to or shall impair, as between the Company, its creditors
other than the holders of Senior Indebtedness of the Company, and the Holders of
the Debentures, the obligation of the Company, which is absolute and
unconditional, to pay to the Holders of the Debentures the principal of (and
premium, if any) and interest on the Debentures as and when the same shall
become due and payable in accordance with their terms, or is intended to or
shall affect the relative rights of the Holders of the Debentures and creditors
of the Company, as the case may be, other than the holders of Senior
Indebtedness of the Company, as the case may be, nor shall anything herein or
therein prevent the Trustee or the Holder of any Debenture from exercising all
remedies otherwise permitted by applicable law upon default under the Indenture,
subject to the rights, if any, under this Article Six of the holders of such
Senior Indebtedness in respect of cash, property or securities of the Company,
as the case may be, received upon the exercise of any such remedy.

Upon any payment or distribution of assets of the Company referred to in this
Article Six, the Trustee, subject to the provisions of Section 602 of the
Indenture, and the Holders of the Debentures shall be entitled to rely upon any
order or decree made by any court of competent jurisdiction in which such
dissolution, winding-up, liquidation or reorganization proceedings are pending,
or a certificate of the receiver, trustee in bankruptcy, liquidation trustee,
agent or other Person making such payment or distribution, delivered to the
Trustee or to the Holders of the Debentures, for the purposes of ascertaining
the Persons entitled to participate in such distribution, the holders of Senior
Indebtedness and other indebtedness of the Company, as the case may be, the
amount thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Article Six.

-13-
<PAGE>

SECTION 6.5. Trustee to Effectuate Subordination.

Each Holder of Debentures by such Holder's acceptance thereof authorizes and
directs the Trustee on such Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination provided in this
Article Six and appoints the Trustee such Holder's attorney-in-fact for any and
all such purposes.

SECTION 6.6. Notice by the Company.

The Company shall give prompt written notice to a Responsible Officer of the
Trustee of any fact known to the Company that would prohibit the making of any
payment of monies to or by the Trustee in respect of the Debentures pursuant to
the provisions of this Article Six. Notwithstanding the provisions of this
Article Six or any other provision of the Indenture and this First Supplemental
Indenture, the Trustee shall not be charged with knowledge of the existence of
any facts that would prohibit the making of any payment of monies to or by the
Trustee in respect of the Debentures pursuant to the provisions of this Article
Six, unless and until a Responsible Officer of the Trustee shall have received
written notice thereof from the Company or a holder or holders of Senior
Indebtedness or from any trustee therefor; and before the receipt of any such
written notice, the Trustee, subject to the provisions of Section 602 of the
Indenture, shall be entitled in all respects to assume that no such facts exist;
provided, however, that, if the Trustee shall not have received the notice
provided for in this Section 6.6 at least two Business Days prior to the date
upon which by the terms hereof any money may become payable for any purpose
(including, without limitation, the payment of the principal of (or premium, if
any) or interest on any Debenture), then, anything herein contained to the
contrary notwithstanding, the Trustee shall have full power and authority to
receive such money and to apply the same to the purposes for which they were
received, and shall not be affected by any notice to the contrary that may be
received by it within two Business Days prior to such date.

The Trustee, subject to the provisions of Section 602 of the Indenture, shall be
entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Senior Indebtedness of the Company, as
the case may be (or a trustee on behalf of such holder) to establish that such
notice has been given by a holder of such Senior Indebtedness or a trustee on
behalf of any such holder or holders. In the event that the Trustee determines
in good faith that further evidence is required with respect to the right of any
Person as a holder of such Senior Indebtedness to participate in any payment or
distribution pursuant to this Article Six, the Trustee may request such Person
to furnish evidence to the reasonable satisfaction of the Trustee as to the
amount of such Senior Indebtedness held by such Person, the extent to which such
Person is entitled to participate in such payment or distribution and any other
facts pertinent to the rights of such Person under this Article Six, and, if
such evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment.

-14-
<PAGE>

SECTION 6.7. Rights of the Trustee; Holders of Senior Indebtedness.

The Trustee in its individual capacity shall be entitled to all the rights set
forth in this Article Six in respect of any Senior Indebtedness at any time held
by it, to the same extent as any other holder of Senior Indebtedness, and
nothing in this Indenture shall deprive the Trustee of any of its rights as such
holder.

With respect to the holders of Senior Indebtedness of the Company, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article Six, and no implied covenants or
obligations with respect to the holders of such Senior Indebtedness shall be
read into this Indenture against the Trustee. The Trustee shall not be deemed
to owe any fiduciary duty to the holders of such Senior Indebtedness and,
subject to the provisions of Section 602 of the Indenture, the Trustee shall not
be liable to any holder of such Senior Indebtedness if it shall pay over or
deliver to Holders of Debentures, the Company or any other Person money or
assets to which any holder of such Senior Indebtedness shall be entitled by
virtue of this Article Six or otherwise.

SECTION 6.8. Subordination May Not Be Impaired.

No right of any present or future holder of any Senior Indebtedness of the
Company to enforce subordination as herein provided shall at any time in any way
be prejudiced or impaired by any act or failure to act on the part of the
Company, as the case may be, or by any act or failure to act, in good faith, by
any such holder, or by any noncompliance by the Company, as the case may be,
with the terms, provisions and covenants of this Indenture, regardless of any
knowledge thereof that any such holder may have or otherwise be charged with.

Without in any way limiting the generality of the foregoing paragraph, the
holders of Senior Indebtedness of the Company may, at any time and from time to
time, without the consent of or notice to the Trustee or the Holders of the
Debentures, without incurring responsibility to the Holders of the Debentures
and without impairing or releasing the subordination provided in this Article
Six or the obligations hereunder of the Holders of the Debentures to the holders
of such Senior Indebtedness, do any one or more the following: (i) change the
manner, place or terms of payment or extend the time of payment of, or renew or
alter, such Senior Indebtedness, or otherwise amend or supplement in any manner
such Senior Indebtedness or any instrument evidencing the same or any agreement
under which such Senior Indebtedness is outstanding; (ii) sell, exchange,
release or otherwise deal with any property pledged, mortgaged or otherwise
securing such Senior Indebtedness; (iii) release any Person liable in any manner
for the collection of such Senior Indebtedness; and (iv) exercise or refrain
from exercising any rights against the Company, as the case may be, and any
other Person.

-15-
<PAGE>

ARTICLE VII
COVENANT TO LIST ON EXCHANGE

SECTION 7.1. Listing on an Exchange.

If the Debentures are to be issued as a Global Debenture in connection with the
distribution of the Debentures to the holders of the Preferred Securities issued
by the Trust upon a Dissolution Event, the Company will use its best efforts to
list such Debentures on the New York Stock Exchange or on such other exchange as
the Preferred Securities are then listed.

ARTICLE VIII
FORM OF DEBENTURE

SECTION 8.1. Form of Debenture.

The Debentures and the Trustee's Certificate of Authentication to be endorsed
thereon are to be substantially in the following forms:

(FORM OF FACE OF DEBENTURE)

[IF THE DEBENTURE IS TO BE A GLOBAL DEBENTURE, INSERT: This Debenture is a
Global Debenture within the meaning of the Indenture hereinafter referred to and
is registered in the name of a Depository or a nominee of a Depository. This
Debenture is exchangeable for Debentures registered in the name of a person
other than the Depository or its nominee only in the limited circumstances
described in the Indenture, and no transfer of this Debenture (other than a
transfer of this Debenture as a whole by the Depository to a nominee of the
Depository or by a nominee of the Depository to the Depository or another
nominee of the Depository) may be registered except in limited circumstances.

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

No._______________
$_________________
[CUSIP No.__________]

____% JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURE
DUE __________

-16-
<PAGE>

Northwestern Public Service Company, a Delaware corporation (the "Company",
which term includes any successor corporation under the Indenture hereinafter
referred to), for value received, hereby promises to pay to , or registered
assigns, the principal sum of _______ Dollars on _______________, (or on such
later date before _______________, if the Company elects to extend the maturity
date as further described herein), and to pay interest on said principal sum
from _______________, 1995, or from the most recent interest payment date (each
such date, an "Interest Payment Date") to which interest has been paid or duly
provided for, quarterly (subject to deferral as set forth herein) in arrears on
March 31, June 30, September 30 and December 31 of each year commencing
_______________, 1995, at the rate of _____% per annum until the principal
hereof shall have become due and payable, and on any overdue principal and
premium, if any, and (without duplication and to the extent that payment of such
interest is enforceable under applicable law) on any overdue installment of
interest at the same rate per annum compounded quarterly. The amount of
interest payable on any Interest Payment Date shall be computed on the basis of
a 360-day year of twelve 30-day months. In the event that any date on which
interest is payable on this Debenture is not a Business Day, then payment of
interest payable on such date will be made on the next succeeding day that is a
Business Day (and without any interest or other payment in respect of any such
delay), except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date. The interest
installment so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in the Indenture, be paid to the person
in whose name this Debenture (or one or more Predecessor Debentures, as defined
in said Indenture) is registered at the close of business on the regular record
date for such interest installment, which shall be the close of business on the
business day next preceding such Interest Payment Date. Any such interest
installment not punctually paid or duly provided for shall forthwith cease to be
payable to the registered Holders on such regular record date and may be paid to
the Person in whose name this Debenture (or one or more Predecessor Debentures)
is registered at the close of business on a special record date to be fixed by
the Trustee for the payment of such defaulted interest, notice whereof shall be
given to the registered Holders of this series of Debentures not less than 10
days prior to such special record date, or may be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Debentures may be listed, and upon such notice as may be required
by such exchange, all as more fully provided in the Indenture. The principal of
(and premium, if any) and the interest on this Debenture shall be payable at the
office or agency of the Trustee maintained for that purpose in any coin or
currency of the United States of America that at the time of payment is legal
tender for payment of public and private debts; provided, however, that payment
of interest may be made at the option of the Company by check mailed to the
registered Holder at such address as shall appear in the Security Register.
Notwithstanding the foregoing, so long as the Holder of this Debenture is the
Property Trustee, the payment of the principal of (and premium, if any) and
interest on this Debenture will be made at such place and to such account as may
be designated by the Property Trustee.

The indebtedness evidenced by this Debenture is, to the extent provided in the
Indenture, subordinate and junior in right of payment to the prior payment in
full of all Senior Indebtedness,

-17-
<PAGE>

and this Debenture is issued subject to the provisions of the Indenture with
respect thereto. Each Holder of this Debenture, by accepting the same, (a)
agrees to and shall be bound by such provisions, (b) authorizes and directs the
Trustee on his or her behalf to take such action as may be necessary or
appropriate to acknowledge or effectuate the subordination so provided and (c)
appoints the Trustee his or her attorney-in-fact for any and all such purposes.
Each Holder hereof, by his or her acceptance hereof, hereby waives all notice of
the acceptance of the subordination provisions contained herein and in the
Indenture by each holder of Senior Indebtedness, whether now outstanding or
hereafter incurred, and waives reliance by each such holder upon said
provisions.

This Debenture shall not be entitled to any benefit under the Indenture
hereinafter referred to, be valid or become obligatory for any purpose until the
Certificate of Authentication hereon shall have been signed by or on behalf of
the Trustee.

Unless the Certificate of Authentication hereon has been executed by the Trustee
referred to on the reverse side hereof, this Debenture shall not be entitled to
any benefit under the Indenture or be valid or obligatory for any purpose.

The provisions of this Debenture are continued on the reverse side hereof and
such continued provisions shall for all purposes have the same effect as though
fully set forth at this place.

IN WITNESS WHEREOF, the Company has caused this instrument to be executed.

Dated:
--------------

NORTHWESTERN PUBLIC SERVICE COMPANY

By:
----------------------------------------------------
Attest:

By:
-----------------
Secretary

(FORM OF CERTIFICATE OF AUTHENTICATION)

CERTIFICATE OF AUTHENTICATION

This is one of the Debentures of the series of Debentures described in the
within-mentioned Indenture.

-18-
<PAGE>

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

as Trustee or as Authentication Agent

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

(FORM OF REVERSE OF DEBENTURE)

This Debenture is one of a duly authorized series of Debentures of the Company
(herein sometimes referred to as the "Debentures"), specified in the Indenture,
all issued or to be issued in one or more series under and pursuant to an
Indenture dated as of _______________, 1995, duly executed and delivered between
the Company and ____________________, as Trustee (the "Trustee"), as
supplemented by the First Supplemental Indenture dated as of _______________,
1995, between the Company and the Trustee (the Indenture as so supplemented, the
"Indenture"), to which Indenture and all indentures supplemental thereto
reference is hereby made for a description of the rights, limitations of rights,
obligations, duties and immunities thereunder of the Trustee, the Company and
the Holders of the Debentures. By the terms of the Indenture, the Debentures
are issuable in series that may vary as to amount, date of maturity, rate of
interest and in other respects as provided in the Indenture. This series of
Debentures is limited in aggregate principal amount as specified in said First
Supplemental Indenture.

Because of the occurrence and continuation of a Tax Event, in certain
circumstances, this Debenture will become due and payable at the principal
amount together with any interest accrued thereon (the "Redemption Price"). The
Redemption Price shall be paid prior to 12:00 noon, New York time, on the date
of such redemption or at such earlier time as the Company determines. The
Company shall have the right to redeem this Debenture at the option of the
Company, without premium or penalty, in whole or in part at any time on or after
_______________, (an "Optional Redemption") or at any time in certain
circumstances upon the occurrence of a Tax Event, at a redemption price equal to
100% of the principal amount plus any accrued but unpaid interest, to the date
of such redemption (the "Optional Redemption Price"). Any redemption pursuant
to this paragraph will be made upon not less than 30 nor more than 60 days'
notice, at the Optional Redemption Price. If the Debentures are only partially
redeemed by the Company pursuant to an Optional Redemption, the Debentures will
be redeemed pro rata or by lot or by any other method utilized by the Trustee;
provided that if, at the time of redemption, the Debentures are registered as a
Global Debenture, the Depository shall determine by lot the principal amount of
such Debentures held by each Debentureholder to be redeemed.

-19-
<PAGE>

In the event of redemption of this Debenture in part only, a new Debenture or
Debentures of this series for the unredeemed portion hereof will be issued in
the name of the Holder hereof upon the cancellation hereof.

In case an Event of Default, as defined in the Indenture, shall have occurred
and be continuing, the principal of all of the Debentures may be declared, and
upon such declaration shall become, due and payable, in the manner, with the
effect and subject to the conditions provided in the Indenture.

The Indenture contains provisions permitting the Company and the Trustee, with
the consent of the Holders of not less than a majority in aggregate principal
amount of the Debentures of each series affected at the time outstanding, as
defined in the Indenture, to execute supplemental indentures for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of the Indenture or of any supplemental indenture or of modifying in
any manner the rights of the Holders of the Debentures; provided, however, that
no such supplemental indenture shall (i) extend the fixed maturity of any
Debentures of any series, or reduce the principal amount thereof, or reduce the
rate or extend the time of payment of interest thereon, or reduce any premium
payable upon the redemption thereof, without the consent of the Holder of each
Debenture so affected, or (ii) reduce the aforesaid percentage of Debentures,
the Holders of which are required to consent to any such supplemental indenture,
without the consent of the Holders of each Debenture then outstanding and
affected thereby. The Indenture also contains provisions permitting the Holders
of a majority in aggregate principal amount of the Debentures of any series at
the time outstanding affected thereby, on behalf of all of the Holders of the
Debentures of such series, to waive any past default in the performance of any
of the covenants contained in the Indenture, or established pursuant to the
Indenture with respect to such series, and its consequences, except a default in
the payment of the principal of or premium, if any, or interest on any of the
Debentures of such series. Any such consent or waiver by the registered Holder
of this Debenture (unless revoked as provided in the Indenture) shall be
conclusive and binding upon such Holder and upon all future Holders and owners
of this Debenture and of any Debenture issued in exchange herefor or in place
hereof (whether by registration of transfer or otherwise), irrespective of
whether or not any notation of such consent or waiver is made upon this
Debenture.

No reference herein to the Indenture and no provision of this Debenture or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and premium, if any, and
interest on this Debenture at the time and place and at the rate and in the
money herein prescribed.

The Company shall have the right at any time during the term of the Debentures
from time to time to extend the interest payment period of such Debentures to up
to 20 consecutive quarters (an "Extended Interest Payment Period"), at the end
of which period the Company shall pay all interest then accrued and unpaid
(together with interest thereon at the rate specified for the Debentures to the
extent that payment of such interest is enforceable under applicable law).

-20-
<PAGE>

Before the termination of any such Extended Interest Payment Period, the Company
may further extend such Extended Interest Payment Period, provided that such
Extended Interest Payment Period together with all such further extensions
thereof shall not exceed 20 consecutive quarters. At the termination of any
such Extended Interest Payment Period and upon the payment of all accrued and
unpaid interest and any additional amounts then due, the Company may commence a
new Extended Interest Payment Period.

As provided in the Indenture and subject to certain limitations therein set
forth, this Debenture is transferable by the registered Holder hereof on the
Security Register of the Company, upon surrender of this Debenture for
registration of transfer at the office or agency of the Company in the City and
State of New York accompanied by a written instrument or instruments of transfer
in form satisfactory to the Company or the Trustee duly executed by the
registered Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Debentures of authorized denominations and for the
same aggregate principal amount and series will be issued to the designated
transferee or transferees. No service charge will be made for any such transfer,
but the Company may require payment of a sum sufficient to cover any tax or
other governmental charge payable in relation thereto.

Prior to due presentment for registration of transfer of this Debenture, the
Company, the Trustee, any paying agent and any Security Registrar may deem and
treat the registered holder hereof as the absolute owner hereof (whether or not
this Debenture shall be overdue and notwithstanding any notice of ownership or
writing hereon made by anyone other than the Security Registrar) for the purpose
of receiving payment of or on account of the principal hereof and premium, if
any, and interest due hereon and for all other purposes, and neither the Company
nor the Trustee nor any paying agent nor any Debenture Registrar shall be
affected by any notice to the contrary.

No recourse shall be had for the payment of the principal of or the interest on
this Debenture, or for any claim based hereon, or otherwise in respect hereof,
or based on or in respect of the Indenture, against any incorporator,
stockholder, officer or director, past, present or future, as such, of the
Company or of any predecessor or successor corporation, whether by virtue of any
constitution, statute or rule of law, or by the enforcement of any assessment or
penalty or otherwise, all such liability being, by the acceptance hereof and as
part of the consideration for the issuance hereof, expressly waived and
released.

The Debentures of this series are issuable only in registered form without
coupons in denominations of $25 and any integral multiple thereof. As provided
in the Indenture and subject to certain limitations herein and therein set
forth, Debentures of this series so issued are exchangeable for a like aggregate
principal amount of Debentures of this series of a different authorized
denomination, as requested by the Holder surrendering the same.

All terms used in this Debenture that are defined in the Indenture shall have
the meanings assigned to them in the Indenture.

-21-
<PAGE>

ARTICLE IX
ORIGINAL ISSUE OF DEBENTURES

SECTION 9.1. Original Issue of Debentures.

Debentures in the aggregate principal amount of $33,505,154 may, upon execution
of this First Supplemental Indenture, be executed by the Company and delivered
to the Trustee for authentication, and the Trustee shall thereupon authenticate
and deliver said Debentures to or upon the written order of the Company, signed
by its Chairman, its President, or any Vice President and its Treasurer or an
Assistant Treasurer, without any further action by the Company.

ARTICLE X
MISCELLANEOUS

SECTION 10.1. Ratification of Indenture.

The Indenture, as supplemented by this First Supplemental Indenture, is in all
respects ratified and confirmed, and this First Supplemental Indenture shall be
deemed part of the Indenture in the manner and to the extent herein and therein
provided.

SECTION 10.2. Trustee Not Responsible for Recitals.

The recitals herein contained are made by the Company and not by the Trustee,
and the Trustee assumes no responsibility for the correctness thereof. The
Trustee makes no representation as to the validity or sufficiency of this First
Supplemental Indenture.

SECTION 10.3. Governing Law.

This First Supplemental Indenture and each Debenture shall be deemed to be a
contract made under the internal laws of the State of New York, and for all
purposes shall be construed in accordance with the laws of said State.

SECTION 10.4. Separability.

In case any one or more of the provisions contained in this First Supplemental
Indenture or in the Debentures shall for any reason be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this First
Supplemental Indenture or of the Debentures, but First Supplemental Indenture
and the Debentures shall be construed as if such invalid or illegal or
unenforceable provision had never been contained herein or therein.

-22-
<PAGE>

SECTION 10.5. Counterparts.

This First Supplemental Indenture may be executed in any number of counterparts
each of which shall be an original; but such counterparts shall together
constitute but one and the same instrument.

-23-
<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, on the date or dates indicated in the
acknowledgements and as of the day and year first above written.

NORTHWESTERN PUBLIC SERVICE COMPANY

By: /s/ Richard R. Hylland
----------------------------------------------------
Richard R. Hylland
Vice President - Strategic Development

Attest: /s/ Alan D. Dietrich
-------------------------
Alan D. Dietrich
Corporate Secretary

THE CHASE MANHATTAN BANK (N.A.)

By: /s/ James Heaney
--------------------------------------------------
Name: James Heaney
Title: Vice President

Attest: Kathleen Perry
--------------------
Assistant Secretary

-24-
<PAGE>

STATE OF SOUTH DAKOTA )
) SS
COUNTY OF BEADLE )

IN WITNESS WHEREOF, I have hereunto set my hand and affixed my seal of
office this 1st day of August, 1995.

/s/ Susan M. Anderson
---------------------------------------------
(Notarial Seal) Susan M. Anderson
NOTARY PUBLIC, BEADLE COUNTY, S.D.
My Commission Expires June 8, 2000

STATE OF NEW YORK )
) SS
COUNTY OF KINGS )

IN WITNESS WHEREOF, I have hereunto set my hand and affixed my seal of
office this 1st day of August, 1995.

/s/ Denis Kelly
(Notarial Seal) --------------------------------------------
NOTARY PUBLIC
COMMISSION EXPIRES

-25-
<PAGE>

-26-

<PAGE>

EXHIBIT 23

INDEPENDENT AUDITORS' CONSENT

The Board of Directors
Synergy Group Incorporated:

We consent to the incorporation by reference in Registration Statements
(No. 33-60423, 33-66908) on Forms S-3 of Northwestern Public Service
Company of our qualified report dated June 30, 1995 with respect to the
consolidated balance sheet of Synergy Group Incorporated and subsidiaries as
of March 31, 1995 and 1994, and the related consolidated statement of
operations, stockholders' equity and cash flows for all of the years in the
three-year period ended March 31, 1995.

Our report dated June 30, 1995, contains an explanatory paragraph that states
that the Company has suffered recurring losses from operations, has a net
capital deficiency and has defaulted on certain of its debt, which raise
substantial doubt about its ability to continue as going concern. The
consolidated financial statements and financial statement schedule do not
include any adjustments that might result from the outcome of that
uncertainty.

KPMG Peat Marwick LLP

Jericho, New York
August 14, 1995

<PAGE>

AGREEMENT AMENDING MANAGEMENT AGREEMENT

THIS AGREEMENT, dated July 31, 1995, is made and entered into among
Empire Gas Corporation, a Missouri corporation ("Empire"), Northwestern Growth
Corporation, a South Dakota corporation ("NGC"), and SYN Inc., a Delaware
corporation ("SYN"), to amend the Management Agreement, dated May 17, 1995,
among such parties.
NOW THEREFORE, the parties hereto agree that the above-mentioned
Management Agreement is hereby amended to change the definition of the term
"Stock Agreement" therein to mean the Amended and Restated Agreement Among
Initial Stockholders and SYN Inc., dated as of May 17, 1995, entered into by
Empire, NGC and SYN.
IN WITNESS HEREOF, the parties hereto have executed this Agreement as
of the date first above written.

Empire Gas Corporation SYN Inc.

By: /s/ Paul S. Lindsey By: /s/ Paul S. Lindsey
------------------------- -------------------------
Its President Title: President

Northwestern Growth Corporation

By: /s/ Richard R. Hylland
-------------------------
Its President

<PAGE>

EXHIBIT 99(c)

AMENDED AND RESTATED AGREEMENT AMONG INITIAL STOCKHOLDERS AND SYN INC.

THIS AGREEMENT, dated as of May 17, 1995, is made and entered into among
Empire Gas Corporation, a Missouri corporation ("Empire"), Northwestern Growth
Corporation, a South Dakota corporation ("NGC"), and SYN Inc., a Delaware
corporation ("SYN"), with respect to the following facts:

A. Empire currently is engaged in the business of distributing and
selling at retail liquified petroleum ("LP") gas and appliances, and has a
management experienced in the operation of such business.

B. NGC is a wholly-owned subsidiary of Northwestern Public Service
Company ("NWPS") and has as one of its objectives the making of investments that
could benefit NWPS and its stockholders.

C. Empire and NGC, acting together, have made a successful bid to acquire
the LP gas distribution and appliance business of Synergy Group Incorporated
("Synergy"; such acquisition being hereinafter called the "Synergy
Acquisition"), in what is planned to be the first step in the proposed
development by Empire and NGC, on a team basis, of a significant position in the
LP gas distribution industry. Empire and NGC have contemplated, in their
bidding for the Synergy Acquisition, that they will rely principally on Empire
for management expertise and on NGC to provide or arrange the financing for the
Synergy Acquisition, and that the success of the Synergy Acquisition will depend
in large measure upon the cost savings and operating improvements expected to be
achieved by having Empire do the planning and management of the business of
Synergy and its subsidiaries, under the direction of the Board of Directors of
SYN.

D. Empire and NGC have caused SYN to be incorporated to serve as the
vehicle (directly or through subsidiaries to be created) for making the Synergy
Acquisition.

E. Empire and NGC, on behalf of SYN, are concluding the negotiation of
the definitive agreement (the "Synergy Acquisition Agreement") for the Synergy
Acquisition, and need to provide for (i) the initial capitalization of SYN, (ii)
certain loan financing for SYN, (iii) the management of SYN and (iv) for certain
matters pertaining to the ownership of shares of stock of SYN.

NOW THEREFORE, in consideration of the premises and the agreements
exchanged herein, the parties hereto agree as follows:

ARTICLE 1: INITIAL CAPITALIZATION OF SYN;
STOCK SUBSCRIPTIONS AND RESERVATIONS OF STOCK

SECTION 1.01 INITIAL AUTHORIZED STOCK OF SYN. SYN has been incorporated
by Empire and NGC with an initial authorized capitalization (as set forth in
Article FOURTH of SYN's Certificate of Incorporation, a true and complete copy
of which is attached hereto as Exhibit A), consisting of 100,000 shares of
common stock, par value 1 CENT per share (the "Common Stock"; and the 100,000
shares of Common Stock referred to herein shall only be increased with the prior
written agreement of Empire and NGC unless such increased number of shares is to
be issued in an arm's length

<PAGE>

transaction to a party who is not affiliated with any of the parties to this
Agreement), and 100,000 shares of preferred stock, par value 1 CENT per share,
issuable in one or more series (the "Preferred Stock"). Prior to the
consummation of the Synergy Acquisition, SYN shall, and Empire and NGC shall
cause SYN to, take all action necessary to create and authorize the issuance of
a series of the Preferred Stock, namely, the Series A Cumulative Preferred
Stock, consisting of 70,500 shares, the terms of which shall be as set forth in
Exhibit B attached hereto, with such changes therein as the parties hereto may
approve before such series is created (the "Series A Preferred Stock").

SECTION 1.02 SUBSCRIPTIONS AND OPTION FOR STOCK. NGC has previously
purchased, and hereby subscribes for, stock of SYN, and NGC has granted Empire
an option to purchase certain shares of stock from NGC, as follows:

(a) SYN and NGC acknowledge that NGC has purchased from SYN, and SYN
has sold and issued to NGC, 1,000 shares of Common Stock for a cash
purchase price of $1,000.00 which has been paid by NGC to SYN, and that
these shares are the only shares of stock of SYN that are currently
outstanding.

(b) NGC hereby subscribes for, and agrees to purchase from SYN, and
SYN hereby agrees to sell and issue to NGC, an additional 71,500 shares of
Common Stock for a cash purchase price of $71,500.00 to be paid at the time
of such issuance, with this transaction to be consummated (the
"Subscription Closing") at the First Closing, as defined in the Synergy
Acquisition Agreement, unless an earlier time for the Subscription Closing
is agreed to by the parties hereto. The obligation of NGC under its
subscription in this paragraph (b) is subject to the condition (unless
waived by NGC) that NGC shall have been able to obtain the funds from the
Permanent Financing or the Temporary Financing, as those terms are defined
in the Synergy Acquisition Agreement, at or prior to the time of the
Subscription Closing.

(c) NGC hereby subscribes for, and agrees to purchase, or to cause its
parent corporation, NWPS, to purchase from SYN, and SYN hereby agrees to
sell and issue to NGC or NWPS, as the case may be, 68,000 shares of Series
A Preferred Stock for a cash purchase price of $1,000 per share
($68,000,000.00 total), with this transaction to be consummated at the
Subscription Closing. The obligation of NGC under its subscription in this
paragraph (c) is subject to the condition (unless waived by NGC) that NGC
or NWPS shall have been able to obtain the funds from the Permanent
Financing or the Temporary Financing, as those terms are defined in the
Synergy Acquisition Agreement, at or prior to the time of the Subscription
Closing and that, at the time of the Subscription Closing, the First
Closing (as defined in the Synergy Acquisition Agreement) is concurrently
occurring or is reasonably assured of being consummated immediately
thereafter.

(d) Empire hereby subscribes for, and agrees to purchase from SYN,
and SYN hereby agrees to issue and sell to Empire, 10,000 shares of Common
Stock (which shall represent 10% of the issued and outstanding Common
Stock) for a cash purchase price of $10,000 to be paid at the time of such
issuance, with this transaction to be consummated at the Subscription
Closing. The obligation of Empire under its subscription in this paragraph
(d) is subject to the condition (unless waived by Empire) that NGC
consummates its purchase of shares of Common Stock under paragraph (b)
above in this Section 1.02 at the Subscription Closing.

<PAGE>

(e) NGC hereby grants to Empire an option to purchase from NGC, at a
price of $1.00 per share, up to 20,000 of the shares of Common Stock which
shall represent 20% of the issued and outstanding Common Stock, subject to
NGC acquiring such shares pursuant to paragraph (b) above in this Section
1.02. Such option may be exercised at any time after September 30, 1995
and prior to September 30, 1997, or the Determination Date (as defined in
Section 1.04 herein), whichever is earlier, by Empire's giving written
notice of such exercise to NGC. After the giving of such notice, NGC shall
assign and deliver to Empire the shares of Common Stock for which the stock
option was exercised, as promptly as possible, but in any event within
seven days, in exchange for Empire's payment to NGC of the purchase price
for such shares; and the shares so assigned and delivered shall then be
shares owned by Empire and shall be held by Empire subject to the terms of
this Agreement.

SECTION 1.03 RESERVATIONS OF STOCK FOR ISSUANCE. SYN shall, and Empire
and NGC shall cause SYN to, take all action necessary to reserve for initial
issuance, 17,500 shares of Common Stock and 2,500 shares of Series A Preferred
Stock to be issued to the Stockholders (as defined in the Synergy Acquisition
Agreement) at the Second Closing (also as defined in the Synergy Acquisition
Agreement), pursuant to the Synergy Acquisition Agreement.

SECTION 1.04 COMMON STOCK RETURN. The following provisions of this
Section 1.04 apply in the event Empire exercises the stock option granted to it
in Section 1.02(e) herein:

(a) The "Common Stock Return," as that term is used herein, shall be
the number of shares of Common Stock of SYN which Empire hereby agrees to
assign and deliver to NGC, without cost to NGC, in the event that the
common equity value at a Determination Date (as defined below) is below
levels specified for such date in subparagraph (iii) in this paragraph (a).
The Common Stock Return shall be set in accordance with the following
formula:

(i) The Determination Date shall be the date on which SYN is
sold (meaning a sale of substantially all of the assets of SYN and its
subsidiaries, the acquisition of SYN by another, non-affiliated entity
by merger or consolidation, or the sale of partnership units or shares
of stock of SYN which entitle the holder thereof to cast at least a
majority of the votes entitled to be cast in the general election of
directors of SYN or the date on which the sale of partnership units or
shares of SYN's Common Stock is closed in an underwritten public
offering, for which the partnership units or shares are registered
under the Securities Act of 1933, or the date on which this Agreement
expires or is terminated in accordance with Section 7.02 herein,
whichever of the foregoing first occurs).

(ii) The value of the total outstanding Common Stock of SYN on
the Determination Date (the "Value"), shall be determined by the
parties hereto on the basis of the sale price for SYN if the sale of
SYN is involved, or based upon the price to SYN (or the selling
stockholders if SYN is not the seller) in the event an underwritten
public offering of partnership units or Common Stock of SYN is
involved, or on the basis of the fair market value of the outstanding
Common Stock of SYN in every other event, as determined by an
appraisal firm or an investment banking firm selected by the parties
hereto, with such fair market value to be

3
<PAGE>

determined on the basis of the value of SYN and its subsidiaries as a
whole, if sold as a going concern. In the event there is a
combination of one or more entities with SYN, the value of SYN will be
determined by either (x) a fair market value appraisal or (y) in the
event there is a public offering within nine months after such
combination, the value shall be the initial price to the public of the
SYN shares of Common Stock or partnership units in such public
offering.

(iii) For these purposes, "deemed outstanding shares of
Common Stock" shall be the total of the number of shares of Common
Stock issued and outstanding, plus the number that would be issued and
outstanding if all outstanding stock options, warrants, conversion
rights and other rights to acquire shares of Common Stock were
exercised, whether or not exercisable at the time. The number of
shares of Common Stock of SYN constituting the Common Stock Return
shall be the percentage of the deemed outstanding shares of Common
Stock of SYN as of the Determination Date, determined on the basis of
the following table and paragraph (b) below, if applicable:

Column A Column B Column C

Percentage of deemed outstanding Percentage of deemed outstanding
Fiscal Year of shares of Common Stock of SYN shares of Common Stock of SYN
SYN in which shall be 0% if the Value as of shall be 7.5% if the Value as of
Determination the Determination Date is the Determination Date is
Date Occurs: At Least the Following Amount: Less than the Following Amount:
-------------- -------------------------------- ---------------------------------
<S> <C> <C>
1996 $24,500,000 $22,250,000

1997 $30,000,000 $24,750,000

1998 $36,750,000 $27,500,000

1999 $45,000,000 $30,600,000

2000 $55,200,000 $34,000,000

After 2000 1.225 times the previous year's 1.1125 times the previous year's amount
amount

</TABLE>

(b) If the Value as of the Determination Date is more than the amount
in Column C in Section 1.04(a)(iii) above, but less than the amount in
Column B therein, the percentage used to determine the Common Stock Return
shall be a figure between 7.5% and 0% which is in proportion to what the
Value is to the amounts in the two columns for the particular Determination
Date.

SECTION 1.05 ACQUISITION FOR INVESTMENT. Empire and NGC each represent
and warrant to the other, and to SYN, as follows: It has (through its
management personnel) such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of its purchase of
securities of SYN as provided for in this Agreement; it is acquiring such
securities, and will acquire them, for investment and not with a view toward, or
with any intention of,

<PAGE>

distributing or selling any of the securities and it will not sell or offer to
sell or otherwise transfer any of the securities in violation of the Securities
Act of 1933, as amended.

ARTICLE 2: LOAN FINANCING FOR SYN

NGC shall make a commercially reasonable effort to arrange for SYN, or
provide SYN with, loan financing for SYN, on a fully secured basis, of up to
$70,000,000 principal amount needed by SYN for the Synergy Acquisition.

ARTICLE 3: LIMIT TO FINANCING OBLIGATIONS

Neither Empire nor NGC, nor any of their affiliates, shall have any
obligation to provide, or arrange, financing for SYN other than as expressly
provided for in Articles 1 and 2 herein.

ARTICLE 4: SYNERGY ACQUISITION

Each of the parties hereto will make a commercially reasonable effort in
cooperation with the other parties hereto, to do those things within its control
to consummate the Synergy Acquisition in accordance with the terms of, and
subject to the conditions in, the Synergy Acquisition Agreement. Nothing in
this Agreement or otherwise shall be construed to give anyone who is not a party
to this Agreement, whether under a third party beneficiary legal doctrine or
otherwise, a right to enforce the provisions of this Article or to obtain relief
for any failure to perform in accordance with the requirements of this Article.

ARTICLE 5: MANAGEMENT OF SYN

SECTION 5.01 At or before the First Closing (as defined in the Synergy
Acquisition Agreement), the parties hereto will enter into a management
agreement in substantially the form attached hereto as Exhibit C, or with such
changes therein as the parties hereto hereafter agree upon (the "Management
Agreement"), pursuant to which the planning and management of the business of
SYN subsequent to the Second Closing (as defined in the Synergy Acquisition
Agreement) will be conducted by Empire under the direction of the Board of
Directors of SYN, as provided therein.

SECTION 5.02 DIRECTORS AND OFFICERS OF SYN.

(a) For purposes of this Agreement, "Control Period" means the period
of time commencing on the date of this Agreement and continuing either (i)
until this Agreement is terminated pursuant to Section 7.02 herein because
of the termination of the Synergy Acquisition Agreement without the Synergy
Acquisition having been completed or (ii) until a time after the First
Closing, as defined in the Synergy Acquisition Agreement, when (A) the
Control Period is terminated by agreement of the parties hereto, (B) NGC no
longer owns a majority of the shares of Common Stock of SYN deemed to be
outstanding (determined as provided in Section 1.04 herein), (C) Empire no
longer owns at least 20%

<PAGE>

of the shares of Common Stock of SYN deemed to be outstanding or has
an option to acquire at least that amount of shares, or (D) when SYN
consummates an underwritten public offering of partnership units or
shares of its Common Stock, registered under the Securities Act of
1933, whichever of (A), (B), (C) or (D) first occurs.

(b) Throughout the Control Period, NGC and Empire shall vote their
voting shares of stock of SYN that are capable of being voted in a general
election of directors of SYN (i.e., not including the Series A Preferred
Stock or other classes or series of stock which vote only for a limited
number of directors if and when a prescribed default in the payments of
dividends thereon has continued for a prescribed period of time), and will
otherwise use their respective commercially reasonable efforts, to carry
out the following:

(i) the Board of Directors of SYN shall consist of five members,
three of whom shall be nominees of NGC (the "NGC Positions") and two
of whom shall be nominees of Empire (the "Empire Positions"); and any
vacancies occurring in the NGC Positions will be promptly filled with
nominees of NGC and any vacancies occurring in the Empire Positions
will be promptly filled with nominees of Empire.

(ii) The officers of SYN shall include at all times a Chairman of
the Board and a Vice Chairman of the Board, who will be persons
nominated by NGC, and a President and Chief Executive Officer, who
will be Paul S. Lindsey, Jr., and a Secretary, who will be a person
nominated by Empire. The authority and duties of such officers shall
be as set forth in the by-laws of SYN, a true and complete copy of
which as in effect on the date hereof is attached hereto as Exhibit D.

(c) To initiate compliance with preceding paragraph (b), Empire and
NGC have caused the following persons to be elected to the positions with
SYN indicated by their names, to serve for the period provided in the by-
laws of SYN:

- Chairman of the Board and director -- Merle D. Lewis (an NGC
nominee for such positions);

- Vice Chairman of the Board and director -- Richard R.
Hylland (an NGC nominee for such positions);

- President and Chief Executive Officer and director -- Paul
S. Lindsey, Jr. (an Empire nominee as to the position of
director);

- Secretary and director -- Douglas A. Brown (an Empire
nominee for such positions);

with the fifth member of the Board of Directors of SYN (one of the NGC
Positions) to be nominated by NGC, and elected, at a future time when
NGC has selected the nominee for such position.

<PAGE>

ARTICLE 6: DISPOSITION OF SYN STOCK BY EMPIRE OR NGC

SECTION 6.01 PERMITTED DISPOSITIONS.

(a) NGC may at any time or from time to time transfer any of the
securities issued by SYN which NGC may own at any time to NWPS or any
wholly-owned subsidiary of NWPS, provided that notice of such transfer is
given to the other parties to this Agreement and that the transferee
becomes a party to this Agreement with respect to the securities so
transferred, but all of such transferees and NGC shall collectively act,
and be treated, as a single entity with NGC acting as their representative
for purposes of this Agreement.

(b) Empire may at any time and from time to time transfer any of the
securities issued by SYN which Empire may own at any time to any affiliated
party, provided that notice of such transfer is given to the other parties
to this Agreement and the transferee becomes a party to this Agreement with
respect to the securities so transferred, but all such transferees and
Empire shall collectively act, and be treated, as a single entity with
Empire acting as their representative for purposes of this Agreement.

SECTION 6.02 RIGHTS OF FIRST REFUSAL.

(a) Except as permitted by Section 1.04 and Section 6.01(b) herein,
so long as the Management Agreement is in effect, Empire will not sell or
otherwise dispose of any shares of Common Stock of SYN, or any other
securities convertible into such shares, to any party without first
offering the same for sale to NGC in writing on the same terms as are
offered to or by the other party (with full disclosure of such terms to
NGC) and allowing not less than 30 days after its receipt of the offer for
NGC to accept the offer; and if such offer is accepted by NGC, NGC shall
have 90 days in which to complete the purchase on such terms.

(b) Except as permitted by Section 1.02(e) and Section 6.01(a)
herein, so long as the Management Agreement is in effect, NGC will not sell
or otherwise dispose of any shares of Common Stock of SYN, or any other
securities convertible into such shares, to any party without first
offering the same for sale to Empire in writing on the same terms as are
offered to or by the other party (with full disclosure of such terms to
Empire) and allowing Empire not less than 30 days after its receipt of the
offer for Empire to accept the offer, and if such offer is accepted by
Empire, Empire shall have 90 days in which to complete the purchase on such
terms, but if Empire declines such offer, then Empire shall have the right
to participate on a pro rata basis in the sale of such shares by NGC;
provided, however, that the preceding provisions of this paragraph (b)
shall not apply to any pledge or granting of a security interest in any
shares of Common Stock of SYN, or any other securities convertible into
such shares, by NGC to secure loan financing obtained by NWPS, NGC or SYN,
or guaranties of such loan financing, or any sale thereof by foreclosure of
such pledge or security interest, or any sale thereof in lieu of such
foreclosure.

<PAGE>

ARTICLE 7: MISCELLANEOUS

SECTION 7.01 RESTRICTIVE LEGEND. Each certificate issued by SYN to
evidence shares of Common Stock, or securities convertible into such shares,
owned by either Empire or NGC shall be endorsed with the following legend:

"The shares represented by this certificate are subject to
the Amended and Restated Agreement among the Corporation and
its Initial Stockholders, dated as of May 17, 1995, as the
same may be amended, on file with the issuing Corporation at
its principal business office and may be transferred or
otherwise disposed of only in accordance therewith."

SECTION 7.02 TERM OF THIS AGREEMENT. This Agreement, if not sooner
terminated by agreement of the parties hereto or pursuant to the next sentence,
shall terminate when the Control Period terminates. In the event the Synergy
Acquisition Agreement is terminated without the Synergy Acquisition having been
completed, the parties hereto will liquidate and dissolve SYN as promptly as
possible when all obligations of SYN under, or with respect to, the Synergy
Acquisition Agreement have been discharged or provided for; and this Agreement
shall then automatically terminate.

SECTION 7.03 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been given (a) when delivered in
person, (b) one business day after deposit with a nationally recognized
overnight courier service (c) two business days after being deposited in the
United States mail, postage prepaid, first class, registered or certified mail,
or (d) the business day on which it is sent and received by facsimile, as
follows:

(i) If to SYN, to:

SYN Inc.
c/o Northwestern Growth Corporation
33 Third Street, S.E.
Huron, South Dakota 57350
Fax No. (605) 353-8286

Attention: Richard R. Hylland, President

with a copy to Empire, addressed and sent to it at the place required
under this Agreement for giving notice to Empire

<PAGE>

(ii) If to Empire, to:

Empire Gas Corporation
P.O. Box 303
1700 South Jefferson
Lebanon, Missouri 65536
Fax No. (417) 532-8529

Attention: Paul S. Lindsey, Jr., President

(iii) If to NGC, to:

Northwestern Growth Corporation
33 Third Street, S.E.
Huron, South Dakota 57350
Fax No. (605) 353-8286

Attention: Richard R. Hylland, President

SECTION 7.04 SECTION 351 OF THE CODE. Each of the parties hereto agrees
to comply with the requirements of Section 6.28 of the Synergy Acquisition
Agreement, both with respect to the transaction referred to therein and with
respect to any transaction under this Agreement to the extent necessary to
assure the result under Section 351 of the Internal Revenue Code of 1986, as
amended, for the transaction referred to in such Section 6.28.

SECTION 7.05 CAPTIONS. The captions in this Agreement are included for
convenience of reference only and shall be ignored in the construction and
interpretation of this Agreement.

SECTION 7.06 GOVERNING LAW. This Agreement shall be construed in
accordance with and governed by the internal laws of the State of Delaware
without regard to the choice of law principles thereof.

SECTION 7.07 COUNTERPARTS. Execution of separate copies of this Agreement
by each or some of the several parties hereto shall have the same force and
effect as though all such parties had executed the original of this Agreement.
Further, the parties hereto may execute several counterparts of this Agreement,
all of which shall constitute but one and the same agreement.

<PAGE>

IN WITNESS WHEREOF, each of the parties hereto have caused this Agreement
to be executed in its name as of the date first above written.

EMPIRE GAS CORPORATION

By /s/ Paul S. Lindsey
--------------------------------------------
President

NORTHWESTERN GROWTH CORPORATION

By /s/ Richard R. Hylland
---------------------------------------------
President

SYN INC.

By /s/ Paul S. Lindsey
---------------------------------------------
Title: President