WAIVER AND RELEASE

WAIVER AND RELEASE  

This Waiver and Release, (“Release”, undersigned and dated as of August 12, 2008, (“Release”), is entered into by and between NorthWestern Corporation, d/b/a NorthWestern Energy, a Delaware corporation with its principal place of business located at 3010 West 69 ^th Street, Sioux Falls, South Dakota, 57108, its officers, agents, directors, employees, successors, subsidiaries, insurers, parents and/or affiliated companies, and assigns (“NWEC or Company”) and Michael J. Hanson (“Hanson”), a South Dakota resident, to settle all issues between us in connection with Hanson's severance of employment. NWEC and Hanson are collectively referred to herein as the “Parties”.

NOW, THEREFORE, in consideration of the foregoing premises and further in consideration of the mutual covenants, conditions and agreements contained in this Release and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto do hereby agree as follows:

You will be eligible for a pro-rated 2008 incentive award based on the amount of time served in an eligible status during the performance period to be calculated at the end of the performance period and payable in accordance with the terms of the 2008 Employee Incentive Plan.

You will be reimbursed for any COBRA premiums paid during the twelve (12) month period following the date employment is terminated.

Outplacement services will be provided up to $12,000 (Twelve thousand dollars) during the twelve (12) month period following the date employment is terminated.

that Hanson may have arising out of or related to his employment with or separation from, NWEC (“Claims”). Hanson is releasing the following claims which include, without limitation, claims under his original employment terms, which are canceled as of the Severance Date with no further benefits or payments to be provided thereunder, the WARN Act, as amended, any and all claims of wrongful discharge or breach of contract, any and all claims for equitable estoppel, any and all claims for employee benefits, including, but not limited to, any and all claims under the Employee Retirement Income Security Act of 1974, as amended, and any and all claims of employment discrimination on any basis, including, but not limited to, any and all claims under Title VII of the Civil Rights Act of 1964, as amended, under the Age Discrimination in Employment Act of 1967, as amended, under the Civil Rights Act of 1866, 42 U.S.C. §1981, under the Civil Rights Act of 1991, as amended, under the Americans with Disabilities Act of 1990, as amended, under the Family and Medical Leave Act of 1993, under the Immigration Reform and Control Act of 1986, as amended, under the Fair Labor Standards Act, as amended, 29 U.S.C. §201 et seq ., the Older Workers Benefit Protection Act, as amended, the Wrongful Discharge from Employment Act, 39-2-901 et seq., MCA, any federal, state or local law enforcing express or implied employment contracts or requiring an employer to deal with employees fairly or in good faith including 27-1-221, MCA, any federal, state, or local laws prohibiting employment discrimination, such as in the State of South Dakota, any claim filed in NWEC's bankruptcy proceedings, and any and all claims under any other federal, state, or local labor law, civil rights law, fair employment practices law, or human rights law, any and all claims of slander, libel, defamation, invasion of privacy, intentional or negligent infliction of emotional distress, intentional or negligent misrepresentation, fraud, and prima facie tort, any and all claims for monetary recovery, including but not limited to, back pay, front pay, liquidated, compensatory, and punitive damages, and attorneys’ fees, experts’ fees, disbursements and costs which against the Released Parties, that Hanson ever had, now have, or hereafter can, shall, or may have, for, upon, or by reason of any matter, cause, or thing whatsoever from the beginning of time to the date of Hanson’s execution of this Release. Hanson will never file any lawsuit, complaint or claim based on any Claims, and Hanson will withdraw with prejudice any such lawsuit, complaint, or claim that may already be pending in any court or administrative agency. Hanson promises never to seek any damages, remedies, or other relief for himself personally (any right to which Hanson hereby waives) by filing or prosecuting a charge with any administrative agency with respect to the Claims purportedly released by this Release. This subsection shall not apply to challenges to the ADEA release, to the extent, if any, prohibited by applicable law.

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received by the Vice President, General Counsel and Corporate Secretary by the end of the seven (7) day period. NWEC, in writing, advised Hanson to discuss this Release with his own attorney (at Hanson’s own expense) during this period if Hanson wished to do so. Hanson has carefully read this Release, fully understands what it means, and is entering into it voluntarily. Hanson is receiving valuable consideration in exchange for his execution of this Release that he would not otherwise be entitled to receive.