CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
               OF SERIES B CUMULATIVE CONVERTIBLE PREFERRED STOCK
                                       OF
                                  ABC-NACO INC.
     ABC-NACO  Inc., a Delaware corporation (the "Corporation"), pursuant to the
                                                  -----------
provisions  of  Section  151  of  the  General  Corporation  Law of the State of
Delaware  (the  "DGCL"),  does hereby make this Certificate of Designation under
                 ----
the  corporate  seal  of  the Corporation and does hereby state and certify that
pursuant to the authority vested in the Board of Directors of the Corporation by
the  Certificate  of  Incorporation, the Board of Directors has duly adopted the
following  resolutions:
     RESOLVED,  that  pursuant  to  Article  Fourth  of  the  Certificate  of
Incorporation,  as  amended  (which authorizes one million (1,000,000) shares of
preferred stock, par value $1.00 per share ("Preferred Stock"), none of which is
                                             ---------------
presently  issued  and  outstanding),  the  Board  of Directors hereby fixes the
designations  and  preferences  and  relative  participating, optional and other
special  rights and qualifications, limitations and restrictions of a new series
of  Preferred Stock consisting of shares to be designated as Series B Cumulative
Convertible  Preferred  Stock.
Series  B  Cumulative  Convertible  Preferred  Stock
----------------------------------------------------
     RESOLVED,  that  the  holders  of Series B Cumulative Convertible Preferred
Stock, except as otherwise provided by law, shall have and possess the following
rights  and  preferences.
          A.  Series  B  Cumulative  Convertible  Preferred  Stock.
              ----------------------------------------------------
              1.  Designation, Number of Shares.  This series of preferred stock
              ---------------------------------
shall  be designated as Series B Cumulative Convertible Preferred Stock ("Series
                                                                          ------
B  Preferred Stock"), and the number of shares that shall constitute such series
------------------
shall  be Three Hundred Thousand (300,000).  The par value of Series B Preferred
Stock  shall  be  $1.00  per  share.
            2.  Rank.  With  respect  to  dividend  rights  and  rights  on
                ----
liquidation,  winding  up and dissolution of the Corporation, Series B Preferred
Stock  shall  rank  senior  to:
               (i)     the  Common  Stock,  par  value  $0.01 per share ("Common
                                                                          ------
Stock"),  of  the  Corporation;  and
               (ii)     the  Series  A  and each other class of capital stock or
class  or  series  of  Preferred  Stock issued by the Corporation after the date
hereof  (in  accordance  with Paragraph A.7.(a)(ii) hereof), the terms of which,
other  than  the  Series A, shall specifically provide that such class or series
shall rank junior to Series B Preferred Stock as to dividend rights or rights on
liquidation,  winding  up  and  dissolution  of  the  Corporation  (each  of the
securities  in  clauses  (i)  and (ii) above collectively referred to as "Junior
                                                                          ------
Securities").
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          2.     Dividend  Provisions.
                 --------------------
               (a)     Each holder of Series B Preferred Stock shall be entitled
to  receive,  when,  as  and if declared by the Board of Directors, out of funds
legally  available therefor, dividends on each share of Series B Preferred Stock
after  the  date  of  the original issuance of the Series B Preferred Stock at a
rate  equal  to  eight percent (8.0%) per share per annum on One Hundred Dollars
($100)  per  share  in  cash,  or  at the Corporation's election, in fully paid,
non-restricted,  fully  tradable,  non-assessable  shares of Common Stock, which
shares of such Common Stock shall be valued at one hundred percent (100%) of the
average  closing  price  on  the NASDAQ National Market ("NASDAQ") for the sixty
                                                          ------
(60) consecutive trading days immediately prior to the Dividend Declaration Date
(as  defined in Paragraph B. hereof). With respect to any dividend on the Series
B Preferred Stock paid by the Corporation in shares of Common Stock, such shares
of  Common  Stock  when issued shall be (i) registered for sale by the holder of
the  Series B Preferred Stock  under the Securities Act of 1933, as amended (and
applicable  state  securities  laws),  and  (ii)  listed  on NASDAQ or the NYSE.
               (b)     All  dividends,  whether  payable in cash or in shares of
Common  Stock, shall be cumulative, whether or not earned or declared, and shall
accrue  on a semi-annual basis beginning on the date of the original issuance of
Series  B  Preferred  Stock  (whether or not funds are legally available for the
declaration  and/or  payment  of  such  dividends),  and  shall  be  payable
semi-annually  in arrears on each Dividend Payment Date (as defined in Paragraph
B.  hereof), commencing on the first Dividend Payment Date after the date of the
original  issuance  of such Series B Preferred Stock.  Each dividend on Series B
Preferred  Stock shall be payable to the holders of record of Series B Preferred
Stock  as  they  appear  on the stock register of the Corporation on such record
date  as  may be fixed by the Board of Directors, which record date shall not be
less  than  ten  (10)  nor  more  than  sixty  (60)  calendar  days prior to the
applicable  Dividend  Payment  Date.  Notwithstanding  the foregoing, during the
first  two  (2)  years  after  the  date  of  original  issuance of the Series B
Preferred Stock, the Corporation shall be entitled to defer payment of dividends
on  shares  of  Series  B  Preferred  Stock; provided, that during such two-year
                                             --------
period,  dividends  on  shares  of  Series  B Preferred Stock shall cumulate and
compound  and any so deferred dividends shall be payable in full upon the second
anniversary  of  the  date of original issuance of the Series B Preferred Stock.
               (c)     Dividends  shall cease to accrue in respect of any shares
of Series B Preferred Stock on the date such shares are converted into shares of
Common  Stock  in  accordance  with  Paragraph  A.5.  hereof.
               (d)     Accrued dividends on the Series B Preferred Stock, if not
paid  on  the  first  or any subsequent Dividend Payment Date following accrual,
shall thereafter accrue additional dividends ("Additional Dividends") in respect
                                               --------------------
thereof,  compounded  semi-annually,  at  the  rate  specified  hereinabove  in
Paragraph  A.3.(a)  hereof  or  as  specified  hereinbelow  in Paragraph A.3.(g)
hereof.
               (e)     All  dividends  paid  with  respect to shares of Series B
Preferred  Stock  pursuant  to  Paragraph  A.3.(a) shall be paid pro rata to the
holders  of  Series  B  Preferred  Stock  of  record  entitled  thereto.
               (f)     Dividends  on  account  of  arrears for any past Dividend
Period  may  be  declared and paid at any time, without reference to any regular
Dividend  Payment  Date, to the holders of Preferred Stock of record on any date
as  may  be  fixed by the Board of Directors, which date is not more than thirty
(30)  calendar  days  prior  to  the  payment  of  such  dividends.
               (g)     The  dividend  payable  to  holders of Series B Preferred
Stock  as  set  forth above in Paragraph A.3.(a) shall be increased to a rate of
twelve  percent (12%) per share per annum on the Series B Liquidation Preference
(the  "Default  Dividends"),  which Default Dividends shall be payable in either
       ------------------
cash,  unless  prohibited  by the Credit Agreement dated as of February 19, 1999
among  the Company, ABC-NACO de MEXICO, S.A. de C.V., Dominion Castings Limited,
Bank  of  America Canada, Bank of America National Trust and Savings Association
and  the other financial institutions party thereto, as amended and restated, or
Common  Stock  at  the choosing of each holder of Series B Preferred Stock, upon
the  occurrence  and during the continuance of any of the following events (each
an "Event of Default" and collectively the "Events of Default"), upon the giving
    ----------------                        -----------------
of written notice thereof to the Corporation by the holders of a majority of the
shares  of  Series  B  Preferred  Stock  then  outstanding:
                    (i)     in  the  event  that  the  Corporation  does not (A)
declare  the  dividend  payable on the shares of Series B Preferred Stock within
(30)  calendar  days  of the Dividend Declaration Date, (B) fulfill its dividend
payment  obligation  in  full  for  the  Series  B Preferred Stock, as set forth
herein,  within thirty (30) calendar days after said dividend payment is due and
payable,  or  (C)  fulfill its dividend payment obligation in the form of either
cash  or  stock  as  required  herein;  or
                    (ii)     in  the  event  that  the  Corporation  shall  have
materially  breached  any of the representations and warranties contained in any
of  the  Stock  Purchase  Agreement  or  the  Investors  Rights  Agreement;  or
                    (iii)     in  the  event  that  the  Corporation  shall have
materially  breached  any of the covenants or agreements contained in any of the
Stock Purchase Agreement or the Investors Rights Agreement and such breach shall
not  have  been cured to the satisfaction of the holders of record of a majority
of  the  shares  of  Series B Preferred Stock then outstanding within forty-five
(45)  calendar  days  after  the  date of giving of notice of such breach to the
Corporation;  or
                    (iv)     in  the  event that the Corporation shall (A) apply
for  or  consent to the appointment of a receiver, trustee or liquidator for the
Corporation  or  any  of its property; (B) admit in writing its inability to pay
debts  as  they  mature;  (C)  make  a  general  assignment  for  the benefit of
creditors;  (D)  be  adjudicated  bankrupt  or  insolvent;  (E) file a voluntary
petition  in  bankruptcy,  a  petition  or  answer  seeking reorganization or an
arrangement  with creditors to take advantage of any bankruptcy, reorganization,
insolvency,  readjustment of debt, dissolution or liquidation law or statute, or
an  answer  admitting the material allegations of a petition filed against it in
any  proceeding  under  any  such law; or (F) have failed to have an involuntary
petition  in  bankruptcy  filed against it dismissed and discharged within sixty
(60)  calendar  days  after  the date of such filing; corporate actions shall be
taken  for  the purpose of effecting any of the foregoing; or an order, judgment
or  decree  shall be entered without the application, approval or consent of the
Corporation,  by  any  court  of  competent  jurisdiction,  approving a petition
seeking reorganization of the Corporation or of all or a substantial part of its
assets, and such order, judgment or decree shall continue unstayed and in effect
for  sixty  (60)  calendar  days  (a  "Bankruptcy");  or
                                       ----------
                    (v)     if  at  any time after the date of original issuance
of  the  first share of Series B Preferred Stock, shares of Common Stock are not
publicly  traded  on  NASDAQ  or  NYSE,  or  fail  to  satisfy  the then current
requirements  for  listing  on  such  market  or  exchange.
          Notwithstanding  the  foregoing,  in the event that the Corporation is
unable  to meet its obligation to pay cash dividends in the form of cash because
of  (a)  a  deficiency  in  the  cash  position of the Corporation such that the
payment  of  such  dividends in cash would have a Material Adverse Effect on the
Corporation,  or  (b)  a  prohibition by the DGCL, then the Corporation shall be
permitted  to  pay  Default Dividends in shares of Common Stock during such time
the condition described in this paragraph continues; provided, however, that the
                                                     --------  -------
Corporation shall not be entitled to satisfy its dividend payment obligations by
paying  dividends  in  shares  of Common Stock upon the occurrence or during the
continuance  of  an  Event of Default set forth in Paragraph A.3.(g)(iv) hereof.
               (h)     The holders of Series B Preferred Stock shall be entitled
to  receive  the  dividends provided for in Paragraphs A.3.(a) and (g) hereof in
preference  to  and  in  priority  over  any  dividends  upon  any of the Junior
Securities.  Such dividends on the Series B Preferred Stock shall be cumulative,
whether  or  not  earned  or  declared,  so that if at any time full Accumulated
Dividends  (as  defined  in Paragraph B. below) on all shares of Preferred Stock
then  outstanding have not been paid for all Dividend Periods then elapsed and a
prorated dividend on the Series B Preferred Stock at the rate aforesaid from the
Dividend  Payment Date immediately preceding the Junior Payment Date (as defined
below)  to  the Junior Payment Date have not been paid or set aside for payment,
the  amount  of  such unpaid dividends shall be paid before any sum shall be set
aside  for  or  applied  by the Corporation to the purchase, redemption or other
acquisition for value of any shares of Junior Securities (either pursuant to any
applicable  sinking  fund  requirement  or  otherwise)  or any dividend or other
distribution  shall  be paid or declared and set apart for payment on any Junior
Securities  (the  date  of  any  such  actions  to be referred to as the "Junior
                                                                          ------
Payment  Date").  In  the  event  that  the Corporation shall pay or declare any
      -------
dividend,  or  make  any  distribution,  on  account  of  any  Junior Securities
(including  Common  Stock),  the  holders  of  Series  B  Preferred  Stock shall
participate with the holders of Common Stock or other Junior Securities on a pro
rata  basis,  based  upon  the  number of shares of Common Stock or other Junior
Securities  held  by each such holder (assuming conversion of all such shares of
Series  B  Preferred  Stock into Common Stock on the terms set forth herein), in
receipt  of  such  dividends  when, as and if declared by the Board of Directors
(other  than a dividend payable in shares of Common Stock or other securities or
rights  convertible into or entitling the holder thereof to receive, directly or
indirectly,  additional  shares  of  Common  Stock), which dividends shall be in
addition  to  and  not  in lieu of the dividends on shares of Series B Preferred
Stock  set  forth  in  Paragraphs  A.3.(a)  or  A.3.(g)  hereof  .
               (i)     Dividends  payable  on  Series  B Preferred Stock for any
period  less  than one (1) year shall be computed on the basis of a 360-day year
consisting  of  twelve  30-day  months  plus  the actual number of calendar days
elapsed  in  the  month  for  which  such  dividends  are  payable.
          3.     Liquidation  Preference.
                 -----------------------
               (a)     Upon  any  voluntary  or  involuntary  liquidation,
dissolution  or  winding  up  of  the  Corporation, the holders of all shares of
Series  B  Preferred  Stock then outstanding shall be entitled to be paid out of
the  assets of the Corporation available for distribution to its stockholders an
amount in cash equal to One Hundred Dollars ($100.00) in cash per share, plus an
amount  equal  to  full cumulative dividends (whether or not earned or declared)
accrued and unpaid thereon, including Default Dividends and Additional Dividends
(such  amount,  as  so  determined,  is  referred  to  herein  as  the "Series B
                                                                        --------
Liquidation  Preference"), to the date of final distribution and no more, before
         --------------
any  payment or distribution is made on account of any Junior Securities.  After
payment  in  full  pursuant  to  this  Paragraph  A.4.,  the holders of Series B
Preferred  Stock  shall  not  be  entitled  to  any further participation in any
distribution  in  the  event  of  liquidation,  dissolution or winding up of the
affairs  of  the  Corporation.
               (b)     Certain  Transactions  Treated  as  Liquidation.  For
                       -----------------------------------------------
purposes  of  this Paragraph A.4., at the election of the holders of record of a
majority  of  the  then  outstanding shares of Series B Preferred Stock, (A) any
acquisition  of  the  Corporation  by means of merger or other form of corporate
reorganization  with  or into another corporation in which outstanding shares of
the  Corporation  are exchanged for securities or other consideration issued, or
caused  to  be  issued,  by  the  other  corporation or its subsidiary, in which
transaction  this  Corporation  is not the surviving entity, and, as a result of
which  transaction,  the stockholders of the Corporation own fifty percent (50%)
or  less  of  the voting power of the surviving entity, (B) any acquisition in a
transaction or series of transactions by a person or group (as defined below) of
persons  the  result  of  which  is  that  such  person or group of persons owns
beneficially  fifty  percent  (50%)  or  more  of  the  voting  securities  then
outstanding  of  the Corporation, or (C) a sale, transfer or lease (other than a
pledge  or  grant  of  a  security  interest  to  a  bona fide lender) of all or
substantially  all  of  the  assets of the Corporation and its Subsidiaries on a
consolidated basis (other than to a wholly-owned subsidiary of the Corporation),
shall  be treated as a liquidation, dissolution or winding up of the Corporation
and  shall  entitle  the  holders  of Series B Preferred Stock to receive at the
closing  of  any  such  transactions  the  amount  that  would  be received in a
liquidation,  dissolution  or  winding up pursuant to Paragraph A.4.(a). hereof.
For  purposes  hereof,  the  term "group" means two or more persons who act as a
partnership,  syndicate,  or pursuant to any other arrangement or understanding,
for the purpose of acquiring, holding, or disposing of securities of the Company
including  without  limitation  pursuant  to  Rule  13d-5  promulgated under the
Exchange  Act  .
          4.     Conversion.
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               (a)     Right  of  Conversion.  Each  share of Series B Preferred
                       ---------------------
Stock  shall  be  convertible, at the option of the holder thereof, at any time,
and  from  time to time, after the date of issuance of such share, at the office
of  the Corporation or any transfer agent for the Series B Preferred Stock, into
such  number of fully paid, registered, non-assessable shares of Common Stock as
is determined by dividing (i) One Hundred Dollars ($100.00) plus an amount equal
to  full  cumulative  dividends  (whether or not earned or declared) accrued and
unpaid thereon, including Default Dividends and Additional Dividends by (ii) the
Conversion Price.  The "Conversion Price" for the Series B Preferred Stock shall
                        ----------------
be  the  average  closing  price  of  the  Company's Common Stock for the thirty
trading days ending February 17, 2000 as reported by Bloomberg rounded up to the
nearest  dollar.  The Conversion Price for the Series B Preferred Stock shall be
subject  to  adjustment  as  set  forth  in  Paragraph  A.5.(c)  hereof.
               (b)     Procedures  for  Voluntary Conversion.  Before any holder
                       -------------------------------------
of  shares  of Series B Preferred Stock shall be entitled to convert any of such
shares  into shares of Common Stock, such holder shall surrender the certificate
or  certificates therefor, duly endorsed, at the office of the Corporation or of
any  transfer  agent  for  the  Series B Preferred Stock, and shall give written
notice  by  mail,  postage  prepaid, or hand delivery, to the Corporation at its
principal  corporate office, of the election to convert the same and shall state
therein the name or names in which the certificate or certificates for shares of
Common  Stock  are  to be issued, and in the case of a partial conversion of the
Series  B  Preferred  Stock,  the  certificate or certificates for shares of the
Series  B  Preferred  Stock  not  converted.  The  Corporation shall, as soon as
practicable  thereafter,  issue  and  deliver  at such office to such holders of
shares  of  Series  B  Preferred  Stock,  or  to the nominee or nominees of such
holders,  a certificate or certificates for the number of shares of Common Stock
to  which  such holder shall be entitled as aforesaid.  Such conversion shall be
deemed  to have been made immediately prior to the close of business on the date
of such surrender of the shares of Series B Preferred Stock to be converted, and
the  person  or  persons entitled to receive the shares of Common Stock issuable
upon  such  conversion shall be treated for all purposes as the record holder or
holders of such shares of Common Stock as of such date.  If the conversion is in
connection  with  an  underwritten offering of securities registered pursuant to
the  Securities  Act,  the conversion may, at the option of any holder tendering
the  Series  B  Preferred  Stock  for  conversion,  be  conditioned  upon  the
effectiveness of such offering, in which event the person(s) entitled to receive
Common Stock issuable upon such conversion of the Series B Preferred Stock shall
not  be deemed to have converted such Series B Preferred Stock until immediately
prior to the effectiveness of such offering and the Corporation shall deliver to
such holders tendering Series B Preferred Stock for conversion written notice of
the  anticipated  date of such effectiveness no less than ten (10) calendar days
prior  thereto.
               (c)     Adjustments  of  Conversion Price.  So long as any shares
                       ---------------------------------
of  Series B Preferred Stock are outstanding, the Conversion Price of the Series
B  Preferred  Stock shall be subject to adjustment from time to time as follows:
                    (i)     (A)     Upon  issuance  (or deemed issuance pursuant
to the provisions hereof) by the Corporation of any Additional Stock (as defined
below)  after  the  date  of  issuance  of  Series  B  Preferred  Stock, without
consideration  or  for  an  Effective  Price  per  share,  or,  in  the  case of
Convertible  Securities,  a conversion price per share, less than the Conversion
Price  for  the  Series  B  Preferred  Stock  in effect immediately prior to the
issuance  (or  deemed  issuance)  of  such Additional Stock, then the Conversion
Price for the Series B Preferred Stock in effect immediately prior to each (such
issuance  or  deemed  issuance)  shall  be adjusted to a price determined by the
following  formula:  (A + B)   (C + D), where "A" equals the number of shares of
Common  Stock  outstanding immediately prior to such issuance or sale multiplied
by  the then applicable Conversion Price, where "B" equals the consideration, if
any,  received  by  the Corporation upon such issuance or sale, where "C" equals
the  total number of shares of Common Stock outstanding prior to issuance of the
additional  shares  and  where "D" equals any Additional Stock or any conversion
shares, or any other shares reserved for issuance which are associated with such
financing,  immediately  after such issuance or sale.  See Annex A hereto for an
                                                           -------
example  of  the  formula  set  forth  herein.
                         (B)     No  adjustment  of  the  Conversion  Price  for
Series  B  Preferred  Stock shall be made in an amount less than one-half of One
Cent ($0.005) per share, provided that any adjustments which are not required to
be  made  by reason of this sentence shall be carried forward and shall be taken
into  account  in  any  subsequent  adjustment  to  the  Conversion  Price.  No
adjustment  of the Conversion Price for the Series B Preferred Stock pursuant to
this  Paragraph  A.5.(c)(i)  shall have the effect of increasing such Conversion
Price  for  the  Series  B  Preferred Stock above the Conversion Price in effect
immediately  prior  to  such  adjustment.
                         (C)     In  the  case  of the issuance of securities of
the  Corporation  for  cash,  the  amount  of  consideration  received  by  the
Corporation  for  such  securities shall be deemed to be the amount of cash paid
therefor  before deducting any discounts, commissions or other expenses allowed,
paid  or  incurred  by  the  Corporation  for  any  underwriting or otherwise in
connection  with  the  issuance  and  sale  thereof.
                         (D)     In  the  case  of the issuance of securities of
the  Corporation  for  a  consideration in whole or in part other than cash, the
consideration  other  than  cash shall be deemed to have a dollar value equal to
the fair market value as determined by the Board of Directors in accordance with
generally  accepted  accounting  principles  of  such  non-cash  consideration,
irrespective  of  any  accounting  treatment  thereof.
                         (E)     In the case of the issuance (whether before, on
or  after  the  date  of  issuance  of  Series  B Preferred Stock) of Options or
Convertible Securities, the following provisions shall apply for all purposes of
this  Paragraph  A.5.(c)(i)  and  Paragraph  A.5.(c)(ii)  hereof:
          (1)     With  respect  to  Options  to  purchase  Common  Stock,  the
aggregate  maximum number of shares of Common Stock deliverable upon exercise of
such  Options  shall be deemed to have been issued at the time such Options were
issued  and  for  a  consideration equal to the consideration (determined in the
manner  provided  in  Subparagraph  A.5.(c)(i)(C) and Subparagraph A.5.(c)(i)(D)
hereof),  if  any, received by the Corporation for such Options plus the minimum
exercise  price  provided  in such Options for Common Stock issuable thereunder.
          (2)     With respect to Convertible Securities and Options to purchase
Convertible  Securities,  the aggregate maximum number of shares of Common Stock
deliverable  upon  the conversion or exchange of any such Convertible Securities
and  the  aggregate  maximum  number of shares of Common Stock issuable upon the
exercise  of  such Options to purchase Convertible Securities and the subsequent
conversion  or  exchange  of such Convertible Securities shall be deemed to have
been  issued at the time such Convertible Securities or such Options were issued
and  for  a  consideration  equal  to the consideration, if any, received by the
Corporation  for  any  such Convertible Securities and Options, plus the minimum
additional  consideration,  if  any,  to be received by the Corporation upon the
conversion  or  exchange  of such Convertible Securities or the exercise of such
Options  and  the  conversion or exchange of the Convertible Securities issuable
upon  exercise  of such Options (the consideration in each case to be determined
in the manner provided in Subparagraphs A.5.(c)(i)(C) and A.5.(c)(i)(D) hereof).
          (3)     In  the  event of any change in the number of shares of Common
Stock  deliverable,  or  in  the  consideration payable to the Corporation, upon
exercise  of  such  Options  or  upon conversion or exchange of such Convertible
Securities,  including,  but  not  limited  to,  a  change  resulting  from  the
antidilution  provisions thereof, the Conversion Price of the Series B Preferred
Stock,  to  the  extent in any way affected by or computed using such Options or
Convertible  Securities,  shall  be  recomputed  to  reflect such change, but no
further  adjustment shall be made for the actual issuance of Common Stock or any
payment  of  such  consideration  upon  the  exercise of any such Options or the
conversion  or  exchange  of  such  Convertible  Securities.
          (4)     Upon  the expiration or termination of any such Options or any
such  rights to convert or exchange Convertible Securities, the Conversion Price
of  the  Series  B  Preferred  Stock,  to  the  extent in any way affected by or
computed  using  such  Options or Convertible Securities, shall be recomputed to
reflect  the  issuance of only the number of shares of Common Stock (and Options
and  Convertible  Securities  which  remain in effect) that were actually issued
upon  the  exercise  of  such Options or upon the conversion or exchange of such
Convertible  Securities.
          (5)     The  number  of  shares  of Common Stock deemed issued and the
consideration  deemed  paid  therefor pursuant to Subparagraphs A.5.(c)(i)(E)(1)
and  (2)  hereof  shall  be  appropriately  adjusted  to  reflect  any  change,
termination  or  expiration  of  the  type  described  in  either  Subparagraph
A.5.(c)(i)(E)(3)  or  (4)  hereof.
                    (ii)     "Additional  Stock" shall mean any shares of Common
                              -----------------
Stock  or  shares  of  Common  Stock issuable pursuant to Convertible Securities
issued  or  Options  (or  deemed  to  have  been  issued  pursuant  to Paragraph
A.5.(c)(i)(E)  hereof) by the Corporation after the date of issuance of Series B
Preferred  Stock,  except:
                         (A)     Common  Stock  issued pursuant to a transaction
described  in  Paragraph  A.5.(c)(iii)  hereof;
                         (B)     Common Stock or options to purchase such Common
Stock  issued  to  officers,  employees  or directors of, or consultants to, the
Corporation,  pursuant  to  any  agreement,  plan or arrangement approved by the
Board  of  Directors  of  the  Corporation  (the  "Permitted  Options");  and
                                                   ------------------
                         (C)     Common Stock issued or issuable upon conversion
of  shares  of  Series  B  Preferred  Stock.
                    (iii)     In  the  event the Corporation at any time or from
time  to  time  after  the  date of issuance of Series B Preferred Stock fixes a
record  date  for  the effectuation of a split or subdivision of the outstanding
shares of Common Stock or the determination of holders of shares of Common Stock
entitled  to  receive  a  dividend  or  other distribution payable in additional
shares  of  Common  Stock  or  other  securities  or rights convertible into, or
entitling  the  holder  thereof  to  receive  directly or indirectly, additional
shares  of  Common Stock (hereinafter referred to as "Common Stock Equivalents")
                                                      ------------------------
without payment of any consideration by such holder for the additional shares of
Common  Stock  or  Common  Stock Equivalents (including the additional shares of
Common  Stock  issuable  upon  conversion or exercise thereof), then, as of such
record date (or the date of such dividend, distribution, split or subdivision if
no  record  date is fixed), the Conversion Price of the Series B Preferred Stock
shall  be  appropriately  decreased so that the number of shares of Common Stock
issuable  on  conversion  of  each  share  of  Series B Preferred Stock shall be
increased  in  proportion  to  such  increase  in the aggregate number of shares
issuable  with  respect  to  Common Stock Equivalents, with the number of shares
issuable  with  respect to Common Stock Equivalents determined from time to time
in  the  manner  provided  for  deemed  issuances  in Subparagraph A.5.(c)(i)(E)
hereof.
                    (iv)     If the number of shares of Common Stock outstanding
at  any time after the date of issuance of Series B Preferred Stock is decreased
by  a combination of the outstanding shares of Common Stock, then, following the
record date of such combination, the Conversion Price for the Series B Preferred
Stock  shall  be  appropriately increased so that the number of shares of Common
Stock  issuable on conversion of each share of Series B Preferred Stock shall be
decreased  in  proportion  to  such decrease in the outstanding shares of Common
Stock.
               (d)     Other  Distributions.  In the event the Corporation shall
                       --------------------
declare  a  distribution  payable  in  securities of other persons, evidences of
indebtedness  issued by the Corporation or other persons, assets (excluding cash
dividends)  or  options  or  rights  not  referred  to in Paragraph A.5.(c)(iii)
hereof,  then,  in each such case for the purpose of this Paragraph A.5.(d), the
holders  of  shares  of  Series  B  Preferred  Stock  shall  be  entitled  to  a
proportionate  share of any such distribution as though they were holders of the
number  of  shares of Common Stock into which their shares of Series B Preferred
Stock  are  convertible as of the record date fixed for the determination of the
holders  of  shares  of  Common  Stock  entitled  to  receive such distribution.
               (e)     Recapitalization.  If  at  any  time or from time to time
                       ----------------
there  shall  be  a  recapitalization or reclassification of Common Stock (other
than  a  subdivision,  combination or consolidation, merger or sale of assets or
stock  transaction provided for in Paragraph A.4.(b) hereof), provision shall be
made  so that each holder of shares of Series B Preferred Stock shall thereafter
be  entitled  to  receive,  upon conversion of the Series B Preferred Stock, the
number  of shares of stock or other securities or property of the Corporation or
otherwise, receivable upon such recapitalization or reclassification by a holder
of  the  number  of  shares  of  Common Stock into which such shares of Series B
Preferred  Stock  could  have  been  converted  immediately  prior  to  such
recapitalization.  In any such case, appropriate adjustment shall be made in the
application  of the provisions of this Paragraph A.5. with respect to the rights
of  the holders of shares of Series B Preferred Stock after the recapitalization
or  reclassification  to  the  end  that  the  provisions of this Paragraph A.5.
(including  adjustments of the Conversion Price then in effect and the number of
shares  purchasable  upon  conversion  of the Series B Preferred Stock) shall be
applicable  after  that  event  as  nearly  equivalent  as  may  be practicable.
               (f)     No Impairment.  The Corporation will not, by amendment of
                       -------------
this  Certificate  of  Incorporation  or  through  any  reorganization,
recapitalization  or  any  other  voluntary  action,  avoid or seek to avoid the
observance  or  performance  of  any  of  the  terms to be observed or performed
hereunder  by the Corporation, but will at all times in good faith assist in the
carrying  out  of all the provisions of this Paragraph A.5. and in the taking of
all  such  action  as  may  be  necessary or appropriate in order to protect the
conversion  rights  of the holders of shares of Series B Preferred Stock against
impairment.
               (g)     No  Fractional  Shares.  No  fractional  shares  shall be
                       ----------------------
issued upon conversion of the Series B Preferred Stock, and the number of shares
of Common Stock to be issued shall be rounded upward to the nearest whole share,
and  there shall be no payment to a holder of shares of Series B Preferred Stock
for  any such rounded fractional share.  Whether or not fractional shares result
from  such  conversion  shall  be determined on the basis of the total number of
shares  of  Series  B  Preferred Stock the holder is at the time converting into
Common  Stock  and  the  number  of  shares  of  Common Stock issuable upon such
aggregate  conversion.
               (h)     Certificate  as  to  Adjustments.  Upon the occurrence of
                       --------------------------------
each  adjustment  or  readjustment  of  the  Conversion  Price  of  the Series B
Preferred  Stock  pursuant  to  this  Paragraph  A.5.,  the  Corporation, at its
expense,  shall  promptly  compute such adjustment or readjustment in accordance
with the terms hereof and prepare and furnish to each holder of shares of Series
B  Preferred  Stock  a certificate setting forth such adjustment or readjustment
and  showing  in  detail the facts upon which such adjustment or readjustment is
based, certified by the Corporation's Chief Executive Officer or Chief Financial
Officer.  The  Corporation  shall,  upon  the written request at any time of any
holder  of  shares of Series B Preferred Stock, furnish or cause to be furnished
to  such  holder  a  like  certificate  setting  forth  (i)  such adjustment and
readjustment,  (ii)  the  Conversion  Price at the time in effect, and (iii) the
number of shares of Common Stock and the amount, if any, of other property which
at  the  time  would  be  received  upon  the  conversion of a share of Series B
Preferred  Stock.
               (i)     Notices  of  Record  Date.  In the event of any taking by
                       -------------------------
the  Corporation  of  a record of the holders of any class of securities for the
purpose  of  determining  the  holders  thereof  who are entitled to receive any
dividend  (other  than  a  cash  dividend)  or  other distribution, any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, the Corporation
shall mail to each holder of shares of Series B Preferred Stock, at least twenty
(20)  calendar days prior to the date specified therein, a notice specifying the
date  on  which any such record is to be taken for the purpose of such dividend,
distribution  or  right,  and  the  amount  and  character  of  such  dividend,
distribution  or  right.
               (j)     Reservation of Stock Issuable Upon Conversion, Dividends.
                       --------------------------------------------------------
The  Corporation  shall  at all times take appropriate steps to reserve and keep
available  out of its authorized but unissued shares of Common Stock, solely for
the  purpose of (i) effecting the conversion of the shares of Series B Preferred
Stock,  such  number of its shares of Common Stock as shall from time to time be
sufficient  to  effect  the  conversion  of  all  outstanding shares of Series B
Preferred Stock, and (ii) the payment of dividends as contemplated in Paragraphs
A.3.(a) and (g).  If at any time the number of authorized but unissued shares of
Common  Stock  shall  not  be  sufficient  to  effect the conversion of all then
outstanding shares of Series B Preferred Stock or the payment of dividends, then
in  addition  to such other remedies as shall be available to the holder of such
shares  of  Series  B  Preferred Stock, the Corporation will take such corporate
action  as  may,  in  the  opinion  of its counsel, be necessary to increase its
authorized but unissued shares of Common Stock to such number of shares as shall
be  sufficient  for  such  purposes.
               (k)     Notices.  Any  notice  required by the provisions of this
                       -------
Paragraph  A.5. to be given to the holders of shares of Series B Preferred Stock
shall  be  deemed  given  when  received  if  delivered  via  courier or sent by
facsimile,  or  by  United  States  mail, postage prepaid, and addressed to each
holder  of  record  at  its  address  appearing on the books of the Corporation.
               (l)     Mandatory  Conversion.
                       ---------------------
                    (i)     At any time after the third (3rd) anniversary of the
date of the original issuance of the Series B Preferred Stock, all  or a portion
of  the  shares  of  Series  B  Preferred  Stock  shall,  at  the  option of the
Corporation  (as  determined  by  the  Board  of  Directors),  automatically  be
converted  into fully paid, registered and non-assessable shares of Common Stock
in  accordance  with  Paragraph A.5.(a) above, if the following three conditions
are  met:
                         (A)     the  Closing  Common  Stock  Market  Price  (as
defined  in  Paragraph  B.(d)  hereof)  for  sixty (60) consecutive trading days
ending  no  more  than  fifteen  (15)  trading  days  prior  to  such  mandatory
conversion,  shall be the greater of (1) $18.00 or (2) not less than two hundred
percent  (200%)  of  the  Conversion  Price  then  in  effect;
                         (B)     the  average  trading  volume during such sixty
(60)  trading  day  period  shall be at least 45,000 shares per trading day; and
                         (C)     an  effective shelf registration (in accordance
with  Section  4(b) of the Investors Rights Agreement) is then in effect for the
shares  of  Common  Stock to be issued upon conversion of the shares of Series B
Preferred  Stock  .
                    (ii)     If  the Corporation has elected to convert Series B
Preferred  Stock  into  Common Stock pursuant to Paragraph A.5.(l)(i) above, the
Corporation  will  provide  written  notice of mandatory conversion of shares of
Series B Preferred Stock to each holder of record of Series B Preferred Stock no
less  than  ten  (10)  nor more than twenty (20) calendar days prior to the date
fixed  for  conversion  by prepaid overnight delivery service, to each holder at
such  holder's  address  as it appears on the stock register of the Corporation.
The  Corporation's  obligation to deliver shares of Common Stock shall be deemed
fulfilled  if,  on  the mandatory conversion date, the Corporation shall deposit
with  a  bank  or trust company in New York, New York having capital of at least
One  Hundred  Million  Dollars  ($100,000,000),  such number of shares of Common
Stock  as are required to be delivered by the Corporation upon the conversion of
the  shares  of Series B Preferred Stock so called for conversion.  Provided the
Corporation  has  fulfilled  its obligation to deposit shares as provided in the
foregoing  sentence,  effective  on  the  mandatory conversion date fixed by the
Corporation  and  notified  to  the  holders  of  Series B Preferred Stock, each
outstanding  share  of  Series  B  Preferred  Stock plus an amount equal to full
cumulative  dividends  (whether  or  not  earned or declared) accrued and unpaid
thereon,  including  Default  Dividends  and  Accumulated  Dividends,  shall  be
converted  into  a  fully  paid,  registered, and non-assessable share of Common
Stock  at  the  Conversion  Price  then in effect, automatically and without any
action on the part of any holder of shares of Series B Preferred Stock, and each
such  share  of  Common  Stock  shall  be  deemed outstanding from and after the
mandatory  conversion  date.
          5.     Status of Converted Stock.  In the event any shares of Series B
                 -------------------------
Preferred Stock are converted to Common Stock pursuant to Paragraph A.5. hereof,
the shares so converted or so redeemed shall be canceled, retired and eliminated
and  shall  not  be  reissued  by  the  Corporation.
          6.     Voting  Rights.
                 --------------
               (a)     Class  Voting  Rights.
                       ---------------------
                    (i)     Except  as  otherwise  provided  below, a vote of at
least  a majority of the shares of the Series B Preferred Stock then outstanding
shall  be  sufficient  to  take  any  action  requiring the vote of the Series B
Preferred  Stock  as  a  separate  class.  At  any  meeting  where  the Series B
Preferred  Stock shall have the right to vote as a separate class, the presence,
in  person or by proxy, of a majority of the then outstanding shares of Series B
Preferred  Stock  shall  constitute  a  quorum  of  such  class.
                    (ii)     So  long  as  any  Series  B  Preferred  Stock  is
outstanding,  the  Corporation  shall  not,  without the affirmative vote of the
holders  of  at  least  sixty-six  and  two-thirds  percent  (66  2/3%)  of  all
outstanding  shares  of  Series  B Preferred Stock voting separately as a class,
given  in  person  or by proxy, either in writing or by resolution adopted at an
annual or special meeting called for this purpose (A) amend, alter or repeal any
provision  of  the  Certificate  of Incorporation or By-laws of the Corporation,
each as amended, so as to affect, in any manner adverse to the holders of Series
B Preferred Stock, the relative rights, preferences, qualifications, limitations
or  restrictions of the Series B Preferred Stock; or (B) increase the authorized
number  of shares of Series B Preferred Stock or create, authorize, designate or
reclassify  any  authorized  stock  of  the  Corporation  into,  or increase the
authorized  amount  of, or issue any capital stock or any securities convertible
into  or  exchangeable  or  exercisable  for  any securities of the Corporation,
ranking,  either  as  to  payment  of  dividends,  distributions  of assets upon
liquidation  or  otherwise  or redemption, prior or senior to or pari passu with
the  Series  B  Preferred  Stock,  or  (C) create, authorize or issue any Junior
Securities,  which  are  required  to be redeemed by the Corporation at any time
that  any  shares  of  Series  B  Preferred  Stock  are  outstanding.
               (b)     Board  of Directors.  Until the occurrence of an Event of
                       -------------------
Default, the holders of shares of Series B Preferred Stock shall not be entitled
to  elect  any  director  to  the  Corporation's  Board  of Directors.  Upon the
occurrence  of  an  Event  of  Default  and  the  expiration  of any cure period
specified  in  Paragraph  A.3(g),  the  holders  of record of shares of Series B
Preferred Stock shall be entitled to elect, voting separately as a class one (1)
director  to  the Corporation's Board of Directors (the "Series B Director") and
                                                         -----------------
the Corporation shall immediately upon such occurrence and the expiration of any
such  cure  period,  and in no event later than two (2) business days thereafter
arrange  for the election of the Series B Director whether by special meeting or
otherwise.  At  any such meeting called for the purpose of electing the Series B
Director,  the  presence  in  person  or  by proxy of the holders of record of a
majority  of  the  shares  of  Series  B Preferred Stock then outstanding, shall
constitute  a  quorum for the election of the Series B Director to be elected by
such  holders.  A  vacancy  in  any  directorship  entitled to be elected by the
holders  of  record  of  shares  of  Series B Preferred Stock (including without
limitation,  a vacancy resulting from the decision during an earlier election by
the  holders  of the Series B Preferred Stock not to fill the directorship to be
held  by  the Series B Director) shall be filled only by vote or written consent
of  the  holders  of record of shares of Series B Preferred Stock, in the manner
set  forth  herein.  Each  Series  B  Director  who  shall  have been elected as
provided  in  this  Paragraph  A.7.(b)  may be removed during his or her term of
office, whether with or without cause, by the holders of record of a majority of
the  shares of Series B Preferred Stock then outstanding.  The Series B Director
shall be entitled to one (1) vote on all matters which directors are entitled to
vote  on.  The  holders  of  record  of  a  majority  of  the shares of Series B
Preferred  Stock  then  outstanding shall have the right to call meetings of the
Board of Directors and management of the Corporation, upon no less than ten (10)
calendar  days' prior written notice; provided, that such meetings are called no
                                      --------
more  frequently  than  once  per  fiscal  quarter.
     B.     Definitions.  As  used  herein,  the  following terms shall have the
            -----------
following  definitions:
               (a)     "Accumulated  Dividends"  means with respect to any share
                        ----------------------
of  Series  B Preferred Stock, the dividends that have accrued on such shares as
of  such  specific date for Dividend Periods ending on or prior to such date and
that  have  not previously been paid in cash, including Additional Dividends and
Default  Dividends.
               (b)     "Additional Dividends" has the meaning given to such term
                        --------------------
in  Paragraph  A.3.(d).
               (c)     "Additional Stock" has the meaning set forth in Paragraph
                        ----------------
A.5.(c)(ii).
               (d)     "Closing Common Stock Market Price" for any day means the
                        ---------------------------------
last  sale  price regular way, or, in case no such sale takes place on such day,
the  average  of the closing bid and asked prices regular way, in either case as
reported  NASDAQ,  NYSE  or  any  other  national  securities  market.
               (e)     "Common  Stock  Equivalents" has the meaning set forth in
                        --------------------------
Paragraph  A.5.(c)(iii)  hereof.
               (f)     "Conversion Price" has the meaning set forth in Paragraph
                        ----------------
A.5.(a)  hereof.
               (g)     "Convertible Securities" means any indebtedness or shares
                        ----------------------
of  stock  convertible  into  or  exchangeable  for  Common  Stock.
               (h)     "Dividend Declaration Date" means the last trading day on
                        -------------------------
NASDAQ  immediately  prior  to June 30 and December 31 of each year in which any
shares  of  the  Series  B  Preferred  Stock  are  outstanding.
               (i)     "Dividend  Payment Dates" means July 31 and January 31 of
                        -----------------------
each  year  (or, if such day is not a business day, the next succeeding day that
is  a  business  day);
               (j)     "Dividend  Period" means the Initial Dividend Period and,
                        ----------------
thereafter,  each  Semi-Annual  Dividend  Period.
               (k)     "Effective Price" of shares of Additional Stock means the
                        ---------------
quotient  determined  by  dividing  (i)  the  total  number  of  such  shares of
Additional  Stock  issued or sold, or deemed to have been issued or sold, by the
Corporation under Paragraph A.5.(c) hereof, into (ii) the consideration received
by  the  Corporation  under  Paragraph  A.5.(c)  hereof for the issuance of such
shares  of  Additional  Stock.
               (l)     "Initial  Dividend  Period"  means  the  dividend  period
                        -------------------------
commencing on the date of issuance of the Series B Preferred Stock and ending on
the  first  Dividend  Payment  Date  to  occur  thereafter.
               (m)     "Investors" shall have the meaning set forth in the Stock
                        ---------
Purchase  Agreement.
               (n)     "Investors  Rights  Agreement" means the Investors Rights
                        ----------------------------
Agreement  dated  as  of  March  8,  2000,  by and among the Corporation and the
Investors named therein, the Schedules and Exhibits thereto, and any certificate
or  other  document  required  thereby,  as the same may be amended from time to
time.
               (o)     "Junior  Payment  Date"  has  the  meaning  set  forth in
                        ---------------------
Paragraph  A.3.(h)  hereof.
               (p)     "Junior  Securities"  has  the  meaning  set  forth  in
                        ------------------
Paragraph  A.2.  hereof.
               (q)     "Material  Adverse  Effect"  shall  mean  (i) any adverse
                        -------------------------
change  in  the  condition  (financial  or otherwise), assets (including without
limitation tangible and intangible assets), liabilities, business, or results of
operations or prospects of the Company or any of its Subsidiaries, which change,
individually  or  in  the  aggregate,  is  material  to  the  Company  and  its
Subsidiaries  taken  as  a whole, or (ii) any event, matter, condition or effect
which  materially  adversely  impairs the ability of the Company to perform on a
timely  basis  its obligations under this Agreement or the Company to consummate
the  transactions  contemplated  by  this  Agreement.

               (r)     "NASDAQ"  shall  have  the meaning set forth in Paragraph
                        ------
A.3.(a)  hereof.
               (s)     "NYSE"  shall  mean  the  New  York  Stock  Exchange.
                        ----
               (t)     "Option"  means  rights, options or warrants to subscribe
                        ------
for,  purchase  or  otherwise  acquire  Common  Stock or Convertible Securities.
               (u)     "Permitted  Options"  has  the  meaning  set  forth  in
                        ------------------
Paragraph  A.5.(c)(ii)(B)  hereof.
               (v)     "person"  shall  mean  and  include  an  individual,  a
                        ------
corporation,  a  partnership,  a  trust,  an  unincorporated  organization and a
government  or  any  department,  agency  or  political  subdivision  thereof.
               (w)     "Semi-Annual  Dividend  Periods"  means  the  semi-annual
                        ------------------------------
periods  (1)  commencing  on  each  January 1 and ending on each June 30 and (2)
commencing  on  July  1  and  ending  on  each  December  31.
               (x)     "Stock  Purchase  Agreement"  means  the  Preferred Stock
                        --------------------------
Purchase  Agreement  dated as of February 18, 2000, by and among the Corporation
and  the  Investors  named  therein, the Schedules and Exhibits thereto, and any
certificate  or other document required thereby, as the same may be amended from
time  to  time.
               (y)     "Subsidiaries"  means  when  used  with  reference  to  a
                        ------------
person,  a  corporation  or  limited  liability  company,  the  majority  of the
outstanding  voting  securities  or  membership  interests  of  which  are owned
directly  or  indirectly  by  such  person.

     IN  WITNESS  WHEREOF,  the  undersigned  has  caused this Certificate to be
signed  on  the  _____  day  of  March,  2000.


                                   ABC-NACO  INC.

     By:  _________________________
     Name:  J.P.  Singsank
     Title:  Senior  Vice  President  and
Chief  Financial  Officer

<PAGE>
                                     ANNEX A

     Example  of  Application  of  Formula  for  Adjustment of Conversion Price.
If,  twelve  (12)  months  after the original issuance of the Series B Preferred
Stock,  9,000,000  shares  of  Common  Stock  were  then  outstanding  and  the
Corporation  was to issue 100,000 shares of Common Stock (the Additional Stock)
for  $8.00  per  share (and thus, less than the $9 Conversion Price for Series B
Preferred  Stock  then  in  effect),  the  Conversion Price would be adjusted as
follows:
<TABLE>
<CAPTION>



<S>                                  <C>
                                              [(C +D)]

[(9,000,000 x $9) + (100,000 x $8)]/[(9,000,000) +(100,000)]

[(81,000,000)+($800,000 )]. . . . ./[(9,100,000)]

[(81,800,000)]. . . . . . . . . . ./[(9,100,000)]

                                   = $8.989
</TABLE>