**FORM** **BCA
      10.30R** **(rev.
      Dec. 2003)**


**ARTICLES
      OF AMENDMENT**


**RESTATED
      ARTICLES**


**OF
      INCORPORATION**


**Business
      Corporation Act**





**Jesse
      White, Secretary of State**


**Department
      of Business Services**


**Springfield,
      IL 62756**


**Telephone
      (217)782-l832**


**http://www.
      cyberdriveillinois. com**





**Remit
      payment in the form of a check or money order payable to the Secretary of State.**





____________________________________File
      #
      ____________________________ Filing Fee: $150.00 Approved:


**____________                          
      __________Submit in duplicate
      _______________ Type or Print clearly in black
      ink______                        
______ Do not write above this line
      ___________________**





**1.
      CORPORATE NAME:  Northern Illinois
      Gas Company**


**(Note
      1)**


**2.
      MANNER OF ADOPTION OF AMENDMENT:**


**The
      following amendment of the Articles of Incorporation was adopted
      onJuly
      20**


****  **(Month
      &Day)**


**2006 in the manner indicated below. ("X"one box
      only)**


**(Year)**





**[
      ]**  **** **By
      a majority of the incorporators, provided no directors were named in the
      articles of incorporation and no directors have been elected;**


**(Note
      2)**


**[
      ]**  **By
      a majority of the board of directors, in accordance with Section 10.10, the
      corporation having issued no shares as of the time of adoption of this
      amendment;**


**(Note
      2)**


**[
      X]**  **By
      a majority of the board of directors, in accordance with Section 10.15, shares
      having been issued but shareholder action not being required for the adoption
      of
      the**


**amendment;**


**(Note
      3)**


**[
      ]**  **By
      the shareholders, in accordance with Section 10.20, a resolution of the board
      of
      directors having been duly adopted and submitted to the shareholders. At a
      meeting of**


**shareholders,
      not less than the minimum number of votes required by statute and by the
      articles of incorporation were voted in favor of the amendment;**


**(Note
      4)**


**[
      ]**   **By
      the shareholders, in accordance with Sections 10.20 and 7.10, a resolution
      of
      the board of directors having been duly adopted and submitted to the
      shareholders.**


**A** **consent
      in writing has been signed by shareholders having not less than the minimum
      number of votes required by statute and by the articles of
      incorporation.**


**** **Shareholders
      who have not consented in writing have been given notice in accordance with
      Section 7.10;**


**(Notes
      4&5)**


**[
      ]**  **By
      the shareholders, in accordance with Sections 10.20 and 7.10, a resolution
      of
      the board of directors having been duly adopted and submitted to the
      shareholders.**


**A
      consent in writing has been signed by all the shareholders entitled to vote
      on
      this amendment.**


**(Note 5)**























**C-326**













**3(a** **)
      List all provisions of the restated articles of incorporation that amend the
      existing articles of incorporation:**





**As
      permitted by subsection (a)(8) of Section 10.30, the restated articles of
      incorporation of Northern Illinois Gas Company do not set forth the information
      required by paragraphs 3,4 and 6 of subsection (a) of Section 2.10. Information
      required by paragraphs 3 and 6 of subsection (a) of Section 2.10 had been
      contained in Articles Two and Six of the existing articles of incorporation
      of
      Northern Illinois Gas Company, respectively. Additionally, information permitted
      (but not required) to be included in articles of incorporation by Section
      2.10(b)(iv) had been contained in Article Nine of the existing articles of
      incorporation of Northern Illinois Gas Company. That information related solely
      to the estimated value of property and business of Northern Illinois Gas Company
      for the year following its incorporation. That information is no longer relevant
      and has been removed from the restated articles of incorporation. Accordingly,
      Articles Two, Six and Nine of the restated articles of incorporation of Northern
      Illinois Gas Company contain no textual information other than the notation
      "Intentionally Left Blank."**




















**3(b)
      Text of the Restated Articles of Incorporation: (Note 6)**


**(Attach
      additional pages if extra space is needed,)**





**(a)The
      text of the restated articles of incorporation of Northern Illinois Gas Company
      consisting of 31 pages, is attached.**





**(b)Northern
      Illinois Gas Company was incorporated on January 12, 1976 under the name of
      NEW
      UTILITY, INC. It changed its name to Northern Illinois Gas Company pursuant
      to
      an amendment to its articles of incorporation effective April 30, 1976.**





**(c)** **As** **** **of
      the date hereof, the address of the registered office of Northern Illinois
      Gas
      Company is 1844 Ferry Road, Naperville, Illinois 60563 and the name of its
      registered agent is Paul C. Gracey, Jr.**





**(d)The
      following chart shows (i) by class (and, as applicable, by series within each
      class), the number, of shares of stock of Northern Illinois Gas Company that
      are
      authorized and issued, and par value and (ii) the total paid-in-capital of
      Northern Illinois Gas Company.**





**Class**
            **Number
                of**
              **Shares
                Authorized**
            **Number
                of**
              **Shares
                Issued**
            **Par Value****Preferred****Series
                4.48**
            **33,0000**
            **33,0000**
            **$100****Series
                5.0**
            **8,0000**
            **8,0000**
            **$100****Series
                4.60 Conv.**
            **8,7500**
            **8,7500**
            **$100****Series
                5 Conv.**
            **5,2588**
            **5,2588**
            **$100****Undesignated
                Pref**
            **10,000,0000**
            **00**
            **$100****Preferred
                Unallocated**
            **744,9922**
            **00**
            **no par****Common**
            **25,000,0000**
            **15,232,4144**
            **$5****Total
                Paid-In Capital:
                $131,748,963.988**





**Page
      2**

















**4.**  **The
      manner, if not set forth in Article 3b, in which any exchange, reclassification
      or cancellation of issued shares, or a reduction of the number of authorized
      shares of any**


**class
      below the number of issued shares of that class, provided for or effected by
      this amendment, is as follows:** ***(If
      not applicable, insert "No change")***




**No
      change.**








**5.**  **(a)The
      manner, if not set forth in Article 3b, in which said amendment effects a change
      in the amount of paid-in capital (Paid-in capital replaces the terms Stated
      Capital**


**and
      Paid-in Surplus and is equal to the total of these accounts) is as follows:** ***(If
      not applicable, insert "No change")***





**No
      change.**





(b)The
      amount of paid-in capital (Paid-in Capital replaces the terms Stated Capital
      and
      Paid-in Surplus and is equal to the total of these accounts) as changed by
      this
      amendment is as follows:*(if
      not applicable, insert "No change")*


**(Note
      7)**








**Before
      Amendment**  **After
      Amendment**





**Paid-in
      Capital**  **$**  **$
      No change**





**(Complete
      either Item 6 or 7 below. All signatures must be in** **BLACK
      INK** **.)**





**6.**  **The
      undersigned corporation has caused these articles to be signed by a duly
      authorized officer** ****** **who
      affirms, under** ****** **penalties
      of perjury, that the facts stated herein are true.**





**Dated   July 20,** **2006**   **Northern
      Illinois Gas Company**


**(Month
      & Day) (Year)       (Exact
      Name of
      Corporation at date of execution)**


**/s/
      PAUL C. GRACEY,
      JR.**


**(Any
      Authorized Officer’s Signature)**




**Paul
      C. Gracey, Jr.,
      Secretary**


**(Type
      or Print Name and Title)**





**7.**  **If
      amendment is authorized pursuant to Section 10. 10 by the incorporators, the
      incorporators must sign below, and type or print name and title.**





**OR**




**If
        amendment is authorized by the directors pursuant to Section 10.10 and there
        are
        no officers, then a majority of the directors or such directors as may be
        designated**
 **by
        the board, must sign below, and type or print name and title.**




**The
      undersigned affirms, under the penalties of perjury, that the facts stated
      herein are true.**








***Dated  ,***


***(Month
      & Day)***  ***(Year)***












**Page
      3**









**RESTATED**
 
 **ARTICLES
          OF INCORPORATION**
 
 **NORTHERN
          ILLINOIS GAS COMPANY**
 
 
 
 **Article
          One**
 
 The
          name
          of the corporation is Northern Illinois Gas Company.
 
 **Article
          Two**
 
 Intentionally
          Left Blank
 
 
 **Article
          Three**
 
 The
          duration of the corporation is Perpetual.
 
 
 **Article
          Four**
 
 The
          purpose or purposes for which the corporation is organized are:
 
 To
          purchase or otherwise acquire, to explore for and to produce, manufacture,
          refine, store, exchange, transport by pipeline, ship, or any other type
          of
          conveyance, distribute and sell gas and all other forms of energy for fuel,
          heating, cooling, lighting and any and all other purposes; to purchase,
          produce,
          distribute and sell steam or hot water for heating or other purposes; to
          engage
          in industrial, commercial and other activities of every kind in which gas
          or
          other forms of energy are usable; to manufacture, purchase, sell, and otherwise
          dispose of and deal in apparatus, appliances, commodities, goods, wares
          and
          merchandise necessary or convenient for or incidental to such purposes
          or any of
          them; to purchase, lease or otherwise acquire, and to construct, install,
          own,
          manage, maintain and operate, plants, buildings, structures, works, mains,
          pipes, conduits, ships, conveyances of every type, apparatus and any and
          all
          other property necessary or convenient for or incidental to such purposes
          or any
          of them, to render consulting services in connection with such purposes
          or any
          of them; to finance for others the purchase, construction or installation
          of
          properties, plants, buildings, structures, mains, pipes, equipment, ships,
          conveyances of every type, apparatus, appliances and facilities in the
          operation
          of which gas or other forms of energy are usable; to acquire, own, use,
          convey,
          and otherwise dispose of and deal in real property or any interest therein;
          and
          to do any and all of the above specified things directly or through subsidiaries
          or in participation by partnership, joint venture or otherwise with other
          persons, firms or entities.
 
 Page
          1 of
          31
  
  **Article
          Five**
 
 Paragraph
          1: The aggregate number of shares which the Company is authorized to issue
          is
          35,800,000 divided into three classes. The designation of each class, the
          number
          of shares of each class, and the par value, if any, of the shares of each
          class,
          or a statement that the shares of any class are without par value, are
          as
          follows:
 
 Class
                Series
                  (if
                    any)
                Number
                  Of
                    shares
                Par
                    value per share or statement that shares are without par
                    valuePreferred
                See
                    Paragraph 2-I(a)
                800,000
                $100.00Preference
                See
                    Paragraph 2-II(a)
                10,000,000
                without
                    par valueCommon
                None
                25,000,000
                $5.00
 
 As
          used
          in Division I of Paragraph 2 of this Article Five, “junior stock” shall mean the
          Preference Stock, the Common Stock or stock of any other class ranking
          junior to
          the Preferred Stock with respect to the payment of dividends or the distribution
          of assets.
 
 As
          used
          in Division II of Paragraph 2 of this Article Five, “junior stock” shall mean
          the Common Stock or stock of any other class ranking junior to the Preference
          Stock with respect to the payment of dividends or the distribution of
          assets.
 
 Paragraph
          2:  The
          preferences, qualifications, limitations, restrictions and the special
          or
          relative rights in respect of the shares of each class are:
 I.
PREFERRED
            STOCK
 (a)  *Issue
          of Preferred Stock in Series* .
          Authority is hereby expressly vested in the Board of Directors to divide,
          and to
          provide for the issue from time to time of, the Preferred Stock in series,
          and
          to fix and determine as to each such series:
 
 (1)  the
          designation of, and the number of shares to be issuable in, such series;
          provided, however, that if the Board of Directors, at any time after the
          initial
 issue
          of shares of any series issued with the privilege of conversion into shares
          of
          the Common Stock, shall provide for the issue of additional shares of
          such
 series,
          such additional shares shall not be offered by the Company at a price per
          share
          less than that at which the shares of such series initially issued
          shall
 have
          been offered;
 
 (2)  the
          dividend rate per annum for the shares of such series, expressed either
          as a
          dollar amount per share or as a percentage of the par value
          thereof;
 
 (3)  the
          price
          or prices at which, and the terms and conditions on which, such shares
          may be
          redeemed;
 
 Page
          2 of
          31
  
  
 (4)  the
          amount payable upon each of such shares in the event of voluntary dissolution,
          liquidation or winding up of the Company;
 
 (5)  the
          amount payable upon each of such shares in the event of involuntary dissolution,
          liquidation or winding up of the Company;
 
 (6)  sinking
          fund provisions, if any, for the redemption or purchase of such shares
          (the term
“sinking fund,” as used herein, including any analogous fund,
 however
          designated); and
 
 (7)  if
          such
          shares are to be issued with the privilege of conversion into shares of
          the
          Common Stock the terms and conditions on which such shares may
 be
          so converted.
 
 In
          all
          other respects shares of the Preferred Stock of all series shall be
          identical.
 
 So
          long
          as any shares of any series of the Preferred Stock shall be outstanding,
          the
          resolution of the Board of Directors establishing such series shall not
          be
          amended so as adversely to affect any of the preferences or other rights
          of the
          holders of the shares of such series, without the affirmative vote or the
          written consent of the holders of at least two-thirds of the shares of
          such
          series outstanding at the time or as of a record date fixed by the Board
          of
          Directors, but such resolution may be so amended with such vote or
          consent.
 
 (b)  *Priority* .
          The
          Preferred Stock shall be prior and senior to the Preference Stock and the
          Common
          Stock as to the payment of dividends and as to the distribution of assets
          upon
          dissolution, liquidation or winding up of the Company.
 
 (c)  *Dividends* .
          Holders
          of the Preferred Stock of each series shall be entitled to receive cash
          dividends, out of funds legally available therefor, when and as declared
          by the
          Board of Directors, at such rate per annum as shall have been fixed by
          the Board
          of Directors for the shares of such series. Dividends on the Preferred
          Stock of
          all series shall, unless otherwise provided by the Board of Directors,
          be
          payable quarterly on the first day of each of the months of February, May,
          August and November in each year, each such quarterly payment to be in
          respect
          of the quarterly period (or portion thereof in the case of the first dividend
          payable on shares, if any, of any series issued between quarterly dividend
          payment dates) ending with the day next preceding the date of such payment.
          Dividends on the Preferred Stock of each series shall be cumulative with
          respect
          to each share from the date of issue thereof. Accumulations of dividends
          shall
          not bear interest. Whenever there shall be paid on the shares of any series
          of
          the Preferred Stock the full amount or any part of the dividends payable
          thereon, there shall also be paid at the same time on the shares of each
          other
          series of Preferred Stock, if any, then outstanding the full amount or
          a like
          proportionate part, as the case may be, of the dividends payable
          thereon.
 
 
 
 Page
          3 of
          31
  
  
 No
          funds
          shall be paid into or set aside for any sinking fund created for any series
          of
          the Preferred Stock or for any stock of any class ranking on a parity with
          or
          junior to the Preferred Stock with respect to the payment of dividends
          or the
          distribution of assets, unless all dividends on the Preferred Stock for
          all past
          quarterly dividend periods, and (subject to the limitation hereinafter
          stated)
          for the current quarterly dividend period, shall have been paid or shall
          have
          been declared and funds sufficient for such payment set aside by the Company,
          separate and apart from its other funds.
 
 No
          dividend shall be paid or other distribution made on any junior stock,
          other
          than a dividend or distribution solely of shares of junior stock, and no
          junior
          stock shall be purchased or otherwise acquired by the Company for a
          consideration, unless (1) all dividends on the Preferred Stock for all
          past
          quarterly dividend periods, and (subject to the limitation hereinafter
          stated)
          for the current quarterly dividend period, shall have been paid or shall
          have
          been declared and funds sufficient for such payment set aside by the Company,
          separate and apart from its other funds, and (2) all funds then and theretofore
          required to be paid into or set aside for any sinking fund or funds created
          for
          one or more series of the Preferred Stock shall have been so paid or set
          aside.
 
 If
          the
          date of any payment or setting aside of funds, referred to in the second
          preceding paragraph, or the date of payment of any dividend or making of
          any
          other distribution or any purchase or other acquisition, referred to in
          the next
          preceding paragraph, shall be a quarterly Preferred Stock dividend payment
          date,
          the references in such paragraphs to “the current quarterly dividend period”
shall be inapplicable for all of the purposes thereof.
 
 (d)  *Redemption
          of Preferred Stock.* Subject
          to the limitations stated in subdivision (e) hereof and except as may be
          otherwise provided by the Board of Directors in respect of the shares of
          a
          particular series, shares of any one or more series of the Preferred Stock
          may
          be called for redemption and redeemed, at the option of the Company, in whole at
          any time or in part from time to time, upon the notice hereinafter provided
          for,
          by the payment therefor in cash of the then applicable optional redemption
          price
          or prices fixed by the Board of Directors for the shares which are to be
          redeemed.
 
 If
          at any
          time less than all shares of any series of the Preferred Stock shall be
          called
          for redemption, the shares so called shall be selected by lot in such manner,
          or
          pro rata, all as may be determined by the Board of Directors.
 
 Notice
          of
          any proposed redemption shall be given by the Company by mail, or caused
          by the
          Company to be so given, not more than 60 nor less than 30 days prior to
          the
          redemption date, to the holders of record of the shares to be redeemed
          at their
          respective addresses then appearing on the records of the Company.
 
 
 
 
 Page
          4 of
          31
  
  If
          notice
          of redemption shall have been duly given as hereinabove provided and if,
          on or
          before the redemption date, the funds necessary for such redemption shall
          have
          been set aside by the Company, separate and apart from its other funds,
          then, on
          and after the redemption date, all shares for the redemption of which such
          funds
          shall have been so set aside shall, whether or not the certificates for
          such
          shares shall have been surrendered for cancellation, be deemed to be no
          longer
          outstanding for any purpose and all rights with respect to such shares
          shall
          cease and terminate on the redemption date, except only the right of the
          holders
          of the certificates for such shares to receive, out of the funds so set
          aside,
          the amount payable upon the redemption thereof without interest.
 
 At
          any
          time before the redemption date the Company may deposit in trust the funds
          necessary for such redemption with a bank or trust company, to be designated
          in
          the notice of such redemption, doing business in the City of Chicago, State
          of
          Illinois, or in the Borough of Manhattan, the City of New York, State of
          New
          York, and having capital, surplus and undivided profits aggregating at
          least
          $5,000,000. In the event such deposit is made so that the deposited funds
          shall
          be forthwith available to the holders of the shares to be redeemed upon
          surrender of the certificates evidencing such shares, then, upon the giving
          of
          the notice of such redemption, as hereinabove provided, or upon the earlier
          delivery to such bank or trust company of irrevocable authorization and
          direction so to give such notice, all shares with respect to the redemption
          of
          which such deposit shall have been made and the giving of such notice effected
          or authorization therefor given shall, whether or not the certificates
          for such
          shares shall have been surrendered for cancellation, be deemed to be no
          longer
          outstanding for any purpose and all rights with respect to such shares
          shall
          thereupon cease and terminate, except only the right of the holders of
          the
          certificates for such shares (1) to receive, out of the funds so deposited
          in
          trust, from and after the time of such deposit, the amount payable upon
          the
          redemption thereof, without interest, or (2) to exercise any privilege
          of
          conversion which shall not theretofore have terminated. Any funds so deposited
          which shall not be required for the payment of the redemption price of
          such
          shares by reason of the exercise of any right of conversion subsequent
          to the
          date of such deposit shall be paid over to the Company forthwith. At the
          expiration of six years after the redemption date, any such funds then
          remaining
          on deposit with such bank or trust company shall be paid over to the Company,
          free of trust, and thereafter the holders of the certificates for such
          shares
          shall have no claims against such bank or trust company, but only claims
          as
          unsecured creditors against the Company for amounts equal to their pro
          rata
          portions of the funds so paid over, without interest. Any interest on or
          other
          accretions to funds deposited with such bank or trust company shall belong
          to
          the Company.
 
 The
          provisions of this subdivision (d) with respect to the method and effect
          of
          redemption shall be applicable to the redemption of shares pursuant to
          any
          sinking fund created for any series of the Preferred Stock as well as to
          the
          optional redemption of shares, except to the extent, if any, that the terms
          of
          such sinking fund, as fixed and determined by the Board of Directors, shall
          expressly otherwise provide.
 
 
 
 
 Page
          5 of
          31
  
  (e)  *Limitations
          on Redemption and Purchase of Preferred Stock.* If
          and so
          long as the Company shall be in default in the payment of any quarterly
          dividend
          on shares of any series of the Preferred Stock, or shall be in default
          in the
          payment of funds into or the setting aside of funds for any sinking fund
          created
          for any series of the Preferred Stock, the Company shall not (other than
          by the
          use of unapplied funds, if any, paid into or set aside for a sinking fund
          or
          funds prior to such default):
  (1)  redeem
          any shares of the Preferred Stock unless all shares thereof are redeemed;
          or
 
 (2)  purchase
          or otherwise acquire for a consideration any shares of the Preferred Stock,
          except pursuant to offers of sale made by holders of the Preferred Stock
          in
          response to an invitation for tenders given simultaneously by the Company
          by
          mail to the holders of record of all shares of the Preferred Stock then
          outstanding at their respective addresses then appearing on the records
          of the
          Company.
 
 (f)  S *tatus
          of Preferred Stock Redeemed, Purchased or Otherwise Reacquired.* All
          shares of the Preferred Stock of any series which shall have been redeemed,
          purchased or otherwise reacquired by the Company may have the status of
          authorized and unissued shares of Preferred Stock, as may, in each case,
          be
          determined by the Board of Directors.
 
 (g)  *Liquidation
          Preference.* In
          the
          event of dissolution, liquidation or winding up of the Company, whether
          voluntary or involuntary, holders of the Preferred Stock of each series
          shall be
          entitled to receive out of the assets of the Company, before any payment
          or
          distribution shall be made to the holders of any junior stock, such amount
          per
          share as shall have been fixed by the Board of Directors as the voluntary
          liquidation price or the involuntary liquidation price, as the case may
          be, for
          the shares of such series. If upon any such dissolution, liquidation or
          winding
          up, the assets of the Company available for payment to stockholders are
          not
          sufficient to make payment in full to holders of the Preferred Stock, payment
          shall be made to such holders ratably in accordance with the numbers of
          shares
          held by them respectively, and, in case there shall then be outstanding
          more
          than one series of the Preferred Stock, ratably in accordance with the
          respective distributive amounts to which such holders shall be
          entitled.
 
 Neither
          a
          consolidation or merger of the Company with or into any other corporation,
          nor a
          merger of any other corporation into the Company, nor the redemption or
          purchase
          by the Company of all or a part of the outstanding shares of any class
          or
          classes of its stock, nor a sale or transfer of the property and business
          of the
          Company, as or substantially as an entirety, shall be considered a dissolution,
          liquidation or winding up of the Company within the meaning of the foregoing
          provisions.
 
 (h)  *Restrictions
          on Certain Corporate Action.* (1)
          So
          long as any shares of the Preferred Stock shall be outstanding, the Company
          shall not, without the affirmative vote or the written consent of the holders
          of
          at least two-thirds of the shares of the Preferred Stock outstanding at
          the time
          or as of a record date fixed by the Board of Directors:
 
 Page
          6 of
          31
  
   (A)  create
          or
          authorize any stock of any class ranking prior to or on a parity with the
          Preferred Stock with respect to the payment of dividends or the distribution
          of
          assets; or
  (B)  amend
          the
          Articles of Incorporation of the Company so as adversely to affect any
          of the
          preferences or other rights of the holders of the Preferred Stock; provided,
          however, that if any such amendment would adversely affect any of the
          preferences or other rights of the holders of one or more, but less than
          all, of
          the series of the Preferred Stock then outstanding, the affirmative vote
          or the
          written consent of, and only of, the holders of at least two-thirds of
          the
          shares of each series so adversely affected shall be required.
 
 (2)  So
          long
          as any shares of the Preferred Stock shall be outstanding, the Company
          shall
          not, without the affirmative vote or the written consent of the holders
          of a
          majority of the shares of the Preferred Stock outstanding at the time or
          as of a
          record date fixed by the Board of Directors:
 (A)  issue
          any
          shares of the Preferred Stock in excess of 300,000 shares, or any shares
          of
          stock of any other class, which may hereafter be authorized, ranking prior
          to or
          on a parity with the Preferred Stock with respect to the payment of dividends
          or
          the distribution of assets (other than for the purpose of effecting the
          retirement, by redemption, exchange or otherwise, of outstanding shares
          ranking
          at least on a parity with, and representing an aggregate amount of stated
          capital at least equal to the aggregate amount of the stated capital to
          be
          represented by, the shares proposed to be issued), if the aggregate amount
          of
          the stated capital represented by all Preferred Stock and all prior and
          parity
          stock to be outstanding after the proposed issue, after giving effect to
          the
          retirement of any Preferred Stock or any prior or parity stock to be retired
          in
          connection with such issue, would exceed 75% of the aggregate amount of
          the
          stated capital represented by all junior stock, plus the amount of the
          retained
          earnings of the Company and its consolidated subsidiaries, if any, as of
          the end
          of the preceding fiscal year (the term “stated capital,” as used in this subpart
          (A), includes any related paid-in surplus); or
 
 (B)  consolidate
          with or merge into any other corporation, under applicable statutory procedure,
          or make any sale or transfer of the property and business of the Company
          as or
          substantially as an entirety; provided, however, that this restriction
          shall not
          apply to a consolidation of the Company with or its merger into or the
          sale or
          transfer of the property and business of the Company as or substantially
          as an
          entirety to (i) any corporation which owns directly, or indirectly through
          one
          or more other corporations, 50% or more of the voting securities of the
          Company,
          (ii) any corporation 50% or more of the voting securities of which are
          so owned
          by the Company, or (iii) any corporation, when such consolidation, merger,
          sale
          or transfer shall be required by order or regulation of any commission
          or other
          governmental agency having jurisdiction in the premises. The term “sale or
          transfer,” as used in this subpart (B), includes a lease or exchange but does
          not include a mortgage or pledge.
 
 Page
          7 of
          31
  
  (i)  *Preemptive
          Rights.* Holders
          of the Preferred Stock shall not have any preemptive rights.
 
 
 SERIES
          OF
          PREFERRED STOCK - PREFERENCES
 
 A.
          4.48%
          Preferred Stock Preferences
 
 I. *Designation
          of Series and Number of Shares to be Issuable Therein* .
          Such
          series of the Preferred Stock shall be designated 4.48% Preferred Stock,
          in
          which series 33,000 shares shall be issuable.
 
 II. *Annual
          Rate of Dividends* .
          Dividends shall be payable on the shares of the 4.48% Preferred Stock at
          the
          rate of 4.48% per annum on the par value thereof, and no more.
 
 III. *Redemption* .
          The
          shares of the 4.48% Preferred Stock may be called for redemption and redeemed,
          at the option of the Company, in whole at any time or in part from time
          to time,
          upon the notice and in the manner provided in subdivision (d) of Division
          I of
          Paragraph 2 of Article Five of the Articles of Incorporation of the
          Company.
 
 The
          per
          share optional redemption prices of the shares of such series shall be
          $103.24
          if redeemed before May 1, 1980, and $102.12 if redeemed on or after May
          1, 1980,
          in each case plus the amount of accrued and unpaid dividends, if any, thereon
          to
          the redemption date.
 
 The
          redemption price of shares of the 4.48% Preferred Stock redeemed through
          the
          sinking fund provided in division V shall be $101 per share plus the amount
          of
          accrued and unpaid dividends, if any, thereon to the redemption
          date.
 
 IV. *Liquidation
          Prices* .
          The
          amount payable on each share of the 4.48% Preferred Stock in the event
          of
          voluntary dissolution, liquidation or winding up of the Company shall be
          an
          amount equal to the optional redemption price thereof applicable at the
          date
          fixed for payment, and no more. The amount payable on each share of such
          series
          in the event of involuntary dissolution, liquidation or winding up of the
          Company shall be $100 per share plus the amount of accrued and unpaid dividends,
          if any, thereon to the date fixed for payment, and no more.
 
 V. *Sinking
          Fund* .
          Subject
          to the provision hereinafter set forth with respect to the application
          of
          reacquired shares of the 4.48% Preferred Stock in lieu of the setting aside
          of
          funds, the Company shall, on or before May 1 of each year beginning with
          the
          year 1976, so long as any shares of the 4.48% Preferred Stock shall be
          outstanding, set aside as a sinking fund for such stock, separate and apart
          from
          its other funds, but only to the extent of "available net income" (as
          hereinafter defined) for the preceding fiscal year of the Company, and
          in no
          case otherwise than out of legally available funds, an amount sufficient
          to
          redeem on such May 1, at the sinking fund redemption price, 3,000 shares
          of the
          4.48% Preferred Stock. If in any year the full amount required for such
          redemption of said 3,000 shares shall not be set aside, the deficiency
          shall
          accumulate and the Company shall set aside on or before each succeeding
          May 1,
          until the deficiency is made good in full, all, or such part as may be
          required,
          of the amount, if any, by
 
 Page
          8 of
          31
  
  which
          available net income of the Company for the preceding fiscal year shall
          exceed
          the amount required for such redemption of said 3,000 shares. The amount
          set
          aside, as hereinabove provided, on or before each May 1 shall be applied
          to the
          redemption on such May 1 of the greatest number of whole shares redeemable,
          at
          the sinking fund redemption price, out of such amount, any unapplied excess
          to
          revert to the Company's general funds.
 
 The
          term
          "available net income" as hereinabove used means, for any fiscal year,
          the net
          income of the Company for such year determined in accordance with generally
          accepted principles of accounting and as certified by independent public
          accountants, who may be regular auditors of the Company, but after deducting
          from such net income an amount equal to the aggregate of the dividends
          payable
          during such year, whether or not actually paid, on all shares of Preferred
          Stock
          (regardless of series) outstanding during such year.
 
 In
          lieu
          of all or any part of the amount otherwise required by the provisions of
          this
          division V to be set aside in any year, the Company may (i) apply any shares
          of
          the 4.48% Preferred Stock, not previously so applied, which it shall have
          acquired or shall have redeemed otherwise than through the sinking fund,
          and
          (ii) take credit for any shares of the 4.48% Preferred Stock of the Company's
          predecessor, Northern Illinois Gas Company ("NI-Gas"), not previously applied
          to
          sinking fund purposes, which NI-Gas, prior to its merger into NICOR Inc.,
          purchased or redeemed otherwise than through the sinking fund for such
          NI-Gas
          4.48% Preferred Stock, such shares of the Company or of NI-Gas, as the
          case
          maybe, to be taken for the purposes of such application at the sinking
          fund
          redemption price.
 
 VI. *Status
          of 4.48% Preferred Stock Redeemed or Purchased* .
          No
          shares of the 4.48% Preferred Stock redeemed, purchased or otherwise reacquired
          by the Company may be reissued as shares of the same series, but such shares
          shall have the status of authorized and unissued shares of Preferred Stock,
          subject to later issuance as shares of one or more other series hereafter
          established.
 
 
 B.
              5%
                  Preferred Stock Preferences 
 I. *Designation
          of Series and Number of Shares to be Issuable Therein* .
          Such
          series of the Preferred Stock shall be designated 5% Preferred Stock, in
          which
          series 8,000 shares shall be issuable.
 
 II. *Annual
          Rate of Dividends* .
          Dividends shall be payable on the shares of the 5% Preferred Stock at the
          rate
          of 5% per annum on the par value thereof, and no more.
 
 III. *Redemption* .
          The
          shares of the 5% Preferred Stock may be called for redemption and redeemed,
          at
          the option of the Company, in whole at any time or in part from time to
          time,
          upon the notice and in the manner provided in subdivision (d) of Division
          I of
          Paragraph 2 of Article Five of the Articles of Incorporation of the Company.
 
 The
          per
          share optional redemption prices of the shares of such series shall be
          $102 plus
          the amount of accrued and unpaid dividends, if any, thereon to the redemption
          date.
 
 Page
          9 of
          31
  
  
 The
          redemption price of shares of the 5% Preferred Stock redeemed through the
          sinking fund provided in division V hereof shall be $101 per share plus
          the
          amount of accrued and unpaid dividends, if any, thereon to the redemption
          date.
 
 IV. *Liquidation
          Prices* .
          The
          amount payable on each share of the 5% Preferred Stock in the event of
          voluntary
          dissolution, liquidation or winding up of the Company shall be an amount
          equal
          to the optional redemption price thereof, and no more. The amount payable
          on
          each share of such series in the event of involuntary dissolution, liquidation
          or winding up of the Company shall be $100 per share plus the amount of
          accrued
          and unpaid dividends, if any, thereon to the date fixed for payment, and
          no
          more.
 
 V. *Sinking
          Fund* .
          Subject
          to the provision hereinafter set forth with respect to the application
          of
          reacquired shares of the 5% Preferred Stock in lieu of the setting aside
          of
          funds, the Company shall, on or before May 1 of each year beginning with
          the
          year 1976, so long as any shares of the 5% Preferred Stock shall be outstanding,
          set aside as a sinking fund for such stock, separate and apart from its
          other
          funds, but only to the extent of "available net income" (as hereinafter
          defined)
          for the preceding fiscal year of the Company, and in no case otherwise
          than out
          of legally available funds, an amount sufficient to redeem on such May
          1, at the
          sinking fund redemption price, 2,000 shares of the 5% Preferred Stock.
          If in any
          year the full amount required for such redemption of said 2,000 shares
          shall not
          be so set aside, the deficiency shall accumulate and the Company shall
          set aside
          on or before each succeeding May 1, until the deficiency is made good in
          full,
          all, or such part as may be required, of the amount, if any, by which available
          net income of the Company for the preceding fiscal year shall exceed the
          amount
          required for such redemption of said 2,000 shares. The amount set aside,
          as
          hereinabove provided, on or before each May 1 shall be applied to the redemption
          on such May 1 of the greatest number of whole shares redeemable, at the
          sinking
          fund redemption price, out of such amount, any unapplied excess to revert
          to the
          Company's general funds.
 
 The
          term
          "available net income" as hereinabove used means, for any fiscal year,
          the net
          income of the Company for such year determined in accordance with generally
          accepted principles of accounting and as certified by independent public
          accountants, who may be the regular auditors of the Company, but after
          deducting
          from such net income an amount equal to the aggregate of the dividends
          payable
          during such year, whether or not actually paid, on all shares of Preferred
          Stock
          (regardless of series) outstanding during such year.
 
 In
          lieu
          of all or any part of the amount otherwise required by the provisions of
          this
          division V to be set aside in any year, the Company may (i) apply any shares
          of
          the 5% Preferred Stock, not previously so applied, which it shall have
          acquired
          or shall have redeemed otherwise than through the sinking fund, and (ii)
          take
          credit for any shares of the 5% Preferred Stock of the Company's predecessor,
          Northern Illinois Gas Company ("NI-Gas"), not previously applied to sinking
          fund
          purposes, which NI-Gas, prior to its merger into NICOR Inc., purchased
          or
          redeemed otherwise than through the sinking fund for such NI-Gas 5% Preferred
          Stock, such shares of the Company or of NI-Gas, as the case may be, to
          be taken
          for the purposes of such application at the sinking fund redemption
          price.
 
 Page
          10
          of 31
  
  VI. *Status
          of 5% Preferred Stock Redeemed or Purchased* .
          No
          shares of the 5% Preferred Stock redeemed, purchased or otherwise reacquired
          by
          the Company may be reissued as shares of the same series, but such shares
          shall
          have the status of authorized and unissued shares of Preferred Stock, subject
          to
          later issuance as shares of one or more other series.
 
 
 C.
              4.60%
                  Convertible Preferred Stock Preferences 
 I. *Designation
          of Series and Number of Shares to be Issuable Therein* .
          Such
          series of the Preferred Stock shall be designated 4.60% Convertible Preferred
          Stock (hereinafter called the "4.60% Convertible Series"), in which not
          more
          than 17,500 shares shall be issuable.
 
 II. *Annual
          Amount of Dividends* .
          Dividends shall be payable on the shares of the 4.60% Convertible Series
          in the
          amount of $4.60 per share per annum, and no more.
 
 III. *Redemption* .
          None of
          the shares of the 4.60% Convertible Series may be redeemed prior to January
          1,
          1986, unless cash dividends in a total amount of not less than $4.60 shall
          have
          been paid during the twelve calendar months immediately preceding the first
          day
          of the month in which such redemption is to be effected on the number of
          shares
          of the Common Stock equal to the number issuable, on the last day of such
          twelve
          months period, on conversion of one share of the 4.60% Convertible Series.
          Subject to the foregoing, the shares of the 4.60% Convertible Series may
          be
          called for redemption and redeemed, at the option of the Company, in whole
          at
          any time or in part from time to time, upon the notice and in the manner
          provided in subdivision (d) of Division I of Paragraph 2 of Article Five
          of the
          Articles of Incorporation of the Company.
 
 The
          redemption prices of the shares of the 4.60% Convertible Series shall be:
          $103
          per share if redeemed prior to January 1, 1981; $101.50 per share if redeemed
          during the five-year period beginning January 1, 1981; and $100 per share
          if
          redeemed on or after January 1, 1986; in each case plus the amount of accrued
          and unpaid dividends, if any, thereon to the redemption date.
 
 IV. *Liquidation
          Prices* .
          The
          amount payable on shares of the 4.60% Convertible Series in the event of
          voluntary dissolution, liquidation or winding up of the Company shall be
          an
          amount equal to the redemption price thereof applicable at the date fixed
          for
          payment, and no more, or $103 per share in case such shares shall not at
          the
          time be redeemable, plus the amount of accrued and unpaid dividends, if
          any,
          thereon to the date fixed for payment, and no more. The amount payable
          on each
          share of the 4.60% Convertible Series in the event of involuntary dissolution,
          liquidation or winding up of the Company shall be $100 per share, plus
          the
          amount of accrued and unpaid dividends, if any, thereon to the date fixed
          for
          payment, and no more.
 
 V. *Conversion
          Provisions* .
 
 (a)
          The
          shares of the 4.60% Convertible Series shall be convertible, at the option
          of
          the respective holders thereof, into fully paid and nonassessable shares
          of the
          Common Stock of the Company at the conversion price of $53.63 per share,
          in each
          case taking the shares of the 4.60% Convertible Series at $100 per share,
          that
          is, at the rate of 1.86463 shares of Common Stock for each share of the
          4.60%
          Convertible Series; provided, however, that:
 
 Page
          11
          of 31
  
  
 (1)
          as
          provided in subdivisions (b) and (c) of this division V, such conversion
          price
          shall be subject to adjustment or change in certain cases, and, as provided
          in
          said subdivision (c), the number of shares of Common Stock issuable upon
          conversion of shares of the 4.60% Convertible Series shall be subject to
          increase or decrease in certain cases;
 
 (2)
          as
          provided in subdivisions (d) and (e) of this division V, shares or other
          securities, other than shares of the Common Stock, may in certain cases
          become
          issuable upon conversion of shares of the 4.60% Convertible Series;
 
 (3)
          whenever the Company shall call for redemption any shares of the 4.60%
          Convertible Series, the conversion rights of the holders thereof shall
          terminate
          at the close of business on the fifth day prior to the redemption date
          (except
          that if the funds necessary for such redemption shall not be set aside
          or
          deposited on or before the redemption date, as provided in the Articles
          of
          Incorporation of the Company, such conversion rights shall be reinstated
          on the
          redemption date); and
 
 (4)
          in
          case of any dissolution, liquidation or winding up of the Company, whether
          voluntary or involuntary, or in case the Company shall be required, by
          order or
          regulation of any commission or other governmental agency having jurisdiction
          in
          the premises, to consolidate with or merge into another corporation and
          such
          order or regulation shall not permit the provisions of subdivision (e)
          of this
          division V to become effective, then and in any such case the conversion
          rights
          of the holders of the shares of the 4.60% Convertible Series shall terminate
          on
          such date as shall be fixed by the Board of Directors, but not earlier
          than the
          close of business on the thirtieth day following the mailing by the Company
          to
          the holders of record of the shares of the 4.60% Convertible Series of
          the
          statement required by subdivision (h) of this division V to be so
          mailed.
 
 (b)
          In
          case the Company shall at any time or from time to time issue any shares
          of the
          Common Stock in addition to the shares to be issued pursuant to the Agreement
          and Plan of Merger and Reorganization to which the Company is a party,
          dated
          January 20, 1976 (other than (i) additional shares issued upon conversion
          of
          shares of the 4.60% Convertible Series or shares of the Company's 5% Convertible
          Preferred Stock or $1.90 Convertible Preference Stock, (ii) additional
          shares
          which may be issued by the Company pursuant to any employe stock purchase,
          stock
          option or similar plan or plans heretofore or hereafter adopted, and (iii)
          shares issued pursuant to subdivision (c) of this division V) and such
          additional shares shall be so issued without consideration or for a
          consideration per share less than the "minimum price" per share (such price
          being $55 per share, subject to adjustment as provided in subdivision (c)
          of
          this division V), then upon such issue such conversion price shall (until
          a
          further adjustment thereof shall be required by the provisions of this
          subdivision (b)) be reduced to a price, calculated to the nearest (or if
          there
          shall be no nearest, then to the next lower) cent, determined by
          dividing:
 
 Page
          12
          of 31
  
  
 (1)
          an
          amount equal to the sum of (i) the number of shares of the Common Stock
          outstanding (determined as hereinafter provided) immediately prior to such
          issue
          multiplied by the then effective per share conversion price of the Common
          Stock,
          and (ii) the consideration (determined as hereinafter provided) received
          by the
          Company upon such issue; by
 
 (2)
          the
          total number of shares of the Common Stock outstanding (determined as
          hereinafter provided) immediately after such issue;
 
 provided,
          however, that if such conversion price would, by the application of the
          foregoing formula, be reduced by an amount less than 50 cents, no adjustment
          of
          such conversion price shall be made, but in that event the adjustment which,
          except for this provision, would be required to be made shall be carried
          forward
          and made at the time of and together with the next subsequent adjustment
          which,
          together with any adjustment or adjustments so carried forward, shall amount
          to
          a reduction of the then effective conversion price by 50 cents or
          more.
 
 In
          determining, for the purposes of this subdivision (b), the number of shares
          of
          the Common Stock outstanding at any particular time, there shall be included,
          without limiting the generally accepted meaning of the term "outstanding"
          (1)
          any shares issued on conversion of shares of the 4.60% Convertible Series
          or the
          Company's 5% Convertible Preferred Stock or $1.90 Convertible Preference
          Stock,
          (2) any shares which, pursuant to paragraph (A) of this subdivision (b)
          shall be
          deemed to have been issued but which shall not actually have been issued,
          or
          into which the $1.90 Convertible Preference Stock of the Company's predecessor,
          Northern Illinois Gas Company ("NI-Gas") was initially convertible when
          issued
          by NI-Gas, but which had not been issued by NI-Gas, up to and including
          the
          effective date of the merger pursuant to the Agreement and Plan of Merger
          and
          Reorganization to which the Company is a party dated January 20, 1976,
          and (3)
          any shares owned or held by the Company; and there shall be excluded any
          shares
          of the Common Stock which may have been issued by the Company or by NI-Gas
          pursuant to any employe stock purchase, stock option or similar plan or
          plans of
          the Company or NI-Gas heretofore (in the case of the Company or NI-Gas)
          or
          hereafter (in the case of the Company) adopted.
 
 In
          determining, for the purposes of this subdivision (b), what constitutes
          the
          issue of additional shares of the Common Stock by the Company and the
          consideration received therefor, the following provisions shall be
          applicable:
 
 (A)
          In
          case the Company shall issue any shares (other than shares of the 4.60%
          Convertible Series or the Company's 5% Convertible Preferred Stock or $1.90
          Convertible Preference Stock) convertible into shares of the Common Stock
          or any
          obligations so convertible, all shares of the Common Stock into which such
          convertible shares or obligations shall be initially convertible shall,
          on the
          earliest date on which such convertible shares or obligations shall by
          their
          terms be convertible, be deemed to be additional shares of the Common Stock
          issued as of such date, and the Company shall be deemed to have received,
          as of
          such date, for such shares of the Common Stock so deemed to have been issued
          an
          aggregate consideration equal to the sum of (i) the
 
 Page
          13
          of 31
  
  consideration
          received by the Company for such convertible shares or obligations, and
          (ii)
          such additional consideration, if any, as would be receivable by the Company
          for
          or upon issuance of such shares of the Common Stock so deemed to have been
          issued if issued on the earliest date on which such convertible shares
          or
          obligations shall by their terms be convertible.
 
 (B)
          In
          case the Company shall issue any rights to subscribe for or purchase, or
          any
          options to purchase, shares of the Common Stock, and if any of such rights
          or
          options shall be exercised and shares of the Common Stock shall be issued
          upon
          such exercise, the Company shall be deemed to have received for such shares
          of
          the Common Stock so issued an aggregate consideration equal to the sum
          of (i)
          the consideration received by the Company for such shares upon the issuance
          thereof, and (ii) such additional consideration, if any, as shall have
          been
          received by the Company for such rights or options; provided, however,
          that if
          such rights or options shall be exercisable over a stated period of time,
          a
          recomputation of the conversion price by reason of the exercise thereof
          need not
          be made upon each such exercise but may be made at such time or times as
          shall
          be determined by the Board of Directors, subject only to the conditions
          that if
          the period of time during which such rights or options shall be exercisable
          shall not exceed 30 days, such recomputation shall be made within 10 days
          following the expiration of such period, and that if such period shall
          exceed 30
          days, such recomputation shall be made at least once in each month next
          succeeding a month, within such period, during which any such exercise
          shall
          occur.
 
 (C)
          In
          case the Company shall issue or sell, for cash, any additional shares of
          the
          Common Stock or any shares (other than shares of the 4.60% Convertible
          Series or
          the Company's 5% Convertible Preferred Stock or $1.90 Convertible Preference
          Stock) convertible into shares of the Common Stock or any obligations so
          convertible, or any rights to subscribe for or purchase, or any options
          to
          purchase, shares of the Common Stock, the consideration received by the
          Company
          therefor shall be deemed to be the amount of cash received therefor, plus
          the
          amount of any discount (below the public or other offering price) at which
          such
          issue or sale shall have been made by the Company, and before deducting
          the
          amount of any commissions or other expenses paid or incurred by the Company
          for
          any underwriting of, or otherwise in connection with, such issue or sale.
          In
          case the Company shall issue or sell, for a consideration other than cash,
          any
          such additional shares of the Common Stock or any such convertible shares
          or
          obligations or any such rights or options, the consideration received by
          the
          Company therefor shall be deemed to be the fair value of such consideration,
          as
          determined by the Board of Directors.
 
 (c)
          In
          case (i) any shares of the Common Stock shall be issued by the Company
          as a
          dividend on the then outstanding Common Stock or on shares of stock of
          any other
          class ranking junior to the Preferred Stock with respect to the payment
          of
          dividends or the distribution of assets, or (ii) the shares of the Common
          Stock
          at any time outstanding shall be subdivided, by reclassification or otherwise,
          into a greater number of shares, the per share conversion price and the
          per
          share minimum price of the Common Stock shall be decreased proportionately
          and
          the number of shares of the Common Stock issuable upon the conversion of
          each
          share of the 4.60% Convertible Series increased proportionately. In case
          the
          shares of the Common Stock at any
 
 Page
          14
          of 31
  
  time
          outstanding shall be combined, by reclassification or otherwise, into a
          lesser
          number of shares, the per share conversion price and the per share minimum
          price
          of the Common Stock shall be increased proportionately and the number of
          shares
          of the Common Stock issuable upon conversion of each share of the 4.60%
          Convertible Series decreased proportionately.
 
 (d)
          In
          case of any reclassification of the Common Stock or any capital reorganization
          of the Company involving a change in the Common Stock, other than a
          reclassification or reorganization involving merely a subdivision or combination
          of outstanding shares of the Common Stock, the shares of the 4.60% Convertible
          Series shall thereafter be convertible into the number and class of shares
          or
          other securities of the Company to which the shares of the Common Stock
          otherwise issuable upon conversion of the shares of the 4.60% Convertible
          Series
          would have been entitled upon such reclassification or reorganization if
          outstanding at the time thereof; and in any such case appropriate adjustment,
          as
          determined by the Board of Directors, shall be made in the application
          of the
          provisions of this division V with respect to the conversion rights thereafter
          of the holders of the shares of the 4.60% Convertible Series, to the end
          that
          such provisions shall thereafter be applicable, as nearly as reasonably
          may be,
          in relation to any shares or other securities thereafter issuable or deliverable
          upon the conversion of shares of the 4.60% Convertible Series.
 
 (e)
          Subject to the limitation hereinafter stated in this subdivision (e), in
          case of
          any consolidation of the Company with or its merger into another corporation,
          the shares of the 4.60% Convertible Series (or any shares issued in exchange
          therefor upon such consolidation or merger) shall thereafter be convertible
          into
          the number and class of shares or other securities of the corporation resulting
          from such consolidation or merger to which the shares of the Common Stock
          otherwise issuable upon conversion of the shares of the 4.60% Convertible
          Series
          would have been entitled upon such consolidation or merger if outstanding
          at the
          time thereof; and in any such case appropriate adjustment shall be made
          in the
          application of the provisions of this division V with respect to the conversion
          rights thereafter of the holders of the shares of the 4.60% Convertible
          Series,
          to the end that such provisions shall thereafter be applicable, as nearly
          as
          reasonably may be, in relation to any shares or other securities thereafter
          issuable or deliverable upon the conversion of shares of the 4.60% Convertible
          Series (or any shares issued in exchange therefor upon such consolidation
          or
          merger); and appropriate provision, as determined by the Board of Directors,
          shall be made as a part of the terms of any such consolidation or merger
          whereby
          the conversion rights of the holders of the shares of the 4.60% Convertible
          Series shall be protected and preserved in accordance with the provisions
          of
          this subdivision (e); provided, however, that in case of any such consolidation
          or merger which may be required by order or regulation of any commission
          or
          other governmental agency having jurisdiction in the premises, the provisions
          of
          this subdivision (e) shall be effective only if permitted by such order
          or
          regulation.
 
 (f)
          No
          payment or adjustment with respect to dividends on shares of the 4.60%
          Convertible Series or on the Common Stock shall be made in connection with
          any
          conversion.
 
 Page
          15
          of 31
  
  
 (g)
          Whenever the per share conversion price of the Common Stock shall be adjusted
          or
          changed as provided in subdivision (b) or (c) of this division V, the Company
          shall promptly file with each Transfer Agent for the shares of the 4.60%
          Convertible Series and, as soon as practicable after such adjustment or
          change
          and in no event later than 10 full business days thereafter, shall mail
          to the
          holders of record of such shares at their respective addresses then appearing
          on
          the records of the Company a statement signed by an officer of the Company,
          setting forth the adjusted or changed conversion price determined as provided
          in
          said subdivision (b) or (c), as the case may be, and setting forth in reasonable
          detail the facts requiring such adjustment or change, and, in case of an
          increase or decrease in the number of shares of the Common Stock issuable
          upon
          conversion of each share of the 4.60% Convertible Series, setting forth
          such
          increased or decreased number of shares. Each Transfer Agent for the shares
          of
          the 4.60% Convertible Series shall be fully protected in relying on such
          statement and shall be under no duty to examine into the accuracy thereof.
          If
          any question shall at any time arise with respect to an adjusted or changed
          conversion price or the minimum price, such question shall be determined
          by a
          firm of independent certified public accountants selected by the Company
          and
          acceptable to the Transfer Agents for the shares of the 4.60% Convertible
          Series, and such determination shall be binding upon the Company and the
          holders
          of such shares.
 
 (h)
          In
          case:
 
 (1)
          the
          Company shall propose to pay any dividend on the Common Stock payable in
          shares
          of the Common Stock or to make any other distribution, other than cash
          dividends, to the holders of the Common Stock; or
 
 (2)
          the
          Company shall propose to offer for subscription to the holders of the Common
          Stock any additional shares of any class or any other rights or options;
          or
 
 (3)
          the
          Company shall propose to effect any reclassification of the Common Stock
          or any
          capital reorganization involving a change in the Common Stock, other than
          a
          reclassification or reorganization involving merely a subdivision or combination
          of outstanding shares of the Common Stock; or
 
 (4)
          the
          Company shall propose to consolidate with or merge into another corporation,
          or
          to sell or transfer its property and business as or substantially as an
          entirety, or shall propose to dissolve, liquidate or wind up;
 
 then,
          in
          each such case, the Company shall file with each Transfer Agent for the
          shares
          of the 4.60% Convertible Series and shall mail to the holders of record
          of such
          shares at their respective addresses then appearing on the records of the
          Company a statement, signed by an officer of the Company, with respect
          to the
          proposed action, such statement to be so filed and mailed at least 10 days,
          if
          paragraph (1) or (2) of this subdivision (h) shall be applicable, and at
          least
          40 days, if paragraph (3) or (4) of this subdivision (h) shall be applicable,
          prior to the date of the taking of such action or the record date for holders
          of
          the Common Stock for the purposes thereof, whichever is earlier. If such
          statement relates to any proposed action referred to in paragraph (3)
 
 Page
          16
          of 31
  
  or
          (4) of
          this subdivision (h), it shall set forth such facts with respect thereto
          as
          shall reasonably be necessary to inform each Transfer Agent for the shares
          of
          the 4.60% Convertible Series and the holders of such shares as to the effect
          of
          such action upon the conversion rights of such holders.
 
 (i)
          In
          order to effect the conversion of shares of the 4.60% Convertible Series
          the
          holder of the certificate or certificates therefor shall surrender such
          certificate or certificates to the Chicago Transfer Agent (acting as the
          Conversion Agent) for the shares of the 4.60% Convertible Series, with
          request
          for conversion. If the shares of the Common Stock issuable upon such conversion
          are to be issued in a name other than that in which the shares of the 4.60%
          Convertible Series to be converted are registered, such certificate or
          certificates shall be duly endorsed for transfer or accompanied by a duly
          executed stock transfer power, and shall be accompanied by all necessary
          stock
          transfer stamps or equivalent funds.
 
 Upon
          such
          surrender of such certificate or certificates, the Company shall issue
          and
          deliver or cause to be issued and delivered to the person entitled thereto
          a
          certificate or certificates for the number of full shares of the Common
          Stock
          issuable upon such conversion, together with, if the shares of the 4.60%
          Convertible Series represented by the certificate or certificates therefor
          surrendered for conversion are not evenly convertible, cash in the amount
          obtained by multiplying the resulting fraction by the per share conversion
          price
          of the Common Stock then effective. In no event shall the Company be required
          to
          issue a fraction of a share of the Common Stock upon any conversion of
          shares of
          the 4.60% Convertible Series. If the per share conversion price of the
          Common
          Stock effective at the time of any conversion is such that the shares of
          the
          4.60% Convertible Series are not evenly convertible into full shares of
          the
          Common Stock, the number of shares of the Common Stock to be issuable upon
          such
          conversion shall be calculated to the nearest (or if there shall be no
          nearest,
          then to the next higher) 1/100 of a share. The Company shall pay all original
          issue taxes, if any, payable upon the issue of shares of the Common Stock
          issued
          upon any conversion.
 
 Such
          conversion shall be deemed to have been effected on the date of the surrender
          of
          such certificate or certificates for shares of the 4.60% Convertible Series,
          and
          the person in whose name the certificate or certificates for the shares
          of the
          Common Stock issuable upon such conversion are to be issued shall be deemed
          to
          be the holder of record of such shares as of such date.
 
 (j)
          The
          Company shall at all times have authorized but unissued, or in its treasury,
          a
          number of shares of the Common Stock sufficient for the conversion of all
          shares
          of the 4.60% Convertible Series from time to time outstanding.
 
 VI. *Status
          of Shares of 4.60% Convertible Series Redeemed or Purchased* .
          No
          shares of the 4.60% Convertible Series redeemed, purchased or otherwise
          reacquired by the Company may be reissued as shares of the same series,
          but such
          shares shall have the status of authorized and unissued shares of Preferred
          Stock, subject to later issuance as shares of one or more other series
          hereafter
          established.
 
 Page
          17
          of 31
  
  D.
          5%
          Convertible Preferred Stock Preferences
 
 I. *Designation
          of Series and Number of Shares to be Issuable Therein* .
          Such
          series of the Preferred Stock shall be designated 5% Convertible Preferred
          Stock
          (hereinafter called the "5% Convertible Series"), in which not more than
          5,258
          shares shall be issuable.
 
 II. *Annual
          Amount of Dividends* .
          Dividends shall be payable on the shares of the 5% Convertible Series in
          the
          amount of $5.00 per share per annum, and no more.
 
 III. *Redemption* .
          The
          shares of the 5% Convertible Series may be called for redemption and redeemed,
          at the option of the Company, in whole at any time or in part from time
          to time,
          upon the notice and in the manner provided in subdivision (d) of Division
          I of
          Paragraph 2 of the Article Five of the Articles of Incorporation of the
          Company.
 
 The
          redemption prices of the shares of the 5% Convertible Series shall be $104
          per
          share if redeemed prior to January 1, 1978; $103 per share if redeemed
          during
          the five-year period beginning January 1, 1978; $102 per share if redeemed
          during the five-year period beginning January 1, 1983; $101 per share if
          redeemed during the five-year period beginning January 1, 1988; and $100
          per
          share if redeemed on or after January 1, 1993; in each case plus the amount
          of
          accrued and unpaid dividends, if any, thereon to the redemption
          date.
 
 IV. *Liquidation
          Prices* .
          The
          amount payable on shares of the 5% Convertible Series in the event of voluntary
          dissolution, liquidation or winding up of the Company shall be an amount
          equal
          to the redemption price thereof applicable at the date fixed for payment,
          and no
          more, or $100 per share in case such shares shall not at the time be redeemable,
          plus the amount of accrued and unpaid dividends, if any, thereon to the
          date
          fixed for payment, and no more. The amount payable on each share of the
          5%
          Convertible Series in the event of involuntary dissolution, liquidation
          or
          winding up of the Company shall be $100 per share plus the amount of accrued
          and
          unpaid dividends, if any, thereon to the date fixed for payment, and no
          more.
 
 V. *Conversion
          Provisions* .
 
 (a)
          The
          shares of the 5% Convertible Series shall be convertible, at the option
          of the
          respective holders thereof, into fully paid and nonassessable shares of
          the
          Common Stock of the Company at the conversion price of $32.76 per share,
          in each
          case taking the shares of the 5% Convertible Series at $100 per share,
          that is,
          at the rate of 3.0525 shares of Common Stock for each share of the 5%
          Convertible Series; provided, however, that:
 
 (1)
          as
          provided in subdivisions (b) and (c) of this division V, such conversion
          price
          shall be subject to adjustment or change in certain cases, and, as provided
          in
          said subdivision (c), the number of shares of Common Stock issuable upon
          conversion of shares of the 5% Convertible Series shall be subject to increase
          or decrease in certain cases;
 
 (2)
          as
          provided in subdivisions (d) and (e) of this division V, shares or other
          securities, other than shares of the Common Stock, may in certain cases
          become
          issuable upon conversion of shares of the 5% Convertible Series;
 
 Page
          18
          of 31
  
  
 (3)
          whenever the Company shall call for redemption any shares of the 5% Convertible
          Series, the conversion rights of the holders thereof shall terminate at
          the
          close of business on the fifth day prior to the redemption date (except
          that if
          the funds necessary for such redemption shall not be set aside or deposited
          on
          or before the redemption date, as provided in the Articles of Incorporation
          of
          the Company, such conversion rights shall be reinstated on the redemption
          date);
          and
 
 (4)
          in
          case of any dissolution, liquidation or winding up of the Company, whether
          voluntary or involuntary, or in case the Company shall be required, by
          order or
          regulation of any commission or other governmental agency having jurisdiction
          in
          the premises, to consolidate with or merge into another corporation and
          such
          order or regulation shall not permit the provisions of subdivision (e)
          of this
          division V to become effective, then and in any such case the conversion
          rights
          of the holders of the shares of the 5% Convertible Series shall terminate
          on
          such date as shall be fixed by the Board of Directors, but not earlier
          than the
          close of business on the thirtieth day following the mailing by the Company
          to
          the holders of record of the shares of the 5% Convertible Series of the
          statement required by subdivision (h) of this division V to be so
          mailed.
 
 (b)
          In
          case the Company shall at any time or from time to time issue any shares
          of the
          Common Stock in addition to the shares issued pursuant to the Agreement
          and Plan
          of Merger and Reorganization to which the Company is a party, dated January
          20,
          1976 (other than (i) additional shares issued upon conversion of shares
          of the
          5% Convertible Series or the Company's 4.60% Convertible Preferred Stock
          or
          $1.90 Convertible Preference Stock, and (ii) additional shares which may
          be
          issued by the Company pursuant to any employe stock purchase, stock option
          or
          similar plan or plans heretofore or hereafter adopted) and such additional
          shares shall be so issued without consideration or for a consideration
          per share
          less than the per share conversion price of the Common Stock in effect
          immediately prior to the time of such issue, then upon such issue such
          conversion price shall (until a further adjustment thereof shall be required
          by
          the provisions of this subdivision (b)) be reduced to a price, calculated
          to the
          nearest (or if there shall be no nearest, then to the next lower) cent,
          determined by dividing:
 
 (1)
          an
          amount equal to the sum of (i) the number of shares of the Common Stock
          outstanding (determined as hereinafter provided) immediately prior to such
          issue
          multiplied by the then effective per share conversion price of the Common
          Stock,
          and (ii) the consideration (determined as hereinafter provided) received
          by the
          Company upon such issue; by
 
 (2)
          the
          total number of shares of the Common Stock outstanding (determined as
          hereinafter provided) immediately after such issue;
 
 Page
          19
          of 31
  
  
 provided,
          however, that if such conversion price would, by the application of the
          foregoing formula, be reduced by an amount less than 50 cents, no adjustment
          of
          such conversion price shall be made, but in that event the adjustment which,
          except for this provision, would be required to be made shall be carried
          forward
          and made at the time of and together with the next subsequent adjustment
          which,
          together with any adjustment or adjustments so carried forward, shall amount
          to
          a reduction of the then effective conversion price by 50 cents or
          more.
 
 In
          determining, for the purposes of this subdivision (b), the number of shares
          of
          the Common Stock outstanding at any particular time, there shall be included,
          without limiting the generally accepted meaning of the term "outstanding"
          (1)
          any shares issued on conversion of shares of the 5% Convertible Series
          or the
          Company's 4.60% Convertible Preferred Stock or $1.90 Convertible Preference
          Stock, (2) any shares which, pursuant to paragraph (A) of this subdivision
          (b),
          shall be deemed to have been issued but which shall not actually have been
          issued, or into which the 4.60% Convertible Preferred Stock or $1.90 Convertible
          Preference Stock of the Company's predecessor, Northern Illinois Gas Company
          ("NI-Gas") was initially convertible when issued by NI-Gas, but which had
          not
          been issued by NI-Gas, up to and including the effective date of the merger
          pursuant to the Agreement and Plan of Merger and Reorganization to which
          the
          Company is a party dated January 20, 1976, and (3) any shares owned or
          held by
          the Company; and there shall be excluded any shares of the Common Stock
          which
          may have been issued by the Company or by NI-Gas pursuant to any employe
          stock
          purchase, stock option or similar plan or plans of the Company or NI-Gas
          heretofore (in the case of the Company or NI-Gas) or hereafter (in the
          case of
          the Company) adopted.
 
 In
          determining, for the purposes of this subdivision (b), what constitutes
          the
          issue of additional shares of the Common Stock by the Company and the
          consideration received therefor, the following provisions shall be
          applicable:
 
 (A)
          In
          case the Company shall issue any shares (other than shares of the 5% Convertible
          Series or the Company's 4.60% Convertible Preferred Stock or $1.90 Convertible
          Preference Stock) convertible into shares of the Common Stock or any obligations
          so convertible, all shares of the Common Stock into which such convertible
          shares or obligations shall be initially convertible shall, on the earliest
          date
          on which such convertible shares or obligations shall by their terms be
          convertible, be deemed to be additional shares of the Common Stock issued
          as of
          such date, and the Company shall be deemed to have received, as of such
          date,
          for such shares of the Common Stock so deemed to have been issued an aggregate
          consideration equal to the sum of (i) the consideration received by the
          Company
          for such convertible shares or obligations, and (ii) such additional
          consideration, if any, as would be receivable by the Company for or upon
          issuance of such shares of the Common Stock so deemed to have been issued
          if
          issued on the earliest date on which such convertible shares or obligations
          shall by their terms be convertible.
 
 (B)
          In
          case the Company shall issue any rights to subscribe for or purchase, or
          any
          options to purchase, shares of the Common Stock, and if any of such rights
          or
          options shall be exercised and shares of the Common Stock shall be issued
          upon
          such exercise, the Company shall be deemed to have received for such shares
          of
          the Common Stock so issued
 
 Page
          20
          of 31
  
  an
          aggregate consideration equal to the sum of (i) the consideration received
          by
          the Company for such shares upon the issuance thereof, and (ii) such additional
          consideration, if any, as shall have been received by the Company for such
          rights or options; provided, however, that if such rights or options shall
          be
          exercisable over a stated period of time, a recomputation of the conversion
          price by reason of the exercise thereof need not be made upon each such
          exercise
          but may be made at such time or times as shall be determined by the Board
          of
          Directors, subject only to the conditions that if the period of time during
          which such rights or options shall be exercisable shall not exceed 30 days,
          such
          recomputation shall be made within 10 days following the expiration of
          such
          period, and that if such period shall exceed 30 days, such recomputation
          shall
          be made at least once in each month next succeeding a month, within such
          period,
          during which any such exercise shall occur.
 
 (C)
          In
          case the Company shall issue or sell, for cash, any additional shares of
          the
          Common Stock or any shares (other than shares of the 5% Convertible Series
          or
          the Company's 4.60% Convertible Preferred Stock or $1.90 Convertible Preference
          Stock) convertible into shares of the Common Stock or any obligations so
          convertible, or any rights to subscribe for or purchase, or any options
          to
          purchase, shares of the Common Stock, the consideration received by the
          Company
          therefor shall be deemed to be the amount of cash received therefor, plus
          the
          amount of any discount (below the public or other offering price) at which
          such
          issue or sale shall have been made by the Company, and before deducting
          the
          amount of any commissions or other expenses paid or incurred by the Company
          for
          any underwriting of, or otherwise in connection with, such issue or sale.
          In
          case the Company shall issue or sell, for a consideration other than cash,
          any
          such additional shares of the Common Stock or any such convertible shares
          or
          obligations or any such rights or options, the consideration received by
          the
          Company therefor shall be deemed to be the fair value of such consideration
          as
          determined by the Board of Directors.
 
 (D)
          In
          case any shares of the Common Stock shall be issued by the Company as a
          dividend
          on the then outstanding Common Stock or on shares of stock of any other
          class
          ranking junior to the Preferred Stock with respect to the payment of dividends
          or the distribution of assets, the shares so issued shall be deemed to
          have been
          issued without consideration.
 
 (c)
          In
          case the shares of the Common Stock at any time outstanding shall be subdivided,
          by reclassification or otherwise, into a greater number of shares, the
          per share
          conversion price of the Common Stock shall be decreased proportionately
          and the
          number of shares of the Common Stock issuable upon conversion of each share
          of
          the 5% Convertible Series increased proportionately. In case the shares
          of the
          Common Stock at any time outstanding shall be combined, by reclassification
          or
          otherwise, into a lesser number of shares, the per share conversion price
          of the
          Common Stock shall be increased proportionately and the number of shares
          of the
          Common Stock issuable upon conversion of each share of the 5% Convertible
          Series
          decreased proportionately.
 
 (d)
          In
          case of any reclassification of the Common Stock or any capital reorganization
          of the Company involving a change in the Common Stock, other than a
          reclassification or reorganization involving merely a subdivision or combination
          of outstanding shares of the
 
 Page
          21
          of 31
  
  Common
          Stock, the shares of the 5% Convertible Series shall thereafter be convertible
          into the number and class of shares or other securities of the Company
          to which
          the shares of the Common Stock otherwise issuable upon conversion of the
          shares
          of the 5% Convertible Series would have been entitled upon such reclassification
          or reorganization if outstanding at the time thereof; and in any such case
          appropriate adjustment, as determined by the Board of Directors, shall
          be made
          in the application of the provisions of this division V with respect to
          the
          conversion rights thereafter of the holders of the shares of the 5% Convertible
          Series, to the end that such provisions shall thereafter be applicable,
          as
          nearly as reasonably may be, in relation to any shares or other securities
          thereafter issuable or deliverable upon the conversion of shares of the
          5%
          Convertible Series.
 
 (e)
          Subject to the limitation hereinafter stated in this subdivision (e), in
          case of
          any consolidation of the Company with or its merger into another corporation,
          the shares of the 5% Convertible Series (or any shares issued in exchange
          therefor upon such consolidation or merger) shall thereafter be convertible
          into
          the number and class of shares or other securities of the corporation resulting
          from such consolidation or merger to which the shares of the Common Stock
          otherwise issuable upon conversion of the shares of the 5% Convertible
          Series
          would have been entitled upon such consolidation or merger if outstanding
          at the
          time thereof; and in any such case appropriate adjustment shall be made
          in the
          application of the provisions of this division V with respect to the conversion
          rights thereafter of the holders of the shares of the 5% Convertible Series,
          to
          the end that such provisions shall thereafter be applicable, as nearly
          as
          reasonably may be, in relation to any shares or other securities thereafter
          issuable or deliverable upon the conversion of shares of the 5% Convertible
          Series (or any shares issued in exchange therefor upon such consolidation
          or
          merger); and appropriate provision, as determined by the Board of Directors,
          shall be made as a part of the terms of any such consolidation or merger
          whereby
          the conversion rights of the holders of the shares of the 5% Convertible
          Series
          shall be protected and preserved in accordance with the provisions of this
          subdivision (e); provided, however, that in case of any such consolidation
          or
          merger which may be required by order or regulation of any commission or
          other
          governmental agency having jurisdiction in the premises, the provisions
          of this
          subdivision (e) shall be effective only if permitted by such order or
          regulation.
 
 (f)
          No
          payment or adjustment with respect to dividends on shares of the 5% Convertible
          Series or on the Common Stock shall be made in connection with any
          conversion.
 
 (g)
          Whenever the per share conversion price of the Common Stock shall be adjusted
          or
          changed as provided in subdivision (b) or (c) of this division V, the Company
          shall promptly file with each Transfer Agent for the shares of the 5%
          Convertible Series and, as soon as practicable after such adjustment or
          change
          and in no event later than 10 full business days thereafter, shall mail
          to the
          holders of record of such shares at their respective addresses then appearing
          on
          the records of the Company a statement signed by an officer of the Company,
          setting forth the adjusted or changed conversion price determined as provided
          in
          said subdivision (b) or (c), as the case may be, and setting forth in reasonable
          detail the facts requiring such adjustment or change, and, in case of an
          increase or decrease in the number of shares of the Common Stock issuable
          upon
          conversion of each share of the 5% Convertible Series, setting forth such
          increased or decreased number of shares. Each Transfer Agent for the shares
          of
          the 5% Convertible Series
 
 Page
          22
          of 31
  
  shall
          be
          fully protected in relying on such statement and shall be under no duty
          to
          examine into the accuracy thereof. If any question shall at any time arise
          with
          respect to an adjusted or changed conversion price, such question shall
          be
          determined by a firm of independent certified public accountants selected
          by the
          Company and acceptable to the Transfer Agents for the shares of the 5%
          Convertible Series, and such determination shall be binding upon the Company
          and
          the holders of such shares.
 
 (h)
          In
          case:
 
 (1)
          the
          Company shall propose to pay any dividend on the Common Stock payable in
          shares
          of the Common Stock or to make any other distribution, other than cash
          dividends, to the holders of the Common Stock; or
 
 (2)
          the
          Company shall propose to offer for subscription to the holders of the Common
          Stock any additional shares of any class or any other rights or options;
          or
 
 (3)
          the
          Company shall propose to effect any reclassification of the Common Stock
          or any
          capital reorganization involving a change in the Common Stock, other than
          a
          reclassification or reorganization involving merely a subdivision or combination
          of outstanding shares of the Common Stock; or
 
 (4)
          the
          Company shall propose to consolidate with or merge into another corporation,
          or
          to sell or transfer its property and business as or substantially as an
          entirety, or shall propose to dissolve, liquidate or wind up;
 
 then,
          in
          each such case, the Company shall file with each Transfer Agent for the
          shares
          of the 5% Convertible Series and shall mail to the holders of record of
          such
          shares at their respective addresses then appearing on the records of the
          Company a statement, signed by an officer of the Company, with respect
          to the
          proposed action, such statement to be so filed and mailed at least 10 days,
          if
          paragraph (1) or (2) of this subdivision (h) shall be applicable, and at
          least
          40 days, if paragraph (3) or (4) of this subdivision (h) shall be applicable,
          prior to the date of the taking of such action or the record date for holders
          of
          the Common Stock for the purposes thereof, whichever is earlier. If such
          statement relates to any proposed action referred to in paragraph (3) or
          (4) of
          this subdivision (h), it shall set forth such facts with respect thereto
          as
          shall reasonably be necessary to inform each Transfer Agent for the shares
          of
          the 5% Convertible Series and the holders of such shares as to the effect
          of
          such action upon the conversion rights of such holders.
 
 (i)  In
          order
          to effect the conversion of shares of the 5% Convertible Series the holder
          of
          the certificate or certificates therefor shall surrender such certificate
          or
          certificates to the Chicago Transfer Agent (acting as the Conversion Agent)
          for
          the shares of the 5% Convertible Series, with request for conversion. If
          the
          shares of the Common Stock issuable upon such conversion are to be issued
          in a
          name other than that in which the shares of the 5% Convertible Series to
          be
          converted are registered, such certificate or certificates shall be duly
          endorsed for transfer or accompanied by a duly executed stock transfer
          power,
          and shall be accompanied by all necessity stock transfer stamps or equivalent
          funds.
 
 Page
          23
          of 31
  
  
 Upon
          such
          surrender of such certificate or certificates, the Company shall issue
          and
          deliver or cause to be issued and delivered to the person entitled thereto
          a
          certificate or certificates for the number of full shares of the Common
          Stock
          issuable upon such conversion, together with, if the shares of the 5%
          Convertible Series represented by the certificate or certificates therefor
          surrendered for conversion are not evenly convertible, cash in the amount
          obtained by multiplying the resulting fraction by the per share conversion
          price
          of the Common Stock then effective. In no event shall the Company be required
          to
          issue a fraction of a share of the Common Stock upon any conversion of
          shares of
          the 5% Convertible Series. If the per share conversion price of the Common
          Stock
          effective at the time of any conversion is such that the shares of the
          5%
          Convertible Series are not evenly convertible into full shares of the Common
          Stock, the number of shares of the Common Stock to be issuable upon such
          conversion shall be calculated to the nearest (or if there shall be no
          nearest,
          then to the next higher) 1/100 of a share. The Company shall pay all original
          issue taxes, if any, payable upon the issue of shares of the Common Stock
          issued
          upon any conversion.
 
 Such
          conversion shall be deemed to have been effected on the date of the surrender
          of
          such certificate or certificates for shares of the 5% Convertible Series,
          and
          the person in whose name the certificate or certificates for the shares
          of the
          Common Stock issuable upon such conversion are to be issued shall be deemed
          to
          be the holder of record of such shares as of such date.
 
 (j)
          The
          Company shall at all times have authorized but unissued, or in its treasury,
          a
          number of shares of the Common Stock sufficient for the conversion of all
          shares
          of the 5% Convertible Series from time to time outstanding.
 
 VI. *Status
          of Shares of 5% Convertible Series Redeemed or Purchased* .
          No
          shares of the 5% Convertible Series redeemed, purchased or otherwise reacquired
          by the Company may be reissued as shares of the same series, but such shares
          shall have the status of authorized and unissued shares of Preferred Stock,
          subject to later issuance as shares of one or more other series hereafter
          established.
 
 
 
 II.
          PREFERENCE STOCK
 
 (a)  *Issue
          of Preference Stock in Series.* Authority
          is hereby expressly vested in the Board of Directors to divide, and to
          provide
          for the issue from time to time of, the Preference Stock in series, and
          to fix
          and determine as to each series:
  (1)  the
            designation of, and the number of shares to be issuable in, the
            series;
 (2)  the
              rate
              of dividend;
 (3)  the
          price
          or prices at which, and the terms and conditions on which, shares of the
          series
          may be redeemed;
 
 Page
          24
          of 31
  (4)  the
            amount payable upon shares of the series in the event of voluntary dissolution,
            liquidation or winding up of the Company;
  (5)  the
            amount payable upon shares of the series in the event of involuntary
            dissolution, liquidation or winding up of the Company;
  (6)  sinking
            fund provisions, if any, for the redemption or purchase of shares of
            the series
            (the term “sinking fund,” as used herein, including any analogous fund, however
            designated);
  (7)  whether
            shares of the series shall be convertible into shares of any other class,
            or
            into shares of any series of the same or any other class, and, if so
            convertible, the terms and conditions on which such shares may be so
            converted;
  (8)  the
            relative rights and preferences, and any other terms, conditions or provisions,
            of shares of the series not inconsistent with the provisions of this
            Article
            Five or of The Business Corporation Act of the State of Illinois as such
            Article
            or Act may be hereafter amended.
 
 So
          long
          as any shares of any series of the Preference Stock shall be outstanding,
          the
          resolution of the Board of Directors establishing such series shall not
          be
          amended, and no action of the Board of Directors shall be taken, so as
          to reduce
          the dividend rate, to alter the provisions as to redemption, or otherwise
          adversely to affect any of the preferences or other rights of the holders,
          of
          the shares of such series, without the affirmative vote or the written
          consent
          of the holders of at least two-thirds of the shares of such series outstanding
          at the time or as of a record date fixed by the Board of Directors, but
          such
          resolution may be so amended, or such action taken, with such vote or
          consent.
 
 (b)  *Priority.* The
          Preference Stock shall be prior and senior to the Common Stock as to the
          payment
          of dividends and as to the distribution of assets upon dissolution, liquidation
          or winding up of the Company.
 
 (c)  *Dividends.* Subject
          to the preferential rights of the holders of the Preferred Stock with respect
          to
          the payment of dividends and sinking fund payments, as set forth in subdivision
          (c) of Division I, holders of the Preference Stock of each series shall
          be
          entitled to receive cash dividends, out of funds legally available therefor,
          when and as declared by the Board of Directors, at such rate per annum
          as shall
          have been fixed by the Board of Directors for the shares of such series.
          Dividends on the Preference Stock of all series shall, unless otherwise
          provided
          by the Board of Directors, be payable quarterly on the first day of each
          of the
          months of February, May, August and November in each year, each such quarterly
          dividend to be in respect of the quarterly period ending with the day next
          preceding the date of such payment; provided, however, that if shares of
          any
          series are issued between quarterly dividend payment dates, the first dividend
          on such shares (1) shall be an amount per share equal to that portion of
          the
          quarterly dividend for such series which (A) the period beginning with
          the date
          of issue of such shares and ending with the last day of the quarterly dividend
          period in which such issue occurs, bears to (B) the full quarterly dividend
          period, and (2) shall be payable on either the first or the
 
 Page
          25
          of 31
  
  second
          quarterly dividend payment date following the date of issue of such shares
          as
          determined by the Board of Directors. Dividends on the Preference Stock
          of each
          series shall, unless otherwise provided by the Board of Directors, be cumulative
          with respect to each share from the date of issue thereof. Accumulations
          of
          dividends shall not bear interest. Whenever there shall be
          paid
          on the shares of any series of the Preference Stock the full amount or
          any part
          of the dividends payable thereon, there shall also be paid at the same
          time on
          the shares of each other series of the Preference Stock, if any, then
          outstanding the full amount or a like proportionate part, as the case may
          be, of
          the dividends payable thereon.
 
 No
          dividend shall be paid or other distribution made on any junior stock,
          other
          than a dividend or distribution solely of shares of junior stock, and no
          junior
          stock shall be purchased or otherwise acquired, other than upon conversion
          into
          or exchange for any shares of any other class of stock, by the Company
          for a
          consideration, unless (1) all dividends on the Preference Stock for all
          past
          dividend periods shall have been paid or shall have been declared and funds
          sufficient for such payment set aside by the Company, separate and apart
          from
          its other funds, and (2) all funds then and theretofore required to be
          paid into
          or set aside for any sinking fund or funds created for one or more series
          of the
          Preference Stock shall have been so paid or set aside.
 
 (d)  *Redemption
          of Preference Stock.* Except
          as
          may be otherwise provided by the Board of Directors in respect of the shares
          of
          a particular series, shares of any one or more series of the Preference
          Stock
          which are redeemable under the resolution of the Board of Directors providing
          for the issue of such shares may be called for redemption and redeemed,
          at the
          option of the Company, in whole at any time or in part from time to time,
          upon
          the notice hereinafter provided for, by the payment therefor in cash of
          the then
          applicable optional redemption price or prices fixed by the Board of Directors
          for the shares which are to be redeemed.
 
 If
          at any
          time less than all shares of any series of the Preference Stock shall be
          called
          for redemption, the shares so called shall be selected by lot in such manner,
          or
          pro rata, all as may be determined by the Board of Directors.
 
 Notice
          of
          any proposed redemption shall be given by the Company by mail, or caused
          by the
          Company to be so given, not more than 60 nor less than 30 days prior to
          the
          redemption date, to the holders of record of the shares to be redeemed
          at their
          respective addresses then appearing on the records of the Company.
 
 If
          notice
          of redemption shall have been duly given as hereinabove provided and if,
          on or
          before the redemption date, the funds necessary for such redemption shall
          have
          been set aside by the Company, separate and apart from its other funds,
          then, on
          and after the redemption date, all shares for the redemption of which such
          funds
          shall have been so set aside shall, whether or not the certificates for
          such
          shares shall have been surrendered for cancellation, be deemed to be no
          longer
          outstanding for any purpose and all rights with respect to such shares
          shall
          cease and terminate on the redemption date, except only the right of the
          holders
          of the certificates for such shares to receive, out of the funds so set
          aside,
          the amount payable upon the redemption thereof without interest.
 
 Page
          26
          of 31
  
  At
          any
          time before, or by the opening of business on, the redemption date the
          Company
          may deposit in trust the funds necessary for such redemption with a bank
          or
          trust company, to be designated in the notice of such redemption, doing
          business
          in the City of Chicago, State of Illinois, or in the Borough of Manhattan,
          the
          City of New York, State of New York, and having capital, surplus and undivided
          profits aggregating at least $5,000,000. In the event such deposit is made
          so
          that the deposited funds shall be forthwith available to the holders of
          the
          shares to be redeemed upon surrender of the certificates evidencing such
          shares,
          then, upon the giving of the notice of such redemption, as hereinabove
          provided,
          or upon the earlier delivery to such bank or trust company of irrevocable
          authorization and direction so as to give such notice, all shares with
          respect
          to the redemption of which such deposit shall have been made and the giving
          of
          such notice effected or authorization therefor given shall, whether or
          not the
          certificates for such shares shall have been surrendered for cancellation,
          be
          deemed to be no longer outstanding for any purpose and all rights with
          respect
          to such shares shall thereupon cease and terminate, except only the right
          of the
          holders of the certificates for such shares (1) to receive, out of the
          funds so
          deposited in trust, from and after the time of such deposit, the amount
          payable
          upon the redemption thereof, without interest, or (2) to exercise any privilege
          of conversion which shall not theretofore have terminated. Any funds so
          deposited which shall not be required for the payment of the redemption
          price of
          such shares by reason of the exercise of any right of conversion subsequent
          to
          the date of such deposit shall be paid over to the Company forthwith. At
          the
          expiration of six years after the redemption date, any such funds then
          remaining
          on deposit with such bank or trust company shall be paid over to the Company,
          free of trust, and thereafter the holders of the certificates for such
          shares
          shall have no claims against such bank or trust company, but only claims
          as
          unsecured creditors against the Company for amounts equal to their pro
          rata
          portions of the funds so paid over, without interest. Any interest on or
          other
          accretions to funds deposited with such bank or trust company shall belong
          to
          the Company.
 
 The
          provisions of this subdivision (d) with respect to the method and effect
          of
          redemption shall be applicable to the redemption of shares pursuant to
          any
          sinking fund created for any series of the Preference Stock as well as
          to the
          optional redemption of shares, except to the extent, if any, that the terms
          of
          such sinking fund, as fixed and determined by the Board of Directors, shall
          expressly otherwise provide.
 
 (e)  *Status
          of Preference Stock Redeemed, Purchased or Otherwise Reacquired.* All
          shares of the Preference Stock of any series which shall have been redeemed,
          purchased or otherwise reacquired by the Company (including shares issued
          with
          the privilege of conversion which shall have been surrendered for conversion)
          may have the status of authorized and unissued shares of Preference Stock,
          as
          may, in each case, be determined by the Board of Directors.
 
 (f)  *Liquidation
          Preferences.* In
          the
          event of dissolution, liquidation or winding up of the Company, whether
          voluntary or involuntary, holders of the Preference Stock of each series
          shall
          be entitled to receive out of the assets of the Company remaining after
          payment
          in full shall have been made to the holders of the Preferred Stock, or
          funds or
          other assets sufficient for such payment shall have been set aside by the
          Company, separate and apart from its other assets, such amount per share
          as
          shall have been fixed by the Board of Directors as the voluntary liquidation
          price or the involuntary liquidation price, as the case may be, for the
          shares
          of such series. If
 
 Page
          27
          of 31
  
  upon
          any
          such dissolution, liquidation or winding up, the assets of the Company
          available
          for payment to holders of the Preference Stock are not sufficient to make
          payment in full to the holders of such stock, payment shall be made to
          such
          holders ratably in accordance with the numbers of shares held by them
          respectively, and, in case there shall then be outstanding more than one
          series
          of the Preference Stock, ratably in accordance with the respective distributive
          amounts to which such holders shall be entitled.
 
 Neither
          a
          consolidation or merger of the Company with or into any other corporation,
          nor a
          merger of any other corporation into the Company, nor the redemption or
          purchase
          by the Company of all or a part of the outstanding shares of any class
          or
          classes of its stock, nor a sale or transfer of the property and business
          of the
          Company, as or substantially as an entirety, shall be considered a dissolution,
          liquidation or winding up of the Company within the meaning of the foregoing
          provisions.
 
 (g)  *Restrictions
          on Certain Corporate Action.* (1)
          So
          long as any shares of the Preference Stock shall be outstanding, the Company
          shall not, without the affirmative vote or the written consent of the holders
          of
          at least two-thirds of the shares of the Preference Stock outstanding at
          the
          time or as of a record date fixed by the Board of Directors:
 (A)  create
          or
          authorize any stock of any class ranking prior to or on a parity with the
          Preference Stock with respect to the payment of dividends or the distribution
          of
          assets;
 
 or
  (B)  amend
          the
          Articles of Incorporation of the Company so as adversely to affect any
          of the
          preferences or other rights of the holders of the Preference Stock; provided,
          however, that if any such amendment would adversely affect any of the
          preferences or other rights of the holders of one or more, but less than
          all, of
          the series of the Preference Stock then outstanding, the affirmative vote
          or the
          written consent of, and only of, the holders of at least two-thirds of
          the
          shares of the series so adversely affected shall be required;
 
 (2)  So
          long
          as any shares of the Preference Stock shall be outstanding, the Company
          shall
          not, without the affirmative vote or the written consent of the holders
          of a
          majority of the shares of the Preference Stock outstanding at the time
          or as of
          a record date fixed by the Board of Directors, consolidate with or merge
          into
          any other corporation, under applicable statutory procedure, or make any
          sale or
          transfer of the property and business of the Company as or substantially
          as an
          entirety; provided, however, that this restriction shall not apply to a
          consolidation of the Company with or its merger into or the sale or transfer
          of
          the property and business of the Company as or substantially as an entirety
          to
          (A) any corporation which owns directly, or indirectly through one or more
          other
          corporations, 50% or more of the voting securities of the Company, (B)
          any
          corporation 50% or more of the voting securities of which are so owned
          by the
          Company, or (C) any corporation, when such consolidation, merger, sale
          or
          transfer shall be required by order or regulation of any commission or
          other
          governmental agency having jurisdiction in the premises. The term “sale or
          transfer,” as used in this part (2), includes a lease or exchange but does not
          include a mortgage or pledge.
 
 Page
          28
          of 31
  
  
 (h)  *Preemptive
          Rights.* Holders
          of the Preference Stock shall not have any preemptive rights.
 
 
 III.
          COMMON STOCK
 
 (a)  *Dividends.* Subject
          to the preferential rights of the holders of the Preferred Stock and the
          Preference Stock with respect to the payment of dividends and sinking fund
          payments, as set forth in subdivisions (c) of Division I and Division II,
          respectively, holders of the Common Stock shall be entitled to receive
          dividends, out of funds legally available therefor, when and as declared
          by the
          Board of Directors.
 
 (b)  *Liquidation
          Preferences* .
          In the
          event of dissolution, liquidation or winding up of the Company, whether
          voluntary or involuntary, holders of the Common Stock shall be entitled
          to
          receive, ratably in accordance with the numbers of shares held by them
          respectively, the assets of the Company, available for payment to shareholders,
          remaining after payment in full shall have been made to holders of the
          Preferred
          Stock and the Preference Stock in accordance with the provisions of subdivision
          (g) of Division I and subdivision (f) of Division II, respectively.
 
 Neither
          a
          consolidation or merger of the Company with or into any other corporation,
          nor a
          merger of any other corporation into the Company, nor the redemption or
          purchase
          by the Company of all or a part of the outstanding shares of any class
          or
          classes of its stock, nor a sale or transfer of the property and business
          of the
          Company, as or substantially as an entirety, shall be considered a dissolution,
          liquidation or winding up of the Company within the meaning of the foregoing
          provisions.
 
 (c)  *Preemptive
          Rights.* Holders
          of the Common Stock shall not have any preemptive rights.
 
 **Article
          Six**
 
 Intentionally
          Left Blank
 
 
 **Article
          Seven**
 
 The
          corporation will not commence business until at least one thousand dollars
          has
          been received as consideration for the issuance of shares.
 
 
 **Article
          Eight**
 
 The
          number of directors to be elected at the first meeting of the shareholders
          is
          Three.
 
 Page
          29
          of 31
  
  
 
 **Article
          Nine**
 
 Intentionally
          Left Blank
 
 
 **Article
          Ten**
 
 Paragraph
          1:  The
          Corporation shall indemnify, to the fullest extent permitted under the
          laws of
          the State of Illinois and any other applicable laws, as they now exist
          or as
          they may be amended in the future, any person who was or is a party, or
          is
          threatened to be made a party, to any threatened, pending or completed
          action,
          suit or proceeding, whether civil, criminal, administrative or investigative
          (including, without limitation, an action by or in the right of the
          Corporation), by reason of the fact that he or she is or was a director,
          officer
          or employee of the Corporation, or is or was serving at the request of
          the
          Corporation as a director, officer or employee of another corporation,
          partnership, joint venture, trust, employee benefit plan or other enterprise,
          against expenses (including attorneys' fees), judgments, fines and amounts
          paid
          in settlement actually and reasonably incurred by such person in connection
          with
          such action, suit or proceeding.
 
 Paragraph
          2:  Expenses
          incurred by such a director, officer or employee in defending a civil or
          criminal action, suit or proceeding shall be paid by the Corporation in
          advance
          of the final disposition of such action, suit or proceeding, to the fullest
          extent permitted under the laws of the State of Illinois and any other
          applicable laws, as they now exist or as they may be amended in the
          future.
 
 Paragraph
          3:  The
          rights provided by or granted under this Article Ten are not exclusive
          of any
          other rights to which those seeking indemnification or advancement of expenses
          may be entitled.
 
 Paragraph
          4:  The
          indemnification and advancement of expenses provided by or granted under
          this
          Article Ten shall continue as to a person who has ceased to be a director,
          officer, employee or agent and shall inure to the benefit of the heirs,
          executors and administrators of that person.
 
 Paragraph
          5:  The
          Board
          of Directors may, by resolution, extend the indemnification and advancement
          of
          expenses provisions of this Article Ten to any person who was or is a party
          or
          is threatened to be made a party to any threatened, pending or completed
          action,
          suit or proceeding by reason of the fact that he or she is or was an agent
          of
          the Corporation or is or was serving at the request of the Corporation
          as an
          agent of another corporation, partnership, joint venture, trust, employee
          benefit plan or other enterprise.
 
 Page
          30
          of 31
  
  
 **Article
          Eleven**
 
 No
          director of the Corporation shall have any personal liability to the Corporation
          or its shareholders for monetary damages for breach of fiduciary duty as
          a
          director, provided that this Article Eleven does not eliminate or limit
          the
          liability of a director (i) for any breach of the director's duty of loyalty
          to
          the Corporation or its shareholders, (ii) for acts or omissions not in
          good
          faith or that involve intentional misconduct or a knowing violation of
          law,
          (iii) under Section 8.65 of the Illinois Business Corporation Act of 1983,
          as
          amended, or (iv) for any transaction from which the director derived an
          improper
          personal benefit. This Article Eleven shall not eliminate or limit the
          liability
          of a director for any act or omission occurring before the date when this
          Article Eleven becomes effective.
 
 
 
 
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          31
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