NISOURCE INC.



                                COMMON STOCK

                               PREFERRED STOCK

                        GUARANTEES OF DEBT SECURITIES



                           NISOURCE FINANCE CORP.



                               DEBT SECURITIES

                 FULLY AND UNCONDITIONALLY GUARANTEED AS TO

                       PAYMENT OF PRINCIPAL, PREMIUM

                      (IF ANY) AND INTEREST (IF ANY) BY

                                NISOURCE INC.



                           UNDERWRITING AGREEMENT

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





        1.  INTRODUCTORY.  NiSource Inc., a Delaware corporation

   ("NiSource"), proposes to issue and sell from time to time certain of

   its common stock, par value $.01 per share ("Common Stock") and

   preferred stock, and to issue guarantees of the debt securities issued

   from time to time by NiSource Finance Corp. as described herein, and

   NiSource Finance Corp., an Indiana corporation and a wholly owned

   subsidiary of NiSource ("NiSource Finance"), proposes to issue and

   sell from time to time certain of its unsecured debt securities, in

   each case registered under the registration statement referred to in

   Section 2(a) ("Registered Securities").



        The Registered Securities constituting debt securities will be

   issued under an indenture, dated as of November 14, 2000

   ("Indenture"), among NiSource Finance, NiSource and The Chase

   Manhattan Bank, as Trustee, in one or more series, which series may

   vary as to interest rates, maturities, redemption provisions, selling

   prices and other terms.  The Registered Securities constituting debt

   securities will be guaranteed as to principal, premium, if any,

   interest, if any, and additional amounts, if any, by NiSource pursuant

   to the guarantee set forth in the Indenture, which guarantee will be

   endorsed on each debt security, authenticated and delivered pursuant

   to the Indenture (the "Guarantee" and, collectively, the

   "Guarantees").



        The Registered Securities constituting preferred stock may be

   issued in one or more series, which series may vary as to dividend

   rates, redemption provisions, selling prices and other terms.



        Particular series or offerings of Registered Securities will be

   sold pursuant to a Terms Agreement referred to in Section 3, for









   resale in accordance with terms of offering determined at the time of

   sale.



        The Registered Securities involved in any such offering are

   hereinafter referred to as the "Offered Securities".  The firm or

   firms which agree to purchase the Offered Securities are hereinafter

   referred to as the "Underwriters" of such securities, and the

   representative or representatives of the Underwriters, if any,

   specified in a Terms Agreement referred to in Section 3 are

   hereinafter referred to as the "Representatives"; provided, however,

   that if the Terms Agreement does not specify any representative of the

   Underwriters, the term "Representatives", as used in this Agreement

   (other than in Sections 2(b), 5(d) and 6 and the second sentence of

   Section 3), shall mean the Underwriters.



        2.  REPRESENTATIONS AND WARRANTIES OF NISOURCE AND NISOURCE

   FINANCE.  NiSource and NiSource Finance, as of the date of each Terms

   Agreement referred to in Section 3, represent and warrant to, and

   agree with, the Underwriters that:



             (a)  A registration statement (No. 333-107421), including a

        prospectus, relating to the Registered Securities has been filed

        with the Securities and Exchange Commission ("Commission") and

        has become effective.  Such registration statement, as amended at

        the time of any Terms Agreement referred to in Section 3, is

        hereinafter referred to as the "Registration Statement", and the

        prospectus included in such Registration Statement, as

        supplemented as contemplated by Section 3 to reflect the terms of

        the Offered Securities (if they are debt securities or preferred

        stock) and the terms of the offering of the Offered Securities,

        as first filed with the Commission pursuant to and in accordance

        with Rule 424(b) ("Rule 424(b)") under the Securities Act of 1933

        ("Act"), including all material incorporated by reference

        therein, is hereinafter referred to as the "Prospectus". No

        document has been or will be prepared or distributed in reliance

        on Rule 434 under the Act.



             (b)  On the effective date of the registration statement

        relating to the Registered Securities, such registration

        statement conformed in all respects to the requirements of the

        Act, the Trust Indenture Act of 1939 ("Trust Indenture Act") and

        the rules and regulations of the Commission ("Rules and

        Regulations") and did not include any untrue statement of a

        material fact or omit to state any material fact required to be

        stated therein or necessary to make the statements therein not

        misleading, and on the date of each Terms Agreement referred to

        in Section 3, the Registration Statement and the Prospectus will

        conform in all respects to the requirements of the Act, the Trust

        Indenture Act and the Rules and Regulations, and neither of such

        documents will include any untrue statement of a material fact or

        omit to state any material fact required to be stated therein or

        necessary to make the statements therein not misleading, except

        that the foregoing does not apply to statements in or omissions

        from any of such documents based upon written information









        furnished to NiSource or NiSource Finance by any Underwriter

        through the Representatives, if any, specifically for use

        therein.



             (c)  NiSource has been duly incorporated and is an existing

        corporation in good standing under the laws of the State of

        Delaware, with power and authority (corporate and other) to own

        its properties and conduct its business as described in the

        Prospectus; and NiSource is duly qualified to transact business

        as a foreign corporation in good standing in all other

        jurisdictions in which its ownership or lease of property or the

        conduct of its business requires such qualification, or is

        subject to no material liability or disability by reason of the

        failure to be so qualified in any such jurisdiction.



             (d)  NiSource Finance has been duly incorporated and is an

        existing corporation in good standing under the laws of the State

        of Indiana, with power and authority (corporate and other) to own

        its properties and conduct its business as described in the

        Prospectus; and NiSource Finance is duly qualified to transact

        business as a foreign corporation in good standing in all other

        jurisdictions in which its ownership or lease of property or the

        conduct of its business requires such qualification, or is

        subject to no material liability or disability by reason of the

        failure to be so qualified in any such jurisdiction; all of the

        issued and outstanding capital stock of NiSource Finance has been

        duly authorized and validly issued and is fully paid and

        nonassessable; and the capital stock of NiSource Finance is owned

        by NiSource free from liens, encumbrances and defects.



             (e)  Each significant subsidiary (as defined in Rule 405

        under the Act) of NiSource (each direct and indirect significant

        subsidiary of NiSource other than NiSource Finance being

        hereinafter referred to as a "Significant Subsidiary" and all

        such direct and indirect significant subsidiaries of NiSource

        other than NiSource Finance being hereinafter referred to

        collectively as the "Significant Subsidiaries"), has been duly

        incorporated and is an existing corporation in good standing

        under the laws of the jurisdiction of its incorporation, with

        power and authority (corporate and other) to own its properties

        and conduct its business as described in the Prospectus; and each

        Significant Subsidiary is duly qualified to do business as a

        foreign corporation in good standing in all other jurisdictions

        in which its ownership or lease of property or the conduct of its

        business requires such qualification, or is subject to no

        material liability or disability by reason of the failure to be

        so qualified in any such jurisdiction; all of the issued and

        outstanding capital stock of each Significant Subsidiary has been

        duly authorized and validly issued and is fully paid and

        nonassessable; and except as otherwise disclosed in the

        Prospectus, all of the capital stock of each Significant

        Subsidiary is owned by NiSource, directly or through

        subsidiaries, free from liens, encumbrances and defects.









             (f)  If the Offered Securities are debt securities issued by

        NiSource Finance and guaranteed by NiSource:  The Indenture has

        been duly authorized by each of NiSource and NiSource Finance and

        has been duly qualified under the Trust Indenture Act; the

        Offered Securities which are debt securities have been duly

        authorized by NiSource Finance; the Offered Securities which are

        Guarantees have been duly authorized by NiSource; and when the

        Offered Securities are delivered and paid for pursuant to the

        Terms Agreement on the Closing Date (as defined below) or

        pursuant to Delayed Delivery Contracts (as hereinafter defined),

        the Indenture will have been duly executed and delivered by each

        of NiSource and NiSource Finance, such Offered Securities will

        have been duly executed, authenticated, issued and delivered and

        will conform to the descriptions thereof contained in the

        Prospectus and the Indenture and such Offered Securities which

        are debt securities will constitute valid and legally binding

        obligations of NiSource Finance, and such Offered Securities

        which are Guarantees of such debt securities will constitute

        valid and legally binding obligations of NiSource, in each case,

        enforceable in accordance with their terms, subject to

        bankruptcy, insolvency, fraudulent transfer, reorganization,

        moratorium and similar laws of general applicability relating to

        or affecting creditors' rights and to general equity principles.



             (g)  If the Offered Securities are preferred stock:  The

        Offered Securities have been duly authorized and, when the

        Offered Securities have been delivered and paid for in accordance

        with the Terms Agreement on the Closing Date, such Offered

        Securities will have been validly issued, fully paid and

        nonassessable and will conform to the description thereof

        contained in the Prospectus; and the stockholders of NiSource

        have no preemptive rights with respect to the Offered Securities.

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