THE CORPORATE LIBRARY

Related Party Transactions and Outside Related Director Information

KeySpan Corporation (KSE)

7/11/2006 Proxy Information

boardofdirectors@keyspanenergy.com. These addresses are posted on our website. Our corporate secretary will review all such correspondence and forward to our board of directors, or to a particular director or directors, any such correspondence that deals with the functions of our board of directors or its committees or that our corporate secretary can reasonably determine requires the attention of any director, group of directors or committee of our board of directors. In addition, at each meeting of the Corporate Governance and Nominating Committee of our board of directors, the corporate secretary will report on all such communications received and the response, if any, provided on such communication. Further, any director may at any time review a log of all correspondence received by us that is addressed to our board of directors, a director, group of directors or a committee of our board of directors and request copies of any such correspondence.

Disclosure of “Broker Non-Votes” And Abstentions

SEC rules provide that specifically designated blank spaces are provided on the proxy card for stockholders to mark if they wish either to withhold authority to vote for one or more nominees for director or to abstain on one or more of the proposals. Votes withheld in connection with the adoption of the merger agreement will count as a vote against adoption of the merger agreement. Votes withheld in connection with the election of one or more of the nominees for director will not be counted as votes cast for or against such individuals. With respect to the proposal relating to the selection of auditors, abstentions are not counted in determining the number of votes cast in connection with this proposal since New York law requires a majority of only those votes cast “for” or “against” approval, while broker non-votes are treated as shares not entitled to vote, thus giving both abstentions and non-votes no effect. With respect to the stockholder proposal, broker non-votes will not be counted as votes cast for or against such proposal. All abstentions and broker non-votes are counted towards the establishment of a quorum.

Confidential Voting

We have adopted a policy to the effect that all proxy (voting instruction) cards, ballots and vote tabulations which identify the particular vote of a stockholder are to be kept secret from us, our directors, officers and employees. Accordingly, proxy cards are returned in envelopes addressed to the tabulator, Computershare, which receives and tabulates the proxies and is independent of us. The final tabulation is inspected by inspectors of election who also are independent of us, our directors, officers and employees. The identity and vote of any stockholder shall not be disclosed to us, our directors, officers or employees, nor to any third party except (i) to allow the independent inspectors of election to certify the results of the vote to us, our directors, officers and employees; (ii) as necessary to meet applicable legal requirements and to assert or defend claims for or against us; (iii) in the event of a proxy solicitation based on an opposition proxy statement filed, or required to be filed, with the SEC; or (iv) in the event a stockholder has made a written comment on such form of proxy.

Certain Relationships and Related Transactions

We have director and officer, or “D&O”, liability insurance for the purpose of reimbursing us when we have indemnified our directors and officers. D&O liability insurance also provides direct payment to our directors and officers under certain circumstances when we have not previously provided indemnification. We also have liability insurance which provides fiduciary coverage for us, our directors, officers and employees for any alleged breach of fiduciary duty under the Employee Retirement Income Security Act. The D&O insurance was purchased from Associated Electric & Gas Insurance Services, Energy Insurance Mutual, Zurich American, Hartford, Starr Excess, Quanta and Liberty Mutual for a one year period commencing May 28, 2005 at a cost of $3,277,035. Fiduciary liability insurance was purchased from the American International Group, CHUBB, Zurich American, and Energy Insurance Mutual commencing August 26, 2005 at a cost of $666,552. We plan to renew both programs upon expiration.

Legal Proceedings

On March 20, 2006, a purported class action lawsuit was filed in the New York State Supreme Court for the County of Kings, alleging breach of fiduciary duty against us and our directors, relating to the execution of the merger agreement with Parent. We moved to dismiss the complaint on April 19, 2006. The plaintiff served an amended complaint, on May 26, 2006, which alleges that the merger consideration which our stockholders will receive in connection with the proposed merger transaction is inadequate and unfair because the transaction value of $42.00 for each share of our common stock does not provide our stockholders with a meaningful premium over the market price of the common stock. It also alleges that the proxy statement regarding the merger does not contain adequate disclosure regarding other companies’ bids to buy KeySpan. The amended complaint also adds Parent as a defendant, contending that it aided and abetted the purported violations allegedly committed by us and our directors. We believe the lawsuit is without merit and we intend to contest it vigorously.

While we continue to believe that the lawsuit is without merit, on or about June 16, 2006, the parties reached a preliminary agreement in principle to settle this litigation, without any admission of wrongdoing by any of the defendants. Pursuant to the proposed settlement, we have permitted plaintiff’s counsel to review a draft of this proxy statement and have agreed to certain of plaintiff’s proposed amendments to the Company’s proxy disclosures (although the determination of whether any of the proposed changes or alterations should be made to these disclosures shall remain in our sole discretion), we will not oppose plaintiff’s counsel’s application to the Court for fees and expenses in an aggregate amount not to exceed $350,000, the amended complaint will be dismissed with prejudice, and the settlement agreement will contain a broad general release of all claims that have been or could have been brought by members of the purported class in connection with the proposed merger transaction. The proposed settlement is subject to the satisfaction of a number of conditions, including the successful negotiation of definitive settlement documentation and final Court approval of the settlement following notice to our shareholders.

On February 9, 2005, we were served with a stockholder derivative action asserting claims on behalf of us based upon breach of fiduciary duty. The complaint, which was filed in the New York State Supreme Court for the County of Kings, relates to the 2001 losses of the Roy Kay Companies, mechanical contracting subsidiaries acquired by us in January 2000, and alleges that our directors and certain senior officers breached their fiduciary duties when they placed their own personal interests above our interests by using material non-public information (the alleged misstatement by the former owners of Roy Kay of the financial statements of the Roy Kay companies and certain underlying work-in-progress schedules) to sell securities at artificially inflated prices.

The February 2005 complaint asserts essentially the same allegations as contained in two prior federal stockholder derivative actions which were commenced in October 2001 and June 2002 and were later withdrawn by the plaintiffs. On January 3, 2006, the parties entered into a settlement agreement to settle the action for a nominal sum of $250,000 for plaintiff’s counsel fees and for us to implement certain corporate governance practices. On April 26, 2006, the Court issued an Order and Final Judgement approving the settlement and dismissing the action with prejudice. While we deny any wrongdoing, we believe the settlement is in the best interest of us and our stockholders.

3/30/2005 Proxy Information

Involvement in Certain Legal Proceedings

In May 2000, ContiFinancial Corporation ("ContiFinancial") filed a voluntary petition for relief under the provisions of Chapter 11 of the United States Bankruptcy Code. At the time of such filing, Alan H. Fishman was serving as President and Chief Executive Officer and James L. Larocca was serving as a director of ContiFinancial.

Directors and Officers Liability Insurance and Indemnity

KeySpan has director and officer ("D&O") liability insurance for the purpose of reimbursing the Company when it has indemnified its directors and officers. D&O liability insurance also provides direct payment to KeySpan's directors and officers under certain circumstances when KeySpan has not previously provided indemnification. KeySpan also has liability insurance which provides fiduciary coverage for KeySpan, its directors, officers and employees for any alleged breach of fiduciary duty under the Employee Retirement Income Security Act. The D&O insurance was purchased from Associated Electric & Gas Insurance Services, Energy Insurance Mutual, Zurich American, Hartford, Starr Excess, Quanta and Liberty Mutual for a one year period commencing May 28, 2004 at a cost of $3,270,835. Fiduciary Liability was purchased from the American International Group, CHUBB, Zurich American, and Energy Insurance Mutual commencing August 26, 2004 at a cost of $666,552. The company plans to renew both programs upon expiration.

Legal Proceedings

KeySpan and certain of its current and former officers and directors are defendants in a consolidated class action lawsuit filed in the United States District Court for the Eastern District of New York. This lawsuit alleges, among other things, violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended ("Exchange Act"), in connection with disclosures relating to or following the acquisition of the Roy Kay companies. In June 2004, the parties reached an agreement in principle to settle the consolidated class action lawsuit. The proposed settlement provides for KeySpan to make certain payments to plaintiffs, all of which is to be funded by the insurance carrier providing liability coverage for KeySpan's directors and officers. While KeySpan continues to deny any wrongdoing, we believe the proposed settlement is in the best interest of KeySpan and its shareholders. The settlement is subject to court approval, the timing of which cannot be determined.

On February 9, 2005, KeySpan was served with a shareholder derivative action asserting claims on behalf of KeySpan based upon breach of fiduciary duty. The complaint, which was filed in the New York State Supreme Court for the County of Kings, relates to the 2001 Roy Kay related losses and alleges that KeySpan's directors and certain senior officers breached their fiduciary duties when they placed their own personal interests above the interests of KeySpan by using material non-public information (the fraud at Roy Kay) to sell securities at artificially inflated prices.

This new complaint asserts essentially the same allegations as contained in two prior federal shareholder derivative actions which were commenced in October 2001 and June 2002. On March 15, 2004, KeySpan and the individual defendants filed a motion to dismiss those earlier federal complaints. On April 14, 2004, the plaintiffs filed a notice of voluntary withdrawal of their actions. On April 23, 2004, the federal court dismissed both actions without prejudice. KeySpan intends to file a motion to dismiss this new complaint. While the Company denies any wrongdoing, the outcome of this proceeding cannot be determined as yet.

In late 2001, KeySpan received inquires from the U.S. Attorney's Office, Southern District of New York and the SEC regarding trading in KeySpan Corporation stock by individual officers of KeySpan prior to the July 17, 2001 announcement that KeySpan was taking a special charge in its Energy Services business and otherwise reducing its 2001 earnings forecast.

In March 2002, the SEC issued a formal order of investigation pursuant to which it indicated that it would review the trading activity of certain company insiders as well as KeySpan's compliance with reporting rules and regulations, generally during the period following the acquisition of the Roy Kay companies through the July 17, 2001 announcement. Since mid 2002, KeySpan has not received any further notifications or inquires concerning any of these matters.

3/25/2004 Proxy Information

In May 2000, ContiFinancial Corporation ("ContiFinancial") filed a voluntary petition for relief under the provisions of Chapter 11 of the United States Bankruptcy Code. At the time of such filing, Alan H. Fishman was serving as President and Chief Executive Officer and James L. Larocca was serving as a director of ContiFinancial.

3/27/2003 Proxy Information

John J. Bishar, Jr. was elected Senior Vice President and General Counsel of KeySpan, effective November 1, 2002. Prior to such date, he was a managing partner of the law firm of Cullen and Dykman LLP. During 2002, this firm represented KeySpan in a variety of general and specific matters. The total fees paid to this firm during 2002 were approximately $4,058,730.

Involvement in Certain Legal Proceedings

In May 2000, ContiFinancial Corporation ("ContiFinancial") filed a voluntary petition for relief under the provisions of Chapter 11 of the United States Bankruptcy Code. At the time of such filing, Alan H. Fishman was serving as President and Chief Executive Officer and James L. Larocca was serving as a director of ContiFinancial.