-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WaFzKeU11U9idNBtowpbK5ShjOMQ9Y0DMYTjPp7CyRuLxLsm74WLHUe6oir6lCyG aQ+bg7TPhOVdyNLTrW2CRw== 0000922423-97-000880.txt : 19971027 0000922423-97-000880.hdr.sgml : 19971027 ACCESSION NUMBER: 0000922423-97-000880 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 19971024 SROS: NYSE SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: KEYSPAN ENERGY CORP /NY/ CENTRAL INDEX KEY: 0001022916 STANDARD INDUSTRIAL CLASSIFICATION: NATURAL GAS DISTRIBUTION [4924] IRS NUMBER: 113344628 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-51783 FILM NUMBER: 97700703 BUSINESS ADDRESS: STREET 1: ONE METRO TECH CENTER CITY: BROOKLYN STATE: NY ZIP: 11201-3850 BUSINESS PHONE: 7184031000 MAIL ADDRESS: STREET 1: ONE METRO TECH CENTER CITY: BROOKLYN STATE: NY ZIP: 11201-3850 FORMER COMPANY: FORMER CONFORMED NAME: BUGLILCO HOLDING CORP DATE OF NAME CHANGE: 19970210 FORMER COMPANY: FORMER CONFORMED NAME: KEYSPAN ENERGY CORP DATE OF NAME CHANGE: 19961216 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: LONG ISLAND LIGHTING CO CENTRAL INDEX KEY: 0000060251 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [4931] IRS NUMBER: 111019782 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 175 E OLD COUNTRY RD CITY: HICKSVILLE STATE: NY ZIP: 11801 BUSINESS PHONE: 5165455184 MAIL ADDRESS: STREET 1: 175 E. OLD COUNTRY RD CITY: HICKSVILLE STATE: NY ZIP: 11801 SC 13D 1 SCHEDULE 13D UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D UNDER THE SECURITIES EXCHANGE ACT OF 1934 KEYSPAN ENERGY CORPORATION - -------------------------------------------------------------------------------- (Name of Issuer) COMMON STOCK, PAR VALUE $0.33 1/3 PER SHARE - -------------------------------------------------------------------------------- (Title of Class of Securities) 114259104 - -------------------------------------------------------------------------------- (CUSIP Number) LEONARD P. NOVELLO, SENIOR VICE PRESIDENT AND GENERAL COUNSEL LONG ISLAND LIGHTING COMPANY 175 EAST OLD COUNTRY ROAD HICKSVILLE, NEW YORK 11801 (516) 545-5162 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) Copy to THOMAS E. CONSTANCE, ESQ. KRAMER, LEVIN, NAFTALIS & FRANKEL 919 THIRD AVENUE NEW YORK, NEW YORK 10022 (212) 715-9100 OCTOBER 17, 1997 - -------------------------------------------------------------------------------- (Date of Event which Requires Filing of this Statement) Page 1 of 15 Pages CUSIP NO. 114259104 Page 2 of 15 Pages SCHEDULE 13D 1. NAME OF REPORTING PERSON SS OR I.R.S IDENTIFICATION NO. OF ABOVE PERSON Long Island Lighting Company 11-1019782 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ] 3. SEC USE ONLY 4. SOURCE OF FUNDS WC 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) 6. CITIZENSHIP OR PLACE OF ORGANIZATION New York 7. SOLE VOTING POWER NUMBER OF 0 SHARES BENEFICIALLY 8. SHARES VOTING POWER OWNED BY 0 EACH REPORTING 9. SOLE DISPOSITIVE POWER PERSON 0 WITH 10. SHARES DISPOSITIVE POWER 0 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 9,948,682 shares of Common Stock. 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ] 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 16.6%. Based upon 49,993,378 shares of Common Stock outstanding as of December 18, 1996, as represented by Issuer, calculated pursuant to Rule 13d-3(d)(1) and assuming, solely for purposes of such calculation, that the option to purchase such shares has been exercised. 14. TYPE OF REPORTING PERSON CO ITEM 1. SECURITY AND ISSUER. This Schedule 13D relates to the common stock, par value $0.33 1/3 per share ("KeySpan Common Stock"), of KEYSPAN ENERGY CORPORATION, a New York corporation ("KeySpan"), previously a wholly-owned subsidiary of The Brooklyn Union Gas Company ("Brooklyn Union"), which became Brooklyn Union's parent holding company in connection with a restructuring of Brooklyn Union into a holding company format pursuant to a mandatory exchange of shares with KeySpan. The principal executive offices of KeySpan are located at One Metrotech Center, Brooklyn, New York 11201-3850. ITEM 2. IDENTITY AND BACKGROUND. This Schedule 13D is filed by Long Island Lighting Company, a New York corporation ("LILCO"). LILCO supplies electric and gas service in Nassau and Suffolk Counties and to the Rockaway Peninsula in Queens County, all on Long Island, New York. LILCO's principal executive offices are located at 175 East Old Country Road, Hicksville, New York 11801. Each executive officer and each director of LILCO is a citizen of the United States. The name, business address and present principal occupation of each executive officer and director are set forth in Annex I to this Schedule 13D which is incorporated herein by this reference. During the last five years, to the best of LILCO's knowledge, neither LILCO nor any of its executive officers or directors has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which LILCO or such person was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws, or finding any violation with respect to such laws, and which judgment, decree or final order was not subsequently vacated. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. Pursuant to the Amended and Restated Brooklyn Union Stock Option Agreement (the "Brooklyn Union Stock Option Agreement" and, as amended, the "KeySpan Stock Option Agreement"), dated as of June 26, 1997, between Brooklyn Union and LILCO, as amended by the Amendment, Assignment and Assumption Agreement (the "Amendment"), dated as of September 29, 1997 by and among Brooklyn Union, LILCO and KeySpan, which was signed by the parties thereto on October 17, 1997, KeySpan granted LILCO an irrevocable option (the "KeySpan Option") to purchase from KeySpan, under certain circumstances and subject to certain adjustments, up to 9,948,682 authorized and unissued shares of KeySpan Common Stock, at a price per share of $30.0375 (the Page 3 of 15 Pages "Purchase Price"), payable, at LILCO's option, (a) in cash or (b) subject to KeySpan's having obtained the approvals of any governmental authority required for KeySpan to acquire such shares of LILCO Common Stock (as defined below) from KeySpan, in shares of Common Stock, par value $5.00 per share, of LILCO ("LILCO Common Stock"). As of the date hereof, the KeySpan Option is not exercisable. The shares of KeySpan Common Stock subject to the KeySpan Option would equal 19.9% of the outstanding KeySpan Common Stock before giving effect to the exercise of the KeySpan Option and 16.6% of the outstanding KeySpan Common Stock after giving effect to the exercise of the KeySpan Option. Under certain circumstances, LILCO may require KeySpan to, or KeySpan may be permitted to, repurchase for cash the KeySpan Option and any shares of KeySpan Common Stock acquired pursuant to the exercise of the KeySpan Option. The KeySpan Option was originally granted by Brooklyn Union as a condition of and in consideration for LILCO entering into the Agreement and Plan of Exchange, by and among NYECO CORP., Brooklyn Union and LILCO, dated as of December 29, 1996, which was amended and restated in the Amended and Restated Agreement and Plan of Exchange and Merger between Brooklyn Union and LILCO dated as of June 26, 1997 (as amended, the "Brooklyn Union/LILCO Agreement"), and the LILCO Stock Option Agreement, by and between Brooklyn Union and LILCO, dated as of December 29, 1996, which was amended and restated in the Amended and Restated LILCO Stock Option Agreement between Brooklyn Union and LILCO dated as of June 26, 1997 (as amended, the "LILCO Stock Option Agreement"). The exercise of the KeySpan Option for the full number of shares currently covered thereby would require aggregate funds of $298,833,535. It is anticipated that, should the KeySpan Option become exercisable and should LILCO determine to exercise the KeySpan Option for cash, LILCO would obtain the funds from working capital or by borrowing from parties whose identity is not yet known. A copy of the Brooklyn Union/LILCO Agreement is included as Exhibit 2.2 to this Schedule 13D and is incorporated herein by this reference. A copy of the LILCO Stock Option Agreement is included as Exhibit 2.3 to this Schedule 13D and is incorporated herein by this reference. A copy of the Brooklyn Union Stock Option Agreement is included as Exhibit 2.4 to this Schedule 13D and is incorporated herein by this reference. A copy of the Amendment is included as Exhibit 2.5 to this Schedule 13D and is incorporated herein by this reference. The foregoing discussion of the Brooklyn Union/LILCO Agreement, the LILCO Stock Option Agreement, the Brooklyn Union Stock Option Agreement and the Amendment are qualified in their entirety by reference to such exhibits. Page 4 of 15 Pages ITEM 4. PURPOSE OF TRANSACTION. In connection with the grant of the KeySpan Option, Brooklyn Union and LILCO entered into the Brooklyn Union/LILCO Agreement, pursuant to which, among other matters and subject to the terms and conditions set forth in the Brooklyn Union/LILCO Agreement, each outstanding share of LILCO Common Stock will be exchanged for .803 (the "Ratio") of a newly issued share of Common Stock, par value $0.01 per share, of a holding company (the "Holding Company Common Stock") and each outstanding share of KeySpan Common Stock will be exchanged for one newly issued share of Holding Company Common Stock (collectively, the "Binding Share Exchanges"). Also in connection with the grant of the KeySpan Option, KeySpan and LILCO entered into the LILCO Stock Option Agreement, pursuant to which LILCO granted KeySpan an irrevocable option (the "LILCO Option") to purchase from LILCO, under certain circumstances and subject to certain adjustments, up to 23,981,964 authorized and unissued shares of LILCO Common Stock, at a price per share of $19.725, payable, at KeySpan's option, (a) in cash or (b) subject to KeySpan's having obtained the approvals of any governmental authority required for KeySpan to acquire such shares of LILCO Common Stock from LILCO, in shares of LILCO Common Stock. The LILCO Option was granted by LILCO as a condition of and in consideration for KeySpan entering into the Brooklyn Union/LILCO Agreement and the KeySpan Stock Option Agreement. The terms and conditions of the Brooklyn Union/LILCO Agreement are set forth in the Joint Proxy Statement, a copy of which is included as Exhibit 2.1 to this Schedule 13D and is incorporated herein by this reference. The foregoing discussion of the Brooklyn Union/LILCO Agreement is qualified in its entirety by reference to such exhibit. Except as set forth herein, LILCO does not have any current plans or proposals that relate to or would result in (i) the acquisition by any person of additional shares of KeySpan Common Stock or the disposition of shares of KeySpan Common Stock; (ii) an extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving KeySpan or any of its subsidiaries; (iii) a sale or transfer of any material amount of assets of KeySpan or any of its subsidiaries; (iv) any change in the present board of directors or management of KeySpan, including any plans or proposals to change the number or term of directors or to fill any vacancies on the board; (v) any material change in the present capitalization or dividend policy of KeySpan; (vi) any other material change in KeySpan's business or corporate structure; (vii) any change in KeySpan's Certificate of Incorporation or By-laws, or instruments corresponding thereto, or other actions that may impede the acquisition of control of KeySpan by any person; (viii) causing a class of securities of KeySpan to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter- Page 5 of 15 Pages dealer quotation system of a registered national securities association; (ix) a class of equity securities of KeySpan becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934, as amended; or (x) any action similar to any of those enumerated above. ITEM 5. INTEREST IN SECURITIES OF ISSUER. Although the KeySpan Option does not allow LILCO to purchase any shares of KeySpan Common Stock pursuant thereto unless and until the conditions to exercise specified in the KeySpan Stock Option Agreement occur, assuming for purposes of this Item 5 that such conditions are satisfied and LILCO is entitled to purchase shares of KeySpan Common Stock pursuant to the KeySpan Option, LILCO would currently be entitled to purchase 9,948,682 shares of KeySpan Common Stock, or approximately 19.9% of the currently outstanding KeySpan Common Stock before giving effect to the exercise of the KeySpan Option and 16.6% of the currently outstanding KeySpan Common Stock after giving effect to the exercise of the KeySpan Option (based upon 49,993,378 shares of KeySpan Common Stock outstanding as of December 18, 1996, as represented by KeySpan in the Brooklyn Union/LILCO Agreement). LILCO does not have the right to acquire any shares of KeySpan Common Stock under the KeySpan Option unless certain events specified in the KeySpan Stock Option Agreement occur. Accordingly, LILCO does not have sole or shared voting or dispositive power with respect to any shares of KeySpan Common Stock purchasable under the KeySpan Option, and LILCO disclaims beneficial ownership of KeySpan Common Stock subject to the KeySpan Option until such events occur. Assuming for purposes of this Item 5 that events occurred that would enable LILCO to exercise the KeySpan Option and LILCO exercised the KeySpan Option, LILCO would have sole voting power and sole dispositive power with respect to the shares of KeySpan Common Stock acquired pursuant to the KeySpan Option. The foregoing description of certain terms of the KeySpan Stock Option Agreement is qualified in its entirety by reference to the Brooklyn Union Stock Option Agreement which is filed as Exhibit 2.4 hereto and to the Amendment which is filed as Exhibit 2.5 hereto and which are incorporated herein by this reference. To the best of LILCO's knowledge, no executive officer or director of LILCO beneficially owns any shares of KeySpan Common Stock, nor (except for the issuance of the KeySpan Option) have any transactions in KeySpan Common Stock been effected during the past 60 days by LILCO or, to the best knowledge of KeySpan, by any executive officer or director of LILCO. In addition, no other person is known by LILCO to have the right to receive or the power to direct the receipt of dividends from, or Page 6 of 15 Pages the proceeds from the sale of, the securities covered by this Schedule 13D. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. The following exhibits are filed as part of this Schedule 13D: Exhibit 2.1 -- Joint Proxy Statement of The Brooklyn Union Gas Company and Long Island Lighting Company and Prospectus of BL Holding Corp. and KeySpan Energy Corporation, dated June 27, 1997, included in the Registration Statement on Form S-4 filed on June 30, 1997, as amended by Post-Effective Amendment No. 1, filed on July 3, 1997. (Incorporated herein by reference from KeySpan Energy Corporation's Form S-4 Registration Statement No. 333-30407) Exhibit 2.2 -- Amended and Restated Agreement and Plan of Exchange and Merger between The Brooklyn Union Gas Company and Long Island Lighting Company dated as of June 26, 1997. (Incorporated herein by reference from Annex A of Exhibit 2.1 hereto) Exhibit 2.3 -- Amended and Restated LILCO Stock Option Agreement between The Brooklyn Union Gas Company and Long Island Lighting Company dated as of June 26, 1997. (Incorporated herein by reference from Annex B of Exhibit 2.2 hereto) Exhibit 2.4 -- Amended and Restated Brooklyn Union Stock Option Agreement between Long Island Lighting Company and The Brooklyn Union Gas Company dated as of June 26, 1997. (Incorporated herein by reference from Annex C of Exhibit 2.2 hereto) Exhibit 2.5 -- Amendment, Assignment and Assumption Agreement, dated as of September 29, 1997 by and among Brooklyn Union, LILCO and KeySpan. Page 7 of 15 Pages ANNEX I DIRECTORS AND EXECUTIVE OFFICERS Set forth below are the name and present principal occupation of each director and executive officer of Long Island Lighting Company as of October 17, 1997. The business address of each such director and executive officer is c/o Long Island Lighting Company, 175 East Old Country Road, Hicksville, New York 11801. NAME PRINCIPAL OCCUPATION DIRECTORS OF LILCO: A. James Barnes Dean, Indiana University School of Public and Environmental Affairs George Bugliarello Chancellor, Polytechnic University Renso L. Caporali Senior Vice President of Engineering and Business Development, Raytheon Company Dr. William J. Catacosinos Chairman and Chief Executive Officer, Long Island Lighting Company Peter O. Crisp Chairman, Venrock, Inc. James T. Flynn President and Chief Operating Officer, Long Island Lighting Company Vicki L. Fuller Senior Vice President, Alliance Capital Management Corporation Katherine D. Ortega Former Treasurer of the United States Basil A. Paterson Partner, law firm of Meyer, Suozzi, English and Klein, P.C. Richard L. Schmalensee Director, Massachusetts Institute of Technology Center for Energy and Environmental Policy Research Page 8 of 15 Pages George J. Sideris Retired Senior Vice President, Long Island Lighting Company John H. Talmage Partner, H.R. Talmage & Son Farm EXECUTIVE OFFICERS OF LILCO (WHO ARE NOT DIRECTORS): Theodore A. Babcock Vice President and Treasurer, Assistant Corporate Secretary Michael E. Bray Senior Vice President, Electric Business Unit Charles A. Daverio Vice President, Energy Exchange Group Jane A. Fernandez Vice President, Human Resources Joseph E. Fontana Vice President and Controller Robert X. Kelleher Senior Vice President, Human Resources Howard A. Kosel Vice President, Fossil Production John D. Leonard, Jr. Vice President, Special Projects Adam M. Madsen Senior Vice President, Corporate & Strategic Planning Kathleen A. Marion Vice President, Corporate Services and Corporate Secretary Brian R. McCaffrey Vice President, Communications Joseph W. McDonnell Senior Vice President, Electric & Gas Marketing and External Affairs Leonard P. Novello Senior Vice President and General Counsel Anthony Nozzolillo Senior Vice President, Finance and Chief Financial Officer Richard Reichler Vice President, Tax and Benefits Planning and Deputy General Counsel Page 9 of 15 Pages William G. Schiffmacher Senior Vice President, Customer Relations and Information Systems Werner J. Schweiger Vice President, Electric Operations Richard M. Siegel Vice President, Information Systems and Technology Robert B. Steger Senior Vice President, Gas Business Unit William E. Steiger, Jr. Vice President, Facilities and Real Estate Edward J. Youngling Senior Vice President, Engineering & Construction Page 10 of 15 Pages SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. LONG ISLAND LIGHTING COMPANY By: /s/ Anthony Nozzolillo ----------------------- Name: Anthony Nozzolillo Title: Senior Vice President, Finance and Chief Financial Officer Dated: October 24, 1997 Page 11 of 15 Pages EXHIBIT INDEX EXHIBIT DESCRIPTION 2.1 Joint Proxy Statement of The Brooklyn Union Gas Company and Long Island Lighting Company and Prospectus of BL Holding Corp. and KeySpan Energy Corporation, dated June 27, 1997, included in the Registration Statement on Form S-4 filed on June 30, 1997, as amended by Post- Effective Amendment No. 1, filed on July 3, 1997. (Incorporated herein by reference from KeySpan Energy Corporation's Form S-4 Registration Statement No. 333- 30407) 2.2 Amended and Restated Agreement and Plan of Exchange and Merger between The Brooklyn Union Gas Company and Long Island Lighting Company dated as of June 26, 1997. (Incorporated herein by reference from Annex A of Exhibit 2.1 hereto) 2.3 Amended and Restated LILCO Stock Option Agreement between The Brooklyn Union Gas Company and Long Island Lighting Company dated as of June 26, 1997. (Incorporated herein by reference from Annex B of Exhibit 2.2 hereto) 2.4 Amended and Restated Brooklyn Union Stock Option Agreement between Long Island Lighting Company and The Brooklyn Union Gas Company dated as of June 26, 1997. (Incorporated herein by reference from Annex C of Exhibit 2.2 hereto) 2.5 Amendment, Assignment and Assumption Agreement, dated as of September 29, 1997 by and among Brooklyn Union, LILCO and KeySpan. Page 12 of 15 Pages EX-2.5 2 AMENDMENT, ASSIGNMENT AND ASSUMPTION AGREEMENT Exhibit 2.5 AMENDMENT, ASSIGNMENT AND ASSUMPTION AGREEMENT This AMENDMENT, ASSIGNMENT AND ASSUMPTION AGREEMENT, dated as of September 29, 1997 (this "AMENDMENT"), by and among THE BROOKLYN UNION GAS COMPANY, a New York corporation ("BROOKLYN UNION"), LONG ISLAND LIGHTING COMPANY, a New York corporation ("LILCO"), and KEYSPAN ENERGY CORPORATION, a New York corporation and, prior to the Effective Time (as defined herein), a wholly owned subsidiary of Brooklyn Union ("KEYSPAN"), among other things amends the following agreements: a. the AMENDED AND RESTATED AGREEMENT AND PLAN OF EXCHANGE AND MERGER, dated as of June 26, 1997 (the "MERGER AGREEMENT"), by and between Brooklyn Union and LILCO; b. the AMENDED AND RESTATED BROOKLYN UNION STOCK OPTION AGREEMENT, dated as of June 26, 1997 (the "BROOKLYN UNION OPTION AGREEMENT"); and c. the AMENDED AND RESTATED LILCO STOCK OPTION AGREEMENT, dated as of June 26, 1997 (the "LILCO OPTION AGREEMENT", and together with the Merger Agreement and the Brooklyn Union Option Agreement, the "AGREEMENTS"). WHEREAS, Brooklyn Union and LILCO have determined to engage in a business combination as peer firms in a merger and a binding share exchange and to form a holding company to manage their combined businesses (the "COMPANY") and have entered into the Agreements for such purpose; and WHEREAS, contemporaneously herewith, KeySpan is acquiring all the outstanding shares of common stock, par value $0.33 1/3 per share ("BROOKLYN UNION COMMON STOCK"), of Brooklyn Union in a binding share exchange under Section 913 of the New York Business Corporation Law, in which each share of Brooklyn Union Common Stock will be exchanged for one share of common stock of KeySpan, par value $0.33 1/3 per share ("KEYSPAN COMMON STOCK"), with the result that Brooklyn Union will become a wholly owned subsidiary of KeySpan (such transaction, the "KEYSPAN RESTRUCTURING"); and WHEREAS, pursuant to Section 10.7 of the Merger Agreement the parties desire to provide for the assignment by Brooklyn Union to KeySpan, and the assumption by KeySpan, of all of Brooklyn Union's rights and obligations under the Agreements and to substitute KeySpan for Brooklyn Union thereunder, effective upon the effective time of the KeySpan Restructuring (the "EFFECTIVE TIME"). Page 13 of 15 Pages NOW THEREFORE, in consideration of the premises and the representations, warranties, covenants and agreements contained herein, the parties hereto, intending to be legally bound hereby, agree as follows: Section i. Definitions. Capitalized terms used herein and not otherwise defined herein have the respective meanings given in the Merger Agreement. Section ii. Assumption of Liabilities and Obligations by KeySpan. KeySpan agrees to assume, effective as of the Effective Time, all liabilities and obligations of Brooklyn Union under each of the Agreements, including, without limitation, the obligation under the Brooklyn Union Option Agreement to issue shares of KeySpan Common Stock in certain circumstances as set forth therein. Section iii. Substitution of KeySpan for Brooklyn Union. (a) Each of the Agreements is hereby amended, effective as of the Effective Time, such that KeySpan is substituted for Brooklyn Union for all purposes under the Agreements and all references to Brooklyn Union in the Agreements shall be deemed to refer to KeySpan, except as provided in paragraph (c) below and except for purposes of or references in Article IV, Section 7.2, Section 7.4, and Section 7.6 and the reference to Brooklyn Union in Section 7.1 of the Merger Agreement. (b) Each of the Agreements is hereby amended, effective as of the Effective Time, such that Subsidiaries of KeySpan are substituted for Brooklyn Union Subsidiaries for all purposes under the Agreements and all references to Brooklyn Union Subsidiaries in the Agreements shall be deemed to refer to Subsidiaries of KeySpan, except as provided in paragraph (c) below and except for purposes of or references in Article IV of the Merger Agreement. (c) Section 8.2(b) of the Merger Agreement is hereby amended and restated to read in its entirety as follows: "(b) REPRESENTATIONS AND WARRANTIES. The representations and warranties of Brooklyn Union set forth in this Agreement and the Brooklyn Union Stock Option Agreement shall be true and correct (i) on and as of December 29, 1996 except for such failures of representations or warranties to be true and correct (without regard to any materiality qualifications contained therein) which, individually or in the aggregate, would not be reasonably likely to result in a Brooklyn Union Material Adverse Effect and (ii) on and as of the Closing Date with the same effect as though such representations and warranties had been made with respect to KeySpan instead of Brooklyn Union or with respect to Subsidiaries of KeySpan instead of Brooklyn Union Subsidiaries, as the case may be, on and as of the Closing Date (except for representations and warranties that expressly speak only as of a specific date or time other than December 29, 1996 or the Closing Date which need only be true and correct as of such date or time) except for such failures of representations or warranties to be true and correct (without regard Page 14 of 15 Pages to any materiality qualifications contained therein) which, individually or in the aggregate, would not be reasonably likely to result in a material adverse effect on the business, assets, financial condition, results of operations or prospects of KeySpan and its subsidiaries taken as a whole." Section iv. Substitution of KeySpan Common Stock for Brooklyn Union Common Stock. Each of the Agreements is hereby amended, effective as of the Effective Time, such that KeySpan Common Stock is substituted for Brooklyn Union Common Stock for all purposes under the Agreements and all references to Brooklyn Union Common Stock in the Agreements shall be deemed to refer to KeySpan Common Stock, except for purposes of Article IV of the Merger Agreement. Section v. Acknowledgment of KeySpan Assumption and Substitution. LILCO hereby acknowledges and confirms that, effective as of the Effective Time, all of the liabilities, obligations, benefits and rights of Brooklyn Union under the Agreements shall inure to the benefit of KeySpan under those Agreements. Section vi. Counterparts. This Amendment may be executed in one or more counter- parts, each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement. IN WITNESS WHEREOF, Brooklyn Union, LILCO and KeySpan have caused this Amendment to be signed by their respective officers thereunto duly authorized as of the date first written above. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective duly authorized officers as of the date first above written. THE BROOKLYN UNION GAS COMPANY By: /s/ Robert B. Catell ------------------------ Robert B. Catell Chief Executive Officer LONG ISLAND LIGHTING COMPANY By: /s/ William J. Catacosinos -------------------------- Dr. William J. Catacosinos Chief Executive Officer KEYSPAN ENERGY CORPORATION By: /s/ Robert B. Catell -------------------- Robert B. Catell Chief Executive Officer Page 15 of 15 Pages -----END PRIVACY-ENHANCED MESSAGE-----