EMPLOYMENT AGREEMENT


            THIS  AGREEMENT by and between  MarketSpan  Corporation,  a New York
Corporation (the "Company"), and Robert B. Catell (the "Executive"), dated as of
the 10th day of September, 1998.

                                WITNESSETH THAT

            WHEREAS,  the Company  wishes to provide for the  employment  by the
Company of the Executive,  and the Executive wishes to serve the Company, in the
capacities and on the term and conditions set forth in this Agreement;

            NOW, THEREFORE, it is hereby agreed as follows:

            1. EMPLOYMENT  PERIOD.  The Company shall employ the Executive,  and
the Executive shall serve the Company,  on the terms and conditions set forth in
this Agreement,  for the period (the "Employment  Period") beginning on July 31,
1998 and ending on July 31, 2003.

            2.    POSITION AND DUTIES.

            (a) During the  Employment  Period,  the  Executive  shall  serve as
Chairman  and Chief  Executive  Officer of the  Company,  and as a member of the
Board of Directors of the Company (the "Board").

            (b)  During  the  Employment  Period,  and  excluding  any period of
vacation and sick leave to which the Executive is entitled,  the Executive shall
devote  reasonable  attention  and  time  during  normal  business  hours to the
business  and affairs of the Company  and, to the extent  necessary to discharge
the  responsibilities  assigned to the Executive under this  Agreement,  use the
Executive's reasonable best effort to carry out such responsibilities faithfully
and efficiently. It shall not be considered a violation of the foregoing for the
Executive  to serve  on  corporate,  industry,  civic or  charitable  boards  or
committees.

            (c) The  Executive's  services  shall be performed  primarily at the
Company's  headquarters  in the five  boroughs  of New York City,  or in Nassau,
Suffolk or Westchester Counties of New York, or such other location in which the
Company's headquarters is located.

            3.    COMPENSATION.

            (a) BASE SALARY.  During the Employment  Period, the Executive shall
receive an annual  base  salary  (the  "Annual  Base  Salary")  of not less than
$700,000,  payable in accordance with the Company's regular payroll practice for
its senior  executives,  as in effect from time to time.  During the  Employment
Period, the Annual Base Salary shall be reviewed for


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<PAGE>



possible  increase  at least  annually.  Any  increase in the Annual Base Salary
shall  not limit or  reduce  any other  obligation  of the  Company  under  this
Agreement.  The Annual Base Salary shall not be reduced after any such increase,
and the term  "Annual  Base Salary"  shall  thereafter  refer to the Annual Base
Salary as so increased.

            (b)  INCENTIVE  COMPENSATION.  During  the  Employment  Period,  the
Executive shall participate in short-term incentive  compensation plans ("Annual
Incentive   Compensation")   and/or  long-term  incentive   compensations  plans
("Long-Term Incentive Compensation") providing him with the opportunity to earn,
on a year-by-year  basis,  short-term and long-term  incentive  compensation  at
least  equal  to the  amounts  that he had the  opportunity  to earn  under  the
comparable  plans of KeySpan Energy  Corporation as in effect as of December 29,
1996.

            (c)   OTHER BENEFITS.

            (i) The  Executive  shall be entitled to the  benefits  described in
Appendix A hereto (the "SERP").

            (ii) During the  Employment  Period,  the Company  shall provide the
Executive with life insurance coverage (the "Life Insurance Coverage") providing
a death  benefit to such  beneficiary  or  beneficiaries  as the  Executive  may
designate the amount  provided to him as the Chief  Executive  Officer under the
Group Term Replacement  Insurance Program (GRIP) of KeySpan  Corporation or such
greater amount as may be provided under the GRIP Plan from time to time.

            (iii) In  addition,  and  without  limiting  the  generality  of the
foregoing,  during the Employment Period and thereafter: (A) the Executive shall
be entitled to participate in all applicable  incentive,  savings and retirement
plans,  practices,  policies  and  programs of the Company to the same extent as
other senior executives (or, where applicable, retired senior executives) of the
Company;  and (B) the Executive and/or the Executive's  family,  as the case may
be,  shall be eligible  for  participation  in, and shall  receive all  benefits
under, all applicable  welfare benefit plans,  practices,  policies and programs
provided by the Company,  other than severance  plans,  practices,  policies and
programs but  including,  without  limitation,  medical,  prescription,  dental,
disability,  salary continuance,  employee life insurance, group life insurance,
accidental death and travel accident  insurance plans and programs,  to the same
extent as other senior executives of the Company.  After the Employment  Period,
Executive  shall be entitled to participate  in all plans  applicable to retired
senior executives of the Company.

            (d) PERQUISITES.  During the Employment  Period, the Executive shall
be entitled to receive  perquisites on the same terms and conditions as those he
received from KeySpan Energy Corporation immediately before the Effective Time.


                                      -2-
<PAGE>


            4.    TERMINATION OF EMPLOYMENT.

            (a) DEATH OR DISABILITY.  The Executive's employment shall terminate
automatically  upon the  Executive's  death during the  Employment  Period.  The
Company shall be entitled to terminate the Executive's employment because of the
Executive's Disability during the Employment Period. "Disability" means that (i)
the  Executive  has  been  unable,  for a period  of one  hundred  eighty  (180)
consecutive  business  days,  to  perform  the  Executive's  duties  under  this
Agreement,  as a result of  physical  or mental  illness or  injury,  and (ii) a
physician  selected  by the  Company  or its  insurers,  and  acceptable  to the
Executive or the  Executive's  legal  representative,  has  determined  that the
Executive's  incapacity is total and permanent. A termination of the Executive's
employment by the Company for Disability  shall be communicated to the Executive
by written notice,  and shall be effective on the 30th day after receipt of such
notice by the Executive (the "Disability  Effective Date"), unless the Executive
returns to full-time performance of the Executive's duties before the Disability
Effective Date.

            (b)   BY THE COMPANY.

            (i) The Company may terminate the Executive's  employment during the
Employment  Period for Cause or without Cause.  "Cause" means  conviction of the
Executive of a felony under the laws of New York or gross  misconduct,  which is
willful and  results in  material  and  demonstrable  damage to the  business or
reputation of the Company. No act or failure to act on the part of the Executive
shall be considered  "willful"  unless it is done, or omitted to be done, by the
Executive in bad faith or without  reasonable belief that the Executive's action
or omission was in the best interests of the Company.  Any act or failure to act
that is based upon authority  given pursuant to a resolution duly adopted by the
Board, or the advice of counsel for the Company,  shall be conclusively presumed
to be done,  or omitted to be done,  by the  Executive  in good faith and in the
best interests of the Company.

            (ii) A termination of the Executive's  employment for Cause shall be
effected in accordance with the following procedures. The Company shall give the
Executive written notice ("Notice of Termination for Cause") of its intention to
terminate  the  Executive's  employment  for Cause,  setting forth in reasonable
detail the specific  conduct of the  Executive  that it considers to  constitute
Cause and the specific  provision(s)  of this Agreement on which it relies,  and
stating the date,  time and place of the Special  Board  Meeting for Cause.  The
"Special  Board  Meeting for Cause" means a meeting of the Board called and held
specifically  for the purpose of considering  the  Executive's  termination  for
Cause,  that takes  place not less than ten (10) and not more than  twenty  (20)
business days after the Executive  receives the Notice of Termination for Cause.
The Executive shall be given an opportunity,  together with counsel, to be heard
at the Special Board Meeting for Cause.  The  Executive's  termination for Cause
shall be  effective  when and if a  resolution  is fully  adopted at the Special
Board  Meeting  for  Cause  by  affirmative  vote of a  majority  of the  entire
membership  of the Board,  excluding  employee  directors,  stating that in good
faith opinion of the Board, the Executive is guilty of the conduct  described in
the Notice of Termination for Cause,  and that conduct  constitutes  Cause under
this Agreement.



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<PAGE>



            (iii) A  termination  of the  Executive's  employment  without Cause
shall be effected in accordance with the following procedures. The Company shall
give the Executive written notice ("Notice of Termination without Cause") of its
intention to terminate the  Executive's  employment  without Cause,  stating the
date,  time and place of the Special Board Meeting  without Cause.  The "Special
Board  Meeting  Without  Cause"  means a meeting  of the Board  called  and held
specifically for the purpose of considering the Executive's  termination without
Cause,  that takes  place not less than ten (10) and not more than  twenty  (20)
business days after the  Executive  receives the Notice of  Termination  without
Cause. The Executive shall be given an opportunity, together with counsel, to be
heard at the Special Board Meeting without Cause.  The  Executive's  termination
without Cause shall be effective when and if a resolution is duly adopted at the
Special Board Meeting  without  Cause by  affirmative  vote of a majority of the
entire membership of the Board,  excluding employee directors,  stating that the
Executive is terminated without Cause.

            (c)   GOOD REASON.

          (i) The Executive may terminate  employment for Good Reason or without
     Good Reason. "Good Reason" means:

                  A. the assignment to the Executive of any duties  inconsistent
      in any respect  with  paragraph  (a) of Section 2 of this  Agreement,  the
      failure to provide the Executive with the titles required by paragraph (a)
      of  Section 2 of this  Agreement  or with  duties  commensurate  with such
      titles,  as and when required by said  paragraph (a), or any other action,
      or failure to take action,  by the Company,  the Board or the shareholders
      of  the  Company  by the  Company  that  results  in a  diminution  in the
      Executive's position, authority, titles, duties or responsibilities, other
      than an isolated,  insubstantial and inadvertent  action that is not taken
      in bad faith and is  remedied  by the Company  promptly  after  receipt of
      notice thereof from the Executive;

                  B. any failure to comply with any other provision of Section 3
      of this Agreement,  other and an isolated,  insubstantial  and inadvertent
      failure to comply with a provision of Section 3 of this  Agreement that is
      not taken in bad faith  and is  remedied  by the  Company  promptly  after
      receipt of notice thereof from the Executive;

          C. any  requirements by the Company that the  Executive's  services by
     rendered  primarily at a location or locations other than that provided for
     in paragraph (c) of Section 2 of this Agreement;

                  D. any purported termination of the Executive's  employment by
      the Company for a reason or in a manner not  expressly  permitted  by this
      Agreement;

          E. any failure by the Company to comply with  paragraph (c) of Section
     12 of this Agreement; or



                                    -4-

<PAGE>



                  F. any  other  substantial  breach  of this  Agreement  by the
      Company  that either is not taken in good faith or is not  remedied by the
      Company promptly after receipt of notice thereof from the Executive.

            (ii) A  termination  of  employment by the Executive for Good Reason
shall  be  effectuated  by  giving  the  Company   written  notice  ("Notice  of
Termination  for Good Reason") of the  termination,  setting forth in reasonable
detail the specific  conduct of the Company that constitutes Good Reason and the
specific  provision(s)  of this  Agreement  on which  the  Executive  relies.  A
termination of employment by the Executive for Good Reason shall be effective on
the fifth  business day  following the date when the Notice of  Termination  for
Good  Reason is given,  unless the notice  sets forth a later date  (which  date
shall in no event be later than 30 days after the notice is given).

            (iii) A termination of the  Executive's  employment by the Executive
without  Good Reason shall be effected by giving the Company  written  notice of
the Termination.

            (d) NO WAIVER.  The failure to set forth any fact or circumstance in
a Notice of Termination  for Cause,  A Notice of Termination  without Cause or a
Notice of Termination for Good Reason shall not constitute a waiver of the right
to assert,  and shall not preclude the party giving notice from asserting,  such
fact or  circumstance  in an attempt to enforce any right under or  provision of
this Agreement.

            (e) DATE OF TERMINATION. The "Date of Termination" means the date of
the  Executive's  death,  the Disability  Effective  date, the date on which the
termination  of the  Executive's  employment by the Company for Cause or without
Cause or by the Executive for Good Reason is effective, or the date on which the
Executive  gives the company notice of a termination of employment  without Good
Reason, as the case may be.

            5.    OBLIGATIONS OF THE COMPANY UNDER TERMINATION.

     (a) BY THE COMPANY OTHER THAN FOR CAUSE OR DISABILITY; BY THE EXECUTIVE FOR
GOOD REASON.  (i) If, during the Employment  Period,  the Company terminates the
Executive's  employment,  other than for Cause or  Disability,  or the Executive
terminates  employment  for  Good  Reason,  the  Company  (A)  shall  pay to the
Executive,  in a single  lump sum,  (I) the Accrued  Obligations  (as defined in
Section  5(b)  below),  and (II) the  aggregate  amount of the salary and Annual
Incentive  Compensation  that he would have received if he had remained employed
for the Severance  Period (as defined below) (assuming that the Annual Incentive
Compensation  for such period  would have  equalled  the target  amounts of such
Incentive Compensation as in effect immediately before the Date of Termination);
(B) shall cause the  Executive  to continue  to accrue  benefits  under the SERP
during the  Severance  Period;  and (C) shall  continue to provide the Executive
with the Life  Insurance  Coverage  and the  benefits set forth in Clause (B) of
paragraph  (c)(iii) of Section 3, as if he had remained  employed by the Company
pursuant to this  Agreement  during the  Severance  Period and then  retired (at
which time he will be treated as eligible for all retiree welfare benefits and


                                    -5-

<PAGE>



other benefits  provided to retired senior  executives,  as set forth in Section
3(c)(iii));  PROVIDED,  that to the  extent  such  benefits  cannot be  provided
pursuant to the plan or program  maintained  by the Company for its  executives,
the Company  shall  provide  such  benefits  outside  such plan or program at no
additional cost (including without limitation tax cost) to the Executive and his
family;  and  PROVIDED,  further,  that during any period when the  Executive is
eligible  to receive  welfare  benefits of the type  described  in Clause (B) of
paragraph  (c)(iii)  of  Section 3 under  another  employer-provided  plan,  the
corresponding  benefits  provided  by the  Company  under this  clause  (iii) of
paragraph (a) of Section 5 may be made  secondary to those  provided  under such
other plan. For purposes of such  continued  accrual of benefits under the SERP,
the Executive  shall be considered to have remained  employed for a period equal
to the  Severance  Period,  with  annual  compensation  equal to (x) the  amount
required to be paid under the clause (i) (B) of the preceding sentence,  divided
by (y) the number of years and fractions  thereof in the Severance  Period,  and
then to have  terminated  his  employment.  In  addition to the  foregoing,  any
restricted stock outstanding on the Date of Termination shall be fully vested as
of  the  Date  of  Termination  and  all  options  outstanding  on the  Date  of
Termination shall be fully vested and exercisable and shall remain in effect and
exercisable  through the end of their  respective  terms,  without regard to the
termination of the Executive's  Employment (but in the case of options that were
not vested  immediately  before the Date of  Termination,  not longer  than five
years).  The payments and benefits  provided  pursuant to this  paragraph (a) of
Section  5  are  intended  as  liquidated  damages  for  a  termination  of  the
Executive's  employment by the Company other than for Cause or Disability or for
the  actions  of  the  Company  leading  to a  termination  of  the  Executive's
employment by the Executive for Good Reason, and shall be the sole and exclusive
remedy thereof. For purposes of this Agreement, the Pro Rata Long-Term Incentive
Compensation means the amount of Long-Term compensation that the Executive would
have received  with respect to each  applicable  performance  period that begins
before and ends after the Date of Termination,  assuming such  compensation  had
been paid at target,  and  pro-rated  to reflect the  portion of the  applicable
performance period that ends on the Date of Termination.

            (ii) For  purposes of this  Agreement:  (A) the  "Severance  Period"
shall  mean  the  period  from the Date of  Termination  through  the end of the
Employment  Period,  or, if  longer  and if the Date of  Termination  is after a
Change of Control,  the third anniversary of the Date of Termination;  and (B) a
"Change of Control" shall mean:

                        (I) The acquisition by any  individual,  entity or group
                  (within  the  meaning of Section  13(d)(3)  or 14(d)(2) of the
                  Securities  Exchange Act of 1934,  as amended  (the  "Exchange
                  Act"))  (a  "Person")  of  beneficial  ownership  (within  the
                  meaning of Rule 13d-3  promulgated  under the Exchange Act) of
                  20% or more of  either  (A) the  then  outstanding  shares  of
                  common stock of the Company (the  "Outstanding  Company Common
                  Stock")  or  (B)  the  combined   voting  power  of  the  then
                  outstanding  voting securities of the Company entitled to vote
                  generally  in the  election  of  directors  (the  "Outstanding
                  Company  Voting  Securities");  provided,  however,  that  for
                  purposes of this  subsection  (i), the following  acquisitions
                  shall not constitute a Change of Control:  (A) any acquisition
                  directly from


                                    -6-

<PAGE>



                  the  Company,  (B) any  acquisition  by the  Company,  (C) any
                  acquisition  by any employee  benefit plan (or related  trust)
                  sponsored  or  maintained  by the  Company or any  corporation
                  controlled  by the  Company  or  (D)  any  acquisition  by any
                  corporation  pursuant to a  transaction  which  complies  with
                  clauses  (A),  (B)  and  (C)  of  subsection   (III)  of  this
                  definition of "Change of Control"; or

                        (II) Individuals who, as of the date hereof,  constitute
                  the Board  (the  "Incumbent  Board")  cease for any  reason to
                  constitute  at  least  a  majority  of  the  Board;  provided,
                  however, that any individual becoming a director subsequent to
                  the date hereof whose election,  or nomination for election by
                  the Company's shareholders, was approved by a vote of at least
                  a majority of the  directors  then  comprising  the  Incumbent
                  Board shall be  considered  as though such  individual  were a
                  member  of  the  Incumbent  Board,  but  excluding,  for  this
                  purpose,  any such  individual  whose  initial  assumption  of
                  office occurs as a result of an actual or threatened  election
                  contest  with  respect to the election or removal of directors
                  or other  actual or  threatened  solicitation  of  proxies  or
                  consents by or on behalf of a Person other than the Board; or

                        (III)  Consumption  of  a   reorganization,   merger  or
                  consolidation   or  sale  or  other   disposition  of  all  or
                  substantially  all of the assets of the  Company (a  "Business
                  Combination"),  in each case, unless,  following such Business
                  Combination,  (A) all or substantially  all of the individuals
                  and entities who were the beneficial owners, respectively,  of
                  the Outstanding  Company Common Stock and Outstanding  Company
                  Voting   Securities   immediately   prior  to  such   Business
                  Combination  beneficially  own,  directly or indirectly,  more
                  than 60% of,  respectively,  the then  outstanding  shares  of
                  common  stock  and  the  combined  voting  power  of the  then
                  outstanding  voting  securities  entitled to vote generally in
                  the  election  of  directors,  as  the  case  may  be,  of the
                  corporation   resulting   from   such   Business   Combination
                  (including,  without  limitation,  a  corporation  which  as a
                  result  of  such  transaction  owns  the  Company  or  all  or
                  substantially  all of the Company's  assets either directly or
                  through one or more  subsidiaries) in  substantially  the same
                  proportions  as  their  ownership,  immediately  prior to such
                  Business  Combination of the Outstanding  Company Common Stock
                  and Outstanding Company Voting Securities, as the case may be,
                  (B) no Person  (excluding any corporation  resulting from such
                  Business  Combination or any employee benefit plan (or related
                  trust) of the Company or such corporation  resulting from such
                  Business   Combination)   beneficially   owns,   directly   or
                  indirectly, 20% or more of, respectively, the then outstanding
                  shares of common stock of the corporation  resulting from such
                  Business  Combination or the combined voting power of the then
                  outstanding voting securities of such corporation


                                    -7-

<PAGE>



                  except to the extent that such ownership  existed prior to the
                  Business  Combination  and  (C) at  least  a  majority  of the
                  members of the board of directors of the corporation resulting
                  from such Business  Combination  were members of the Incumbent
                  Board at the time of the  execution of the initial  agreement,
                  or of the action of the  Board,  providing  for such  Business
                  Combination; or

                        (IV)  Approval by the  shareholders  of the Company of a
            complete liquidation or dissolution of the Company.

            (b) DEATH OR DISABILITY. If the Executive's employment is terminated
by reason of the Executive's death or Disability  during the Employment  Period,
the Company shall pay to the Executive or, in the case of the Executive's death,
to  the  Executive's  designated   beneficiaries  (or,  if  there  is  not  such
beneficiary,  to the Executive's estate or legal representative),  in a lump sum
in cash within  thirty (30) days after the Date of  Termination,  the sum of the
following  amounts  (the  "Accrued   Obligations"):   (1)  any  portion  of  the
Executive's  Annual Base Salary through the Date of Termination that has not yet
been paid; (2) an amount representing the Annual Incentive Compensation and cash
Long-Term  Incentive  Compensation  for the  period  that  includes  the Date of
Termination,  computed  by  assuming  that  the  amount  of all  such  Incentive
Compensation would be equal to the target amount of such Incentive  Compensation
as in effect  immediately  before the Date of Termination,  and multiplying that
amount  by a  fraction,  the  numerator  of which is the  number of days in such
period  through the Date of  Termination,  and the  denominator  of which is the
total number of days in the relevant  performance  period;  (3) any compensation
previously  deferred by the  Executive  (together  with any accrued  interest or
earnings  thereon)  that has not yet been  paid;  and (4) any  Annual  Incentive
Compensation and cash Long-Term  Incentive  Compensation for actually earned but
not yet paid for performance periods ending on or before the Date of Termination
accrued  but unpaid and  vacation  pay,  and the  Company  shall have no further
obligations  under this  Agreement,  except as  specified  in  Section  3(c) and
3(e)(ii) above and Section 6 below.

            (c) BY THE COMPANY FOR CAUSE,  BY THE EXECUTIVE  OTHER THAN FOR GOOD
REASON.  If the  Executive's  employment  is terminated by the Company for Cause
during the  Employment  Period,  the Company  shall pay the Executive the Annual
Base Salary through the Date of Termination  and the amount of any  compensation
previously  deferred by the  Executive  (together  with any accrued  interest or
earnings  thereon),  in each case to the  extent not yet paid,  and the  Company
shall have no further  obligations under this Agreement,  except as specified in
Section 6 below. If the Executive  voluntarily  terminates employment during the
Employment Period, other than for Good Reason, the Company shall pay the Accrued
Obligations  to the  Executive in a lump sum in cash within  thirty (30) days of
the Date of Termination, and the Company shall have no further obligations under
this  Agreement,  except as specified  in  paragraph  (c) of Section 3 above and
Section 6 below.

     6.  NON-EXCLUSIVITY  OF RIGHTS.  Nothing in this Agreement shall prevent or
limit the Executive's  continuing or future  participation in any plan, program,
policy or


                                    -8-

<PAGE>



practice  provided by the Company or any of its  affiliated  companies for which
the  Executive may qualify,  nor,  subject to paragraph (f) of Section 13, shall
anything  in this  Agreement  limit  or  otherwise  affect  such  rights  as the
Executive  may have under any contract or  agreement  with the Company or any of
its affiliated  companies.  Vested benefits and other amounts that the Executive
is otherwise entitled to receive under the Incentive Compensation, the SERP, the
Life Insurance Coverage,  or any other plan, policy,  practice or program of, or
any contract or agreement  with, the Company or any of its affiliated  companies
on or after the Date of  Termination  shall be  payable in  accordance  with the
terms of each such plan, policy,  practice,  program,  contract or agreement, as
the  case  may  be,   except  as   explicitly   modified   by  this   Agreement.
Notwithstanding the foregoing,  the Executive shall have no right to receive any
severance pay or other benefits under any plan or policy of the Company or under
the KeySpan Amended and Restated Senior  Executive  Change of Control  Severance
Plan.

            7.  FULL  STATEMENT.  The  Company's  obligation  to  make  payments
provided for in, and otherwise to perform its obligations  under, this Agreement
shall not be affected by any set-off, counterclaim, recoupment, defense or other
claim,  right or action  that the  Company may have  against  the  Executive  or
others. In no event shall the Executive be obligated to seek other employment or
take any  other  action  by way of  mitigation  of the  amounts  payable  to the
Executive  under  any of  the  provisions  of  this  Agreement,  and  except  as
specifically provided in the last proviso of the first sentence of Section 5(a),
such amounts shall not be reduced,  regardless of whether the Executive  obtains
other employment.

            8. CONFIDENTIAL INFORMATION. The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential  information,
knowledge or data relating to the Company or any of its affiliated companies and
their  respective  business that the Executive  obtains  during the  Executive's
employment  by the Company or any of its  affiliated  companies  and that is not
public  knowledge  (other than as a result of the Executive's  violation of this
Section 8)  ("Confidential  Information").  The Executive shall not communicate,
divulge or disseminate  Confidential Information at any time during or after the
Executive's employment with the Company,  except in the course of performing his
duties  hereunder  or with  the  prior  written  consent  of the  Company  or as
otherwise  required  by law or legal  process.  In no event  shall any  asserted
violation of the  provisions  of Section 8  constitute a basis for  deferring or
withholding any amounts otherwise payable to the Executive under this Agreement.

            9.    CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.

            (a) Anything in this Agreement to the contrary  notwithstanding,  in
the event it shall be determined that any payment or distribution by the Company
to, or for the benefit of, the Executive (whether paid or payable or distributed
or  distributable  pursuant to the terms of this  Agreement  or  otherwise,  but
determined without regard to any additional payments required under this Section
9) (a  "Payment")  would be subject to the excise tax imposed by Section 4999 of
the Internal  Revenue Code of 1986 (the  "Code"),  as amended or any interest or
penalties  are incurred by the  Executive  with respect to such excise tax (such
excise tax, together with any such


                                    -9-

<PAGE>



interest and penalties,  are hereinafter collectively refereed to as the "Excise
Tax"), then the Executive shall be entitled to receive an additional  payment (a
"Gross-Up Payment") in an amount such that after payment by the Executive of all
taxes (including any interest or penalties  imposed with respect to such taxes),
including,  without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up  Payment,
the Executive  retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.

            (b) Subject to the  provisions  of paragraph  (c) of this Section 9,
all  determinations  required to be made under this Section 9, including whether
and when a Gross- Up Payment is required and the amount of such Gross-Up Payment
and the assumptions to be utilized in arriving at such  determination,  shall be
made by a certified  public  accounting  firm  designated by the Executive  (the
"Accounting Firm"), which shall provide detailed supporting calculations both to
the Company and the  Executive  within 15 business days of the receipt of notice
from the  Executive  that there has been a Payment,  or such  earlier time as is
requested by the Company.  In the event that the  Accounting  Firm is serving as
accountant or auditor for the  individual,  entity or group effecting the change
of control, the Executive shall appoint another nationally recognized accounting
firm to make the determinations  required hereunder (which accounting firm shall
then be referred to as the Accounting Firm hereunder).  All fees and expenses of
the Accounting Firm shall be born solely by the Company.  Any Gross-Up  Payment,
as  determined  pursuant to this  Section 9, shall be paid by the Company to the
Executive  within  five  (5)  days  of  the  receipt  of the  Accounting  Firm's
determination.  Any  determination  by the Accounting Firm shall be binding upon
the Company and the Executive. As a result of the uncertainty in the application
of  Section  4999 of the Code at the time of the  initial  determination  by the
Accounting Firm hereunder,  it is possible that Gross-Up Payments which will not
have been made by the Company should have been made ("Underpayment"), consistent
with the  calculations  required  to be made  hereunder.  In the event  that the
Company  exhausts its remedies  pursuant to paragraph  (c) of this Section 9 and
the  Executive  thereafter  is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has occurred
and any such  Underpayment  shall be promptly  paid by the Company to or for the
benefit of the Executive.

            (c) The  Executive  shall notify the Company in writing of any claim
by the Internal  Revenue Service that, if successful,  would require the payment
by the Company of the Gross-Up Payment. Such notification shall be given as soon
as practicable  but not later than ten (10) business days after the Executive is
informed in writing of such claim and shall apprise the Company of the nature of
such  claim  and the  date on which  such  claim is  requested  to be paid.  The
Executive  shall not pay such claim prior to the  expiration  of the thirty (30)
day period  following  the date on which it gives such notice to the Company (or
such shorter period ending on the date that any payment of taxes with respect to
such claim is due). If the Company notices the Executive in writing prior to the
expiration  of such period that it desires to contest such claim,  the Executive
shall:



                                    -10-

<PAGE>



     (i) give the Company any  information  reasonably  requested by the Company
relating to such claim,

            (ii) take such action in connection  with  contesting  such claim as
the Company shall  reasonably  request in writing from time to time,  including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company,
            (iii) cooperate with the Company in good faith in order  effectively
to contest such claim, and

            (iv) permit the Company to participate in any  proceedings  relating
to such claim;  PROVIDED,  however, that the Company shall bear and pay directly
all costs and expenses (including additional interest and penalties) incurred in
connection  with  such  contest  and  shall  indemnify  and hold  the  Executive
harmless,  on an after-tax  basis,  for any Excise Tax or income tax  (including
interest  and  penalties  with  respect  thereto)  imposed  as a result  of such
representation  and payment of costs and  expenses.  Without  limitation  on the
foregoing  provisions  of this  paragraph  (c) of Section 9, the  Company  shall
control all  proceedings  taken in connection with such contest and, at its sole
option,  may pursue or forego any and all administrative  appeals,  proceedings,
hearings and conferences  with the taxing authority in respect of such claim and
may, at its sole option,  either direct the Executive to pay the tax claimed and
sue for a refund  or  contest  the  claim  in any  permissible  manner,  and the
Executive  agrees to  prosecute  such  contest  to a  determination  before  any
administrative  tribunal,  in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; PROVIDED, however, that if the
Company  directs  the  Executive  to pay such  claim and sue for a  refund,  the
Company  shall  advance  the  amount of such  payment  to the  Executive,  on an
interest-free basis and shall indemnify and hold the Executive  harmless,  on an
after-tax  basis,  from any  Excise  Tax or income tax  (including  interest  or
penalties  with  respect  thereto)  imposed with respect to such advance or with
respect to any  imputed  income  with  respect to such  advance;  and  PROVIDED,
further,  that any extension of the statute of limitations  relating to payments
of taxes for the  taxable  year of the  Executive  with  respect  to which  such
contested  amount is  claimed  to be due is  limited  solely  to such  contested
amount.  Furthermore,  the Company's  control of the contest shall be limited to
issues with respect to which a Gross-Up  Payment would be payable  hereunder and
the  Executive  shall be entitled to settle or contest,  as the case may be, any
other  issue  raised  by  the  Internal  Revenue  Service  or any  other  taxing
authority.

            (d) If, after the receipt by the Executive of an amount  advanced by
the Company  pursuant to paragraph (c) of this Section 9, the Executive  becomes
entitled to receive any refund with respect to such claim,  the Executive  shall
(subject to the Company's  complying with the  requirements  of paragraph (c) of
this Section 9) promptly pay to the Company the amount of such refund  (together
with any interest paid or credited thereon after taxes applicable thereto).  If,
after the receipt by the Executive of an amount advanced by the Company pursuant
to paragraph (c) of this Section 9, a  determination  is made that the Executive
shall not be entitled  to any refund with  respect to such claim and the Company
does not notify the Executive in writing of its intent to contest such denial of
refund prior to the expiration of 30 days after such


                                    -11-

<PAGE>



determination, then such advances shall be forgiven and shall not be required to
be repaid and the amount of such advance  shall offset,  to the extent  thereof,
the amount of Gross-Up Payment required to be paid.

            10.   INDEMNIFICATION.

            (a) The Company agrees that if the Executive is made a party,  or is
threatened to be made a party, to any action, suit or proceeding, whether civil,
criminal,  administrative  or investigative (a  "Proceeding"),  by reason of the
fact that he is or was a  director,  officer or employee of the Company or is or
was  serving at the  request  of the  Company as a  director,  officer,  member,
employee or agent or another corporation,  partnership,  joint venture, trust or
other  enterprise,  including  service with respect to employee  benefit  plans,
whether or not the basis of such Proceeding is the Executive's alleged action in
an official capacity while serving as a director,  officer,  member, employee or
agent,  the Executive  shall be indemnified  and held harmless by the Company to
the fullest extent legally permitted or authorized by the Company's  certificate
of  incorporation  or bylaws or resolutions of the Company's  Board of Directors
or, if greater,  by the laws of the State of New York against all cost, expense,
liability and loss (including,  without limitation,  attorney's fees, judgments,
fines,  ERISA  excise  taxes  or  penalties  and  amounts  paid or to be paid in
settlement)  reasonably  incurred  or suffered by the  Executive  in  connection
therewith,  and such indemnification  shall continue as to the Executive even is
he has ceased to be a  director,  member,  employee  or agent of the  Company or
other entity and shall inure to the benefit of the Executive's heirs,  executors
and  administrators.  The Company shall advance to the Executive all  reasonable
costs and expenses  incurred by him in  connection  with a Proceeding  within 20
days after receipt by the Company of a written  request for such  advance.  Such
request  shall  include an  undertaking  by the Executive to repay the amount of
such advance if it shall  ultimately be determined that he is not entitled to be
indemnified against such costs and expenses.

            (b)  Neither  failure  of  the  Company   (including  its  board  of
directors,   independent   legal  counsel  or   stockholders)  to  have  made  a
determination prior to the commencement of any proceeding  concerning payment of
amounts claimed by the Executive under Section 10(a) above that  indemnification
of the  Executive  is  proper  because  he has met the  applicable  standard  of
conduct,  nor a determination by the Company  (including its board of directors,
independent  legal counsel or stockholders)  that the Executive has not met such
applicable  standard of conduct,  shall create a presumption  that the Executive
has not met the applicable standard of conduct.

            (c) The Company  also agrees that if the  Executive is made a party,
or is threatened to be made a party, to any action, suit or proceeding by reason
of the  termination of his  employment  with his prior employer or his accepting
employment  with the Company,  he shall be indemnified  and held harmless by the
Company  against  all cost,  expense,  liability  and loss  (including,  without
limitation, attorney's fees) reasonably incurred or suffered by the Executive in
connection therewith.



                                    -12-

<PAGE>



            (d) The Company  agrees to continue and  maintain a  directors'  and
officers'  liability  insurance  policy covering the Executive to the extent the
Company provides such coverage for its other executive officers.

            11. ATTORNEYS' FEES. The Company agrees to pay, as incurred,  to the
fullest extent  permitted by law, all legal fees and expenses that the Executive
may reasonably  incur as a result of any contest  (regardless of the outcome) by
the Company,  the  Executive or others of the validity or  enforceability  of or
liability  under,  or otherwise  involving,  any  provision  of this  Agreement,
together with  interest on any delayed  payment at the  applicable  federal rate
provided for in Section 7872(f)(2)(A) of the Code.

            12.   SUCCESSORS.

            (a) This  Agreement is personal to the  Executive  and,  without the
prior written  consent of the Company,  shall not be assignable by the Executive
otherwise than by will or the laws of descent and  distribution.  This Agreement
shall  inure to the  benefit  of and be  enforceable  by the  Executive's  legal
representatives.

            (b) This Agreement shall inure to the benefit of and be binding upon
the Company and its  successors  and assigns,  provided that the Company may not
assign this Agreement except in connection with the assignment or disposition of
all or substantially  all of the assets or stock of the Company,  or by law as a
result of a merger or consolidation.  In the event of such assignment, a failure
by the successor to specifically assume in writing,  delivered to the Executive,
the  obligations  and  liabilities  of the Company  hereunder  shall be deemed a
material breach of this Agreement.

            (c) The Company  shall  require  any  successor  (whether  direct or
indirect,   by  purchase,   merger,   consolidation  or  otherwise)  to  all  or
substantially  all of the  business  and/or  assets of the company  expressly to
assume and agree to perform  this  Agreement  in the same manner and to the same
extent  that the  Company  would  have been  required  to  perform it if no such
succession had taken place. As used in this Agreement, "Company" shall mean both
the Company as defined above and any such  successor  that assumes and agrees to
perform this Agreement, by operation of law or otherwise.

            13.   MISCELLANEOUS.

            (a) This Agreement shall be governed by, and construed in accordance
with,  the laws of the State of New York,  without  reference to  principles  of
conflict of laws.  The captions of this Agreement are not part of the provisions
hereof and shall have no force or effect.  This  Agreement may not be amended or
modified except by a written  agreement  executed by the parties hereto or their
respective successors and legal representatives.



                                    -13-

<PAGE>



            (b) All notices and other  communications under this Agreement shall
be in  writing  and shall be given by hand  delivery  to the  other  party or by
registered  or  certified  mail,  return  receipt  requested,  postage  prepaid,
addressed as follows:

            If to the Executive:


            If to the Company:

                  Attention: General Counsel

or to such other  address as either  party  furnishes to the other in writing in
accordance  with this  paragraph (b) of Section 13.  Notices and  communications
shall be effective when actually received by the addressee.

            (c) The  invalidity  or  unenforceability  of any  provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this  Agreement.  If any provision of this Agreement shall be held invalid or
unenforceable  in part, the remaining  portion of such provision,  together with
all other  provisions of this Agreement,  shall remain valid and enforceable and
continue in full force and effect to the fullest extent consistent with law.

            (d)  Notwithstanding  any other  provision  of this  Agreement,  the
Company may withhold  from amounts  payable  under this  Agreement  all federal,
state,  local and foreign  taxes that are required to be withheld by  applicable
laws or regulations.

            (e) The  Executive's or the Company's  failure to insist upon strict
compliance  with any provision of, or to assert any right under,  this Agreement
(including,  without  limitation,  the  right  of  the  Executive  to  terminate
employment  for Good  Reason  pursuant  to  paragraph  (c) of  Section 4 of this
Agreement)  shall not be deemed to be a waiver of such  provision or right or of
any other provision of or right under this Agreement.

            (f) The Executive and the Company  acknowledge  that this  Agreement
supersedes  any other  agreement  between  them  concerning  the subject  matter
hereof.

            (g) The rights and benefits of the  Executive  under this  Agreement
may  not  be  anticipated,   assigned,   alienated  or  subject  to  attachment,
garnishment,  levy,  execution  or other legal or  equitable  process  except as
required by law. Any attempt by the Executive to anticipate,  alienate,  assign,
sell,  transfer,  pledge,  encumber  or charge the same shall be void.  Payments
hereunder  shall  not be  considered  assets  of the  Executive  in the event of
insolvency or bankruptcy.

            (h) This Agreement may be executed in several counterparts,  each of
which shall be deemed an original,  and said  counterparts  shall constitute but
one and the same instrument.


                                    -14-

<PAGE>



            IN WITNESS  WHEREOF,  the Executive has hereunto set the Executive's
hand and, pursuant to the  authorization of its Board of Directors,  the Company
has caused this  Agreement to be executed in its name and on its behalf,  all as
of the day and year first above written.


                                /s/ Robert B. Catell                           
                                -----------------------
                                Robert B. Catell


                                MARKETSPAN CORPORATION


                                By: /s/ Edward D. Miller
                                ------------------------
                                    Name:
                                    Title:










                                    -15-

<PAGE>



                                  APPENDIX A

                    SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

Pursuant to Section  3(c) of the  Employment  Agreement,  the  parties  agree as
follows:

      1.    Retirement Benefit

            (a) If the  Executive  terminates  employment  with the Company,  he
shall be eligible to receive a monthly  pension,  commencing on the first day of
the month following such  termination,  equal to the excess, if any, of (i) over
the sum of (ii), (iii), (iv), and (v) as follows:

                 (i)   Sixty-five  (65%)  percent  of Final  Average  Pay on the
                       Executive's  date of termination  of  employment;  if his
                       years  and  months of  service  with the  Company  or its
                       predecessors is less than 25, the 65% shall be reduced in
                       the proportion such service bears to 25.

                (ii)   The Amount payable monthly from the Employees' Retirement
                       Plan of the  Brooklyn  Union Gas Company  For  Management
                       Employees  and from any  successor  plan thereto in which
                       the Executive is a member,  payable in the Normal Form of
                       Benefit for this Plan,  as defined in  sub-paragraph  (d)
                       herein;

               (iii)   The  amount   payable   monthly  from  the   Supplemental
                       Retirement  Plan of the  Brooklyn  Union Gas  Company and
                       from any successor thereto, payable in the Normal Form of
                       Benefit for this Plan,  as defined in  sub-paragraph  (d)
                       herein;

                (iv)   The amount  payable  monthly from the Excess Benefit Plan
                       of the Brooklyn  Union Gas Company and from any successor
                       thereto,  payable in the Normal  Form of Benefit for this
                       Plan, as defined in sub-paragraph (d) herein;

                 (v)   One-half of the monthly amount of Primary Social Security
                       benefit  to  which he would  be  entitled  or is  already
                       receiving as of the date of termination.

            (b) For  purposes of this Plan,  "Final  Average Pay" shall mean the
monthly average of base salary and Annual Incentive  Compensation payable to the
Executive over the 36 consecutive  calendar  months of employment for which such
average is highest. For this purpose, no recognition shall be given to voluntary
deferrals,   Long-term   Incentive   Compensation  or  any  special  short  term
incentives.


                                    -16-

<PAGE>


            (c) If the Executive  terminates his employment prior to age 62, the
amount of monthly benefit otherwise payable under this Section 1 will be reduced
by 6% for  each  year or  portion  thereof  his  termination  precedes  his 62nd
birthday.

            (d) The  Normal  Form of  Benefit  under this Plan is a 100% joint &
survivor  annuity  with the  Executive's  spouse at the time of  termination  of
employment.  If he has no spouse at that time,  the normal  form shall be a life
annuity.  The  Executive  may elect to receive  benefits  under this Plan in any
other actuarially equivalent form of benefit, including a single lump sum.

      2.  Pre-Retirement  Death  Benefit.  In  the  event  of the  death  of the
Executive  prior to the  commencement of benefits under this Plan, his surviving
spouse,  if any,  shall be  eligible  to  receive  a  monthly  pension  for life
commencing on the first of the month  following the  Executive's  death equal to
the benefit  which would have been payable to the Executive if he had retired on
the day before his death and elected a 100% joint and survivor  annuity with his
spouse.

      3.    Disability Benefits.

            In the event the Executive becomes totally and permanently  disabled
as determined by the Company, he shall receive a monthly benefit under this Plan
equal to that which would have been payable if he had  terminated  employment on
the date of disability.

      4. Actuarial  Determinations  Final. The Company's  independent  actuarial
consultant's  determinations  under  paragraphs  1, 2 and 3 shall be  final  and
binding upon the Company and the Executive.

      5.  Forfeiture  of  Benefits.  If  the  Executive  voluntarily  terminates
employment with the Company for any reason other than death or disability  prior
to the completion of 10 years of service,  all benefits under this Plan shall be
forfeited.  For this purpose years of service shall include his employment  with
KeySpan Energy Corporation and Brooklyn Union Gas Company.

      6. Nature of Payments and  Obligations.  The Company shall maintain one or
more  grantor  trusts or other  funding  vehicle as may be  satisfactory  to the
Executive,  which shall be  sufficient at any time to pay all benefits that have
accrued under the Plan.  Any payment due the  Executive or his surviving  spouse
shall be made from the assets of such trust or vehicle which,  for all purposes,
shall  continue  to be general  assets of the  Company.  To the extent  that the
Executive is entitled to payments from the Company  under this Plan,  such right
shall be that of an unsecured general creditor of the Company.







                                    -17-