DIRECTORS' DEFERRED COMPENSATION PLAN
                                       OF
                               KEYSPAN CORPORATION



           On December 21, 2000 the Board of  Directors  of KeySpan  Corporation
adopted  this  amended  Directors'  Deferred   Compensation  Plan  (the  "Plan")
effective January 1, 2001. The Plan was originally adopted on June 26, 1998 with
an effective  date of June 1, 1998.  The terms of the amended Plan are set forth
below.

1.         Purpose of the Plan

           The purpose of the Plan is to provide a method for  Directors who are
not currently  employees of KeySpan Corporation (the "Corporation") to acquire a
proprietary  interest in the  Corporation  and to further align the interests of
the directors with the Corporation's shareholders.  It is intended that the Plan
will meet the requirements of Rule (b-3)  promulgated under Section 16(b) of the
Securities  Exchange Act of 1934, as amended,  and the Plan shall be interpreted
accordingly.

2.         Definitions

           (a) "Annual  Stock Grant" shall mean the number of stock  equivalents
of KeySpan common stock that may be awarded, as determined by the Board, to each
Participant and deferred under this Plan.

          (b)  "Beneficiary"  shall mean a person or entity determined to be the
Participant's beneficiary pursuant to Section 11 hereof.

          (c) "Board of  Directors" or "Board" shall mean the Board of Directors
of KeySpan Corporation .

           (d) "Cash Equivalent  Account" shall mean the bookkeeping account set
up for each  director  electing  to  defer  amounts  not  converted  into  stock
equivalents hereunder.

           (e)       "Code" shall mean the Internal Revenue Code of 1986.

           (f) "Compensation"  shall mean the cash remuneration as determined by
the Board to be paid to a Participant  in  consideration  of such  Participant's
service as a  non-employee  director  including the annual  retainer,  committee
chairman  retainer and meeting  fees,  but not  including  amounts  representing
reimbursement of expenses.

          (g)  "Corporation" or "KeySpan " shall mean KeySpan  Corporation , the
sponsor of this Plan or its successors or assigns.

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          (h) "Effective Date" shall mean June 1, 1998.

          (i) "Exchange Act" shall mean the Securities  Exchange Act of 1934, as
amended.

           (j)  "Participant"  shall mean a member of the Board of  Directors of
KeySpan  Corporation  or The  Brooklyn  Union  Gas  Company  (or any  affiliated
corporation  which by action of its Board of  Directors  may adopt and join this
Plan on behalf of its eligible  directors  after the Effective  Date) and who is
not at the time of  reference  an  employee  of those  companies  or any company
affiliated with those companies.

          (k) "Plan" shall mean this  KeySpan  Corporation  Directors'  Deferred
Compensation Plan.

           (l)  "Prior  Deferred  Plan"  shall  mean  the  Directors'   Deferred
Compensation  Plan of KeySpan Energy  Corporation  or the Directors'  Stock Unit
Retainer Plan of the Long Island Lighting  Company as in effect prior to May 28,
1998.

           (m) "Stock Equivalent  Account" shall mean a book account  maintained
by KeySpan reflecting the stock equivalents of KeySpan common stock allocated to
the  Participant  as a result of the  deferral of  Compensation  or Annual Stock
Grant and any such additional stock equivalents of KeySpan common stock as shall
be  credited  thereto in  respect of  dividends  paid on  KeySpan  common  stock
pursuant to Section 4(d).


3.         Participation

           Non-employee  directors of the  Corporation  or of The Brooklyn Union
Gas Company,  a subsidiary of the Corporation,  shall participate in the Plan as
of the Effective Date. All future non- employee  directors of the Corporation or
of The  Brooklyn  Union Gas Company  shall  commence  participation  in the Plan
immediately upon becoming a director.  Employee  directors shall not be eligible
to participate in this Plan.

4.         Form of Elections

           Each  Participant  shall  execute an election  form for each calendar
year in  which  the  Plan is in  force.  Each  election  form  shall  state  the
percentage by which the  Participant's  Compensation  shall be reduced and shall
state whether  Participant  elects to purchase stock equivalents under paragraph
5(a)(i) hereof or shares under paragraph 5(a)(ii),  or to defer cash pursuant to
paragraph  6. The 50%  Mandatory  Contribution  pursuant  to  section  5 must be
allocated to either stock  equivalents  under paragraph  5(a)(i) or shares under
paragraph 5(a)(ii). Additional elections for the remaining 50% may be made in 5%
increments  and a  Participant  may  elect any form or  combination  of forms in
Paragraph 5 or Paragraph 6.


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          (i)  The  deferral  election  shall  be in the  form  required  by the
     Corporation  and  shall be  delivered  to the  Corporation  no  later  than
     December 31 of the calendar  year  immediately  preceding the calendar year
     for which the deferral election is made.

5.      Mandatory Stock Contribution, Stock Equivalent Account, and Maintenance
of Stock Equivalent Accounts

           (a)  Each  Participant  shall  invest  a  minimum  of  fifty  percent
(50%)(the "Mandatory  Contribution") and may elect up to 100% of Compensation to
purchase either stock  equivalents under this Plan (which would be tax deferred)
or shares under the KeySpan  Investor Program (which would not be tax deferred).
Additionally,  Participant  may receive one hundred percent (100%) of the Annual
Stock Grant, if applicable,  in stock equivalents under this Plan, as determined
by the Board of Directors from time to time.

               (i) Participant  stock equivalents shall be credited to the Stock
          Equivalent Account in the name of such Participant on the last trading
          date of the calendar  month in which the amounts are paid.  Each stock
          equivalent shall be in the form of an unfunded  bookkeeping  entry and
          shall  represent one full or  fractional  share of the common stock of
          the  Corporation.  No actual  shares of common  stock or  certificates
          thereof shall be purchased or held under the Plan.

               (ii) If a Participant elects to receive shares,  Participant will
          be enrolled in the KeySpan Investor Program and will be subject to all
          terms and conditions of that Program.

           (b) The number of stock  equivalents or shares  credited  pursuant to
Section  4(a)  shall be  determined  by  utilizing  the lowest of either (i) the
average of the high and low price per share of KeySpan common stock on the first
trading  day of the  calendar  quarter  or (ii) the  average of the high and low
price per share of KeySpan  common stock on the last trading day of the calendar
quarter, in which the contributions are received.  Such stock equivalents are to
be computed to three decimal places and credited as of the first business day of
the quarter following the quarter in which such credits shall have occurred.

           (c) Each  Participant  account  will be credited as of the  pertinent
date with an amount  equivalent to the amount of any dividend payable on KeySpan
shares  for  each  stock   equivalent  or  fraction  of  an  equivalent  in  the
Participant's Stock Equivalent Account as of such date ("Dividend  Equivalent").
Such Dividend  equivalent  will be  determined by the actual  dividend paid from
time to time in respect of KeySpan issued and outstanding common stock.

           (d) Dividends  Equivalents  as described in paragraph (c) above shall
be credited to the  Participant's  Stock  Equivalent  Account as of the dividend
payment  date in the  form of as many  additional  stock  equivalents  (and  any
fractions  of an  equivalent  computed  to  three  decimal  points)  as could be
purchased  with such Dividend  Equivalents  based on the average of the high and
low price per share of KeySpan common stock on such dividend payment date or, if
no trading occurs on such stock on the dividend payment date, on the trading day
immediately succeeding such date.

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           (e) In the event  that the  number of  outstanding  shares of KeySpan
common  stock  shall be  changed  by  reason of stock  split-ups,  combinations,
recapitalizations,  mergers,  consolidations,  spin-offs or the like,  the Board
shall  make such  adjustments  as it deems  appropriate  in the  number of units
credited to the Stock Equivalent Accounts hereunder.


6.         Cash Equivalent Account, Interest

           (a) Deferral  amounts elected to be deferred into the Cash Equivalent
Account  shall be accrued by  KeySpan  to a  bookkeeping  account as of the date
payment  of  such  amounts  would  have  been  made  by  the  Corporation.   The
establishment of such Cash Equivalent Account is solely for bookkeeping purposes
and shall not represent  amounts held in trust or a segregation of the assets of
the  Corporation  or any form of  funding  of the  deferred  compensation.  Each
Participant shall receive periodic reports setting forth the amounts credited to
his or her Cash Equivalent Account.

           (b) An amount representing  interest into the Cash Equivalent Account
shall be accrued monthly at a rate equal to the prime interest rate as set forth
by Chase Manhattan Bank (or any successor thereto) effective as of the first day
of such calendar month. Such amount shall be credited to the Participant's  Cash
Equivalent Account.

7.         Prior Deferred Plans

           Each Participant who was a participant in a Prior Deferred Plan shall
have an  allocation  made to the  Participant's  Stock  Equivalent  Account of a
number of stock  equivalents of KeySpan stock  determined as if such Participant
were a shareholder of either the Long Island Lighting  Company or KeySpan Energy
Corporation,  as the case may be, on May 28, 1998 with  respect to the number of
stock  equivalents  credited in such Prior Deferred  Plans.  Any amounts of cash
equivalents with respect to a Participant held in a Prior Deferred Plan shall be
allocated to the Cash Equivalent  Account of the Participant  under this Plan as
of the Effective Date.

8.         Transfer Between Cash Equivalent Account and Stock Equivalent Account

           Prior to the first  day of each  calendar  year,  a  Participant,  by
giving written notice to the Corporation, may transfer all or any portion of the
balance in his or her Cash Equivalent  Account into his or her Stock  Equivalent
Account  using the price for the  Corporation's  common stock  determined  under
Section 4(b).

9.         Form and Timing of Payment

           (a)  No payments shall be made to a Participant hereunder prior to
          retirement, death or termination of service as a director.


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           (b) Upon  retirement,  death or  termination of service as a director
(the  "Distribution  Event") all stock  equivalents in the  Participant's  Stock
Equivalent  Account will be converted to cash based on the closing  price of the
Corporation's  common  stock on the last  trading  day of the month in which the
Distribution  Event occurs.  This  converted  amount will be  transferred to the
Participant's  Cash Equivalent  Account and will be aggregated with any existing
balance  in  the  Participant's  Cash  Equivalent  Account  (collectively,   the
"Distribution  Account").  The  Distribution  Account will be paid in accordance
with the Participant's form of election pursuant to subparagraph c below.

           (c) A  Participant  may request a  distribution  of the  Distribution
Account  described  in  paragraph  (b)  by  electing  either  of  the  following
distribution options (i), (ii) or (iii) below:

                     (i)       a lump sum in cash to the  Participant as soon as
                               administratively  feasible after the Distribution
                               Event that determines the Participant's  right to
                               receive payment.

                     (ii)      deferral of the Distribution  Account for up to 5
                               years after the  Distribution  Event.  During the
                               additional  deferral  period,  interest  shall be
                               credited  on the  Distribution  Account,  accrued
                               monthly, at a rate equal to the prime rate as set
                               forth  by  the  Chase   Manhattan  Bank  (or  any
                               successor  bank) effective as of the first day of
                               such   calendar   quarter  and  credited  to  the
                               Participant's Distribution Account. At the end of
                               the additional  deferral period, the Distribution
                               Account  balance  will be  paid in a lump  sum in
                               cash

                     (iii)     the  Participant  may elect to receive payment of
                               the   Distribution   Account   in  equal   annual
                               installments,   the  number  of  which  shall  be
                               specified  in writing by the  Participant  by the
                               date  stated  above,  but in no event  shall such
                               number exceed 10.  Interest  shall be credited on
                               the unpaid  Distribution  Account accrued monthly
                               at a rate equal to the prime rate as set forth by
                               the Chase  Manhattan Bank (or any successor bank)
                               effective  as of the first  day of such  calendar
                               quarter and  credited to the  Participant's  Cash
                               Equivalent Account.

           (a)       The election of the distribution form in paragraph (c) must
                     be delivered to the Corporation no later than December 31st
                     of the year prior to the Distribution Event.

10.        No Forfeitures

           Each Participant's benefits hereunder shall be non-forfeitable.

11.        Beneficiary

           Each  Participant  shall have the right to  designate in writing from
time to time a Beneficiary or  Beneficiaries  by filing a written notice of such
designation with the Corporation. In the event of

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a Beneficiary designated by the Participant does not survive the Participant and
no successor  Beneficiary is selected,  or in the event no valid designation has
been made, such Participant's Beneficiary shall be such Participant's estate. In
the event the Participant's  Beneficiary is the Participant's estate, no payment
shall be made  unless  the  Corporation  shall  have  been  furnished  with such
evidence as the  Corporation may deem necessary to establish the validity of the
payment.

12.        Funding of the Plan

           The Plan in unfunded,  and the amounts credited to each Participant's
Stock Equivalent Account and Cash Equivalent Account and the benefits payable in
respect thereof represent merely unfunded,  unsecured promises of KeySpan to pay
a sum of money to the Participant in the future.

13.        Alienation of Benefits Prohibited

           No  transfer  (other  than a transfer  made by will or by the laws of
descent  and  distribution)  by a  Participant  of  any  right  to  any  payment
hereunder,  whether voluntary or involuntary,  by operation of law or otherwise,
and whether by means of alienation by anticipation,  sale, transfer, assignment,
bankruptcy, pledge, attachments,  charge, or encumbrance of any kind, shall vest
the transferee with any interest or right and any attempt to so alienate,  sell,
transfer, assign, pledge, attach, charge, or otherwise encumber any such amount,
whether  presently  or  thereafter  payable,  shall  be void  and of no force or
effect.

14.        Counterparts

           Any  direction  to defer  amounts  associated  with  this Plan may be
executed  in two or more  counterparts,  any one of  which  shall be  deemed  an
original without reference to the others.

15.        Termination or Amendment

           The Plan may be terminated at any time by the Board of Directors. The
Plan may be amended by the Board of Directors  from time to time in any respect;
provided,  however,  except to the extent any  amendment  is necessary to assure
continued  exemption  under  Rule  16b-3  promulgated  under  Section  16 of the
Exchange  Act and that each of the  Participants  remain an  "outside  director"
within the meaning of Section  162(m) of the Code, no such  amendment may reduce
the  amounts  accrued  to any  Participant's  Stock  Equivalent  Account or Cash
Equivalent Account without the affected Participant's prior written consent.

           Subject to the  preceding  paragraph,  the Board may  delegate to the
officers  of the  Corporation  the right to amend the Plan for the  purposes  of
clarifying or finalizing the Plan and such amendments shall be effective without
further action of the Board.

16.        Choice of Law

           The Plan and all rights hereunder shall be subject to and interpreted
in accordance with the laws of the State of New York,  without  reference to the
principles of conflicts of law.

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