NOTICE OF PENDENCY AND SETTLEMENT OF CLASS ACTION

Transcription

1 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK In re: KEYSPAN CORPORATION SECURITIES LITIGATION CV (ARR) (MDG) NOTICE OF PENDENCY AND SETTLEMENT OF CLASS ACTION TO: ALL PERSONS WHO PURCHASED THE COMMON STOCK OF KEYSPAN COR- PORATION ( KEYSPAN ) DURING THE PERIOD MARCH 24, 2000 THROUGH JULY 17, 2001, INCLUSIVE (THE SETTLEMENT CLASS, THE SETTLEMENT CLASS PERIOD ). PLEASE READ THIS NOTICE CAREFULLY. THIS NOTICE RELATES TO A PRO- POSED SETTLEMENT OF THIS CLASS ACTION LAWSUIT. IF YOU ARE A SET- TLEMENT CLASS MEMBER, THIS NOTICE CONTAINS IMPORTANT INFOR- MATION AS TO YOUR RIGHTS CONCERNING THE SETTLEMENT. IF YOU ARE A MEMBER OF THE SETTLEMENT CLASS AND DO NOT SUBMIT A TIMELY REQUEST FOR EXCLUSION, YOU WILL BE BOUND BY THE RELEASE REGARDLESS OF WHETHER YOU SUBMIT A CLAIM. CLAIMS DEADLINE: CLAIMANTS MUST SUBMIT PROOFS OF CLAIM, ON THE FORM ACCOMPANYING THIS NOTICE, POSTMARKED NO LATER THAN MARCH 1, EXCLUSION DEADLINE: REQUESTS FOR EXCLUSION MUST BE SENT TO THE CLAIMS ADMINISTRATOR, POSTMARKED NO LATER THAN FEBRUARY 10, BANKS, BROKERS AND OTHER NOMINEES: PLEASE SEE THE INSTRUCTIONS IN IX BELOW. YOU ARE HEREBY NOTIFIED, pursuant to an Order of the United States District Court for the Eastern District of New York (the Court ), and Federal Rule of Civil Procedure 23, that the parties have reached a cash settlement in the amount of thirteen million seven hundred fifty thousand dollars ($13,750,000) (the Settlement Fund ) in the above-captioned action (the Litigation ) subject to Court approval. Your recovery from this fund will depend on a number of variables, including, but not limited to, the number of shares of KeySpan common stock you purchased during the Settlement Class Period, and the timing of your purchases and sales. Lead Plaintiffs Counsel, in consultation with their experts, estimate that, if all members of the Settlement Class timely file valid claims, the average recovery per share will be approximately $0.33 before deduction of Court-approved fees and expenses and the costs of settlement notice and administration. Depending upon the number of claims filed and the other factors listed in the Plan of Allocation ( VI, E, below), a Settlement Class Member will receive more or less than this estimated average amount. Defendants emphatically deny any and all claims of wrongdoing, and any and all liability alleged in connection with the Litigation. Further, Representative Plaintiffs and the Defendants do not agree on the amount recoverable per share if the Representative Plaintiffs prevailed in the Litigation. The issues on which the parties disagree include, among others: (1) the appropriate economic model for determining the amount (if any) by which KeySpan common stock was allegedly artificially inflated during the Settlement Class Period; (2) the amount (if any) by which KeySpan common stock was allegedly artificially inflated during the Settlement Class Period; (3) the effect of various market forces influencing the trading prices of KeySpan common stock at various times during the Settlement Class Period; (4) the extent to which external factors, such as general

2 market and industry conditions, influenced the trading prices of KeySpan common stock at various times during the Settlement Class Period; (5) the extent to which the various matters that Representative Plaintiffs allege were materially false or misleading influenced (if at all) the trading prices of KeySpan common stock at various times during the Settlement Class Period; (6) the extent to which the various allegedly adverse facts that Representative Plaintiffs alleged were omitted influenced (if at all) the trading prices of KeySpan common stock at various times during the Settlement Class Period; and (7) whether the statements allegedly made or facts allegedly omitted were material, false, misleading, or otherwise actionable under the securities laws. Representative Plaintiffs believe that the proposed settlement is the best that could be obtained and is in the best interests of the Settlement Class. There are significant risks associated with continuing to litigate and proceeding to trial. In addition, there is a danger that the Settlement Class would not prevail on their claims against the Defendants even if those claims went to trial, in which case the Class would receive nothing. Further, had the case proceeded to trial and assuming the Representative Plaintiffs established liability of the Defendants, the amount of damages recoverable by Settlement Class Members would have been subject to rigorous attack by the Defendants. Recoverable damages are limited to losses actually caused by conduct found actionable under applicable securities laws. Had the Litigation gone to trial, Defendants would have tried to prove that all or most of the losses of Settlement Class Members were caused by non-actionable market, industry, or other general economic factors. The proposed settlement eliminates these risks and provides an immediate recovery for Settlement Class Members. Representative Plaintiffs Counsel have not received any payment for their services in prosecuting this Litigation on behalf of the Representative Plaintiffs and the Members of the Settlement Class. If the Court approves the settlement, counsel for the Representative Plaintiffs will apply to the Court for attorneys fees constituting no more than one-third (1/3) of the Settlement Fund. Representative Plaintiffs Counsel also plan to seek reimbursement of out-of-pocket expenses and costs incurred in connection with this Litigation in an amount not to exceed $650,000.00, or $0.015 per share, and to request that the costs of settlement notice and administration in the amount of up to $200,000.00, or $0.005 per share, be paid out of the Settlement Fund. This Notice is not intended to be, and should not be construed as, an expression of any opinion by the Court with respect to the truth of the allegations in the Litigation or the merits of the claims or defenses asserted. Defendants have expressly denied any and all wrongdoing and/or liability. This Notice is to advise you of the proposed settlement and of your rights in connection therewith. If you have any questions about the settlement, you may contact the following Lead Plaintiffs Counsel: CAULEY BOWMAN CARNEY WEISS & LURIE & WILLIAMS, PLLC -and- JOSEPH H. WEISS S. GENE CAULEY MARK D. SMILOW J. ALLEN CARNEY 551 Fifth Avenue Executive Center Drive, Suite 200 Suite 1600 Little Rock, AR New York, NY I. DEFINITIONS As used in the Stipulation, the following terms have the meanings specified below: A. KeySpan means KeySpan Corporation, a New York corporation, with its principal executive offices located at One MetroTech Center, Brooklyn, New York. B. Defendants means KeySpan and the Individual Defendants (defined below). C. Individual Defendants means Robert Catell, Craig Matthews, Gerald Luterman, and William Feraudo. D. Lead Plaintiffs means Donald Kassan and Peter Hubbard. 2

3 E. Lead Plaintiffs Counsel means the law firms of Cauley Bowman Carney & Williams, PLLC, Executive Center Drive, Suite 200, Little Rock, AR 72211, and Weiss & Lurie, 551 Fifth Ave., Suite 1600, New York, NY F. Person means an individual, corporation, limited liability corporation, professional corporation, limited liability partnership, partnership, limited partnership, association, joint stock company, estate, legal representative, trust, unincorporated association, government or any political subdivision or agency thereof, and any business or legal entity and their spouses, heirs, predecessors, successors, representatives, or assignees. G. Representative Plaintiffs means, collectively, the Persons or entities appointed as Lead Plaintiffs and the Persons or entities designated as Class Representatives in this Litigation. H. Representative Plaintiffs Counsel means counsel who have appeared for any of the Representative Plaintiffs in the Litigation. I. Settlement Class means all Persons who purchased KeySpan common stock between March 24, 2000 and July 17, 2001, inclusive. Excluded from the Settlement Class are KeySpan, the Individual Defendants and members of their immediate families, the members of the Kay family that formerly served as senior officers of Roy Kay, Inc., any entities in which any Defendant has or had a controlling interest, any entities that are a parent or subsidiary of or are controlled by KeySpan, and any affiliates, legal representatives, heirs, predecessors, successors, or assigns of any of the Defendants. Those Persons who timely and validly request exclusion from the Settlement Class pursuant to the Notice of Pendency and Settlement of Class Action to be sent to potential Settlement Class Members are also excluded from the Settlement Class. J. Settlement Class Member or Member of the Settlement Class means a Person who falls within the definition of the Settlement Class. II. THE LITIGATION AND RELATED PROCEEDINGS A. On and after August 28, 2001, the following actions were filed in the United States District Court for the Eastern District of New York (the Court ) as proposed class actions on behalf of Persons who purchased the common stock of KeySpan at various times during the Settlement Class Period: 1. Stephen Dinallo v. KeySpan Corp., et al., 01-CV-5852 (ARR) (MDG); 2. Adele Brody v. KeySpan Corp., et al., 01-CV-5887 (CBA) (MDG); 3. Arnold Bement v. KeySpan Corp., et al., 01-CV-7025 (CBA) (MDG); and 4. Matthew Fay v. KeySpan Corp., et al., 01-CV-7294 (JG) (RML). B. On November 29, 2001, the Court entered an Order consolidating the four foregoing actions into the first filed case. C. On March 27, 2002, the Court appointed Donald Kassan and Peter Hubbard as Lead Plaintiffs for the Litigation. By the same Order, the Court approved the selection of Lead Plaintiffs Counsel: Cauley Bowman Carney & Williams, PLLC and Weiss & Lurie. D. On May 13, 2002, Lead Plaintiffs filed a Consolidated Class Action Complaint (the Consolidated Complaint ). E. Defendants moved to dismiss the Consolidated Complaint on February 7, On March 21, 2003 the motion was granted and the Consolidated Complaint was dismissed with leave to replead certain claims. F. On April 7, 2003, Lead Counsel filed an Amended Class Action Complaint ( Amended Complaint ). In the Amended Complaint, the Lead Plaintiffs alleged that, during the Settlement Class Period, Defendants issued false and misleading statements in violation of Sections 10(b), 20(a) and 20A of the Securities Exchange Act of 1934 (the 1934 Act ), and Rule 10b-5 promulgated thereunder. 3

4 G. On May 27, 2003, Defendants moved to dismiss the Amended Complaint or, in the alternative, to strike certain allegations. The briefing of the motion was completed on June 17, H. On July 30, 2003 the Motion to Dismiss was denied and the motion in the alternative to strike was granted in part and denied in part by the Court. I. On August 19, 2003, Defendants moved for reconsideration, and the briefing of this motion was completed on September 10, On November 20, 2003, the Court granted this motion, striking all alleged false statements made prior to January 25, J. On November 7, 2003, a status conference was held before Magistrate Judge Marilyn D. Go, and a Scheduling Order was entered. K. On November 18, 2003, the parties filed a joint report under Federal Rules of Civil Procedure 26(f) setting forth a proposed case management plan agreed to by the parties listing the deadlines for Defendants response to the Amended Complaint, discovery, and for various motions. L. On December 1, 2003, Lead Counsel filed a Motion for Class Certification. Document and deposition discovery of the proposed class representatives ensued. Thereafter, Defendants stipulated to Howard Frank as the sole class representative, and on March 12, 2004, the Court So Ordered the stipulation and certified a class of all purchasers of KeySpan stock between January 25, 2001 and July 17, The Stipulation was made without prejudice to: (1) the right of any party to bring an appropriate motion at a later time, without leave of Court, to de-certify, limit, extend, or otherwise modify or redefine the class period, the class, or its division into subclasses or to challenge, substitute or modify its representatives, and/or (2) the right of the Court to alter or amend this class certification order at any time prior to the entry of a final judgment on the merits, or to make such other orders as may be appropriate. M. On December 2, 2003, Defendants answered the Amended Complaint. N. In early 2004, Lead Counsel and counsel for the Defendants entered into earnest settlement negotiations. The negotiations were facilitated by the aid and advice of a neutral mediator and proceeded simultaneously with the parties formal discovery of the facts underlying the Litigation. Both sides proceeded over the course of many meetings held in person and via telephone to craft a settlement. O. As a result of these negotiations, counsel for the Defendants and Lead Counsel have agreed to a settlement of the Action. Based on the terms and conditions of the Stipulation summarized herein, and subject to the approval of the Court, Defendants have agreed to pay $13,750,000 in full settlement of any and all claims which were or could have been asserted in the Action. III. DEFENDANTS DENIALS OF WRONGDOING AND LIABILITY Defendants have expressly and emphatically denied and continue to deny each and all of the claims and contentions alleged by the Lead Plaintiffs. Defendants expressly have denied and continue to deny all charges of wrongdoing or liability against them arising out of any of the conduct, statements, acts or omissions alleged, or that could have been alleged, in the Litigation. Defendants also have denied and continue to deny, inter alia, the allegations that the Lead Plaintiffs or the Settlement Class (as defined above) have suffered damages or that the Lead Plaintiffs or the Settlement Class were harmed by the alleged conduct. Neither the Stipulation nor the Settlement shall be construed, whether in whole or in part, as evidence, or an admission or concession on the part of Defendants, of any fault or liability, nor shall the Stipulation, the Settlement or the Supplemental Agreement be considered an admission by Defendants that Lead Plaintiffs have satisfied the requirements for class certification under Federal Rule of Civil Procedure 23. In the event that the Settlement is terminated for any reason, any and all defenses shall remain available to Defendant (including any objections to class certification). Without conceding any infirmity in any defenses they have asserted or intend to assert in the Litigation, Defendants consider it desirable and in their best interest that this Litigation be dismissed on the terms set forth herein in order to avoid further expense and protracted litigation. 4

5 IV. CLAIMS OF THE LEAD PLAINTIFFS AND BENEFITS OF SETTLEMENT The Lead Plaintiffs and their Counsel believe that the claims asserted in the Litigation have merit. However, Lead Plaintiffs and their Counsel recognize and acknowledge Defendants denial of wrongdoing and liability, as well as the expense and length of continued proceedings necessary to prosecute the Litigation through trial and through appeals. Lead Plaintiffs Counsel also have taken into account the uncertain outcome and risk of any litigation, especially in complex actions such as the Litigation, as well as the difficulties and delays inherent in such litigation. Lead Plaintiffs Counsel considered the inherent problems of proving, and possible defenses to, the allegations asserted in the Litigation. Based on their evaluation, Lead Plaintiffs Counsel believe that the settlement set forth in the Stipulation confers substantial benefits upon the Settlement Class and protects the best interests of the Lead Plaintiffs and the Settlement Class. V. THE RIGHTS OF THE SETTLEMENT CLASS MEMBERS If you are a Settlement Class Member, you may receive the benefit of and you will be bound by the terms of the proposed Settlement described in Section VI of this Notice, upon the Court s approval of such terms. If you are a Settlement Class Member, you have the following options: A. You may file a Proof of Claim as described below. If you choose this option, you will remain a Settlement Class Member, you will share in the proceeds of the proposed settlement if your claim is timely and valid and if the proposed settlement is finally approved by the Court, and you will be bound by the Final Judgment and Order of Dismissal described below. B. If you do not wish to be included in the Settlement Class and you do not wish to participate in the proposed settlement described in this Notice, you may request to be excluded. To do so, you must so state in writing postmarked no later than February 10, You must set forth: 1. the name of this Litigation (In re KeySpan Corporation Securities Litigation, CV (ARR) (MDG)); 2. your name, address, and telephone number, and the name and address of the record owner of KeySpan common stock if different from your own; 3. the number of shares of KeySpan common stock you purchased and the number of shares of common stock you sold during the Settlement Class Period, and the dates and prices of any purchase(s) and/or sale(s); and 4. that you wish to be excluded from the Settlement Class. You must address the exclusion request as follows: KeySpan Corporation Securities Litigation c/o Berdon Claims Administration LLC P.O. Box 9014 Jericho, NY NO REQUEST FOR EXCLUSION WILL BE CONSIDERED VALID UNLESS ALL OF THE INFORMATION DESCRIBED ABOVE IS INCLUDED IN ANY SUCH REQUEST. C. If you validly request exclusion from the Settlement Class: (1) you will be excluded from the Settlement Class; (2) you will not share in the proceeds of the settlement described herein; (3) you will not be bound by any judgment entered in the Litigation; and (4) you will not be precluded, by reason of your decision to request exclusion from the Settlement Class, from otherwise prosecuting an individual claim, if timely, against Defendants based on the matters complained of in the Litigation. 5

6 D. If you do not request in writing to be excluded from the Settlement Class as set forth in Paragraph B above, you will be bound by any and all determinations or judgments in the Litigation in connection with the settlement entered into or approved by the Court, whether favorable or unfavorable to the Settlement Class, including, without limitation, the Final Judgment and Order of Dismissal described in Section VIII, Paragraph A, below, and you shall be deemed to have, and by operation of the Final Judgment and Order of Dismissal shall have, fully released all of the Released Claims (defined below) against the Released Parties, regardless of whether you submit a valid Proof of Claim. E. If you do not request exclusion from the Settlement Class, you may object to the settlement and/or the application of Representative Plaintiffs Counsel for an award of attorneys fees and reimbursement of expenses in the manner set forth in Section XI, below. The filing of a Proof of Claim by a Settlement Class Member does not preclude a Settlement Class Member from objecting to the settlement. However, if your objection is rejected, you will be bound by the settlement and the Final Judgment and Order of Dismissal (described in Section VIII, Paragraph A, below) just as if you had not objected. F. You may do nothing at all. If you choose this option, you will not share in the proceeds of the settlement, but you will be bound by any judgment entered by the Court, and you shall be deemed to have, and by operation of the Final Judgment and Order of Dismissal shall have, fully released all of the Released Claims (defined below) against the Released Parties. G. If you are a Settlement Class Member, you may, but are not required to, enter an appearance through counsel of your own choosing at your own expense. If you do not do so, you will be represented by Lead Plaintiffs Counsel: CAULEY BOWMAN CARNEY WEISS & LURIE & WILLIAMS, PLLC -and- JOSEPH H. WEISS S. GENE CAULEY MARK D. SMILOW J. ALLEN CARNEY 551 Fifth Avenue Executive Center Drive, Suite 200 Suite 1600 Little Rock, AR New York, NY VI. THE PROPOSED SETTLEMENT The Settling Parties have reached a settlement in the Litigation, embodied in a Stipulation of Settlement dated as of September 21, 2004 (the Stipulation ). Lead Plaintiffs Counsel, on the basis of, among other things, a thorough investigation of the facts and the law relating to the acts, events, and conduct complained of and the subject matter of the Litigation, have concluded that the proposed settlement is fair to and in the best interests of the Settlement Class. The following description of the proposed settlement of the Litigation is only a summary, and reference is made to the text of the Stipulation, on file with the Court, for a full statement of its provisions: A. The settlement fund consists of $13,750,000 in cash, plus any interest that may accrue thereon ( Settlement Fund ). B. Upon Court approval of the Stipulation and entry of the Final Judgment and Order of Dismissal, and upon satisfaction of the other conditions to the settlement, described below, the Settlement Fund will be distributed as follows: 1. to pay costs and expenses in connection with providing notice to the members of the class and administering the settlement on behalf of the Settlement Class (up to $200,000); 2. to pay Representative Plaintiffs Counsel attorneys fees, expenses, and costs, with interest thereon (the Fee and Expense Award ), if and to the extent allowed by the Court; and 3. to pay the reasonable costs incurred in the preparation of any tax returns required to be filed on behalf of the Settlement Fund, as well as the taxes (and any interest and penalties determined to be due 6

7 thereon) owed by reason of the earnings of the Settlement Fund, including all Taxes and Tax Expenses as defined in the Stipulation. C. Subject to Court approval of the Plan of Allocation described below, the balance of the Settlement Fund (the Net Settlement Fund ) shall be distributed to Settlement Class Members who submit valid, timely, Proof of Claim forms ( Authorized Claimants ), as follows: 1. Each Person claiming to be an Authorized Claimant shall submit a separate Proof of Claim and Release signed under penalty of perjury and supported by such documents as specified in the Proof of Claim as are reasonably available to the Authorized Claimant. 2. All Proof of Claim forms must be postmarked or received by March 1, Unless otherwise ordered by the Court, any Settlement Class Member who fails to submit a Proof of Claim within such period, or such other period the Court may order, shall be forever barred from receiving any payments pursuant to the Stipulation, but will in all other respects be subject to the provisions of the Stipulation and the final judgment entered by the Court. D. To the extent sufficient funds exist in the Net Settlement Fund, each Authorized Claimant will receive an amount equal to the Authorized Claimant s claim, as defined below. If, however, the amount in the Net Settlement Fund is not sufficient to permit payment of the total claim of each Authorized Claimant, then each Authorized Claimant shall be paid that percentage of the Net Settlement Fund that each Authorized Claimant s claim is of the total of the claims of all Authorized Claimants. A claim will be computed pursuant to the Plan of Allocation ( Plan of Allocation ) as follows: E. Plan of Allocation. 1. The Gross Settlement Fund, less all taxes, approved costs, fees and expenses (the Net Settlement Fund ) will be distributed to the Settlement Class Members who submit acceptable Proofs of Claim ( Authorized Claimants ). 2. The Claims Administrator will determine each Authorized Claimant s pro rata share of the Net Settlement Fund based upon each Authorized Claimant s Recognized Claim. 3. Recognized Claims will be calculated as follows: a. For shares purchased during the period from March 24, 2000, through December 10, 2000, and: i. sold on or before July 16, 2001, the Recognized Claim shall be zero; ii. sold from July 17, 2001 through October 14, 2001, the Recognized Claim per share shall be the lesser of (a) 2.0% of the purchase price, or (b) the difference between the purchase price and the Average Closing Price corresponding to the date of sale, as indicated in the table below; iii. retained through October 14, 2001, the recognized Claim per share shall be the lesser of (a) 2.0% of the purchase price, or (b) the difference between the purchase price and $ b. For shares purchased during the period from December 11, 2000 through January 24, 2001, and: i. sold on or before July 16, 2001, the Recognized Claim shall be zero; ii. sold from July 17, 2001 through October 14, 2001, the Recognized Claim per share shall be the lesser of (a) 3.0% of the purchase price, or (b) the difference between the purchase price and the Average Closing Price corresponding to the date of sale, as indicated in the table below; iii. retained through October 14, 2001, the Recognized Claim per share shall be the lesser of (a) 3.0% of the purchase price, or (b) the difference between the purchase price and $

8 c. For shares purchased during the period from January 25, 2001 through July 17, 2001, and: i. sold on or before July 16, 2001, the Recognized Claim shall be zero; ii. sold from July 17, 2001 through October 14, 2001, the Recognized Claim per share shall be the lesser of (a) 5.1% of the purchase price, or (b) the difference between the purchase price and the Average Closing Price corresponding to the date of sale, as indicated in the table below; iii. retained through October 14, 2001, the Recognized Claim per share shall be the lesser of (a) 5.1% of the purchase price, or (b) the difference between the purchase price and $ Average Closing Price per Share: 7/17/ /18/ /19/ /20/ /23/ /24/ /26/ /27/ /30/ /31/ /1/ /2/ /3/ /6/ /7/ /8/ /9/ /10/ /13/ /14/ /15/ /16/ /17/ /20/ /21/ /22/ /23/ /24/ /27/ /28/ /29/ /30/ /31/ /4/ /5/ /6/ /7/ /10/ /17/ /18/ /19/ /20/ /21/ /24/ /25/ /26/ /27/ /28/ /1/ /2/ /3/ /4/ /5/ /8/ /9/ /10/ /11/ /12/ F. General Provisions: 1. The date of purchase or sale is the contract or trade date as distinguished from the settlement date. 2. The date of covering a short sale is deemed to be the purchase date. The date of a short sale is deemed to be the sale date. Shares originally sold short prior to the Settlement Class Period will result in a zero Recognized Claim. 3. The price per share, paid or received, shall be exclusive of all commissions, taxes, fees and other charges. 8

9 4. In processing claims, the first-in, first-out ( FIFO ) basis will be applied to both purchases and sales. 5. Where common stock was purchased or sold by reason of having exercised an option, the option premium should be incorporated into the price accordingly. 6. All profits will be subtracted from all losses to determine the net Recognized Claim of each Authorized Claimant. 7. No payment will be made on any claim where the potential distribution amount is $10.00 or less, but the Authorized Claimant will otherwise be bound by the Final Judgment and Order of Dismissal entered by the Court. 8. The Court shall retain jurisdiction over implementation of the settlement and disposition of the Settlement Fund. The Court has reserved jurisdiction to allow, disallow or adjust the claim of any Settlement Class Member on equitable grounds. G. Payment pursuant to the Plan of Allocation set forth above shall be conclusive against all Authorized Claimants. No Person shall have any claim against Representative Plaintiffs Counsel, any claims administrator, Defendants, or other agent designated by Lead Plaintiffs Counsel or Defendants or Defendants counsel or Defendants insurers, based on distributions made substantially in accordance with the Stipulation and the settlement contained therein, the Plan of Allocation, or further Court orders. All Settlement Class Members who fail to complete and file a valid and timely Proof of Claim and Release shall be barred from participating in distributions from the Net Settlement Fund (unless otherwise ordered by the Court), but otherwise shall be bound by all of the terms of the Stipulation, including the terms of any Judgment entered and the releases given. H. To share in the Settlement Fund, you must submit a valid Proof of Claim and Release on the form enclosed with this Notice postmarked or received no later than March 1, 2005, to the Claims Administrator at the address set forth on the attached Proof of Claim form. You will bear all risks of delay or non-delivery of your claim. I. The Settlement Fund, less any deductions for fees and costs allowed by the Court and taxes due, shall be maintained by the Escrow Agent for the benefit of the Settlement Class, as provided in the Stipulation. VII. CONDITIONS FOR SETTLEMENT The settlement is conditioned upon the occurrence of certain events described in the Stipulation. Those events include, among other things: (1) entry of the Final Judgment and Order of Dismissal by the Court, as provided for in the Stipulation; and (2) expiration of the time to appeal from or alter or amend the Judgment. If, for any reason, any one of the conditions described in the Stipulation is not met, the Stipulation might be terminated and, if terminated, will become null and void, and the parties to the Stipulation will be restored to their respective positions in the Litigation. VIII. DISMISSAL AND RELEASES A. If the Court approves the proposed settlement, the Court will enter the Final Judgment and Order of Dismissal that will dismiss the Litigation against Defendants with prejudice, and bar and permanently enjoin the Representative Plaintiffs, the Lead Plaintiffs, and each Settlement Class Member, regardless of whether such Settlement Class Member has submitted a Proof of Claim, from prosecuting the Released Claims (defined below) against the Released Parties. At such time, any such Settlement Class Member shall be conclusively deemed to have released any and all such Released Claims (including Unknown Claims) against the Released Parties. The Court shall retain jurisdiction over implementation of the settlement, disposition of the Settlement Fund, hearing and determining Representative Plaintiffs Counsel s application for attorneys fees, costs, interest, and expenses (including expert fees and the costs of the notice and administration of the Settlement Fund), and enforcing and administering the Stipulation, including any releases executed in connection therewith. 9

10 B. As used above, Released Claims means and includes any and all claims or causes of action, including Unknown Claims (as defined below), debts, suits, rights of action, dues, sums of money, accounts, bonds, bills, covenants, contracts, controversies, agreements, promises, judgments, variances, executions, obligations, demands, rights, liabilities, damages, losses, fees, and costs of any kind, nature and/or description whatsoever, matured or unmatured, liquidated or unliquidated, accrued or unaccrued, known or unknown, suspected or unsuspected, contingent or non-contingent, whether or not asserted, threatened, alleged or litigated, at law, equity or otherwise, including, without limitation, claims for contribution or indemnification, or for costs, expenses (including, without limitation, amounts paid in settlement) and attorneys fees, claims for negligence, gross negligence, breach of duty of care and/or breach of duty of loyalty, misrepresentation, fraud, breach of fiduciary duty, or violations of any federal, state or local statutes, common law, rules or regulations, that now exist or heretofore existed, that have been or could have been asserted in the Action or any other forum against the Released Parties, whether directly, indirectly, representatively, derivatively or in any other capacity, which arise out of, are based upon or relate to, or are in connection with: (1) the claims asserted in the Action; (2) the purchase or sale or other acquisition or disposition or holding of KeySpan securities during the Settlement Class Period; (3) any of the facts, circumstances, claims, transactions, events, occurrences, acts, disclosures, statements, representations, omissions, or failures to act, or matters of any kind or nature whatsoever, related directly or indirectly to the subject matters referred to, set forth in, or the facts or claims for relief which were or could have been alleged or litigated in the Action; and (4) this Settlement or the entry into it, except for breach of this Settlement. C. Unknown Claims mean: (1) any and all Released Claims that any Representative Plaintiff, Lead Plaintiff, or Settlement Class Member does not know or suspect to exist in his, her, or its favor at the time of the release of the Released Parties, including, without limitation, claims that if known by him, her or it, might have affected his, her, or its decision(s) to settle with and release the Released Parties or not to object to the Settlement, and (2) any and all Settling Defendants Claims which any Defendant does not know or suspect to exist in his, her, or its favor, including, without limitation, claims that if known by him, her or it might have affected his, her or its decision(s) with respect to the Settlement. IX. NOTICE TO BANKS, BROKERS, AND OTHER NOMINEES Banks, brokerage firms, institutions, and other Persons who are nominees and who purchased KeySpan common stock for the beneficial interest of other Persons as of any day from March 24, 2000 through and including July 17, 2001, are requested within ten (10) days of receipt of this Notice to either: (1) provide the Claims Administrator with the names and addresses of such beneficial owners, preferably on computergenerated mailing labels or, electronically, in MS Word or WordPerfect files (label size Avery # 5162), or in an MS Excel data table setting forth (a) title/registration, (b) street address, (c) city/state/zip; or (2) forward a copy of this Notice to each such beneficial owner and provide the Claims Administrator with written confirmation of having done so. Additional copies of the Notice may be requested by contacting: KeySpan Corporation Securities Litigation c/o Berdon Claims Administration LLC P.O. Box 9014 Jericho, NY Telephone: (800) Fax: (516) Website: You are entitled to the reimbursement of any reasonable expenses actually incurred in connection with the research of records and: (1) the generating of labels or electronic media or (2) the mailing of this Notice, after submission to the Claims Administrator of a written request, together with appropriate supporting documentation. 10

11 X. ATTORNEYS FEES, COSTS, AND EXPENSES To date, Representative Plaintiffs Counsel have not received any payment for their services in conducting this Litigation on behalf of the Representative Plaintiffs and the Members of the Settlement Class, nor have counsel been reimbursed for their out-of-pocket expenses. Representative Plaintiffs Counsel in the Litigation will apply to the Court at the conclusion of the hearing described below, for an award of attorneys fees of no more than one-third (1/3) of the Settlement Fund, plus reimbursement of expenses. Such sums as the Court may grant will be paid from the Settlement Fund. Settlement Class Members are not personally liable for any fees or expenses awarded by the Court. The fee requested by Representative Plaintiffs Counsel will compensate them for their efforts in achieving the Settlement Fund for the benefit of the Settlement Class, and for their risk in undertaking this case on a contingent basis. If approved by the Court, the fee requested would fall within the range of fees awarded to plaintiffs counsel under similar circumstances in litigation of this type. XI. THE HEARING ON PROPOSED SETTLEMENT A hearing (the Hearing ) will take place before the Honorable Allyne R. Ross, at the United States District Court for the Eastern District of New York, 225 Cadman Plaza East, Brooklyn, New York, 11201, at 10:00 a.m., on March 2, 2005, for the purpose of determining whether: (1) the proposed settlement is fair, reasonable and adequate and appropriate of Court approval; (2) the proposed Plan of Allocation is fair, just, reasonable, and adequate; (3) the Court should approve applications of Representative Plaintiffs Counsel for an award of attorneys fees, costs and expenses; and (4) the Court should enter Final Judgment and Order of Dismissal dismissing the Litigation with prejudice as against Defendants. The Hearing may be adjourned from time to time by the Court at the Hearing or any adjourned session thereof without further notice. Any Member of the Settlement Class who has not requested exclusion may appear at the Hearing to show cause why the proposed Settlement should not be approved, or the Litigation should not be dismissed with prejudice as against the Defendants, and to present any opposition to the Plan of Allocation or the application of Representative Plaintiffs Counsel for attorneys fees, costs and expenses. However, no such Person shall be heard, unless his, her or its objection or opposition is made in writing and is filed, together with copies of all other papers and briefs by him, her or it, with the Court no later than February 9, 2005, as follows: CLERK OF THE COURT UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK 225 Cadman Plaza East Brooklyn, NY with copies to Lead Plaintiffs Counsel: CAULEY BOWMAN CARNEY WEISS & LURIE & WILLIAMS, PLLC -and- JOSEPH H. WEISS S. GENE CAULEY MARK D. SMILOW J. ALLEN CARNEY 551 Fifth Avenue Executive Center Drive, Suite 200 Suite 1600 Little Rock, AR New York, NY

12 and to Defendants Counsel: SIMPSON THACHER DICKSTEIN SHAPIRO MORIN & BARTLETT LLP -and- & OSHINSKY, LLP MICHAEL J. CHEPIGA ROBERT J. HIGGINS PAUL C. GLUCKOW STEVEN J. ROMAN 425 Lexington Avenue 2101 L Street, N.W. New York, NY Washington, D.C Unless otherwise ordered by the Court, any Member of the Settlement Class who does not make his, her, or its objection or opposition in the manner provided shall be deemed to have waived all objections and opposition to the fairness, reasonableness, and adequacy of the proposed settlement, the Plan of Allocation, or to the request of Representative Plaintiffs Counsel for attorneys fees, costs and expenses. XII. EXAMINATION OF PAPERS AND INQUIRIES This Notice contains only a summary of the terms of the proposed settlement. For a more detailed statement of the matters involved in the Litigation, reference is made to the pleadings, to the Stipulation, and to other papers filed in this action, which may be inspected at the office of the Clerk of the Court, United States District Court for the Eastern District of New York, 225 Cadman Plaza East, Brooklyn, New York, 11201, during business hours of each business day. DO NOT CONTACT THE COURT REGARDING THIS NOTICE If you have any questions about the Settlement, you may contact Lead Plaintiffs Counsel: CAULEY BOWMAN CARNEY WEISS & LURIE & WILLIAMS, PLLC -or- JOSEPH H. WEISS S. GENE CAULEY MARK D. SMILOW J. ALLEN CARNEY 551 Fifth Avenue Executive Center Drive, Suite 200 Suite 1600 Little Rock, AR New York, NY (501) (212) If you need additional copies of the Notice or Proof of Claim and Release, contact the Claims Administrator at: KeySpan Corporation Securities Litigation c/o Berdon Claims Administration LLC P.O. Box 9014 Jericho, NY Telephone: (800) Fax: (516) Website: Dated: November 16, 2004 BY ORDER OF THE COURT 12