EMPLOYMENT AGREEMENT

      This  Agreement  dated as of  October  13,  1998 is between  Colonial  Gas
Company (the "Company"),  a Massachusetts  corporation,  and _____________  (the
"Executive").   It  restates   and  amends  the   Employment   Agreement   dated
__________________between the Company and the Executive.

      The  Company  believes  that it is  desirable,  in  order  to  induce  the
Executive  to remain in the employ of the Company and to place him in a position
to act in the best interests of the Company and its stockholders in the event of
a  proposal  for the  transfer  of control of the  Company,  to provide  certain
severance  benefits  to  the  Executive  if  his  employment  with  the  Company
terminates under the  circumstances  described below.  Accordingly,  the parties
hereto agree as follows:

      1.   Employment Rights.

           (a) Except as otherwise  provided in paragraph  l(b), the Executive's
employment  may be  terminated  at any  time by the  Company  or the  Executive,
subject to the Company's providing the benefits hereinafter specified.

           (b) In the event a tender or exchange  offer is made by any person or
group of persons within the meaning of Section 14(d) of the Securities  Exchange
Act of 1934 (the "Exchange Act"), other than the Company or any employee benefit
plan  sponsored  by the  Company,  for 30% or more of the shares of stock of the
Company  entitled to vote for the election of directors,  the  Executive  agrees
that he will not leave  the  employ of the  Company  (other  than as a result of
disability,  retirement  or death)  until  such offer has been  terminated  or a
change in control of the Company (as hereinafter defined) has occurred.

      2. Termination Prior to Change in Control.  If the Executive's  employment
with the  Company is  terminated  for any reason  prior to the  occurrence  of a
change in control of the Company, he shall be entitled to receive such benefits,
and  only  such  benefits,  to  which  he is  entitled  without  regard  to this
Agreement.  If a change  in  control  shall  occur  within  one year  after  the
termination of the Executive's employment by the Company, such termination shall
be treated as a termination  after a change in control under  paragraph 3 hereof
unless the Company shall sustain the burden of proving that the  termination was
not in contemplation of the change in control.

      3. Termination  After a Change in Control.  If the Executive's  employment
with the Company is terminated within 24 months after the occurrence of a change
in control of the  Company,  he shall be entitled to receive  the  benefits  set
forth  below.  For  purposes  of this  Agreement,  a "change in  control" of the
Company shall mean (i) the  acquisition  directly or indirectly by any person of
beneficial  ownership of shares of stock of the Company resulting in such person
becoming  the  beneficial  owner  of 20% or more of the  shares  of stock of the
Company entitled to vote for the election of directors, (ii) the occurrence of a
change  during  any 24  consecutive  months in the  composition  of the Board of

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Directors so that the Continuing  Directors (as  hereinafter  defined) cease for
any reason to constitute a majority of the Company's Board of Directors or (iii)
a change in  control  of a nature  that  would be  required  to be  reported  in
response  to Item 1 (a) of the  Current  Report on Form 8-K, as in effect on the
date hereof,  pursuant to section 13 or 15(d) of the Exchange  Act.  "Continuing
Directors" shall mean the individuals who were directors at the beginning of the
24-month period or who were designated Continuing Directors by a majority of the
then  Continuing  Directors.  A  person  shall  be  deemed  to have  "beneficial
ownership" of stock if such person or any  "affiliate"  or  "associate"  of such
person  (as those  terms are  defined  in Rule 12b-2  under the  Exchange  Act),
directly or  indirectly,  controls  the voting of such stock or has any options,
warrants, conversion or other rights to acquire such stock.

           (a) Cause.  Upon  termination  of the  Executive's  employment by the
Company for cause,  the  Executive  shall be entitled to his salary  through the
period ending with the date of such  termination and any accrued  benefits,  and
any and all other rights of the Executive  under this Agreement  shall terminate
upon  the  date  of  termination.  "Cause"  shall  mean  and be  limited  to (i)
deliberate  dishonesty by the Executive in connection with his employment,  (ii)
willful and  prolonged  absence  from work (other than as a result of illness or
incapacity) in  circumstances  that  constitute a substantial  abdication of the
Executive's  responsibilities  to the Company after written  notice  thereof has
been given by the Company to the Executive or (iii) the  Executive's  conviction
of a felony.

           (b) Death, Disability,  or Retirement.  If the Executive's employment
is  terminated  by reason of death,  permanent  disability  or  retirement,  the
Executive  shall be entitled to such benefits as may be provided to him pursuant
to the Company's employee benefit plans, including any supplemental arrangements
maintained  for his benefit which are set forth in writing and (1) are described
in the attached  Exhibit A or (2) are adopted after the date of this  Agreement.
Any and all other rights of the Executive  under this Agreement  shall terminate
upon the occurrence of a termination of his employment  under this  subparagraph
and the provisions of subparagraph (c) shall not be applicable.  For purposes of
this  paragraph,  "permanent  disability"  shall be deemed to exist when, in the
good faith  judgment of the Board of Directors of the Company,  the Executive is
unable to perform his duties for the Company  due to illness or  incapacity  and
such  disability has continued for a period of not less than six months,  unless
he shall have returned to the full time performance of his duties within 30 days
after  written  notice of the Board's  determination  has been given to him. For
purposes of this paragraph, "retirement" shall mean termination by the Executive
on or after his normal  retirement  date as set forth in the  Company's  pension
plan now in effect (or any successor or substitute  plan or plans of the Company
put into effect prior to a change in control) or voluntary  early  retirement by
the Executive in accordance with such plan prior to his normal  retirement date.
Written notice of termination of employment  based on retirement  shall be given
at least 60 days in advance.

           (c) Good Reason.  If the Executive's  employment is terminated (1) by
the  Executive  for Good Reason (as  hereinafter  defined) or (2) by the Company
without cause,  in lieu of further  salary for subsequent  periods the Executive
shall be entitled to the following benefits:

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                (i) The Company shall  forthwith pay the Executive,  in addition
      to his  salary  and  accrued  benefits  through  the date of  termination,
      severance  pay in an amount  equal to 2.00 times the sum of (A) the higher
      of (x) his  annual  salary in effect  immediately  prior to the  change in
      control  or (y) his  annual  salary  in  effect  immediately  prior to the
      termination  and (B) the higher of (x) the  average of the last two annual
      bonuses  (annualized  in the case of any  bonus  paid  with  respect  to a
      partial year) paid to him preceding the change in control or preceding the
      date of termination, which ever is greater, and (y) the most recent annual
      bonus  (annualized in the case of any bonus paid with respect to a partial
      year) paid to him preceding the change in control or preceding the date of
      termination, whichever is greater.

                (ii) The Company  shall  maintain in full force and effect,  for
      the continued  benefit of the Executive  and his  dependents  for a period
      ending on the earlier of the commencement date of equivalent benefits from
      a new employer or his normal retirement date (after which the terms of the
      applicable  pension  plan  shall  govern),  the health  insurance,  dental
      insurance and group term life  insurance  plans in which the Executive was
      entitled  to  participate  immediately  prior  to the  termination  of his
      employment or reasonably equivalent benefits,  provided that the Executive
      continues to pay an amount equal to the employee's  share of contributions
      in effect prior to the change in control.

                (iii)If  the  Executive  is  age 55 or  older  on  the  date  of
      termination  of his  employment,  the Executive  will continue to receive,
      until his normal  retirement  date,  service  credit  under the  Company's
      pension plans and any supplemental arrangements maintained for his benefit
      in effect immediately prior to the termination of his employment,  and the
      benefit levels  thereunder shall be calculated as though the Executive had
      received an annual  increase in compensation  until his normal  retirement
      date in an amount equal to the average annual compensation increase of all
      salaried  personnel of the Company  included in such plans.  To the extent
      that payment of any amounts  resulting  from the foregoing may not be made
      from such plans,  the Company  will pay such  amounts to the  Executive as
      supplemental benefits.

                (iv) At the request of the Executive,  the Company shall pay the
      costs of an out-placement service used by the Executive as a result of the
      termination  of his  employment,  provided such service is approved by the
      Company, which approval will not unreasonably be withheld.

                (v) Except as  specifically  set forth above,  the amount of any
      payment or benefit under this paragraph 3(c) shall not be reduced,  offset
      or subject to recovery by the Company by reason of any compensation earned
      by the Executive as the result of employment by another employer after the
      termination of his employment with the Company or otherwise.

      For purposes of this  paragraph  3(c),  "Good  Reason" shall mean that the
Executive has determined in good faith that (1) the Company has failed to assign

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to him on a consistent  basis  executive  duties  performable at the location at
which he worked  before the change in control  (which shall include any location
in  Massachusetts  within  25 miles of such  location  or within 50 miles of the
Company's  executive  offices  immediately prior to the change in control) which
are commensurate with the level of executive duties performed by him immediately
prior to such  change  in  control,  (2) he is  prevented  by the  Company  from
continuing to fulfill his  responsibilities  at a level  commensurate  with that
prior to the change in control,  (3) his salary in effect  immediately  prior to
the change in control is reduced by the  Company,  (4) the Company has failed to
continue in effect any health,  welfare,  retirement,  vacation and other fringe
benefit plans of the Company in which the Executive  participated at the time of
the change in control (or plans  providing  substantially  equivalent  benefits)
other than as a result of the normal  expiration  of any such plan in accordance
with its terms as in effect at the time of the change in control, or the Company
shall have taken or failed to take any action which would  adversely  affect the
Executive's  continued  participation  in or  the  benefits  receivable  by  the
Executives  under  any  such  plan as in  effect  at the time of the  change  in
control,  or (5) the  Company  shall have failed to obtain,  at the  Executive's
request,  an assent to the Company's  performance of its obligations  under this
Agreement  from any person  that  succeeds  to or has the  practical  ability to
control  (either  immediately  or  with  the  passage  of  time),   directly  or
indirectly, the Company's business.

           (d) Automobile.  Upon  termination of the Executive's  employment for
any reason,  he shall have the right to purchase the automobile  supplied to him
by the Company  immediately  prior to the change in control,  or any  automobile
substituted therefore with his approval, at its depreciated cost as shown on the
books of the Company.

      4.   Taxes.

           (a) Withholding.  All payments to be made to the Executive under this
Agreement  will be subject to any  required  withholding  of federal,  state and
local income and employment taxes.

           (b) Payment Limitation. Notwithstanding anything in this Agreement to
the contrary, if the Company determines, based on the opinion of its independent
accountants  serving as such  immediately  prior to the  change in control  (the
"Accounting  Firm"),  that any of the payments  provided for in this  Agreement,
together with any other  payments  that must be included in such  determination,
would  constitute an "Excess  Parachute  Payment" (as defined in Section 280G of
the Internal  Revenue Code of 1986,  as amended (the  "Code"),  and proposed and
final regulations thereunder),  the payments pursuant to this Agreement shall be
reduced  to the  maximum  amount  that  would  permit a  determination  that the
Executive has not received an Excess  Parachute  Payment (the "Maximum  Amount")
unless the after-tax amount payable to the Executive hereunder without regard to
the foregoing limitation ("Uncapped After-Tax Amount," as defined below) exceeds
the after-tax  amount  payable to the Executive  with regard to such  limitation
("Capped  After-Tax  Amount,"  as  defined  below)  by 10%  or  more.  Any  such
determination  or reduction in amounts payable  pursuant to this Agreement shall
be made in accordance with the follow provisions:

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                (i) For purposes of determining  whether the amounts  payable to
      the Executive  pursuant to this Agreement  shall be reduced to the Maximum
      Amount, the following terms shall have the meanings indicated:

                     (x) The "Uncapped  After-Tax  Amount" shall be equal to the
           sum of the amounts payable pursuant this Agreement (without regard to
           this  paragraph  4(b)) and  pursuant to all benefit and  compensation
           plans and arrangements  that must be included in determining  whether
           an Excess Parachute Payment has been made, less the Income Tax Amount
           on such sum and the 20%  excise  tax under  Section  4999 of the Code
           that would be due on all Excess Parachute Payments.

                     (y) The "Capped After-Tax Amount" shall be equal to the sum
           of the Maximum Amount and all amounts payable pursuant to all benefit
           and  compensation  plans and  arrangements  that must be  included in
           determining  whether an Excess Parachute  Payment has been made, less
           the Income Tax Amount on such sum.

                     (z) The "Income Tax Amount" shall be equal to the amount of
           federal,  state and local income taxes and the  Executive's  share of
           Federal  Insurance  Contributions  Act taxes  that would be due on an
           amount  (after  taking into  account the  deductibility  of state and
           local  income taxes for federal  income tax  purposes) if the highest
           marginal  federal,  state and local  income tax rate in effect at the
           time of the  change  in  control  were  imposed  on the  value of the
           payments assuming that the amounts payable pursuant to this Agreement
           and all  benefit and  compensation  plans and  arrangements  shall be
           treated as paid in full on the date of the change in control.

                (ii) If the Accounting Firm determines that payments pursuant to
      this Agreement should be reduced to the Maximum Amount,  the Company shall
      promptly  give  the  Executive  notice  to that  effect  and a copy of the
      detailed  calculation  thereof,  and the Executive may then elect,  in his
      sole discretion, which and how much of the payments shall be eliminated or
      reduced (as long as after such election the present value of the aggregate
      payments  equals the  Maximum  Amount),  and shall  advise the  Company in
      writing of his  election  within 10 days of his  receipt of notice.  If no
      such election is made by the Executive within such period, the Company may
      elect which and how much of the payments  shall be  eliminated  or reduced
      (as  long as after  such  election  the  present  value  of the  aggregate
      payments  equals  the  Maximum  Amount)  and shall  notify  the  Executive
      promptly of such election.  All determinations made by the Accounting Firm
      under this  paragraph 4 shall be based upon  Sections 280G and 4999 of the
      Code  and on  proposed  or  final  regulations  for  applying  those  Code
      sections,  or on substantial  authority within the meaning of Section 6662
      of the Code, shall be binding upon the Company and the Executive and shall
      be made within 60 days of a termination of employment of the Executive. As
      promptly as practicable  following such  determination,  the Company shall
      pay to or distribute for the benefit of the Executive such payments as are

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      then due to the Executive  under this  Agreement and shall promptly pay to
      or distribute for the benefit of the Executive in the future such payments
      as become due to the Executive under this Agreement.

                (iii)As a result of possible  uncertainty in the  application of
      Section  280G  of the  Code  at the  time  of  the  determinations  by the
      Accounting Firm hereunder, amounts may have been paid that should not have
      been paid  ("Overpayment")  or  additional  amounts may not have been paid
      that could have been paid ("Underpayment"),  in each case, consistent with
      the  calculations  required  to be made  hereunder.  In the event that the
      Internal Revenue Service asserts a deficiency against the Executive or the
      Company  in  such a case  and  the  Accounting  Firm  determines  that  an
      Overpayment has been made, any such  Overpayment  shall be treated for all
      purposes as a loan to the  Executive  from the date such  Overpayment  was
      made in an amount equal to the value of such  Overpayment,  which loan the
      Executive  shall  repay  to the  Company  together  with  interest  at the
      applicable federal rate under Section  7872(f)(2)(B) of the Code within 60
      days  after   receipt  by  the   Executive  of  written   notice  of  such
      determination by the Accounting Firm, including the amount of the loan and
      interest calculation; provided, however, that no such loan shall be deemed
      to have been made and no amount  shall be payable by the  Executive to the
      Company if and to the extent such deemed loan and repayment  with interest
      would not  eliminate the excise tax under Section 4999 of the Code, or the
      disallowance  of the deduction  under Section 280G(a) of the Code, for the
      amounts previously paid to the Executive. In the event that the Accounting
      Firm  determines that an  Underpayment  has been made,  such  Underpayment
      shall be promptly  paid by the  Company to the  Executive,  together  with
      interest  at  the   applicable   federal  rate  provided  for  in  Section
      7872(f)(2)(B) of the Code.

      5. Term. The term of this Agreement  shall commence on the date hereof and
shall  continue in effect  until  December 31, 1999 and shall  automatically  be
extended for one additional year on that date and on each December 31 thereafter
unless the Company or the  Executive  shall give at least 90 days prior  written
notice that this Agreement shall not be extended. Notwithstanding the foregoing,
this Agreement shall continue in effect for the period  specified in paragraph 3
hereof if a change in control of the  Company  shall have  occurred  during such
term.  The  respective  obligations  of and  benefits  to the  Company  and  the
Executive  as  provided  in  paragraphs  3,  4,  6 and 7  hereof  shall  survive
termination of this Agreement.

      6. Disclosure of Information. The Executive agrees to receive confidential
and  proprietary  information of the Company in confidence,  and not to disclose
such information to others, except pursuant to the performance of his duties for
the Company,  unless and until such  information has become public  knowledge or
has come into the possession of such others by legal and equitable means.

      7. Fees and  Expenses.  The  Company  shall pay all legal fees and related
expenses  incurred  by the  Executive  as a result of his  seeking  to obtain or
enforce any right or benefit  provided by this  Agreement  following a change in
control of the Company.

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      8.   Miscellaneous.

           (a) Successors and Assigns.  This Agreement shall be binding upon and
inure  to the  benefit  of the  Company,  its  successors  and  assigns  and the
Executive, his successors,  personal representatives and heirs, and shall not be
assignable  by the  Executive  except with  respect to any  payments or benefits
hereunder.  In the event that the Company is consolidated or merged with or into
any other  corporation,  the term "Company" as used herein shall mean such other
corporation, and this Agreement shall continue in full force and effect.

           (b) Amendment;  Waiver. This Agreement may not be modified or amended
in any manner except by an instrument in writing  signed by the parties  hereto.
The waiver by either party of compliance with any provision of this Agreement by
the other  party  shall not  operate  or be  construed  as a waiver of any other
provision  of this  Agreement,  or of any  subsequent  breach by such party or a
provision of that Agreement.

           (c) Notices.  All notices  hereunder  shall be sufficient if given in
writing sent by registered or certified mail, addressed as follows:

                To the Company:

                     Colonial Gas Company
                     40 Market Street
                     Lowell, Massachusetts 01852
                     Attention:  President

                To the Executive:





           (d) Heading.  The headings of paragraphs  herein are included  solely
for   convenience   of   reference   and  shall  not   control  the  meaning  of
interpretations of any of the provisions of this Agreement.

           (e) Severability. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or  enforceability  of any other
provision of this Agreement, which shall remain in full force and effect.

           (f) Applicable  Law. This Agreement  shall be governed by the laws of
Massachusetts.

           (g)  Counterparts.  This  Agreement  may be  executed  in one or more
counterparts,  all of which shall be considered  one and the same  agreement and
each of which shall be deemed an original.

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      IN WITNESS  WHEREOF,  the Company has caused this Agreement to be executed
by its duly authorized  officer and the Executive has executed this Agreement as
of the date first written above.

                                    COLONIAL GAS COMPANY


                                    By:__________________________



                                    By:__________________________



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                                                                       Exhibit A

                        SUPPLEMENTAL PENSION ARRANGEMENT

None.