(As Amended February 27, 1997)



                               EASTERN ENTERPRISES
                       EXECUTIVE STOCK PURCHASE LOAN PLAN




         1. Purpose. The purpose of the Executive Stock Purchase Loan Plan (the
"Loan Plan") is to obtain for Eastern Enterprises (which, together with its
subsidiaries, shall be referred to herein as the "Company") the benefits of the
additional incentive inherent in the ownership of its securities by key
executives who are important to the success and growth of the business of the
Company and to help the Company obtain and retain the services of such
employees.

         2. Administration. The Loan Plan shall be administered by the
Compensation Committee (the "Committee") of the Board of Trustees of the
Company. The Committeee authority, not inconsistent with the Loan Plan, (a) to
determine which of the key executives of the Company shall be eligible to
receive stock purchase loans ("Loan Participants"), (b) to determine the time or
times when stock purchase loans shall be made and the amount of each stock
purchase loan, (c) to determine whether stock purchase loans shall be secured or
unsecured loans, and the terms applicable thereto, (d) to prescribe the forms of
the instruments evidencing stock purchase loans granted under the Loan Plan and
of any other instruments required under the Loan Plan, (e) to adopt, amend and
rescind rules and regulations for the administration of the Loan Plan and for
its own acts and proceedings, and (f) to decide all questions and settle all
controversies and disputes which may arise in connection with the Loan Plan. All
decisions, determinations and interpretations of the Committee shall be binding
on all parties concerned.

         3. Participants. The participants in the Loan Plan shall be such key
executives of the Company, whether or not also officers, or trustees, as may be
selected from time to time by the Committee in its discretion. Trustees who are
not employees shall not be eligible. No stock purchase loan may be made to a
person who is a member of the Committee at the time of grant.

         4. Use of Loans; Collateral. Loans pursuant to the Loan Plan shall be
used by the Loan Participant solely in connection with the purchase of capital
stock of the Company (through exercise of stock options, open market purchases
or private third party transactions), or in connection with the refinancing of
loans made for such purpose, in accordance with the rules and regulations
established by the Committee. All such purchases and all resales of capital
stock of the Company shall be subject to any applicable requirements of federal
and state securities laws. To the extent permitted by law, the Committee may, as
a condition to granting or continuing a loan hereunder, require that the Loan
Participant collateralize the loan by pledging to the Company securities
purchased (or 



previously purchased with a loan being refinanced) with the proceeds of the loan
and such other collateral as may from time to time be required by Regulation G,
as issued by the Board of Governors of the Federal Reserve Board; any such
pledge shall be documented by the execution and delivery of a Pledge Agreement
in such form and containing such provisions, not inconsistent herewith, as the
Committee shall determine. The Committee may, in its sole discretion, determine
to what extent, if any, withdrawal of collateral may be made by a Loan
Participant.

         5. Amount of Loan; Limitations. The amount of any stock purchase loan
granted under the Loan Plan shall not exceed the sum of (a) the price of the
securities purchased with the proceeds of the loan, (b) brokerage fees and other
similar expenses incurred in connection with such purchase, (c) in the case of
an exercise of a "non-qualified" stock option (i.e., any stock option the
exercise of which results in taxable income to the optionee on the date of
exercise), that percentage of the difference between the aggregate fair market
value of the securities purchased on the date of exercise and the aggregate
option exercise price which equals the highest marginal federal income tax rate
prevailing on the date of exercise, and (d) in the case of refinancing a loan,
if and when authorized by the Committee, the principal amount of such loan
outstanding at the time. A Loan Participant may elect to borrow less than the
foregoing sum, in the Loan Participant's sole discretion. A Loan Participant
shall be eligible for more than one stock purchase loan.

         The Committee shall determine from time to time the aggregate amount of
loans which may be made to any Loan Participant and the aggregate amount of
loans that may be made to all Loan Participants under the Loan Plan.
Notwithstanding the foregoing, the aggregate unpaid principal amount of all
stock purchase loans outstanding under the Loan Plan shall not exceed at the
time of making any loan 1/2 of 1% of the Company's total assets as most recently
publicly disclosed by the Company.

         6. Notes. Loans made hereunder shall be evidenced by Promissory Notes,
in such forms and containing such provisions, not inconsistent herewith, as the
Committee shall determine.

         7. Interest. Any Note issued hereunder shall bear interest at a rate to
be determined from time to time by the Committee.

         8. Term of Loans; Demand Loans. The unpaid principal amount of any loan
(and any unpaid interest thereon) shall become due and payable no later than
seven (7) months after a Loan Participant shall cease to be an employee of the
Company. In addition, the Committee, in its discretion, may grant stock purchase
loans to Loan Participants under the Loan Plan on a demand basis, the unpaid
principal amount of any such demand loan (and any unpaid interest thereon) to
become due and payable no later than seven (7) months after demand.

         9. Payment in Cash. The unpaid balance of a stock purchase loan made
under the Loan Plan shall be repayable only in cash.


         10. Prepayment. Notwithstanding any other provision of the Loan Plan, a
Loan Participant who has received a loan shall have the option to repay all or
any portion of the outstanding balance of the loan at any time before the loan
becomes due and payable.

         11. Employment Rights. The granting of a stock purchase loan to a Loan
Participant hereunder shall not confer upon any such Loan Participant any right
to continued employment with the Company nor does it interfere in any way with
the right of the Company to terminate the employment of any of its employees at
any time.

         12. Transferability. The rights of a Loan Participant under the Loan
Plan shall not be transferable except by will or the laws of descent and
distribution.

         13. Amendment, Modification and Termination of the Loan Plan. The Board
of Trustees may at any time terminate and may at any time and from time to time,
and in any respect, amend or modify, the Loan Plan; provided, however, that no
such action of the Board of Trustees, without approval of the stockholders, may
(a) withdraw the administration of the Loan Plan from the Committee, (b) permit
any person while a member of the Committee to receive a loan under the Loan
Plan, or (c) increase the limit on aggregate outstanding loans as specified in
the second sentence of the second paragraph of Section 5. No amendment,
modification, or termination or the Loan Plan shall in any manner affect any
loan theretofore granted under the Loan Plan without the consent of the Loan
Participant.

         14. Effective Date. The Loan Plan and any amendment or modification
thereof shall become effective upon approval by the Board of Trustees of the
Company.


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Approved By Board of Trustees September 20, 1996
Amended February 27, 1997