EXHIBIT 10.3














             AMENDED AND RESTATED CREDIT AGREEMENT

                             among

                     IONICS, INCORPORATED

                              and

              THE FIRST NATIONAL BANK OF BOSTON,
                   individually and as Agent


                       December 31, 1992






















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                       TABLE OF CONTENTS

                                                           Page
1.   THE CREDIT                                             1

     1.1      Commitment to Lend                            1
     1.2      Notes                                         1
     1.2.1.   Selection of Basis for Computing
              Interest                                      3
     1.2.2.   Interest Periods                              4
     1.3.     Optional Repayment f Loans(s)                 4
     1.4.     Method of Payment                             5
     1.5.     Commitment Fees                               6
     1.6.     Additional Costs and Expenses                 6
     1.6.1.   General                                       6
     1.6.2.   Reserve Charge                                7
     1.6.3.   Additional Amounts Payable on
              Account of Credit Facilities                  8
     1.6.4    Bank Certificates                             8
     1.7.     Changes in Circumstances                      9
     1.8.     Standby Letters of Credit                     9

2.   DEFINITIONS                                           13

3.   REPRESENTATIONS AND WARRANTIES                        19

     3.1.     Corporate Authority                          19
     3.2.     Governmental Approvals                       20
     3.3.     Title to Properties; Absence
              of Liens                                     20
     3.4.     Financial Statements                         20
     3.5.     Changes                                      20
     3.6.     Taxes                                        20
     3.7.     Litigation                                   21
     3.8.     Environmental Compliance                     21

4.   CONDITIONS TO LOANS                                   22

5.   COVENANTS                                             23

     5.1.     Financial Statements                         23
     5.2.     Taxes                                        24
     5.3.     Guaranties                                   24
     5.4.     Negative Pledge                              24
     5.5.     Merger and Sale of Assets                    25
     5.6.     Net Worth                                    26
     5.7.     Working Capital                              26
     5.8.     Permitted Indebtedness                       26
     5.9.     Sale and Leaseback                           27
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                              -2-

                                                           Page

     5.10     Environmental Matters                        27
     5.10.1.  Indemnification                              27
     5.10.2.  Notice                                       27
     5.10.3.  Response Actions                             28

6.   DEFAULTS                                              28

7.   SETOFFS                                               29

8.   THE AGENT                                             30

     8.1.     Authorization                                30
     8.2.     Employees and Agents                         31
     8.3.     No Liability                                 31
     8.4.     No Representations                           31
     8.5.     Payments                                     32
     8.6.     Holders of Notes                             33
     8.7.     Indemnity                                    33
     8.8.     Agent as Bank                                33
     8.9.     Resignation                                  33
     8.10.    Notification of Defaults and
              Events of Default                            34
     8.11.    Documents                                    34

9.   ASSIGNMENT AND PARTICIPATION                          34

     9.1.     Conditions to Assignment by Banks            34
     9.2.     Certain Representations and
              Warranties; Limitations; Covenants           35
     9.3.     Register                                     36
     9.4.     New Notes                                    36
     9.5.     Participations                               37
     9.6.     Disclosure                                   37
     9.7.     Miscellaneous Assignment
              Provisions                                   37
     9.8.     Assignment by the Company                    37

10.  MISCELLANEOUS                                         38

     10.1.    Notices                                      38
     10.2.    Term of Agreement                            38
     10.3.    No Waivers                                   38
     10.4.    Massachusetts Law                            38
     10.5.    Computation of Interest                      38
     10.6.    Expenses                                     38
     10.7.    Environmental Assessments                    39
     10.8.    Consents, Amendments, Waivers,
              Etc.                                         39
     10.9.    Counterparts                                 40
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                              -3-


EXHIBITS:

EXHIBIT A     -  Form of Loan Note
EXHIBIT B     -  Form of Promissory Note
EXHIBIT C     -  Form of Assignment and Acceptance

SCHEDULES:

SCHEDULE 3.3  -  Title to Properties; Absence of Liens
SCHEDULE 3.8  -  Environmental Compliance




































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             AMENDED AND RESTATED CREDIT AGREEMENT


AMENDED  AND  RESTATED  CREDIT  AGREEMENT,  dated  as  of
December  31,  1992  by  and  among  IONICS, INCORPORATED (the
Company),  a Massachusetts corporation  having  its  principal
place of business at 65 Grove Street, Watertown, Massachusetts
02172, THE FIRST  NATIONAL  BANK OF BOSTON (FNBB), 100 Federal
Street, Boston, Massachusetts 02110, and such other banks that
are or may become parties to  this Agreement from time to time
in accordance with the provisions  hereof (FNBB and such other
banks being collectively referred to  herein  as the Banks and
each  a Bank) and THE FIRST NATIONAL BANK OF BOSTON  as  Agent
for the Banks (the Agent).

WHEREAS,  the  Company  and  FNBB are parties to a Credit
Agreement  dated  as of December 31,  1986  (as  amended, the
Original Credit Agreement);

WHEREAS,  the  Company  and  FNBB  desire  to  amend the
Original Credit Agreement to (i) extend the maturity of the
Loans and (ii) modify certain covenants and provisions;

NOW  THEREFORE,  the Company, the  Banks  and  the  Agent
hereby  agree  that the Original  Credit  Agreement  shall  be
amended and restated  in  its entirety as set forth herein and
shall remain in full force and effect only as provided herein.

1.  THE CREDIT.

1.1.  Commitment to Lend.   Subject  to  the  terms and
conditions  hereinafter set forth, each of the Banks severally
agrees to lend  and  relend  (a  Loan,  or,  if more than one,
Loans) to the Company from time to time on or  before December
31,  1995,  in  an  aggregate principal amount up to  but not
exceeding $25,000,000  (the Commitment Amount) at any one time
outstanding (the Commitment).   The  Loans  shall  be made
prorata  in  accordance  with  each Bank's Commitment
Percentage.  For purposes of this section,  the  Maximum
Drawing Amount of all  standby  Letters  of Credit shall be
treated  as  a  like aggregate principal amount of Loans
outstanding hereunder.

1.2.  Notes.  The  Company  shall deliver to each Bank a note
(each a Loan Note) dated the date  of  delivery  thereof,
maturing on December 31, 1995 and in a stated principal amount
equal to such Bank's Commitment.  The Loan Notes shall  be  in
the  form  of  Exhibit  A hereto.  The date and amount of each
Loan  made by each Bank, and  the  date  and  amount  of  each
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payment  of  principal on such Loan, shall be recorded by each
Bank on the schedule annexed to such Bank's Loan Note, and the
aggregate unpaid  principal amount shown on each such schedule
shall be the principal  amount  owing  and  unpaid on the and
Loan Notes,  but  the failure to make any such notation  shall
not affect the Company's  obligation to repay the Loans.  The
Loan Notes  shall bear interest  from  the  date  thereof,
payable quarterly  in arrears on the first day of each January,
April, July and October,  such  interest to be computed in
accordance with the procedures described in 1.2.1 below, either

     (i)  at  a  rate  per annum which shall at all times be
equal to the  rate  of interest as may be published from time to
time  by  FNBB at its  head  office  as  its  Base Rate (the
Base Rate); or

     (ii) at a rate per annum  which  shall  be  one-half
percent per annum above the LIBO Rate; or

     (iii)at  a  rate  per  annum  which shall be a Money Market
Rate determined by  FNBB in its absolute discretion and based on
FNBB's cost of funds.

On December 31, 1995, provided no Default shall  have occurred
and all interest payable on such date has been paid  in full,
new  notes  (the  Amortizing Notes) shall be exchanged for
the Loan Notes.  The Amortizing  Notes  shall  be  in  the form
of Exhibit  B  hereto, shall be in the principal amount equal to
the aggregate  unpaid  principal amount of the Loan Notes held
by each Bank on December 31, 1995, shall bear interest payable
at the same intervals as  the  Loan Notes and shall be payable
in a series of twelve (12) consecutive  quarterly installments
of principal beginning on April 1, 1996.   The first eight (8)
installments of principal shall each be in an  amount equal to
6 1/4%  of  the  original  principal  amount of the Amortizing
Notes and the final four (4) installments  of  principal shall
each  be  in  an  amount  equal  to  12 1/2%  of  the original
principal  amount  of  the  Amortizing  Notes.  The Amortizing
Notes shall bear interest on the unpaid principal balance from
time to time outstanding, computed daily from the date
thereof,  with  interest  computed,  in  accordance  with  the
procedures described in 1.2.1 below, either:

     (i)  at a rate per annum  which  shall  at all  times be
one quarter (1/4%) above the rate of interest  as  may  be
published from time to time by FNBB at its head  office  as  its
Base Rate; or


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     (ii) at  a  rate  per  annum  which for all Interest
Periods ending on or before  December 31,  1996  shall  be  one-
half  percent  (1/2%)  per annum above  the  LIBO  Rate  for
each such Interest Period  and  which  for  all  Interest
Periods thereafter shall be  three-fourths percent (3/4%) per
annum  above  the LIBO Rate for each such Interest Period.

The   Loan   Notes   and  the  Amortizing  Notes  are   herein
collectively called the Notes.

     1.2.1.  Selection of Basis for Computing Interest.

     (a)  Not less than  three  (3)  nor  more  than  five (5)
Business  Days  prior  to  a  possible  Rate-Fixing  Date, the
Company shall ask the Agent to quote the LIBO Rate and/or  the
Money  Market  Rate  which  will be effective as of such Rate-
Fixing Date for one or more possible  Interest  Periods.   The
Agent  will  provide to the Company the requested quotation(s)
not  later than  11 A.M.  Boston  time  on  the  second (2nd)
Business  Day  preceding such Rate-Fixing Date and, within two
(2) hours of its receipt of such quotation, the Company shall,
by notice in writing  (or  by telephone and promptly confirmed
in writing) delivered to the Agent, select

     (1)  one  of  the  following   bases  for  computing
interest on the aggregate amount  outstanding on any Note as of
such Rate-Fixing Date:

              (A)  the  Base  Rate  basis for computing  such
interest on all or a specified  portion of such aggregate
amount; or

              (B)  the Money Market Rate basis  for computing
such interest on all or a specified  portion of such  aggregate
amount (which portion shall  be in a minimum  amount  of
$1,000,000  and  even multiples of $100,000); or

              (C)  the LIBO Rate basis for computing interest on
all or a specified portion of such aggregate amount (which
portion  shall  be in a minimum amount  of  $500,000  and  even
multiples of $250,000);








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         (2)  an Interest Period.

              (b)  If   on   any  Rate-Fixing  Date,  the  Agent
shall determine in its sole  discretion reasonably exercised
that it is unable to quote the LIBO Rate by reason of
circumstances or events  in  the London inter-bank  foreign
currency  deposits market generally  affecting  similar  banks,
the  Agent shall promptly   notify   the   Company   and   the
Banks  of  such determination.   Upon receipt of such
notification,  any  LIBO Rate selection for  interest
calculations with respect to such Interest Period pursuant  to
1.2.1(a) hereof shall be deemed ineffective and the Base Rate
basis  for interest calculations shall apply to such selection.

         1.2.2.  Interest Periods.  As to the Base Rate basis
for computing  interest,  an  Interest  Period   may   be
either indefinite  (subject  to change to a different Interest
Period for  the  LIBO  Rate basis  or  Money  Market  Rate
basis  of calculating interest,  by  notice from the Company as
provided in 1.2.1 hereof) or definite.   As to the LIBO Rate
basis, an Interest Period shall be a definite  period  of  one
(1), two (2), three (3) or six (6) months.  As to the Money
Market Rate basis  for computing interest, an Interest Period
shall  be  a definite  period of seven (7), thirty (30), ninety
(90) or one hundred eighty (180) days.  No Interest Period
relating to the Loan Notes  shall  expire later than December
31, 1995; and no Interest Period relating  to the Amortizing
Notes shall expire later than December 31, 1998.  A Rate-Fixing
Date for any Note shall automatically occur on  the first
Business Day following the end of the preceding Interest
Period.   In  the event the Company fails on a timely basis to
select a basis for interest calculations  hereunder,  the  Base
Rate  basis  for interest calculations  shall  apply
thereafter,  using  an  indefinite Interest Period (subject to
change as aforesaid).

         1.3.  Optional Repayment of Loan(s).  The Company
shall have the right, at its election, to repay the Loan(s) in
whole at any time, or in part from time to time.  Any such
repayment of  any portions of any Loan(s) subject to the Base
Rate basis of interest  calculation,  shall be without penalty
or premium but with accrued interest on the date of such
repayment on the amount  repaid. If the Company  shall
voluntarily  repay  any Eurodollar Loan(s) and if any such
repayment occurs during any Interest Period during which the
LIBO Rate is greater than the LIBO Rate  which  would  have been


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quoted (on the amount to be repaid and for the remaining
portion of such Interest Period) by the Agent to the Company had
the  date  of  such repayment been a Rate Fixing Date, the
Company shall pay at  the date of repayment,  in  addition  to
principal and interest, the  LIBO Prepayment Charge.  If the
Company shall voluntarily repay any Money Market Loan(s) and if
any  such repayment occurs during any  Interest  Period  during
which  the  Money  Market  Rate applicable to such Loan is
greater than  the Money Market Rate which would have been quoted
(on the amount  to  be repaid and for  the  remaining  portion
of such Interest Period)  by  the Agent to the Company had  the
date  of  such repayment been a Rate  Fixing  Date,  the
Company  shall pay at  the  date  of repayment, in addition to
principal  and  interest,  the Money Market Prepayment Charge.
The Company shall give the Agent at least  five  (5) Business
Days' written notice of any proposed repayment pursuant  to this
1.3, specifying the proposed date of repayment, the amount  then
to be repaid and the principal amount to be repaid on the
Note(s)  held  by  the Banks.  Each partial repayment of Loan(s)
subject to the Base Rate basis of interest calculation shall be
in an aggregate principal amount of  $50,000  or  multiples
thereof. Each partial repayment  of Eurodollar Loan(s)  shall
be in an aggregate principal amount of $250,000, or multiples
thereof.   Each partial repayment of Money Market Loan(s) shall
be in a minimum aggregate principal amount of $1,000,000 or
multiples of $100,000 thereof. Amounts of  principal  repaid and
applied to the  Loan  Notes  may  be reborrowed so long  as
credit  remains  available  under  the Commitment  and  subject
to  the  conditions specified in 4.  Amounts  of  principal
repaid and applied  to  the  Amortizing Notes may not  be
reborrowed. Prepayments of principal on the Amortizing Notes
will  be applied to installments of principal due in the inverse
order of maturity.  Each partial prepayment shall be allocated
among  the  Banks, in proportion, as nearly as practicable, to
the respective  unpaid  principal amount of each  Bank's Note,
with adjustments to the extent  practicable to equalize any
prior repayments not exactly in proportion.

         1.4.  Method  of  Payment.  All payments and
prepayments of principal and all payments  of interest and
commitment fees shall be made by the Company to  the Agent for
the accounts of the Banks in immediately available funds.







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         1.5.  Commitment Fees.  The  Company  agrees  to pay
the Agent  for the accounts of the Banks in accordance with
their respective   Commitment   Percentages  quarterly  in
arrears, commencing with January 1,  1993 so long as the
Commitments of the Banks are outstanding, a commitment fee at
the rate of 1/8 of  1% per annum on the daily  average  amount
by  which  the Commitment  Amount  minus  the  Maximum  Drawing
Amount of all outstanding   Letters   of  Credit  exceeds  the
outstanding principal amount of Loans.   All  commitment fees
provided for in the Original Credit Agreement shall  continue
to accrue at the applicable rates thereof set forth in the
Original  Credit Agreement  (rather than the applicable rates
thereof set forth in this 1.5)  until  the  Closing Date; and,
on and as of the Closing Date, the applicable rate set forth in
this 1.5 shall become  effective  with  respect   to  such
amounts  accruing thereafter.

         1.6.  Additional Costs and Expenses:

              1.6.1.  General.   Anything in  this  Agreement
to  the contrary notwithstanding,  if any present or future
applicable law  or  regulation  or  interpretation   thereof
shall be applicable  to  the Eurodollar Loans or to any of the
Banks or the Agent, or this  Agreement,  as a result of such
Eurodollar Loans and shall

              (a)  subject any Bank  or the Agent to any tax,
levy,  impost,  duty,  charge,  fee, deduction  or withholding
of  any  nature  with  respect to  this Agreement or the
Eurodollar Loans; or

              (b)  materially  change the basis  of  taxation
(other than any change  in  the  statutory  rate  of domestic
or  foreign tax on net income) of payments to any Bank of  the
principal or the interest on any Eurodollar  Loans   or  any
other  amounts  payable hereunder; or

              (c)  impose or increase  or  render  applicable
any   special   deposit   or   reserve   or  similar
requirements  (whether  or  not having the force  of law)
against assets held by or  deposits  in  or for the  account
of, or loans by an office of any Bank, other than the  reserve
charges payable pursuant to 1.6.2; or





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              (d)  impose on any Bank  or the Agent any other
condition  or  requirement  with  respect   to  this Agreement
or the Eurodollar Loans, and the result of any of the foregoing
is

                    (i) to increase the cost to any Bank  of
making,  funding  or  maintaining its Eurodollar Loans   in  an
amount  considered material by such Bank, or

                    (ii) to reduce  the  amount of principal,
interest  or  other amounts payable hereunder, or

                    (iii) to require such Bank or the Agent to
make any payment with  respect  to, or to  forego  payments  of,
any interest or other sum  payable hereunder,  the  amount  of
which payment  or  foregone  interest or other sum is calculated
by reference  to the gross amount of any sum receivable or
deemed  received  by such Bank or the Agent from the Company
hereunder, then,  and  in  each  such case, the Company will,
upon demand made by the Agent (at the request of any Bank) at
any time and from time to time and as  often  as  the occasion
therefor may arise,  pay  to  the Agent (for the benefit  of
the  affected Banks)  such  reasonable   additional   amounts
as  will  be sufficient to compensate such Banks for such
additional  cost, reduction,  payment  or  foregone interest or
other sums.  The Agent will use its best efforts  (x)  to notify
the Company of the possible imposition of any additional  charge
under  this 1.6.1,  and (y) to minimize the amount of any such
additional cost, reduction,  payment,  foregone  interest  or
other sum, including  but  not  limited  to  using  an alternate
offshore funding source.

         1.6.2.  Reserve  Charge.   For each day  any Eurodollar
Loan is outstanding, the Company shall  pay  to  the Agent for
the  accounts  of  the  Banks  an  amount equal to the Reserve
Charge.   Reserve  Charges  shall  be paid  on  each  interest
payment date in accordance with a bank  certificate  submitted
to  the  Company, as provided in 1.6.4 hereof.  In the  event
that the Board  of  Governors  of  the  Federal Reserve System
establishes regulations which require the  payment of interest
by  Federal  Reserve Banks on reserves maintained  under  said
Regulation D (or  any successor or similar regulation relating
to  such  reserve  requirements)  against  said "Eurocurrency
liabilities",  and any  Bank  receives  any  such  payment of
interest, then to the extent practicable, such Bank shall make
an appropriate reduction  in the Reserve Charge to reflect the



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amount of interest received  by  such  Bank  and determined by
such  Bank  to  be  properly allocable to the portion  of  the
reserve with respect to which the Reserve Charge relates.

              1.6.3.  Additional  Amounts Payable on Account of
Credit Facilities.  If any change  in  law  or any governmental
rule, regulation,  policy, guideline or directive  (whether  or
not having the force of law) or the interpretation thereof
affects the amount of capital required or expected to be
maintained by any Bank or the Agent or any corporation
controlling such Bank or the Agent and  such  Bank  or the Agent
determines that the amount of capital required is increased  by
or based upon the existence  of the credit facilities
established  hereunder  or any loans made  pursuant hereto or
upon agreements or loans of the type contemplated  hereby,  then
the Agent (at the request of any Bank) may notify the Company
of  such  fact.   To  the extent  that  such  increased  capital
requirements  are  not reflected  in  the Base Rate, the Company
and such Bank or (as the  case  may be)  the  Agent  shall
thereafter  attempt  to negotiate an  adjustment  to  the fees
payable hereunder which will adequately compensate such  Bank or
the Agent in light of these circumstances.  If the Company  and
such  Bank  or  the Agent  are  unable  to  agree to such
adjustment within thirty days of the day on which  the  Company
receives  such notice, then  commencing  on  the date of such
notice (but no  earlier than the effective date  of any such
change), the fees payable hereunder shall increase by  an
amount  which  will,  in such Bank's   or  the  Agent's
reasonable  determination,  provide adequate compensation.

         1.6.4.  Bank  Certificates.   A certificate signed by
an officer of each affected Bank, setting  forth  any
additional amount  required  to  be  paid  by  the  Company
under 1.6.1, 1.6.2,  or 1.6.3 hereof and the computations  made
by  such Bank to determine  such  additional amount, shall be
submitted by the Banks to the Company  in  connection  with
each demand made  by  the Banks upon the Company and each such
certificate shall, save  for obvious error, constitute
conclusive evidence of the additional amount required to be paid
by the Company to the Banks upon each such demand pursuant to
1.6.1, 1.6.2, or 1.6.3 hereof.   A  claim by the Agent or the
Banks for all or any part of any additional  amount  required to
be paid by the Company under 1.6.1, 1.6.2, or 1.6.3  hereof  may
be  made before  and/or  after  the end of the Interest Period
to which such claim relates or during  which  such claim has
arisen and before and/or after any repayment or prepayment, to
which such claim relates, for any amount owed hereunder.


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         1.7.  Changes in Circumstances.  If at any time,

              (a)  any Bank shall reasonably determine that (i)
it is  not  practicable  for  such Bank to obtain  United
States Dollar  deposits  in the London  inter-bank  foreign
currency deposits market in  the  principal  amount of any Loan
amounts selected  to  be subject to the LIBO Rate  basis  of
interest calculation and  for  periods equal to any Interest
Period; or (ii) the LIBO Rate does not or will not accurately
reflect the cost to such Bank of obtaining  or  maintaining any
Eurodollar Loan  during  any  Interest  Period  despite   the
Company's compliance with its obligations under 1.6 hereof; or

              (b)  after   using   its  best  efforts  to  use
an alternate offshore funding source,  any  Bank shall
reasonably determine that any present or future applicable  law
has made or will make it unlawful for such Bank to make or
maintain any Eurodollar  Loans  or  to  comply  with  any  of
such  Bank's obligations in respect of any Eurodollar Loans;

then such Bank shall promptly give  notice  of  such
determination to the Company.  Upon notification  pursuant  to
paragraph  (a)  hereof,  the  obligation  of such Bank to make
Eurodollar Loans shall be suspended until such Bank determines
that the circumstances described in such paragraph have ceased
to   exist,  and  the  interest  on  such  Bank's  outstanding
Eurodollar  Loans shall be calculated with respect to the Base
Rate  basis  in   accordance   with   1.2.1   hereof.    Upon
notification  pursuant to paragraph (b) hereof, the obligation
of such Bank to make Eurodollar Loans shall be suspended until
such Bank determines  that the circumstances described in such
paragraph have ceased to  exist,  and  the  interest  on  such
Bank's  outstanding  Eurodollar Loans shall be calculated with
respect  to the Base Rate  basis  in  accordance  with  1.2.1
hereof.

         1.8.  Standby  Letters  of  Credit.   (a)  The Letter
of Credit  Bank may, in each case at the Letter of Credit
Bank's absolute  discretion and upon such terms and conditions
as the Letter of Credit  Bank and the Company may agree, from
time to time issue for the  account of the Company, standby
Letters of Credit (Letters of Credit)  in  form and content
acceptable to the Letter of Credit Bank and the  Company,
provided however, that  at  no  time  shall  the sum of the
aggregate  principal amount of all Loans outstanding  plus  the
aggregate  Maximum Drawing  Amount  of  the  standby Letters of
Credit exceed the Commitment Amount.


/76



              (b)  The Company shall,  on  the  date of issuance
or any extension or renewal of any Letter of Credit and at such
other time  or  times as such charges are customarily  made  by
the Letter of Credit  Bank, pay a fee to the Letter of Credit
Bank in an amount specified  by  the  Letter of Credit Bank at
such time.

              (c)  (i)  The obligations of  the  Company  to
repay the Letter  of  Credit  Bank  as provided hereunder in
respect  of drawings under any Letters  of  Credit  shall  rank
pari passu  with  the obligations of the Company to repay the
Loans,  and shall  be   absolute  and  unconditional  under  any
and  all circumstances.    Without   limiting  the  generality
of  the  foregoing, the Company's obligation  to  repay  the
Company's obligation  in respect of drawing under the Letters of
Credit shall not be  subject  to  any  defense  based  on  the
non-application  or  misapplication  by  the  beneficiary  of
the proceeds  of  any  such  payment  or  the  legality,
validity, regularity or enforceability of the Letter of  Credit
or  any renewal or extension thereof or any other document
whatsoever.   The  Letter  of  Credit  Bank  may  accept  or
pay  any draft presented to it under any Letter of Credit, or
any renewal  or extension  thereof,  regardless  of  when  drawn
or  made and whether   or  not  negotiated,  if  such  draft,
accompanying certificate  or  documents (as applicable) and any
transmittal advice are presented  on  or  before  the  expiry
date of the Letter of Credit, or the renewal or extension
thereof  then in effect.   Furthermore,  neither the Letter of
Credit Bank nor any of its correspondents  shall  be
responsible,  as  to any document presented under a Letter of
Credit, or any renewal or  extension  thereof,  for  the
validity  or sufficiency of any signature or endorsement, for
delay in giving  any  notice  or failure  of  any  instrument to
bear adequate reference to the Letter of Credit or  to  any
renewal or extension thereof, or failure of documents not
required  by  the terms of the Letter of Credit to accompany any
instrument at  negotiation,  or for failure  of any person to
note the amount of any draft on  the reverse of the Letter of
Credit or on any renewal or extension thereof, so  long as such
failure does not result in a payment in excess of the then
remaining Maximum Drawing Amount of such Letter of Credit,  or
to  forward  documents  in  any  manner required by the Letters
of Credit.






/77



         (ii) Any action, inaction or omission on the part of
the Letter  of  Credit Bank or any of its correspondents, under
or in  connection  with  any  Letter  of  Credit  or  renewal
or extension  thereof  or  the  related instruments, documents
or property, if in good faith and  in  conformity with such
laws, regulations or customs as the Letter  of Credit Bank or
any of its correspondents may deem to be applicable, shall be
binding upon the Company and shall not place the Letter of
Credit Bank or  any  of  its  correspondents under any
liability  to  the Company,  in  the  absence  of  gross
negligence  or  willful misconduct by the Letter of Credit Bank
or its correspondents.  The Letter of Credit  Bank's  rights,
powers,  privileges and immunities specified in or arising under
this Agreement are in addition to any heretofore or at any time
hereafter  otherwise created  or  arising,  whether  by  statute
or rule of law  or  contract.  All Letters of Credit issued
hereunder will, except to  the extent that the Letter of Credit
Bank  may  agree  to effect payment of Letters of Credit within
a reasonable period of time  after  resumption of business if
the Letter of Credit Bank's business is  interrupted  as
described in Article 19 of the Uniform Customs and Practice for
Documentary  Credits (as further  described  below), and except
to the extent otherwise expressly  provided hereunder,  be
governed  by  the  Uniform Customs and  Practice for Documentary
Credits (1983 Revision), International  Chamber  of  Commerce,
Publication No. 400, and any subsequent revisions thereof.

         (d)  The Company agrees  that  if  any change in any
law, executive  order  or  regulation,  or  any  directive  of
any administrative  or  governmental  authority  (whether  or
not having the force of law) or in the interpretation  thereof
by any  court or administrative or governmental authority
charged with the administration thereof, shall either:

              (i)  impose,  modify or deem applicable any
reserve, special deposit or similar  requirements  against
letters of credit heretofore or hereafter issued by the Letter
of Credit Bank; or

              (ii)impose  on the Letter of Credit Bank  any
other condition or requirements relating to any such Letters of
Credit;

and the result of any event  referred to in clause (i) or (ii)
above shall be to increase the  cost  to, or decrease the rate
of return of, the Letter of Credit Bank  in respect of issuing
or maintaining any Letter of Credit issued  for the account of


/78




the Company hereunder (which increase in cost  or  decrease in
rate  of  return  shall be the result of the Letter of  Credit
Bank's  reasonable  allocation  among  its  letter  of  credit
customers, of the aggregate  of  such cost increases resulting
from such events), then, upon demand  by  the Letter of Credit
Bank  and  delivery  to  the  Company of a certificate  of  an
officer of the Letter of Credit Bank explaining such change in
law, executive order, regulation, directive, or interpretation
thereof, its impact on the Letter of Credit Bank, and the basis
for determining  such  increased  costs or decreased  return
and  their  allocation,  the  Company shall immediately  pay  to
the Letter of Credit Bank, from  time  to time as specified by
the  Letter of Credit Bank, such amounts as shall be sufficient
to compensate the Letter of Credit Bank for such increased cost
or decreased  return.   The  Letter of Credit Bank's
determination of costs incurred under clause (i) or (ii) above,
and the allocation, if any, of such costs among the Company and
other letter of credit customers of the Letter of Credit Bank,
if done in good faith and made on an equitable basis,  shall  be
presumptively  correct  in  the  absence of evidence to the
contrary.

         (e)  Each Bank (other than the Letter of Credit Bank)
and the  Company  hereby  acknowledge  that  each Letter of
Credit issued by the Letter of Credit Bank pursuant to this
Agreement is issued by the Letter of Credit Bank on behalf of
all of the Banks.     Each Bank (other than FNBB) absolutely,
unconditionally and irrevocably agrees to reimburse the Letter
of Credit Bank in an amount equal to such Bank's Commitment
Percentage of each drawing under any Letter  of Credit made in
accordance  with  this  1.8  and  to be responsible  for  its
Commitment  Percentage  of  all liabilities  incurred  by
the Letter of Credit Bank in respect  of  each  Letter  of
Credit opened  or  extended  by  the  Letter  of  Credit Bank
for the account  of  the  Company  pursuant  to  this Agreement.
The obligations of the Banks hereunder are several and the
failure of any Bank to fulfill its obligations shall not result
in any Bank  becoming obligated to advance more than  its
Commitment Percentage of Loans hereunder.

         (f)  Each Bank shall, and hereby absolutely,
unconditionally and irrevocably agrees,  to  contemporaneously
provide to the Letter of Credit Bank, in funds immediately
available to the Letter of Credit Bank, such Bank's
Commitment Percentage of the funds  necessary  to  pay  each
draft drawn under a Letter of Credit.

/79



         (g)  Each Bank agrees with the Letter of Credit  Bank
and the  other  Banks (other than the Letter of Credit Bank)
that its obligations  to  provide  to the Letter of Credit Bank
its Commitment Percentage of the amount  of  any draft drawn
under any  Letter  of  Credit  shall  be  absolute, irrevocable
and unconditional and further agrees that  such  obligations
shall not  be  affected in any way by any intervening
circumstances occurring  before  or  after the making of such
payment by the Letter  of  Credit Bank pursuant  to  any  Letter
of  Credit, including without limitation:

              (i)  any   modification  or  amendment  of,  or
any consent, waiver,  release  or forbearance with respect to
any  of  the  terms  of  this  Agreement   or  any  other
instrument or document referred to herein;

              (ii)any other act or omission to act of  any  kind
by the Letter of Credit Bank;

              (iii)the existence of any Default or Event of
Default;

              (iv)any  change  of  any  kind  whatsoever  in
the financial  position or creditworthiness of the Company or
any other Person.

         2.  DEFINITIONS.   The  following  terms  shall have
the meanings respectively assigned to them in this 2.

         Agent.  The First National Bank of Boston acting as
agent for the Banks.

         Amortizing Notes.  See 1.2.

         Assignment and Acceptance.  See 9.

         Banks.  See preamble.

         Base Rate.  See 1.2.

         Business   Day.   Any  day  on  which  banks  in
Boston, Massachusetts are  required  to be open for the
transaction of normal banking business and, in  addition,  in
connection with any transaction relating to the LIBO Rate, any
day  on  which banks in London, England are also open for the
transaction of normal banking business.


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         Closing  Date.   The  first  date  on  which  all  of
the conditions set forth in 4 have been satisfied.

         Commitment.   With respect to each Bank, the amount
equal to such Bank's Commitment Percentage of the Commitment
Amount.

         Commitment Amount.  See 1.1.

         Commitment Percentage.   With  respect  to each Bank,
the percentage  set  forth  beside its name below as  such
Bank's percentage of the aggregate Commitments of all of the
Banks:

              Bank                     Percentage
              ____                     __________
              FNBB                        100%

         Company.  See preamble.

         Consolidated.   As applied  to  any  term  used  in
this agreement,  the relevant  figures  for  the  Company
and  its Consolidated  Subsidiaries on a basis determined in
accordance with generally accepted accounting principles after
eliminating all intercompany items and minority interests.

         Consolidated   Subsidiary.    Any   present   or
future corporation or other  entity  (other  than  Yuasa-Ionics
Co., Ltd.,  a  corporation  organized under the laws of Japan)
more than fifty percent (50%)  of  the  shares  of  stock  or
other interests  each  (however  designated)  having ordinary
voting power  for the election of a majority of the  members  of
the board of directors or other governing body of such
corporation or other interests (other than stock having such
power only by reason of the happening of a contingency) shall at
the time be owned by  the Company or by one or more subsidiaries
or by the Company  and   one   or   more  subsidiaries.
Unconsolidated subsidiary means a subsidiary  which  is  not
consolidated for financial reporting purposes.

         Current Assets, Current Liabilities and  Working
Capital.   Respectively,  the  Current  Assets,  Current
Liabilities  and  Working   Capital   of   the  Company  and
its Consolidated Subsidiaries, determined in accordance with
generally accepted accounting principles.

         Default.  Any event described in 6 hereof.

         Delinquent Bank. See 8.5(c).
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         Eligible  Assignee.   Any commercial bank or  other
financial institution,  including without limitation, any
insurance company, savings bank or savings and loan association.

         Environmental  Laws.  Any judgment, decree,  order,
law, license,  rule  or  regulation   pertaining  to
environmental matters, including without limitation, those
arising under the Resource  Conservation  and Recovery  Act,
the  Comprehensive Environmental  Response, Compensation  and
Liability Act of 1980, as amended  ("CERCLA"),  the  Superfund
Amendments  and  Reauthorization  Act of 1986, the Federal Clean
Water Act, the  Federal Clean Air Act, the Toxic Substances
Control Act or any other federal, state  or local statute,
regulation, ordinance,  order, or decree, or common  law,
whether in existence now or hereafter enacted, and as such may
be  amended  from  time to time, relating to health, safety or
the environment.

         Equity  Distribution.   The  payment of cash dividends
on any  class  of  capital stock and any  other  distribution
or payment on account of or in redemption, retirement or
purchase of  such  capital stock;  provided,  however,  that
the  term "Equity Distribution"  does not include the issuance,
delivery or distribution by a corporation of shares of its
common stock pro  rata  to its existing  stockholders  nor  does
the  term include the  sale  or exchange by the Company of
shares of its common stock made in return for cash or other
assets, tangible or intangible.

         Eurodollar Loan(s). That  portion  of  any  Loans made
hereunder,  the  interest  rate  on  which  is  calculated  by
reference to the LIBO Rate in accordance with 1.2.1 hereof.

         Event of Default.  See 6.

         FNBB.  The First  National  Bank  of  Boston  in  its
individual capacity.

         Hazardous Materials.   Any hazardous waste, as defined
by 42 U.S.C. 6903(5), any hazardous substances, as defined by 42
U.S.C. 9601(14), any pollutant  or contaminant, as defined by 42
U.S.C.  9601(33),  and  any  toxic  substance,  hazardous
materials, oil, or other chemicals  or substances regulated by
any Environmental Laws.




/82



         Indebtedness.  All obligations,  contingent or
otherwise, which in accordance  with  generally  accepted
accounting principles should be reflected in the obligor's
balance sheet as liabilities  and  all  guarantees, endorsements
and other contingent  obligations,  direct  or  indirect, in
respect  of Indebtedness  of  others  whether  or  not reflected
in  said balance sheet (other than guarantees and  endorsements
made in connection with items deposited for collection in the
ordinary course of business, and other than federal,  state and
foreign income  taxes,  the  payment  of  which  has been
deferred  in accordance with generally accepted accounting
principles).

         Interest Period.  The period during which  the  basis
for computing interest, selected pursuant to 1.2.1 hereof,  is
to remain in effect, which, as to the LIBO Rate basis, shall be
a period of one (1), two (2), three (3), or six (6) months,  and
which  as to the Money Market Rate basis, shall be a period of
seven (7),  thirty  (30),  ninety  (90)  or one hundred eighty
(180) days.

         Letter of Credit.  See 1.8(a).

         Letter of Credit Bank.  FNBB.

         Loan Documents.  This Agreement, the  Notes,  any
Letters of Credit and any other documents and instruments
executed and delivered in connection with this Agreement.

         Loan Notes.  See 1.2.

         Loans.  See 1.1.

         LIBO  Prepayment Charge.  An amount equal to the
product of (i) the difference  between  (A)  the  LIBO  Rate in
effect during an Interest Period during which all or any
portion  of any  Note  shall  be prepaid voluntarily and (B) the
LIBO Rate which would have been quoted (on the amount so prepaid
and for the remaining portion of such Interest Period) by the
Agent to the Company had the date of such prepayment been a
Rate-Fixing Date, times (ii) the amount so prepaid, times (iii)
a fraction the numerator of which  is the number of days in the
remaining portion of such Interest  Period  and the denominator
of which is three hundred and sixty (360).




/83


         LIBO  Rate.  The annual rate of  interest
determined  by each Bank at or about  11:00 A.M., London Time,
on the Rate-Fixing Day prior to the first  day  of any Interest
Period, as being the rate of interest at which deposits  of
United States Dollars  could  be obtained by such Bank in the
London  inter-bank  foreign  currency   deposits  market,  at
the  time  of determination and in accordance  with  the  usual
practice in such  market,  for  delivery on the first day of
such Interest Period  and  for the number  of  days  comprised
therein,  in amounts equal  (as  nearly  as  may  be) to the
portion of the unpaid principal of the Eurodollar Loan(s)  to
be outstanding on the first day of such Interest Period.

         Majority  Banks.   As  of any date, the Banks holding
at least fifty-one percent (51%)  of  the  outstanding
principal amount of the Notes on such date; and if no such
principal is outstanding,  the Banks whose aggregate Commitments
constitute at least fifty-one percent (51%) of the Commitment
Amount.

         Maximum Drawing  Amount.   With  respect to any Letter
of Credit,  the  maximum  amount which the beneficiary  may
draw under such Letter of Credit,  as  such  amount  may be
reduced from  time  to  time  pursuant to the terms of such
Letter  of  Credit.

         Money Market Loan(s).   That  portion  of  any Loans
made hereunder,  the  interest  rate  on  which  is  calculated
by reference to the Money Market Rate in accordance  with  1.2.1
hereof.

         Money  Market Prepayment Charge.  An amount equal to
the product of (i)  the  difference  between  (A) the Money
Market Rate in effect during an Interest Period during  which
all or any  portion of any Note shall be prepaid voluntarily and
(B) the Money  Market  Rate  which  would have been quoted (on
the amount  so  prepaid  and  for the remaining  portion  of
such Interest Period) by the Agent  to  the Company had the date
of such prepayment been a Rate-Fixing Date, times (ii) the
amount so prepaid, times, (iii) a fraction  the numerator of
which is the number of days in the remaining portion  of  such
Interest Period and the denominator of which is three hundred
and sixty (360).





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         Net Income.  For any period, the consolidated  after
tax net  income  or  net  loss  the  Company  and its
Consolidated Subsidiaries  as  determined  in  accordance  with
generally accepted  accounting  principles applied on a basis
consistent with the financial statements  referred to in 3.4
(except for changes  concurred  with by the Company's
independent public accountants) minus (a)  the  aggregate of any
extraordinary or non-recurring credits included  in such
determination plus (b) any  extraordinary  or  non-recurring
charges  and  (c)  the aggregate of all debits made to retained
earnings  during the period  other  than dividends,
distributions and transfers  to capital accounts (including
currency translation adjustments).

         Notes.  The Loan Notes and the Amortizing Notes.

         Obligations.  All indebtedness, obligations and
liabilities of the Company  to any of the Banks and the Agent,
individually or collectively,  existing  on  the  date of this
Agreement or arising thereafter, direct or indirect,  joint or
several,   absolute   or  contingent,  matured  or  unmatured,
liquidated or unliquidated,  secured  or unsecured, arising by
contract, operation of law or otherwise,  arising  or incurred
under this Agreement or any of the other Loan Documents  or in
respect  of  any  of the Loans or any of the Notes, Letters of
Credit  or  other  instruments  at  any  time  evidencing  any
thereof.

         Original Credit Agreement.  See preamble.

         Person.  Any individual, corporation, partnership,
trust, unincorporated association,  business  or  other legal
entity, and  any  government or any governmental agency  or
political subdivision thereof.

         Property.   All  properties  owned  or  operated  by
the Company.

         Rate-Fixing  Date.  Any Business Day on which the
Company is permitted or required  to  select  the  basis  for
interest calculations under any Note.

         Register.  See 9.3.

         Release.  As specified in the Comprehensive
Environmental Response,  Compensation  and Liability Act of
1980, 42  U.S.C.  9601  et  seq.  ("CERCLA")   and  the  term
"Disposal"  (or  "Disposed") shall have the meaning  specified
in the Resource Conservation  and  Recovery Act of 1976, 42

/85



U.S.C.  6901  et seq.   ("RCRA")   and  regulations
promulgated   thereunder;  provided, that in the  event  either
CERCLA or RCRA is amended  so as to broaden the meaning of any
term defined thereby, such broader meaning shall apply as  of
the effective date of such amendment and provided further, to
the extent that the laws of a state wherein the property lies
establishes  a  meaning  for "Release"  or  "Disposal"  which
is broader than specified in either CERCLA or RCRA, such broader
meaning shall apply.

         Reserve Charge.  An amount equal  to  the  product of
(i) the  outstanding  principal  amount  of  the Eurodollar
Loans hereunder  times  (ii)  the remainder of (a)  the  LIBO
Rate, expressed as a decimal, divided  by the remainder of one
minus the Reserve Rate, minus (b) the LIBO  Rate;  times  (iii)
the fraction,  the  numerator  of  which  shall  be  one  and
the denominator of which shall be three hundred and sixty (360).

         Reserve  Rate.   For purposes relating to the
computation of the Reserve Charge,  the  rate,  expressed  as a
decimal at which  any  Bank would be required to maintain
reserves  under Regulation D  of the Board of Governors of the
Federal Reserve System (or any  subsequent  or  similar
regulation relating to such reserve requirements) against
"Eurocurrency liabilities" (as such term is defined in
Regulation  D) if such liabilities were outstanding.

         Tangible  Net  Worth.  The aggregate book  value  of
the consolidated  assets  of  the  Company  and  its
Consolidated Subsidiaries  (after deduction  therefrom  of  all
applicable reserves and allowances) minus the sum of (a) the
consolidated liabilities of  the  Company and its Consolidated
Subsidiaries and (b) the net book value of the Company's
investments in and loans, advances and extensions  of  credit
to  Unconsolidated Subsidiaries,  goodwill,  patents,
franchises, trademarks  and trade  names, research and
development  expenses  and  similar intangibles,  all
determined  in  accordance  with  generally accepted  accounting
principles consistent with those followed in the preparation  of
the financial statements referred to in 3.4, (except for changes
concurred  with  by  the  Company's independent public
accountants).






/86



              Working Capital.  An amount equal to total current
assets less   total   current  liabilities.   For  purposes  of
this Agreement, "current  liabilities" will not include
outstanding Loans under this Agreement.

              All  terms of an accounting  character  not
specifically defined herein  shall  have  the  meanings assigned
thereto by generally accepted accounting principles.

              3.  REPRESENTATIONS AND WARRANTIES. The Company
represents and warrants to the Banks and the Agent that:

                    3.1.  Corporate  Authority.   The Company
and each Consolidated  Subsidiary  (i) is a corporation duly
organized, existing and in good standing  under  the laws of the
state or foreign country of its incorporation, (ii)  has  all
requisite corporate  power to own its property and conduct its
business as now conducted and as presently contemplated and
(iii) is in good standing  as a foreign corporation and is duly
authorized to do business in  each  jurisdiction  where the
nature of its properties  or  its business requires such
qualification  and where the failure  to so qualify would,
individually or in the aggregate, have a material  adverse
effect  on  the business, financial  condition  or results of
operations of the  Company and  its Consolidated Subsidiaries
taken  as  a  whole.   The execution,  delivery and performance
of this Agreement and the transactions  contemplated  hereby
are  within  the corporate authority  of  the  Company,  have
been authorized by  proper corporate proceedings and will not
contravene any provision of law,  its articles of organization
or  by-laws  or  any  other agreement,  instrument or
undertaking binding upon the Company or any Consolidated
Subsidiary.

              3.2.  Governmental  Approvals.   The execution,
delivery and  performance  of  this Agreement by the  Company
and  the transactions between the parties hereto contemplated
hereby do not require any approval  or  consent  of, or filing
with, any governmental agency or authority, except  such, if
any, as may be required by the Banks.

              3.3.  Title  to  Properties;  Absence of Liens.
The Company  and  each Consolidated Subsidiary has good and
valid title to all properties,  assets  and rights of every name
and nature now purported to be owned by  it  and, except as
listed and  described on Schedule 3.3 attached hereto,  all  of
said properties,  assets  and  rights  are  free  from all
defects, liens, charges and encumbrances whatsoever, except
those of a nature permitted by 5.4.

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         3.4.  Financial  Statements.   The Company has
furnished  to  the  Agent  a balance sheet as at December  31,
1991  and related statements  of income and cash flow of the
Company for the  fiscal year then  ended,  each  certified  by
Coopers  & Lybrand.   The balance sheet and statements of income
and cash flow so furnished  (i)  have  been prepared in
conformity with generally  accepted  accounting  principles
applied   on   a consistent  basis  throughout  the  periods
specified and (ii) present fairly the financial position  of
the   Company as at the dates thereof.

              3.5.  Changes.  Since   the   date  of  the
financial statements  described  in  3.4, there has  been  no
material change  in  the assets, liabilities,  financial
condition  or business of the  Company  or any Consolidated
Subsidiary other than changes in the ordinary course of
business, the effect of which  has  not  been in any case, or
in  the  aggregate, materially  adverse.   Since the dates  of
the  financial statements  described in 3.4 the Company has
neither authorized, agreed to make nor made any Equity
Distribution.

              3.6.  Taxes.  The Company and each Consolidated
Subsidiary  has  filed  all  federal  and  state  tax
returns required to be filed and  all  taxes,  assessments  and
other governmental  charges due upon any of such companies have
been fully paid and  no  extensions  of  time  of payment have
been requested.    Each   of   the  Company  and  its
Consolidated Subsidiaries  has  paid  or recorded  on  its
books  reserves adequate for the payment of  all  federal and
state income tax liabilities.

              3.7.  Litigation.  There is no  litigation
pending, or, to the knowledge of its officers, threatened
against  the Company or any Consolidated Subsidiary which will
substantially adversely affect the ability of the Company to
perform its obligations hereunder.

              3.8.  Environmental Compliance.  The Company has
taken all necessary steps to investigate the past and  present
condition  and  usage  of  the  Property  and the operations
conducted thereon and, based upon such diligent investigation,
has determined that:






/88



              (a)    none   of   the   Company,  its
Consolidated Subsidiaries or any operator of the Property or any
operations thereon  is  in  violation,  or  alleged   violation,
of  any  Environmental  Law,  which  violation  would have  a
material adverse effect on the environment or the  business,
assets or financial  condition of the Company or any of its
Consolidated Subsidiaries;

              (b)   except  as  set forth on Schedule 3.8
attached hereto,  neither  the  Company nor  any  of  its
Consolidated Subsidiaries  has  received   notice   from  any
third  party including,  without limitation: any federal,  state
or  local governmental  authority,  (i)  that  any  one of them
has been identified  by  the  United  States  Environmental
Protection Agency ("EPA) as a potentially responsible  party
under CERCLA with respect to a site listed on the National
Priorities List, 40 C.F.R. Part 300 Appendix B (1986); (ii) that
any Hazardous Materials which any one of them has generated,
transported  or disposed  of  has  been  found at any site at
which a federal, state or local agency or other  third  party
has conducted or has  ordered  that  the  Company  or  any  of
its Consolidated Subsidiaries  conduct  a  remedial
investigation,  removal  or other response action pursuant  to
any  Environmental Law; or (iii)  that  it  is or shall be a
named party  to  any  claim, action, cause of action, complaint,
or legal or administrative proceeding (in each case, contingent
or otherwise) arising out of any third party's  incurrence of
costs, expenses, losses or damages of any kind whatsoever  in
connection with the release of Hazardous Materials;

              (c)  except for violations  with potential
liability of less than $1,000,000 and except as set  forth  on
Schedule 3.8  attached hereto: (i) no portion of the Property
has  been used for  the  handling,  processing,  storage  or
disposal of Hazardous  Materials  except  in  accordance  with
applicable Environmental  Laws;   and   no  underground  tank
or other underground  storage receptacle  for  Hazardous
Materials  is located on any  portion of the Property; (ii) in
the course of any activities conducted  by  the  Company,  its
Consolidated Subsidiaries  or  operators  of  its  properties,
no Hazardous Materials  have  been  generated  or  are being
used  on  the Property  except  in accordance with applicable
Environmental Laws; (iii) there have  been  no  releases  (i.e.
any past or present   releasing,   spilling,  leaking,  pumping,
pouring, emitting,   emptying,   discharging,    injecting,
escaping, disposing  or  dumping)  or threatened releases  of
Hazardous Materials on, upon, into or from the properties of the

/89



Company or its Consolidated Subsidiaries,  which releases would
have a material adverse effect on the value of any of the
Property or adjacent properties or the environment;  (iv)  to
the best of the Company's knowledge, there have been no releases
on, upon, from or into any real property in the vicinity of any
of  the Property which, through soil or groundwater
contamination, may have  come  to  be located on, and which
would have a material adverse effect on  the  value  of,  the
Property;  and (v) in addition, any Hazardous Materials that
have been generated  on any  of  the  Property  have  been
transported offsite only by carriers having an identification
number  issued  by the EPA, treated or disposed  of  only  by
treatment  or  disposal facilities  maintaining   valid
permits  as  required  under applicable   Environmental   Laws,
which transporters and facilities have been and are,  to  the
best  of the Company's knowledge,  operating  in  compliance
with  such permits  and applicable Environmental Laws; and

         (d)  none of the Property is or shall  be subject to
any  applicable environmental clean-up responsibility  law  or
environmental  restrictive  transfer  law  or  regulation,  by
virtue  of  the transactions set forth herein and contemplated
hereby.

         4.  CONDITIONS TO LOANS.  The obligation of the Banks
to effect the amendment  and  restatement  of the Original
Credit Agreement and to make Loans hereunder is conditioned upon

              4.1.  in the case of all borrowings:

                    (a)  receipt  by  the Agent of at  least
three  (3) Business Days' prior written  notice  from  the
Company of the proposed date and amount of the borrowing; and

                    (b)  the  fact  that  at  the  completion
of the borrowing, no Default specified in 6 and no event which,
with the giving of notice or lapse of time or both, would become
a Default  will have occurred and be continuing; and delivery to
the Agent of  the  certificate  to  that  effect signed by an
authorized officer of the Company.

         4.2.  in the case of the effectiveness  of the
amendment and restatement of the Original Credit Agreement and
the first borrowing thereafter, (a) receipt by the Agent  of  an
opinion addressed  to FNBB individually and as Agent of Stephen
Korn, general counsel  for the Company, in form, scope and
substance satisfactory to the  Agent,  as to (i) the matters
referred to in 3.1 and 3.2, (ii) the validity  and
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enforceability of the Company's obligations hereunder and under
the Notes except as limited by bankruptcy, insolvency,
reorganization,  moratorium or other laws  relating  to  or
affecting  generally  the enforcement of creditors' rights, and
(iii) such other matters as the Banks or  the Agent may
reasonably request; and (b) the Company shall have paid all
commitment fees under the Original Credit Agreement accrued to
the Closing Date.

         5.  COVENANTS.  During the term of this Agreement
unless compliance shall have been waived in writing by the
Banks, the Company agrees that:

              5.1.  Financial  Statements.   It  will  furnish
to the Agent:

              (a)  within  90  days  after  the end of each
fiscal year the Consolidated balance sheet of the  Company  as
at the end of, and the related Consolidated statements of income
and cash  flow  for  such  year certified by independent
certified public accountants of nationally recognized standing;

              (b)  within 45  days  after  the  end of each of
the first  three  fiscal  quarters  of  each  fiscal year  of
the Company, the Consolidated balance sheet as  at the end of,
and the related Consolidated statements of income  and  cash
flow, in  each  case  in  the form required under 5.1(a), for
such three month period in  each  case  certified  by the
principal financial officer of the Company, subject, however,
to  year-end audit adjustment; and

              (c)  from time to time such other financial data
and information as any Bank or the Agent may reasonably request.

              The  financial  statements referred to above in
this 5.1 shall  be  prepared  in  accordance  with  generally
accepted accounting principles, such  principles  to be
consistent with those followed in the preparation of the
financial statements referred to in 3.4, except as otherwise
concurred with by the Company's independent public accountants.

              5.2.  Taxes.  It will pay or cause to be paid all
taxes, assessments or governmental charges on or against it or
any of its Consolidated Subsidiaries or its or their properties
prior to  the  time when they become delinquent; provided that
this covenant shall  not  apply  to  any  tax, assessment or
charge which is being in good faith contested  and  with
respect  to which  adequate  reserves  have been established and
are being maintained.

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               5.3.  Guaranties.  It  will  not and will not
permit any of  its  Consolidated Subsidiaries to  endorse,
guarantee  or become surety  for  the  obligations  of  any
person, firm or corporation except that (i) the Company may
guarantee  without limitation   the   obligations  of  any  of
its Consolidated Subsidiaries;   (ii)  the   Company   and   its
Consolidated Subsidiaries may guarantee the obligations of any
person, firm or  corporation,  but  the  aggregate  dollar
amount  of  all obligations guaranteed  under  the  permissive
grant  of this clause (ii) shall not exceed at any one time
outstanding  U.S. $2,000,000;   (iii)   the   Company   and
its   Consolidated Subsidiaries  may  guarantee  the
obligations of any firm  or corporation in which the Company has
an  ownership  interest; and  (iv)  the  Company and its
Consolidated Subsidiaries  may endorse checks for  collection
or  deposit  in  the  ordinary course of business.

              5.4.  Negative Pledge.  It will not create or
suffer  to be  created  or  permit  to  exist any mortgage,
pledge, lien, security  interest  or  other  encumbrance  upon
any  of  its properties or assets or upon the  property or
assets of any of its Consolidated Subsidiaries except  (i)
liens  for taxes or assessments not yet due or whose validity or
amount  is  being contested in good faith by appropriate
proceedings (unless and until  foreclosure,  distraint, sale or
any similar proceeding shall have been instituted)  and
adequate reserves shall have been established and maintained in
accordance  with generally accepted  accounting  principles,
(ii) real estate  mortgages securing indebtedness which is or
was  undertaken  to purchase the mortgaged real estate and
covering only the real estate so purchased,  (iii)  security
interests  securing  indebtedness arising  out  of the
acquisition of personal property  by  the Company or a
Consolidated  Subsidiary  for use in its business or
indebtedness arising out of the acquisition of real
and personal property by the Company in connection with
Industrial Revenue  Bonds of the Company purchased by FNBB,
provided that the aggregate principal amount of indebtedness
secured by each security interest  may  not  exceed  the
purchase price of the property  so  acquired,  (iv)  other
liens  and  encumbrances incidental to the conduct of its
business  or the ownership of its  assets  which  were not
incurred in connection  with  the borrowing of money or the
obtaining of advances or credit, and which  do not in the
aggregate  materially  detract  from  the value of  its  assets
or materially impair the use thereof in the operation of its
business,  (v)  notes  receivable arising from  the  financing

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of  water softener sales, which  may  be pledged as collateral,
(vi)  security  interests  or mortgages securing  indebtedness
which is undertaken in connection  with project financings,
provided  that  the  aggregate  principal amount  of
indebtedness secured by such security interests
or mortgages  shall  not  exceed  $20,000,000  at  any  one
time outstanding,  (vii)  security  interests  or  mortgages on
the property  or  assets  of  any entity acquired by the
Company, provided that the aggregate  principal  amount of
indebtedness secured  by  such  security interests or mortgages
shall not exceed $5,000,000 at  any  one  time  outstanding,
and (viii) renewals,  extensions  or  replacements  of  any  of
the debts underlying  said liens or encumbrances referred to in
clauses (ii),  (iii),  and  (iv)  above,  secured  by  such
liens  or encumbrances   at  the  time  of  the  renewal,
extension  or replacement and  applying  only to the same
property or assets theretofore subject to such liens or
encumbrances.

              5.5.  Merger and Sale  of  Assets. It will not,
and will not permit any Consolidated Subsidiary to consolidate
or merge with or into any other corporation  and  will not sell,
lease, transfer or otherwise dispose of more than  ten percent
of its assets  other than in  the  ordinary  course  of
business; provided,  that  (i)  a  Consolidated Subsidiary, or
any other corporation organized under  the  laws  of  any  state
of the United  States  of America, may be merged into or
consolidated with the Company,  or  another  Consolidated
Subsidiary if the Company  or  such  Consolidated  Subsidiary
shall be the continuing  or  surviving  corporation;  (ii)  any
corporation (other than the Company) organized under the laws of
any state of  the  United  States  of  America  may  be  merged
into or consolidated   with   any  Consolidated  Subsidiary  if
such Consolidated Subsidiary  shall  be the continuing or
surviving corporation or such other corporation shall
immediately become a Consolidated Subsidiary; (iii)  any
Consolidated Subsidiary may sell, lease, transfer or otherwise
dispose  of  its assets to  the  Company;  and  (iv)  no
merger, consolidation, sale, lease, transfer or other
disposition  shall be permitted under (i),  (ii)  or  (iii)
above unless immediately  after  giving effect thereto, the
Company  shall  be  in compliance with all other requirements in
this Agreement.






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              5.6.  Net Worth.    The Company will not permit
Consolidated  Tangible  Net  Worth  to   be   less than  (i)
$150,000,000  plus  seventy  percent  (70%)  of  the
aggregate annual increases in Consolidated Tangible Net Worth
from that existing  on  June  30,  1992  or (ii) 66 2/3% of
Consolidated Indebtedness, whichever of (i) or (ii) is the
greater.

              5.7.  Working  Capital.  The  Company  will  not
permit Consolidated Working Capital to be less than $30,000,000.

              5.8.  Permitted  Indebtedness.  The Company will
not nor will it permit any Consolidated  Subsidiary to, create,
assume or have outstanding Indebtedness owed by it for money
borrowed other than the following:

                    (a)  Indebtedness   arising   from   the
Company's financing of consumer credit sales  of its water
softeners and related products not exceeding in the  aggregate
at  any  one time  outstanding,  the  lesser of $12,000,000 or
seventy-five percent (75%) of the total  unpaid  amount  due  on
customers' notes given in such sales transactions;

                    (b)  Indebtedness   arising   in
connection with Industrial Revenue Bonds of the Company
purchased by FNBB;

                    (c)  Purchase  money Indebtedness arising
from  the acquisition  of  real or personal  property  for  use
in  the business of the Company or of any Consolidated
Subsidiary;

                    (d)  Indebtedness   arising   from   the
Company's financing (whether by sale or by lease) of its water
coolers;

                    (e)  Indebtedness  of  the  Company  or  any
of its Consolidated  Subsidiaries  other  than  that  referred
to in clauses  (a),  (b),  (c)  and  (d)  above,  owed  to  a
bank, corporation,  firm  or  other  person  not  exceeding  in
the aggregate amount at any one time outstanding the principal
sum of $45,000,000; and

                    (f)  Indebtedness  owed  to  the  Banks
under  this Agreement and the Notes.




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              5.9.  Sale  and  Leaseback.   The  Company will
not, nor will  it  permit  any  Consolidated  Subsidiary  to,
sell  or transfer any of its properties with the  intention  of
taking back  a lease of any such property, without the prior
approval of the  Banks,  such approval not to be unreasonably
withheld.  Notwithstanding  the  foregoing,  the  Company  shall
not  be required to obtain  the prior approval of the Banks if
the net book value of all property  to be sold or transferred
does not exceed $1,000,000 in aggregate amount in any fiscal
year.

              5.10.  Environmental Matters.

                    5.10.1.  Indemnification.   The  Company
covenants and agrees that it will indemnify and hold the Banks
harmless from and  against  any  and  all  claims,  expense,
damage, loss or liability incurred by the Agent or any of the
Banks (including all costs of legal representation incurred by
the Agent or any of  the  Banks) resulting from (a) any Release
or  threatened Release of  Hazardous  Materials  on  the
Property,  (b)  any violation of any Environmental Laws with
respect to conditions at  the  Property  or the operations
conducted thereon, or (c) the investigation or remediation of
offsite locations at which the Company or its predecessors  are
alleged to have directly or indirectly Disposed of Hazardous
Materials  to  the  extent that  such liability arises from such
Disposal by the Company, except  any  of  the  foregoing  which
result  from the gross negligence or willful misconduct of the
indemnified party.  It is expressly acknowledged by the Company
that this covenant of indemnification  shall  survive the
payment of the  Loans  and shall inure to the benefit  of the
Agent, the Banks, and their successors and assigns.

              5.10.2.  Notice.   The Company covenants and
agrees promptly to provide the Agent with written  notice:   (a)
upon the  Company's  obtaining  knowledge  of  any violation of
any Environmental  Law  regarding  the Property or  the
Company's operations  which  violation could  have  a  material
adverse effect on the Property  or  on  the  Company's
operations; (b) upon the Company's obtaining knowledge  of  any
potential or known  Release,  or  threat  of  Release,  of  any
Hazardous Materials  at,  from, or into the Property which it
reports in writing or is reportable  by it in writing to any
governmental authority or which could materially  affect  the
value of the Property;  (c)  upon  the  Company's receipt of any
notice  of violation of any Environmental  Laws  or  of  any
Release  or threatened  Release of Hazardous Materials,

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including a notice or claim of liability  or  potential
responsibility  from any third  party (including without
limitation any federal,  state or local  governmental
officials) and including notice of any formal inquiry,
proceeding,  demand,  investigation  or  other action  with
regard  to  (A)  the  Company's  or any person's operation of
the Property, (B) contamination on,  from or into the  Property,
or (C) investigation or remediation of  offsite locations at
which the Company or its predecessors are alleged to  have
directly or indirectly  Disposed  of  Hazardous Materials; or
(d) upon the Company's obtaining knowledge that any expense or
loss has been  incurred  by  such  governmental authority  in
connection  with  the  assessment, containment, removal or
remediation of any Hazardous Materials with respect to which the
Company may be liable or for  which a lien may be imposed on the
Property.

              5.10.3.  Response  Actions.  The Company
covenants  and agrees that if any Release  or Disposal of
Hazardous Materials shall  occur  or  shall have occurred  on
the  Property,  the Company will cause  the prompt containment
and removal of such Hazardous  Materials  and   remediation  of
the  Property  as necessary to comply with all Environmental
Laws or to preserve the value of the Property.  All  such
response  actions shall commence  within 90 days of providing
notice to the  Agent  of such Release or Disposal pursuant to
5.10.2 hereof.

              6.  DEFAULTS.   If  any  of the following events
shall occur:

              6.1.  if the Company shall fail to  pay  any
installment of principal or interest of any Note in any case  on
or before the tenth day following the due date thereof;

              6.2.  if the Company shall fail to perform any
covenant contained in 5.3, 5.4, 5.5, 5.8, 5.9 or 5.10 hereof;

              6.3.  if  the Company shall fail to perform any
covenant contained in 5.6  or  5.7 for 30 days after the
commencement date of its failure to perform;

              6.4.  if the Company  shall  fail  to  perform any
term, covenant  or  agreement  herein  contained (other  than
those specified  in  6.1,  6.2 or 6.3 above)  for  30  days
after written notice of default has been given to the Company by
the Agent;


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              6.5.  if any representation  or  warranty of the
Company in 3 hereof or in any certificate delivered  hereunder
shall prove to have been false in any material respect upon the
date when made;

              6.6.  if  the  Company  or  any  Consolidated
Subsidiary shall fail to pay at maturity, or within any
applicable period of grace, any obligation for borrowed monies
or  advances, or fail  to  observe  or  perform any term,
covenant or agreement contained in any agreement by which it is
bound, evidencing or securing borrowed monies  or advances, for
such period of time as  would, or would have permitted
(assuming  the  giving  of appropriate  notice if required) the
holder or holders thereof or of any obligations  issued
thereunder  to  accelerate  the maturity thereof, unless the
same shall have been waived; or

              6.7.  if  the  Company  or  any  Consolidated
Subsidiary shall admit in writing of its inability  to  pay its
debts; or suffer a receiver or trustee for all or substantially
all  of its  property  to  be  appointed and, if appointed
without its consent,  not  to be discharged  within  60  days;
or  suffer proceedings under  any  law relating to bankruptcy,
insolvency or the reorganization or relief of debtors to be
instituted by or against it and, if contested  by it, not to be
dismissed or stayed within 60 days; or suffer any  judgment  in
excess  of $1,000,000 to be entered against it, or any writ of
attachment or  execution  or  any  similar process to be issued
or levied against a substantial part  of  its  property, which
judgment, writ or process is not discharged, released,  stayed,
bonded, or vacated within 60 days after its entry, issue or
levy;

then, and in every such event described above in 6 (Events
of Default, or, if the giving of notice or the lapse of time
or both is required, then, prior to such notice or lapse of
time, Defaults),  if such Default continues, the Agent may, and
upon the request of  the Majority Banks shall, by notice in
writing to the Company, terminate  the  Commitment  of  the
Banks and declare  all  amounts owing with respect to the Notes
held  by the Banks to be,  and  they  shall thereupon forthwith
become, due and payable without presentment,  demand, protest or
other notice of any kind, all of which are hereby  expressly
waived by  the  Company;  provided  that in the event of any
Event of Default  specified  in 6.7, all  such  amounts  shall
become immediately  due and payable  automatically  and  without
any requirement of notice from the Agent or any Bank.


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         7.  SETOFF.

         Any deposits or other sums at any time credited by or
due from any of the  Banks  to  the  Company and any securities
or other property of the Company in the  possession of any of
the Banks  may  at  all  times be held and treated  as
collateral security for the payment  of  the  Notes and any and
all other liabilities, direct or indirect, absolute  or
contingent, due or  to become due, now existing or hereafter
arising,  of  the Company  to  any  of the Banks.  Regardless of
the adequacy of any collateral, any  deposits or other sums
credited by or due from any of the Banks  to the Company may be
applied to or set off against such liabilities  at  any time.
Each of the Banks agrees with each other Bank that (a)  if  an
amount to be set off  is to be applied to Indebtedness of the
Company  to  such Bank,  other  than Indebtedness evidenced by
the Notes held by such Bank, such  amount shall be applied
ratably to such other Indebtedness and to  the  Indebtedness
evidenced  by all such Notes  held  by such Bank, and (b) if
such Bank shall  receive from the Company,  whether  by
voluntary payment, exercise of the right of setoff,
counterclaim,  cross  action, enforcement of  the  claim
evidenced by the Notes held by  such  Bank  by proceedings
against  the  Company  at  law  or in equity or by proof
thereof  in  bankruptcy,  reorganization,  liquidation,
receivership or similar proceedings,  or  otherwise, and
shall retain and apply to the payment of the Note  or  Notes
held by such Bank any amount in excess of its ratable portion
of  the payments  received  by  all  of  the Banks with respect
to the Notes  held  by all of the Banks, such  Bank  will  make
such disposition and arrangements with the other Banks with
respect to such excess,  either  by  way  of  distribution,  pro
tanto assignment of claims, subrogation or otherwise as shall
result in each Bank receiving in respect of the Notes held by
it, its  proportionate  payment  as  contemplated  by  this
Agreement;  provided  that  if  all or any part of such excess
payment  is thereafter recovered  from  such  Bank,  such
disposition and  arrangements shall be rescinded and the amount
restored to the  extent of such recovery, but without interest.

               8.  THE AGENT.

               8.1.  Authorization.   The Agent is authorized
to  take  such action on behalf of each of the Banks and to
exercise all such powers as are hereunder and  under  any of the
other Loan Documents and any related documents delegated  to
the  Agent, together  with such powers as are reasonably

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incident thereto, provided that  no  duties  or
responsibilities  not expressly assumed  herein  or  therein
shall  be  implied to have  been assumed by the Agent.  The
relationship between  the Agent and the  Banks  is and shall be
that of agent and principal  only, and nothing contained  in
this  Agreement or any of the other Loan Documents shall be
construed to constitute the Agent as a trustee for any Bank.

              8.2.  Employees and Agents.   The Agent may
exercise its powers  and  execute  its  duties by or through
employees  or agents and shall be entitled  to  take, and to
rely on, advice of counsel concerning all matters pertaining to
its rights and duties under this Agreement and the other Loan
Documents.  The Agent may utilize the services of such Persons
as the Agent in its  sole  discretion  may  reasonably
determine,   and  all reasonable fees and expenses of any such
Persons shall be paid by the Company.

              8.3.  No  Liability.   Neither the Agent nor any
of its shareholders, directors, officers  or  employees nor any
other Person  assisting  them  in  their  duties nor  any  agent
or employee thereof, shall be liable for  any  waiver, consent
or approval given or any action taken, or omitted to be taken,
in good faith by it or them hereunder or under any  of  the
other Loan Documents, or in connection herewith or therewith,
or be responsible for the consequences of any oversight or error
of judgment  whatsoever,  except  that  the  Agent  or such
other Person,  as the case may be, may be liable for losses  due
to its willful misconduct or gross negligence.

              8.4.  No   Representations.   The  Agent  shall
not be responsible for the execution or validity or
enforceability of this Agreement, the  Notes, any of the other
Loan Documents or any  instrument  at  anytime   constituting,
or  intended  to constitute, collateral security  for  the
Notes,  or  for the value  of  any  such  collateral security or
for the validity, enforceability or collectibility  of  any
such  amounts owing with respect to the Notes, or for any
recitals or  statements, warranties  or  representations made
herein or in any  of  the other Loan Documents  or  in  any
certificate  or  instrument hereafter  furnished to it by or on
behalf of the Company,  or be bound to  ascertain  or  inquire
as  to the performance or observance  of  any  of  the terms,
conditions,  covenants  or agreements  herein  or  in  any
instrument   at   any   time constituting,  or  intended to
constitute, collateral security for the Notes.  The  Agent
shall  not  be  bound to ascertain whether any notice, consent,

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waiver or request delivered to it by  the Company or any holder
of any of the Notes  shall  have been  duly  authorized or is
true, accurate and complete.  The Agent has not made nor does it
now make any representations or warranties,  express  or
implied,  nor  does  it  assume  any liability to the  Banks,
with respect to the credit worthiness  or  financial  conditions
of  the  Company  or  any  of  its  Subsidiaries.    Each   Bank
acknowledges   that   it   has, independently and without
reliance upon the Agent or any other Bank, and based upon such
information  and documents as it has deemed appropriate, made
its own credit  analysis and decision to enter into this
Agreement.

              8.5.  Payments.

                    (a)  A payment by the Company to the Agent
hereunder or any of the other Loan Documents for the account of
any Bank shall  constitute a payment to such Bank.   The  Agent
agrees promptly to distribute to each Bank such Bank's pro rata
share of payments received by the Agent for the account of the
Banks except as otherwise expressly provided herein or in any of
the other Loan Documents.

                    (b)  If in the opinion of the Agent the
distribution of any amount received by it in such capacity
hereunder, under the Notes  or  under  any  of  the  other Loan
Documents might involve   it  in  liability,  it  may  refrain
from   making  distribution  until  its right to make
distribution shall have been adjudicated by a  court  of
competent jurisdiction.  If a  court of competent jurisdiction
shall adjudge that any amount received and distributed by the
Agent  is  to  be repaid, each Person  to  whom  any such
distribution shall have  been  made shall either repay to the
Agent its proportionate share of the amount so adjudged  to be
repaid or shall pay over the same in such manner and to such
Persons as shall be determined by such court.

                    (c)  Notwithstanding anything to the
contrary contained in this Agreement  or  any  of  the  other
Loan Documents, any  Bank  that  fails (i) to make available to
the Agent its pro rata share of any  Loan  or  (ii) to comply
with the provisions of 7 with respect to making  dispositions
and arrangements  with the other Banks, where such Bank's share
of any payment received,  whether  by  setoff or otherwise, is
in excess  of  its pro rata share of such  payments  due  and
to payable to all  of the Banks, in each case as, when and to
the full extent required  by  the  provisions  of  this
Agreement, shall  be deemed delinquent (a Delinquent Bank) and

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shall  be  deemed a  Delinquent  Bank until such time as such
delinquency is satisfied.  A Delinquent  Bank  shall  be  deemed
to  have assigned  any  and  all  payments  due to it from the
Company, whether  on account of outstanding Loans,  interest,
fees  or  otherwise,   to   the   remaining   nondelinquent
Banks  for  application  to,  and reduction of, their respective
pro  rata  shares of all outstanding  Loans.   The Delinquent
Bank hereby authorizes  the  Agent  to  distribute such
payments  to  the nondelinquent Banks in proportion to their
respective pro rata  shares of all outstanding Loans.   A
Delinquent Bank shall be deemed to have satisfied in full a
delinquency when and if, as a  result  of  application  of the
assigned  payments  to  all outstanding  Loans  of  the
nondelinquent  Banks,  the  Banks' respective  pro rata shares
of  all  outstanding  Loans  have  returned  to  those   in
effect  immediately  prior  to  such delinquency  and  without
giving  effect  to  the  nonpayment causing such delinquency.

              8.6.  Holders  of  Notes.   The Agent may deem and
treat the payee of any Note as the absolute  owner  thereof  for
all purposes  hereof until it shall have been furnished in
writing with a different name by such payee or by a subsequent
holder.

              8.7.  Indemnity.   The  Banks  ratably  agree
hereby to indemnify and hold harmless the Agent from and against
any and all claims,   actions   and  suits  (whether  groundless
or otherwise), losses, damages,  costs,  expenses  (including
any expenses  for which the Agent has not been reimbursed  by
the Company as required by 10.6), and liabilities of every
nature and character arising out of or related to this
Agreement, the Notes, or any  of the other Loan Documents or the
transactions contemplated or  evidenced  hereby  or thereby, or
the Agent's actions taken hereunder or thereunder,  except  to
the extent that  any of the same shall be directly caused by the
Agent's willful misconduct or gross negligence.

              8.8.  Agent  as  Bank.  In its individual
capacity, FNBB shall have the same obligations  and  the  same
rights, powers and privileges in respect to its Commitment and
the Loans made by it, and as the holder of any of the Notes, as
it would have were it not also the Agent.

              8.9.  Resignation.  The Agent may resign atany
time by giving  sixty (60) days' prior written notice thereof
to  the Banks  and  the  Company.   Upon  any  such
resignation,  the Majority  Banks  shall  have  the right to
appoint a successor Agent.   Unless  a  Default or Event  of
Default  shall  have occurred and be continuing,  such
successor  Agent  shall  be reasonably  acceptable  to the
/101



Company.  If no successor Agent shall have been so appointed  by
the Majority Banks and shall have accepted such appointment
within  thirty  (30) days after the retiring Agent's giving of
notice of resignation, then the retiring  Agent  may,  on
behalf  of  the  Banks,  appoint  a  successor Agent, which
shall be a financial institution having a  rating  of not less
than A or its equivalent by Standard  &  Poor's Corporation.
Upon the acceptance of any appointment as Agent hereunder  by  a
successor  Agent, such successor Agent shall  thereupon succeed
to and become  vested  with  all  the rights,  powers,
privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations
hereunder.  After any retiring Agent's resignation, the
provisions of this Agreement  and  the  other Loan  Documents
shall  continue  in effect for its benefit in respect of any
actions taken or omitted  to  be  taken  by  it while it was
acting as Agent.

              8.10.  Notification  of  Defaults and Events of
Default.  Each Bank hereby agrees that, upon  learning  of the
existence of a Default or an Event of Default, it shall promptly
notify the  Agent thereof.  The Agent hereby agrees that upon
receipt of any  notice  under  this 8.10 it shall promptly
notify the other Banks of the existence  of  such  Default  or
Event  of Default.

              8.11.   Documents.  The Agent will forward to each
Bank, promptly after  the  Agent's  receipt  thereof, a copy of
each document furnished to the Agent for such Bank hereunder.

              9.  ASSIGNMENT AND PARTICIPATION.

               9.1.  Conditions  to  Assignment by  Banks.
Except  as provided herein, each Bank may  assign to one or more
Eligible Assignees  all  or  a  portion of its  interests,
rights  and obligations under this Agreement  (including  all or
a portion of its  Commitment  Percentage  and Commitment and
the  same portion of the Loans at the time owing  to  it)  and
the Notes held  by  it;  provided  that  (a)  each of the Agent
and  the Company  shall have given its prior written  consent
to  such assignment,  which  consent,  in the case of the
Company, will not be unreasonably withheld, (b)  each  such
assignment shall be  of a constant, and not a varying,
percentage  of  all  the assigning  Bank's rights and
obligations under this Agreement, (c) each assignment  shall  be
in  an  amount that is a whole  multiple of $5,000,000, and (d)
the parties to such assignment shall execute and deliver to the

/102



Agent, for  recording  in the Register   (as   hereinafter
defined),   an  Assignment  and Acceptance, substantially in the
form of Exhibit C  hereto (an Assignment and Acceptance),
together with any Notes subject to such  assignment.   Upon
such execution, delivery, acceptance and recording, from and
after  the effective date specified in each Assignment and
Acceptance,  which effective date shall be at least five (5)
Business Days after  the  execution thereof, (i) the assignee
thereunder shall be a party  hereto  and,  to the  extent
provided  in such Assignment and Acceptance, have the rights and
obligations  of  a Bank hereunder, and (ii) the assigning  Bank
shall,  to  the  extent   provided   in  such assignment  and
upon payment to the Agent of the registration fee referred to in
9.3,  be  released  from  its obligations under this Agreement.

              9.2.  Certain Representations and Warranties;
Limitations;  Covenants.   By  executing  and  delivering
an Assignment  and  Acceptance,  the  parties  to  the
assignment thereunder confirm to and agree with each other and
the other parties  hereto as follows:  (a) other than the
representation  and warranty  that it is the legal and
beneficial owner of the interest being  assigned thereby free
and clear of any adverse claim, the assigning  Bank makes no
representation or warranty and assumes no responsibility  with
respect to any statements, warranties or representations made
in  or  in connection with this Agreement or the execution,
legality, validity, enforceability,  genuineness, sufficiency
or  value  of  this  Agreement, the other Loan Documents or any
other instrument or document furnished  pursuant  hereto;  (b)
the assigning Bank makes no representation   or   warranty  and
assumes no responsibility with respect to the financial
condition of the Company and its Consolidated Subsidiaries or
any other Person primarily or secondarily  liable  in  respect
of any of  the Obligations, or the performance or observance  by
the Company and its Consolidated Subsidiaries or any other
Person primarily or  secondarily  liable  in  respect  of  any
of the Obligations  of  any of their obligations under this
Agreement or any of the other  Loan Documents or any other
instrument or document  furnished  pursuant  hereto  or
thereto; (c) such assignee  confirms  that  it  has received  a
copy of this Agreement, together with  copies  of the most
recent financial statements referred to in 5.1 and  such  other
documents and information  as  it  has  deemed  appropriate to
make its own credit analysis and decision to enter into such
Assignment and Acceptance; (d) such assignee will,
independently and without reliance upon the assigning Bank, the
Agent or any other Bank and based on such documents and
information  as  it shall deem appropriate  at  the  time,
/103



continue  to make its own credit decisions in taking or not
taking action under this Agreement; (e)  such  assignee
represents and warrants  that  it  is  an Eligible Assignee; (f)
such  assignee appoints and authorizes the Agent to take such
action as  agent  on  its behalf and to exercise such powers
under this Agreement and  the  other Loan Documents as are
delegated to the Agent by the terms hereof or thereof,
together   with   such  powers  as  are  reasonably incidental
thereto; (g) such assignee  agrees  that  it  will perform in
accordance  with their terms all of the obligations that  by
the  terms of this  Agreement  are  required  to  be performed
by it  as  a  Bank; and (h) such assignee represents and
warrants that it is legally  authorized to enter into such
Assignment and Acceptance.

         9.3.  Register.  The Agent shall maintain a copy of
each Assignment and Acceptance delivered  to  it  and a register
or similar list (the Register) for the recordation  of  the
names and  addresses of the Banks and the Commitment Percentage
of, and principal  amount  of the Revolving Credit Loans owing
to, the Banks from time to time.   The  entries  in  the
Register shall be conclusive, in the absence of manifest error,
and the Company,  the Agent and the Banks may treat each Person
whose name is recorded  in  the Register as a Bank hereunder for
all purposes of this Agreement.   The  Register shall be
available for inspection by the Company and the  Banks at any
reasonable time and from time to time upon reasonable prior
notice.  Upon each such recordation, the assigning Bank agrees
to pay to the Agent a registration fee in the sum of $2,000.

         9.4.  New Notes.  Upon its receipt  of an Assignment
and Acceptance  executed  by  the  parties  to  such assignment,
together with each Note subject to such assignment,  the Agent
shall  (a)  record  the  information contained therein in
the Register, and (b) give prompt  notice  thereof  to the
Company and  the  Banks (other than the assigning Bank).  Within
five (5) Business  Days  after receipt of such notice, the
Company, at its own expense, shall execute and deliver to the
Agent, in exchange for each surrendered Note, a new Note to the
order of such Eligible Assignee  in  an  amount  equal  to  the
amount assumed  by such Eligible Assignee pursuant to such
Assignment and Acceptance  and,  if  the assigning Bank has
retained some portion of its obligations  hereunder, a new Note
to the order of  the  assigning  Bank  in an amount  equal  to
the  amount retained by it hereunder.   Such  new Notes shall
provide that they are replacements for the surrendered  Notes,
shall be in an aggregate principal amount equal to the aggregate

/104



principal amount of the surrendered Notes, shall be dated the
effective date of such Assignment and Acceptance and shall
otherwise  be in  substantially the form of the assigned Notes.
Within five (5) days  of  issuance of any new Notes pursuant to
this 9.4, the Company shall deliver an opinion of counsel,
addressed to the Banks and the Agent,  relating  to  the due
authorization, execution  and delivery of such new Notes  and
the  legality, validity and  binding  effect  thereof,  in form
and substance satisfactory  to the Banks.  The surrendered
Notes shall be cancelled and returned to the Company.

              9.5.  Participations.  Each Bank may sell
participations to one or more  banks or other entities in all or
a portion of such Bank's rights  and  obligations  under this
Agreement and the  other  Loan  Documents;  provided  that   (a)
each  such participation  shall  be  in  an  amount  of  not
less than $5,000,000,  (b)  any  such  sale  or  participation
shall not affect the rights and duties of the selling  Bank
hereunder to the Company and (c) the only rights granted to the
participant pursuant  to such participation arrangements with
respect  to waivers, amendments  or  modifications  of  the Loan
Documents shall  be  the  rights  to  approve  waivers,
amendments or modifications  that  would  reduce  the  principal
of  or the interest  rate  on  any Loans, extend the term or
increase the amount of the Commitment  of  such  Bank as it
relates to such participant, reduce the amount of any commitment
fees to which such participant is entitled or extend any
regularly scheduled payment date for principal or interest.

              9.6.  Disclosure.  The Company  agrees that any
Bank may disclose information obtained by such Bank  pursuant
to  this Agreement to assignees or participants and potential
assignees or  participants  hereunder;  provided  that such
assignees or participants  or  potential  assignees  or
participants shall agree (a) to treat in confidence such
information,  (b) not to disclose such information to a third
party and (c) not to make use of such information for purposes
of transactions unrelated to such contemplated assignment or
participation.

              9.7.   Miscellaneous  Assignment  Provisions.   If
any assignee Bank is not incorporated under the laws of the
United States of America or any state thereof, it shall, prior
to the date  on  which  any interest or fees are payable
hereunder or under any of the other Loan Documents for its
account, deliver to the Company and the Agent certification as
to its exemption from deduction or  withholding  of  any  United
States federal income taxes.  Anything contained in this  9  to
/105



the contrary notwithstanding, any Bank may at any time pledge
all or any portion  of  its  interest  and  rights  under  this
Agreement (including  all  or  any portion of its Notes) to any
of  the twelve Federal Reserve Banks organized under 4 of the
Federal Reserve  Act,  12  U.S.C.   341.    No  such  pledge  or
the enforcement thereof shall release the  pledgor  Bank  from
its obligations   hereunder   or  under  any  of  the  other
Loan Documents.

              9.8.  Assignment by the  Company.  The Company
shall not assign or transfer any of its rights  or obligations
under any of the Loan Documents without the prior  written
consent  of each of the Banks.

              10.  MISCELLANEOUS.

              10.1.   Notices.   All  written notices hereunder
to any party hereto shall be deemed to  have been given when
properly deposited in the mails or delivered  to  the telegraph
company addressed to such party at its address given  above  or
at any other  address specified in writing to the person giving
such notice.    All  written  notices  shall  be  sent  prepaid
by certified mail,  return  receipt  required,  or  by
telegraph.   Notwithstanding the foregoing, the written notice
called  for in 1.2.1 hereof is effective only upon receipt by
the Agent.

              10.2.  Term of Agreement.  This Agreement shall
continue in  force and effect so long as any Commitment, or any
Note or any obligation  of  the  Company  for  any  interest  or
other amounts owing hereunder shall be outstanding.

              10.3.  No  Waivers.   No failure or delay by any
of  the Banks in exercising any right,  power,  or privilege
hereunder shall  operate as a waiver thereof; nor shall  any
single  or partial exercise  thereof  preclude  any  other  or
further exercise thereof  or the exercise of any other right,
power or privilege.

              10.4.  Massachusetts  Law.  This Agreement and
each Note shall be deemed to be a contract  made under seal and
shall be construed in accordance with and governed  by  the laws
of the Commonwealth of Massachusetts.

              10.5.  Computation  of  Interest.   Interest
shall  be computed  on the basis of a year of 360 days and paid
for  the actual number  of days for which due.  If the due date
for any payment of principal is extended by operation of law,
/106



interest shall be payable  for  such  extended  time.   If  any
payment required  by this Agreement becomes due on a day on
which  the Agent is required  or  permitted by law to remain
closed, such payments may be made on  the  next succeeding day
on which the Agent  is  open,  and  such extension  shall  be
included  in computing interest in connection with such payment.

              10.6.  Expenses.   The  Company  will pay all
reasonable out-of-pocket  expenses  incurred  by  the  Agent
(including reasonable fees and disbursements of Messrs. Bingham,
Dana & Gould,  counsel  for  the  Agent)  in  connection with
(i) the preparation, review and execution of this  Agreement
and  all other documents contemplated   herein   and   (ii)
the administration of the loan  program  contemplated herein.
The Company   will  pay  all  reasonable  out-of-pocket
expenses incurred by  any  Bank  or  the  Agent  in connection
with the enforcement of any of the provisions hereof.

              10.7.  Environmental  Assessments.    After
reasonable notice by the Banks, whether or not an Event of
Default  shall have  occurred,  the  Banks  may,  from time to
time, in their discretion for the purpose of assessing and
ensuring the value of the Property, obtain one or more
environmental assessments or  audits of the Property prepared by
a  hydrogeologist,  an independent  engineer  or other qualified
consultant or expert approved by the Banks to  evaluate  or
confirm (i) whether any Hazardous Materials are present in the
soil  or  water at the Property  and  (ii)  whether  the  use
and  operation of  the Property complies with all Environmental
Laws.   Environmental assessments  may  include  without
limitation detailed  visual inspections of the Property
including, without limitation, any and all storage areas,
storage  tanks,  drains,  dry wells and leaching areas, and the
taking of soil samples, surface  water samples  and  ground
water  samples,  as  well  as such other investigations or
analyses as the Banks deem appropriate.   If any  Event of
Default shall have occurred and be continuing at the time  such
assessments  or  audits  are  commenced,  such environmental
assessments or audits shall be at the sole cost and expense of
the  Company, if no Event of Default shall have occurred and be
continuing  at  such time, such assessments or audits shall be
at the Banks' expense.

              10.8.  Consents, Amendments,  Waivers,  Etc.
Except as otherwise expressly provided in this Agreement, any
consent or approval  required or permitted by this Agreement to
be  given by one or more  or all of the Banks may be given, and
any term of this Agreement or of any other instrument related
/107



hereto or mentioned herein  may  be  amended,  and  the
performance or observance  by  the  Company of any terms of this
Agreement or such other instrument  or  the  continuance  of any
Default or Event  of  Default  may be waived (either generally
or in a particular instance and either retroactively or
prospectively) with, but only with,  the  written  consent of
the Company and the  written  consent of the Majority Banks.
Notwithstanding the foregoing,  (i)  no  amendment,  waiver  or
consent shall, unless in writing and signed by all of the Banks,
reduce  the principal of or interest rate on any Loans, extend
the term or increase  the amount of the Commitment of any Bank,
reduce the amount of any  commitment fees, extend any regularly
scheduled payment date for  principal  or  interest,  or  change
the definition of Majority  Banks;  and (ii) 8 may not be
amended without the written consent of the  Agent.   No  waiver
shall extend  to  or  affect  any obligation not expressly
waived or impair any right consequent  thereon.  No course of
dealing or delay or omission on the part  of  any  Bank in
exercising any right  shall  operate  as  a  waiver thereof or
otherwise  be prejudicial thereto.  No notice  to or demand upon
the Company shall entitle the Company to other or further notice
or demand in similar or other circumstances.

         10.9.  Counterparts.  This Agreement  may  be  signed
in any  number  of  counterparts  with the same effect as if
the signatures hereto and thereto were  upon  the same
instrument.  Complete sets of counterparts shall be lodged with
the Company and the Banks.

                              IONICS, INCORPORATED


                              By: /s/Arthur L. Goldstein
                              Title: Chairman and Chief
                                     Executive Officer


                              THE FIRST NATIONAL BANK OF BOSTON,
                                  individually and as Agent


                              By: /s/H.J. Petrillo
                              Title: Vice President




/108




                                                 EXHIBIT A


                       FORM OF LOAN NOTE

$25,000,000                             Boston, Massachusetts


     For value received, Ionics, Incorporated (the "Maker"), a
Massachusetts corporation, promises to pay to the order of The
First National Bank of Boston (the "Bank") at its head office,
the principal sum of Twenty Five Million Dollars ($25,000,000),
or if less than such principal amount, the aggregate unpaid
principal amount of all Loans made by the Bank to the Maker
pursuant to the Credit Agreement described below, as shown on
the Schedule attached to and made part of this Note, on December
31, 1995 and to pay interest on the unpaid balance hereof at
said office on the first day of each January, April, July and
October from the date hereof until maturity at a rate computed
in accordance with, and to pay such other charges, if any, as
may be required pursuant to, the provisions of the Credit
Agreement described below, as shown on the Schedule attached to
and made pat of this Note, on December 31, 1995 and to pay
interest on the unpaid balance hereof at said office on the
first day of each January, April, July and October from the date
hereof until maturity at a rate computed in accordance with, and
to pay such other charges, if any, as may be required pursuant
to, the provisions of the Credit Agreement described below.

     Overdue principal and interest shall bear interest at a
rate which at all times shall be one percent (1%) above the rate
of interest hereon in effect from time to time compounded
monthly and payable on demand.

     This note is the Loan Note issued under and is subject to
the Amended and Restated Credit Agreement dated as of December
31, 1992 ( as amended from time to time, the "Credit Agreement")
among the Maker, the Bank, such other lending institutions as
may become parties thereto from time to time, and The First
National Bank of Boston as Agent, and all capitalized terms used
herein which are not otherwise defined herein have the meanings
assigned to them by the Credit Agreement.  Reference is made to
the Credit Agreement for rights as to the prepayment hereof, the
acceleration of the maturity hereof, and the selection of
interest charges payable hereunder.


/109



     Every maker, endorser and guarantor of this Note or of the
obligation represented hereby waives presentment, demand,
notice, protest and all other demands and notices in connection
with the delivery, acceptance, performance, default or
enforcement of this Note, assents to any extension or
postponement of the time of payment of any other indulgence, to
any substitution, exchange or release of collateral and to the
addition or release of any other party or person primarily or
secondarily liable.

                              IONICS, INCORPORATED



Dated:_______________         By:_________________________
                                 Title

































/110



                                                 EXHIBIT B

                            FORM OF
                        PROMISSORY NOTE


$______________                         Boston, Massachusetts


     FOR VALUE RECEIVED, Ionics, Incorporated (the "Maker"), a
Massachusetts corporation, hereby promises to pay to the order
of The First National Bank of Boston (the "Bank"), at its head
office, the principal amount of $__________ in a series of 12
consecutive quarterly installments commencing April 1, 1996, the
first eight (8) of which shall be in the amount of $____________
each and the final four (4) installments of which shall be in
the amount of $___________ each.  The Maker agrees to pay
interest from the date hereof on the principal balance from tie
to time outstanding, quarterly in arrears commencing April 1,
1996 and at maturity, at a rate computed in accordance with, and
to pay such other charges, if any, as may be required pursuant
to the provisions of the Credit Agreement described below.

     Overdue principal and interest shall bear interest at a
rate which at all times shall be one and one-half percent (1
1/2%) above the rate of interest hereon in effect from time to
time.  overdue interest is compounded monthly and overdue
principal and interest are both payable on demand.

     This Note is the Amortizing Note issued under a certain
Amended and Restated Credit Agreement dated as of December 31,
1992 (as amended from time to time, the "Credit Agreement")
among the Maker, the Bank, such other lending institutions as
may be come parties thereto from time to time, and The First
National Bank of Boston as Agent, and all capitalized terms used
herein which are not otherwise defined herein have the meanings
assigned to them by the Credit Agreement.  Reference is made to
the Credit Agreement for rights as to the prepayment hereof, the
acceleration of the maturity hereof and the selection of
interest charges payable hereunder.

     Every maker, endorser and guarantor of this Note or the
obligation represented hereby waives presentment, demand,
notice, protest and all other demands and notices in connection
with the delivery, acceptance, performance, default or
enforcement of this Note, assents to any extension or

/111




postponement of the time of payment or any other indulgence, to
any substitution, exchange or release of collateral and to the
addition or release of any other party or person primarily or
secondarily liable.

                              IONICS, INCORPORATED


Dated:______________          By:__________________________
                                 Title:





































/112




                                                 EXHIBIT C


               FORM OF ASSIGNMENT AND ACCEPTANCE

                      Dated ____________


     Reference is made to the Amended and Restated Credit
Agreement, dated as of December 31, 1992 (as amended and in
effect from time to time, the "Credit Agreement"), among Ionics,
Incorporated (the "Company"), certain lending institutions which
are or may become parties thereto (the "Banks"), and The First
National Bank of Boston, as agent (in such capacity, the
"Agent"), for itself and the Banks.  Capitalized terms used
herein and not otherwise defined shall have the meanings
assigned to such terms in the Credit Agreement.

     __________________________ (the "Assignor") and
_____________________ ( the "Assignee") agree as follows:

     1.  The Assignor hereby sells and assigns to the Assignee,
and the Assignee hereby purchases and assumes from the Assignor,
a ____% interest in and to all the Assignor's rights and
obligations under the Credit Agreement relating to the Loans as
of the Effective Date (as hereinafter defined).

     2.  The Assignor (i) represents that as of the date hereof,
its Commitment Percentage without giving effect to assignments
thereof which have not yet become effective) is ____%, and the
aggregate outstanding balance of its Loans (unreduced by any
assignments thereof which have not yet become effective ) is
$____________; (ii) makes no representation or warranty and
assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the
Credit Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency, or value of the Credit
Agreement or any other instrument or document furnished pursuant
thereto, other than that it is the legal and beneficial owner of
the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (iii) makes no
representation or warranty and assumes no responsibility with
respect to the financial condition of the Company, its
Consolidated subsidiaries or any other Person primarily or
secondarily liable in respect of any of the Obligations, or the
performance or observance by the Company and its Consolidated

/113



Subsidiaries or any other Person primarily or secondarily liable
in respect of any of the Obligations of any of their obligations
under the Credit Agreement or any other instrument or document
delivered or executed pursuant thereto; and (iv) attaches the
Notes delivered to it under the Credit Agreement and requests
that the Company exchange such Notes for a new Note or Notes
payable to each of the Assignor and the Assignee as follows:

     Notes Payable to         Amount of
      the Order of:             Note

     [Name of Assignor]       [Note ($____)]

     [Name of Assignee]       [Note ($----)]

     3.  The Assignee (i) represents and warrants that it is
legally authorized to enter into this Assignment and Acceptance;
(ii) confirms that it has received a copy of the Credit
Agreement and the other Loan Documents, together with copies of
the most recent financial statements delivered pursuant to
Section 5.1 thereof and such other documents and information as
it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Acceptance; (iii)
agrees that it will, independently and without reliance upon the
Assignor, any other Bank or the Agent and based on such
documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not
taking action under the Credit Agreement; (iv) represents and
warrants that it is an Eligible Assignee; (v) appoints and
authorizes the Agent to take such action as agent on its behalf
and to exercise such powers under the Credit Agreement and the
other Loan Documents as are delegated to the Agent by the terms
thereof, together with such powers as are reasonably incidental
thereto; and (vi) agrees that it will perform in accordance with
their terms all the obligations which by the terms of the Credit
Agreement are required to be performed by it as a Bank.

     4.  The effective date for this Assignment and Acceptance
shall be [at least five days after execution and delivery of
this certificate] (the "Effective Date").  Following the
execution of this Assignment and Acceptance, it will be
delivered to the Agent for acceptance and recording in the
register by the Agent.






/114



     5.  Upon such acceptance and recording, from and after the
Effective Date, (i) the Assignee shall be a party to the Credit
Agreement and, to the extent provided in this Assignment and
Acceptance, have the rights and obligations of a Bank
thereunder, and (ii) the Assignor shall, with respect to that
portion of its interest under the Credit Agreement assigned
hereunder, relinquish its rights and be released from all of its
obligations under the Credit Agreement.

     6.  Upon such acceptance and recording, from and after the
Effective Date, the Agent shall make all payments in respect of
the interest assigned hereby (including payments of principal,
interest, fees and other amounts) to the Assignee.  the Assignor
and Assignee shall make all appropriate adjustments in payments
for periods prior to the Effective Date by the Agent or with
respect to the making of this assignment directly between
themselves.

     7.  THIS ASSIGNMENT AND ACCEPTANCE IS INTENDED TO TAKE
EFFECT AS A SEALED INSTRUMENT TO BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF
MASSACHUSETTS.

     IN WITNESS WHEREOF, intending to be legally bound, each of
the undersigned has caused this Assignment and acceptance to be
executed on its behalf by its officer thereunto duly authorized,
as of the date first above written.

                              [NAME OF ASSIGNOR]



                              By:  _________________________
                              Title:________________________


                              [NAME OF ASSIGNEE]


                              By:  _________________________
                              Title:________________________








/115





                                                 SCHEDULE 3.3


<TABLE>

<CAPTION>
                     IONICS, INCORPORATED

  SCHEDULE OF PROPERTIES SECURED BY MORTGAGES AS OF 12/31/92.

                                             LOAN AMOUNT
     SECURITY                 MORTGAGEE      (AT 9/30/92)  MATURITY
<S>                       <C>                <C>           <C>
1.   PROPERTY LOCATED     TOWN OF WATERTOWN  $  420,000    07/01/94
     65 GROVE STREET &
     58 IRVING STREET
     WATERTOWN, MA

2.   PROPERTY LOCATED     SECURITY PACIFIC   $  199,880    12/31/92
     4101 EASTWOOD STREET
     PHOENIX, AZ

3.   LAND LOCATED         LANDS ADMIN.       $  143,866    12/31/05
     1873 LYTTON ROAD     COMMISSION
     LYTTON, BRISBANE
     QUEENSLAND, AUSTRALIA
</TABLE>



















/116







                                             SCHEDULE 3.8



                          IONICS, INCORPORATED


Paragraph (b):  The Company has been notified by the United States
                Environmental Protection Agency that it has been
                identified as a potentially responsible party under
                CERCLA with respect to the following sites listed on the
                National Priorities List:

                1.  Union Chemical site, Union, Maine

                2.  Silresim site, Lowell, Massachusetts

                3.  Solvents Recovery Service of New England
                       site, Southington, Connecticut

Paragraph (c):  The following are the underground storage tanks that are
                located on the Company's property or operated by the
                Company.

                1.  Four tanks, Watertown, Massachusetts

                2.  One tank, Phoenix, Arizona

                3.  One tank, Springfield, Massachusetts















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