Exhibit 10.1

                     IONICS, INCORPORATED

             1998 NON-EMPLOYEE DIRECTORS' FEE PLAN

1. PURPOSE. The Ionics, Incorporated 1998 Non-Employee
Directors' Fee Plan (the "Fee Plan") is intended to promote the
long-term interests of Ionics, Incorporated (the "Corporation")
by increasing the share ownership of members of the Board of
Directors of the Corporation who are not employees of the
Corporation or its subsidiaries, thereby aligning their
interests more closely with those of the shareholders of the
Corporation, and to attract and retain highly qualified and
capable non-employee Directors.

2. DEFINITIONS.

   (a)  "Board" means the Board of Directors of the Corporation.

   (b)  "Board Year" means the period commencing on the date of
the Corporation's annual meeting of stockholders and ending on
the date preceding the next following annual meeting of
stockholders.

   (c)  "Committee" means the Compensation Committee of the Board
of Directors of the Corporation or any committee performing
similar functions.

   (d)  "Common Stock" means the common stock, par value $1.00
per share, of the Corporation.

   (e)   "Corporation" means Ionics, Incorporated, a
Massachusetts corporation.

   (f)  "Director" means a member of the Board who is not an
employee of the Corporation or any of its subsidiaries.

   (g)  "Exchange Act" means the Securities Exchange Act of 1934,
as amended.

   (h)  "Fair Market Value" means as of any given date, the last
reported sales price of the Common Stock as reported in The Wall
Street Journal for such date, or if no such sale is reported on
such date, then the last reported sales price on the last
preceding trade date to the sales date; or, if no such sale is
reported on the last preceding trade date to the sales date, or
if the Common Stock is not publicly traded as of such date, the
fair market value of the Common Stock as determined by the
Committee in good faith based on the available facts and
circumstances at the time.

   (i)  "Fees" means the annual retainer scheduled to be paid to
a Director for the Board Year, but excluding meeting fees paid
for attendance at meetings of the Board or of any committee of
the Board.

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   (j)  "Grants" means issuances of Common Stock hereunder
pursuant to a Share Election by a Director.

   (k)  "Restricted Stock" means shares of Common Stock that have
not been registered under the Securities Act of 1933, as amended.

   (l)  (l) "Rule 16b-3" shall have the meaning set forth in
Section 8 hereof.

   (m)  "Share Election" shall have the meaning set forth in
Section 5(a) hereof.

3. ADMINISTRATION OF THE FEE PLAN.

   (a)  ADMINISTRATION BY THE COMMITTEE.  The Fee Plan shall be
administered by the Committee.

   (b)  AUTHORITY OF THE COMMITTEE.  The Committee shall adopt
such rules as it may deem appropriate in order to carry out the
purpose of the Fee Plan.  All questions of interpretation,
administration, and application of the Fee Plan shall be
determined by a majority of the members of the Committee then in
office, except that the Committee may authorize any one or more
of its members, or any officer of the Corporation, to execute and
deliver documents on behalf of the Committee.  The determination
of such majority shall be final and binding in all matters
relating to the Fee Plan.

4. STOCK RESERVED FOR THE FEE PLAN. The number of shares of
Common Stock authorized for issuance under the Fee Plan is
100,000, subject to adjustment pursuant to Section 6 hereof.
Shares of Common Stock delivered hereunder may be either
authorized but unissued shares or previously issued shares
reacquired and held by the Corporation.

5. FORM AND TIME OF FEE PAYMENTS.

   (a)  Election. Each Director shall be paid his or her Fee
(payable in two equal installments) at the time of the first and
third regular meetings of the Board during a Board Year either in
cash or in Common Stock of the Corporation.  Each Director shall
provide a written notice to the Clerk of the Corporation at least
thirty (30) days prior to the commencement of each Board Year
indicating that such Director elects to be paid his or her Fee
for the upcoming Board Year in cash or in Common Stock (the
"Share Election").  In the event a Director fails to submit such
notice, the Fee will be paid to such individual in cash.  The
election made by a Director pursuant hereto will apply to the Fee
for the entire Board Year covered by such election.  If the Fee
Plan becomes effective other than at the beginning of a Plan Year
and the second installment of Fees has not yet been made, then
the election to be made for such year shall cover only the second
installment of the Fee.

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   (b)  Valuation. For a Fee payable in Common Stock, the number
of shares of Common Stock to be delivered to a Director shall be
calculated based upon the Fair Market Value of the Common Stock
on the trading date next preceding the date of the Board meeting
at which payment will be made.  Such calculation will be rounded
to the nearest whole number.

   (c)  Formula Plan. Nothing contained in this Section 5 shall
be interpreted in such a manner so as to disqualify the Fee Plan
from treatment as a "formula plan" under Rule 16b-3.

   (d)  Limitation. No Director may receive shares of Common
Stock as payment of Fees under this Agreement if such Director
has already acquired shares of Common Stock pursuant to Share
Elections under this Fee Plan which total one percent (1%) of the
issued and outstanding Common Stock as of the date this Fee Plan
is adopted.

6. EFFECT OF CERTAIN CHANGES IN CAPITALIZATION. In the event of
any stock split, stock dividend, recapitalization,
reorganization, merger, consolidation, combination, exchange of
shares, liquidation, spin-off or other similar change in
capitalization, or any distribution to holders of Common Stock
other than a cash dividend, the maximum number or class of shares
available under this Fee Plan, the number or class of shares of
Common Stock to be delivered hereunder and each Director's share
account shall be proportionately adjusted by the Committee.

7. TERM OF FEE PLAN.  This Fee Plan shall become effective as of
the date of approval of the Fee Plan by the Board, and shall
remain in effect until terminated by the Board or until no
further shares of Common Stock are available for issuance
hereunder.  

8. AMENDMENT; TERMINATION. The Board of the Corporation may at
any time and from time to time alter, amend, suspend, or
terminate this Fee Plan in whole or in part, subject to any
requirement of shareholder approval required by applicable law,
rule or regulation, including Rule 16b-3 of the Exchange Act, as
amended from time to time ("Rule 16b-3"); and provided, further,
that the provisions of Section 5(a) hereof shall not be amended
more than once every six months, other than to comply with
changes in the Internal Revenue Code of 1986, as amended, the
Employee Retirement Income Security Act of 1974, as amended, or
the rules thereunder.  Notwithstanding the foregoing, no
amendment shall affect adversely any of the rights of any
Director, without such Director's consent, under any election
theretofore in effect under this Fee Plan.

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9. GENERAL RESTRICTIONS.

   (a)  INVESTMENT REPRESENTATIONS.  The shares of Common Stock
issued under the plan will be Restricted Stock.  The Corporation
may require any Director to whom Common Stock is transferred, as
a condition of receiving such Common Stock, to give written
assurances in substance and form satisfactory to the Corporation
and its counsel to the effect that such person is acquiring the
Common Stock for his or her own account for investment and not
with any present intention of selling or otherwise distributing
the same, and to such other effects as the Corporation deems
necessary or appropriate in order to comply with Federal and
applicable state securities laws.

(b)     COMPLIANCE WITH SECURITIES LAWS.  Each Grant shall be
subject to the requirement that, if at any time counsel to the
Corporation shall determine that the listing, registration, or
qualification of the shares subject to such Grant upon any
securities exchange or under any state or federal law, or the
consent or approval of any governmental or regulatory body, is
necessary as a condition of, or in connection with, the issuance
of shares of Common Stock thereunder, such grant may not be
accepted or exercised in whole or in part unless such listing,
registration, qualification, consent or approval shall have been
effected or obtained on conditions acceptable to the Committee.
Nothing herein shall be deemed to require the Corporation to
apply for or to obtain such listing, registration or
qualification.

10. WITHHOLDING. The Corporation may defer making payments under
this Fee Plan until satisfactory arrangements have been made for
the payment of any federal, state or local income taxes required
to be withheld with respect to such payment or delivery.

11. GOVERNING LAW. This Fee Plan and all rights hereunder shall
be construed in accordance with and governed by the laws of the
Commonwealth of Massachusetts.

12. FEE PLAN INTERPRETATION. This Fee Plan is intended to comply
with Rule 16b-3 to the extent applicable to this Fee Plan, and
shall be construed to so comply.  

13. HEADINGS. The headings of sections and subsections herein are
included solely for convenience of reference and shall not affect
the meaning of any of the provisions of this Fee Plan.











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