1

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D. C. 20549

                                    FORM 10-Q

                   Quarterly Report Under Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

          For the Quarter April 30, 1998 Commission File Number 0-8675

                         OIL-DRI CORPORATION OF AMERICA
                         ------------------------------
             (Exact name of registrant as specified in its charter)

               DELAWARE                                36-2048898
    -------------------------------                -------------------
    (State or other jurisdiction of                 (I.R.S. Employer
     Incorporation or organization)                Identification No.)

     410 North Michigan Avenue
         Chicago, Illinois                                60611
 ----------------------------------------               ----------
 (Address of principal executive offices)               (Zip Code)

Registrant's telephone number, including area code (312) 321-1515

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
at least the past 90 days.

                             Yes X           No
                                ---            ---

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the close of the period covered by this report.

Common Stock  - 5,440,630 Shares (Including 982,760 Treasury Shares)
Class B Stock - 1,794,888 Shares (Including 342,241 Treasury Shares)

                                    Page -1-
   2

                  OIL-DRI CORPORATION OF AMERICA & SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                            (IN THOUSANDS OF DOLLARS)
                                   (UNAUDITED)

                                                                        APRIL 30                JULY 31
ASSETS                                                                    1998                    1997
                                                                        --------                --------

CURRENT ASSETS
Cash and Cash Equivalents                                               $  9,962                $  9,997
Investment Securities                                                      1,161                   1,544
Accounts Receivable                                                       22,739                  20,341
Allowance for Doubtful Accounts                                             (414)                   (261)
Inventories                                                               12,150                  10,604
Prepaid Expenses and Taxes                                                 6,592                   4,685
                                                                        --------                --------
                  TOTAL CURRENT ASSETS                                    52,190                  46,910
                                                                        --------                --------

PROPERTY, PLANT AND EQUIPMENT - AT COST
Cost                                                                     115,736                 114,533
Less Accumulated Depreciation and                                        (61,669)                 58,737
                                                                        --------                --------
  Amortization
                  TOTAL PROPERTY, PLANT                                   54,067                  55,796
                                                                        --------                --------
                  AND EQUIPMENT, NET

OTHER ASSETS
Investment in Subsidiary                                                  13,791                       0
Goodwill (Net of Accumulated Amortization)                                 3,942                   4,040
Deferred Income Taxes                                                      2,434                   2,446
Other                                                                      4,574                   5,366
                                                                        --------                --------
                     TOTAL OTHER ASSETS                                   24,741                  11,852
                                                                        --------                --------

TOTAL ASSETS                                                            $130,998                $114,558
                                                                        ========                ========

The accompanying notes are an integral part of the consolidated financial
statements.

                                    Page -2-
   3

                  OIL-DRI CORPORATION OF AMERICA & SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                            (IN THOUSANDS OF DOLLARS)
                                   (UNAUDITED)

                                                                            APRIL 30                 JULY 31
LIABILITIES & STOCKHOLDERS' EQUITY                                            1998                     1997
                                                                            ---------               ---------
                                                                                                    
CURRENT LIABILITIES
Current Maturities of Notes Payable                                         $      92               $   1,946
Accounts Payable                                                                4,225                   4,050
Dividends Payable                                                                 444                     475
Accrued Expenses                                                                7,966                   9,274
Restructuring Reserve                                                             734                       0
                                                                            ---------               ---------
                  TOTAL CURRENT LIABILITIES                                 $  13,461               $  15,745
                                                                            ---------               ---------

NONCURRENT LIABILITIES
Notes Payable                                                                  41,972                  17,052
Deferred Compensation                                                           2,801                   2,750
Other                                                                           1,910                   1,681
                                                                             --------                --------
                  TOTAL NONCURRENT LIABILITIES                                 46,683                  21,483
                                                                             --------                --------

                  TOTAL LIABILITIES                                            60,144                  37,228
                                                                             --------                --------

STOCKHOLDERS' EQUITY
Common and Class B Stock                                                          724                     724
Paid-In Capital in Excess of Par Value                                          7,698                   7,686
Restricted Unearned Stock Compensation                                            (37)                    (18)
Retained Earnings                                                              84,044                  82,243
Cumulative Translation Adjustment                                                (980)                   (907)
                                                                             --------                --------
                                                                               91,449                  89,728
Less Treasury Stock, At Cost                                                  (20,595)                (12,398)
                                                                             --------                --------
                  TOTAL STOCKHOLDERS' EQUITY                                   70,854                  77,330
                                                                             --------                --------

TOTAL LIABILITIES & STOCKHOLDERS' EQUITY                                     $130,998                $114,558
                                                                             ========                ========

The accompanying notes are an integral part of the consolidated financial
statements.

                                    Page -3-
   4

                  OIL-DRI CORPORATION OF AMERICA & SUBSIDIARIES
             CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
             (IN THOUSANDS OF DOLLARS, EXCEPT FOR PER SHARE AMOUNTS)
                                   (UNAUDITED)

                                                                 FOR THE NINE MONTHS ENDED
                                                                         APRIL 30
                                                                ---------------------------
                                                                   1998            1997
                                                                -----------     -----------
                                                                                  
NET SALES                                                       $   118,995     $   119,319
Cost Of Sales                                                        81,615          83,328
                                                                -----------     -----------
GROSS PROFIT                                                         37,380          35,991
Selling, General And Administrative Expenses                         28,550          27,372
Restructuring Expense                                                 3,129               0
                                                                -----------     -----------
INCOME FROM OPERATIONS                                                5,701           8,619

OTHER INCOME (EXPENSE)
     Interest Expense                                                (1,253)         (1,349)
     Interest Income                                                    307             456
     Other, Net                                                        (329)           (232)
                                                                -----------     -----------
         TOTAL OTHER EXPENSE, NET                                    (1,275)         (1,125)
                                                                -----------     -----------

INCOME BEFORE INCOME TAXES                                            4,426           7,494
Income Taxes                                                          1,261           2,136
                                                                -----------     -----------
NET INCOME                                                            3,165           5,358

RETAINED EARNINGS
     Balance at Beginning of Year                                    82,243          77,386
     Less Cash Dividends Declared                                     1,364           1,465
                                                                -----------     -----------

RETAINED EARNINGS - APRIL 30                                    $    84,044     $    81,279
                                                                ===========     ===========
AVERAGE SHARES OUTSTANDING                                        6,231,626       6,644,428
                                                                ===========     ===========
NET INCOME PER SHARE                                            $      0.51     $      0.81
                                                                ===========     ===========

The accompanying notes are an integral part of the consolidated financial
statements.

                                    Page -4-
   5

                  OIL-DRI CORPORATION OF AMERICA & SUBSIDIARIES
             CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
             (IN THOUSANDS OF DOLLARS, EXCEPT FOR PER SHARE AMOUNTS)
                                   (UNAUDITED)

                                                      ---------------------------
                                                      FOR THE THREE MONTHS ENDED
                                                                APRIL 30
                                                      ---------------------------
                                                          1998            1997
                                                      -----------     -----------
                                                                        
NET SALES                                             $    38,334     $    36,002
Cost Of Sales                                              26,148          25,938
                                                      -----------     -----------
GROSS PROFIT                                               12,186          10,064
Selling, General And Administrative Expenses                9,850           8,047
                                                      -----------     -----------
INCOME FROM OPERATIONS                                      2,336           2,017

OTHER INCOME (EXPENSE)
     Interest Expense                                        (452)           (432)
     Interest Income                                           90             155
     Other, Net                                               (32)           (112)
                                                      -----------     -----------
         TOTAL OTHER EXPENSE, NET                            (394)           (389)

INCOME BEFORE INCOME TAXES                                  1,942           1,628
Income Taxes                                                  553             464
                                                      -----------     -----------
NET INCOME                                                  1,389           1,164

AVERAGE SHARES OUTSTANDING                              6,070,282       6,582,374
                                                      ===========     ===========

NET INCOME PER SHARE                                  $      0.23     $      0.18
                                                      ===========     ===========

The accompanying notes are an integral part of the consolidated financial
statements.

                                    Page -5-
   6

                  OIL-DRI CORPORATION OF AMERICA & SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (IN THOUSANDS OF DOLLARS)
                                   (UNAUDITED)

                                                                   FOR THE NINE MONTHS ENDED
                                                                            APRIL 30
                                                                   -------------------------
CASH FLOWS FROM OPERATING ACTIVITIES                                   1998         1997
                                                                     --------     --------
                                                                                 
NET INCOME                                                           $  3,165     $  5,358

Adjustments to Reconcile Net Income to Net Cash
  Provided by Operating Activities:
     Depreciation and Amortization                                      5,676        5,670
     Restructuring Reserve                                              3,129            0
     Provision for bad debts                                              264           25
     (Increase) Decrease in:
         Accounts Receivable                                           (2,509)       1,494
         Inventories                                                   (1,546)       1,346
         Prepaid Expenses and Taxes                                    (1,907)        (944)
         Other Assets                                                     (27)        (308)
     Increase (Decrease) in:
         Accounts Payable                                                 175       (1,710)
         Accrued Expenses                                              (1,308)        (129)
         Deferred Compensation                                             51          122
         Restructuring Reserve                                         (2,395)           0
         Other                                                            229          230
                                                                     --------     --------
                TOTAL ADJUSTMENTS                                        (168)       5,796
                                                                     --------     --------

     NET CASH PROVIDED BY OPERATING ACTIVITIES                          2,997       11,154
                                                                     --------     --------

CASH FLOWS FROM INVESTING ACTIVITIES
     Investment in Subsidiary                                         (13,791)           0
     Capital Expenditures                                              (4,528)      (4,141)
     Proceeds from sale of property, plant and
        equipment                                                           4          555

     Dispositions of Non-Performing Assets                                781            0
     Purchases of Investment Securities                                  (528)        (315)
     Dispositions of Investment Securities                                911          400
     Proceeds from sale of Investments                                    709            0
     Other                                                                (18)        (145)
                                                                     --------     --------

     NET CASH USED IN INVESTING ACTIVITIES                            (16,460)      (3,646)
                                                                     --------     --------

CASH FLOWS FROM FINANCING ACTIVITIES
   Proceeds from issuance of Long-Term Debt                            25,000            0
     Principal Payments on Long-Term Debt                              (1,934)      (1,627)
     Dividends Paid                                                    (1,395)      (1,485)
     Purchases of Treasury Stock                                       (8,238)      (3,804)
     Other                                                                 (5)          43
                                                                     --------     --------
     NET CASH PROVIDED BY (USED IN)FINANCING ACTIVITIES                13,428       (6,873)
                                                                     --------     --------

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                      (35)         635
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                            9,997       10,114
                                                                     ========     ========
CASH AND CASH EQUIVALENTS, APRIL 30                                  $  9,962     $ 10,749
                                                                     ========     ========

The accompanying notes are an integral part of the consolidated financial
statements.

                                    Page -6-
   7

                  OIL-DRI CORPORATION OF AMERICA & SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1.   BASIS OF STATEMENT PRESENTATION

The financial statements and the related notes are condensed and should be read
in conjunction with the consolidated financial statements and related notes for
the year ended July 31, 1997, included in the Company's Annual Report on Form
10-K filed with the Securities and Exchange Commission.

The consolidated financial statements include the accounts of the Company and
its subsidiaries. All significant intercompany transactions are eliminated.

The unaudited financial information reflects all adjustments which are, in the
opinion of management, necessary for a fair presentation of the statements
contained herein.

2.   INVENTORIES

The composition of inventories is as follows (in thousands):

                                     APRIL 30             JULY 31
                                    (UNAUDITED)          (UNAUDITED)
                                    -----------          -----------
                                       1998                 1997
                                      -------              -------
                                                         
Finished goods                         $7,489               $6,684
Packaging                               3,958                3,168
Other                                     703                  752
                                      -------              -------
                                      $12,150              $10,604
                                      =======              =======

Inventories are valued at the lower of cost or market. Cost is determined by the
first-in, first-out method.

3.    RESTRUCTURING RESERVE

As previously disclosed, the Company divested its transportation business
effective November 22, 1997. In conjunction with the divestiture, the Company
recorded during the second quarter a pre-tax restructuring charge of $3,129,000
to cover the costs of exiting the transportation business ($1,443,000) and to
write off certain other non-performing assets, primarily manufacturing machinery
and equipment ($905,000). At April 30, 1998, $734,000 of the restructuring
charges remained in Current Liabilities. A summary of the restructuring activity
is presented below (in thousands):

                                                                           
1998 Restructuring charge                                                   $3,129
1998 Activity:
  Machinery and equipment                                                      781
  Transportation business exit costs                                           821
  Obsolete Inventory                                                           300
  Other                                                                        498
                                                                            ------
Balance at April 30, 1998                                                   $  734
                                                                            ======

                                    Page -7-
   8

4.    NEW ACCOUNTING PRONOUNCEMENTS

The Company adopted Statement of Financial Accounting Standards No. 128,
"Earnings Per Share" during the second quarter of 1998. The statement simplifies
the standards for computing earnings per share ("EPS") previously defined in
Accounting Principles Board Opinion No. 15, "Earnings Per Share" (APB 15) and
makes them comparable to international EPS standards. It replaces the
presentation of primary EPS with a presentation of basic EPS.

Basic EPS excludes dilution and is computed by dividing net income available to
common stockholders (numerator) by the weighted-average number of common shares
outstanding (denominator) for the period. Diluted EPS is computed similarly to
fully diluted EPS under APB 15. A reconciliation of the numerator and
denominator of the basic EPS computation to the numerator and denominator of the
diluted EPS computation is presented in Exhibit 11 of this document.

In June 1997, SFAS No. 130, "Reporting Comprehensive Income" and SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information" were
issued. SFAS No. 130 establishes standards for the reporting of comprehensive
income and its components in a financial statement presentation. SFAS No. 130
separates comprehensive income into net income and other comprehensive income,
but does not change the measurement and presentation of net income. Other
comprehensive income includes certain changes in the equity of the Company which
are currently recognized and presented separately in the Consolidated Statements
of Stockholder's Equity, such as the change in the Translation Adjustment
account. SFAS No. 130 is effective for the Company beginning in fiscal 1999.

SFAS No. 131 establishes new standards for the way companies report information
about operating segments and requires that those enterprises report selected
information about operating segments in the interim financial reports issued to
shareholders. SFAS No. 131 is effective for the Company beginning in fiscal
1999.

5.    ACQUISITION

On April 20, 1998, the Company completed the purchase of the Fuller's Earth
absorbent business of American Colloid Co., a wholly owned subsidiary of Amcol
International, for an amount approximating $13,865,000. The purchase includes a
production plant and mineral reserves in Mounds, Illinois ("Mounds Production
Company"), and mineral reserves located in Paris, Tennessee, and Silver Springs,
Nevada. This absorbent business has annual sales approximating $15,000,000. The
Company financed the acquisition through a fixed rate private debt placement.
The acquisition will be accounted for as a purchase; accordingly, the purchase
price will be allocated to the underlying assets and liabilities based upon
their estimated fair values as soon as they are determinable.

                                    Page -8-
   9

MANAGEMENT DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

NINE MONTHS ENDED APRIL 30, 1998 COMPARED TO NINE
MONTHS ENDED APRIL 30, 1997

RESULTS OF OPERATIONS

Total Company net sales for the nine months ended April 30, 1998 were
$118,995,000, a decrease of 0.3% from net sales of $119,319,000 in the first
nine months of fiscal 1997. This decrease was primarily due to exiting the
transportation business. Transportation sales for the first nine months of
fiscal 1997 were $5,837,000 compared to $2,372,000 in the first nine months of
the current year. Excluding transportation, sales increased 2.8% in the first
nine months of fiscal 1998 versus fiscal 1997. Net income for the first nine
months of fiscal 1998 was $3,165,000 or $0.51 per share, compared to $5,358,000
or $0.81 per share earned in the first nine months of fiscal 1997. The decrease
was primarily due to a restructuring charge recorded in the second quarter of
fiscal 1998. The restructuring charge, which covered the costs of exiting the
transportation business and writing off certain non-performing assets, reduced
income before income taxes by $3,129,000, net income by $2,237,000, and earnings
per share by $0.36 for the nine months ended April 30, 1998.

Net sales of cat box absorbents increased $1,869,000, or 2.6% from prior year
amounts. Net sales of agricultural and fluids purification products increased
$1,320,000 or 4.7%, from the comparable period in fiscal 1997. The higher sales
resulted from an increased demand for fluids purification products in the United
Kingdom. Net sales of industrial and environmental sorbents were comparable to
prior year levels. Net sales of transportation services decreased $3,465,000 or
59.4% from prior year levels due to the exiting from this business in November
1997.

Consolidated gross profit as a percentage of net sales for the nine months ended
April 30, 1998 increased to 31.4% from 30.2% in the comparable period of fiscal
1997. Changes in sales mix, a Company-wide effort to reduce costs and exiting
the transportation business contributed to this increase.

Operating expenses as a percentage of net sales increased to 26.6% in the first
nine months of fiscal 1998 from 22.9% in the same period of fiscal 1997. This
increase is primarily due to a pre-tax charge of $3,129,000 recorded in the
second quarter of fiscal 1998 for the restructuring reserve.

Interest expense decreased $96,000 and interest income decreased $149,000.

The Company's effective tax rate was 28.5% of pre-tax income in the first nine
months of both fiscal 1998 and fiscal 1997.

The assets of the Company increased $16,440,000, or 14.4%, during the first nine
months of fiscal 1998, primarily due to the acquisition of Mounds Production
Company. Current assets increased $5,280,000, or 11.3%, from fiscal 1997 year
end balances primarily due to increased accounts receivable, prepaid expenses,
and inventories, partially offset by lower investment securities. Property,
plant and equipment, net of accumulated depreciation, decreased $1,729,000
during the first nine months due to the write-off of non-performing assets
against the restructuring reserve and depreciation expense exceeding capital
expenditures.

Total liabilities in the nine months ended April 30, 1998 increased $22,916,000,
or 61.6%, due primarily to increased notes payable related to the purchase of
Mounds Production Company. Current liabilities decreased $2,284,000 or 14.5%
from July 31, 1997 balances, 

                                    Page -9-
   10

primarily due to a reduction in the current maturities of notes payable as well
as accrued expenses, partially offset by increased accounts payable and the
balance of the restructuring reserve recorded in the second quarter.

EXPECTATIONS

The Company anticipates sales during the remainder of fiscal 1998 will be at
higher levels than sales in the comparable period of fiscal 1997 due to
incremental sales of cat box absorbents, agricultural carriers and industrial
sorbents resulting from the April 20, 1998 acquisition of Mounds Production Co.
These incremental sales will offset the loss of approximately $2 million per
quarter of backhaul revenue previously generated by the Company's transportation
business (exited in the second quarter of the current fiscal year) and the
approximately $1.5 million per quarter of sales to Sam's Club, which recently
decided to discontinue carrying the Company's cat litter product. However, sales
growth of cat box absorbents is subject to continuing competition for shelf
space in the grocery, mass merchandiser and club markets. Demand for AGSORB(R)
carriers and Pure-Flo(R) fluids purification products are expected to show
slight improvement through the remainder of the fiscal year.

The foregoing statements under this heading are "forward looking statements"
within the meaning of that term in the Securities Exchange Act of 1934, as
amended. Actual results may be lower than those reflected in these
forward-looking statements, due primarily to: continued vigorous competition in
the grocery, mass merchandiser and club markets; the level of success of new
products; integration of recent acquisitions; and the cost of new product
introductions and promotions in consumer markets. These forward-looking
statements also involve the risk of changes in market conditions in the overall
economy and, for the agricultural and fluids purification division, in the
planting activity, crop quality and overall agricultural demand, including
export demand.

LIQUIDITY AND CAPITAL RESOURCES

The current ratio increased to 3.9 at April 30, 1998 from 3.0 at July 31, 1997.
Working capital increased $7,564,000 during the nine months ended April 30, 1998
to $38,729,000. Cash provided by operations continues to be the Company's
primary source of funds to finance ordinary investing needs and financing
activities. During the nine months ended April 30, 1998, the balances of cash,
cash equivalents and other investments decreased $418,000. Cash on hand at the
beginning of the year of $9,997,000, cash provided by operating activities of
$2,996,000 and $25,000,000 of fixed rate financing secured during the third
quarter were used to fund the purchase of Mounds Production Company
($13,865,000), the purchase of the Company's common stock ($8,238,000), capital
expenditures ($4,528,000), principal payments on long term debt ($1,934,000) and
dividend payments ($1,395,000). The fixed rate financing was completed at 6.55%,
and consists of 15-year notes having an average life of ten years. Total cash
and investment balances held by the Company's foreign subsidiaries at April 30,
1998 and July 31, 1997 were $2,600,000 and $2,803,000 respectively.

                                   Page -10-
   11

THREE MONTHS ENDED APRIL 30, 1998 COMPARED TO
THREE MONTHS ENDED APRIL 30, 1997

Consolidated net sales for the three months ended April 30, 1998 were
$38,334,000, an increase of $2,332,000 or 6.5%, over net sales of $36,002,000 in
the third quarter of fiscal 1997. Excluding transportation sales, which were
$1,970,000 in the third quarter of last year, sales increased 12.6% in the third
quarter of fiscal 1998 versus fiscal 1997. Net income for the three months ended
April 30, 1998 was $1,389,000 or $0.23 per share, an increase of 19.3% from
$1,164,000, or $0.18 per share, earned in last year's quarter.

Net sales of cat box absorbents increased $3,311,000 or 16.4% from prior year
amounts. Net sales of agricultural and fluids purification products increased
$916,000, or 10.3% from the comparable period in fiscal 1997. The higher sales
resulted from increased demand for PURE-FLO(R) Supreme fluids purification
products in the United Kingdom. Net sales of industrial and environmental
sorbents increased $70,000 or 1.4% from last year's third quarter.

Consolidated gross profit as a percentage of net sales for the three months
ended April 30, 1998 increased to 31.8% from 28.0% in the comparable period of
fiscal 1997. Changes in sales mix, a Company-wide effort to reduce costs and
exiting the transportation business contributed to this increase.

Operating expenses as a percentage of net sales increased to 25.7% in the third
quarter of fiscal 1998 from 22.4% in the same quarter of the prior year.

Interest expense increased $20,000 while interest income decreased $65,000.

The Company's effective tax rate was 28.5% of pre-tax income in the third
quarter of both fiscal 1998 and fiscal 1997.

FOREIGN OPERATIONS

Net sales by the Company's foreign subsidiaries for the nine months ended April
30, 1998 were $10,257,000, or 8.6% of total Company sales. This represents an
increase of $1,221,000 or 13.5% from the same period of fiscal 1997, in which
foreign subsidiary sales were $9,036,000, or 7.6% of total Company sales. Net
income of the foreign subsidiaries for the first nine months of fiscal 1998 was
$465,000 compared with $431,000 in the same period of fiscal 1997. Identifiable
assets of the Company's foreign subsidiaries as of April 30, 1998, were
$11,692,000, an increase of $1,826,000 from $9,866,000 as of July 31, 1997. The
increase is primarily due to higher fixed assets, prepaid expenses, inventories,
and cash and cash equivalents.

Net sales by the Company's foreign subsidiaries for the quarter ended April 30,
1998 were $3,776,000 or 9.9% of total Company sales. This represents an increase
of $860,000, or 29.5% from the same quarter in fiscal 1997, in which foreign
subsidiary sales were $2,916,000, or 8.1% of total Company sales. Net income of
the foreign subsidiaries for the second quarter of fiscal 1998 was $144,000 and
was flat in the same period of fiscal 1997.

                                   Page -11-
   12

6.    (a) EXHIBITS: The following documents are an exhibit to this report.

                                                                                              Exhibit
                                                                                               Index
                                                                                              -------
                                                                                        
    Exhibit 11:       Statement Re:  Computation of per share earnings                            14
    Exhibit 27:       Financial Data Schedule                                                     15

    Exhibit (10)(m):  $25,000,000 Note Purchase Agreement dated as of April                    
                      15, 1998, between the Company and Teachers Insurance and 
                      Annuity Association of America and CIGNA Investments, Inc.               16-78

      (b)   On May 7, 1998, the Company filed a Report on Form 8-K announcing
            that the Company completed the purchase of the Fuller's Earth
            absorbent business of American Colloid Company pursuant to an
            Asset Purchase Agreement dated as of April 20, 1998.

                                   Page -12-
   13

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

OIL-DRI CORPORATION OF AMERICA 
  (Registrant)

BY /s/ Michael L. Goldberg
  ------------------------------
       Michael L. Goldberg
       Executive Vice President and Chief Financial Officer

BY /s/ Daniel S. Jaffee
  ------------------------------
       Daniel S. Jaffee
       President and Chief Executive Officer

Dated:  June 12, 1998

                                   Page -13-
   1

================================================================================

                         OIL-DRI CORPORATION OF AMERICA

                                   $25,000,000

                      6.55% Senior Notes due April 15, 2013

                                ----------------

                             NOTE PURCHASE AGREEMENT

                                ----------------

                           Dated as of April 15, 1998

================================================================================

   2

                                                         TABLE OF CONTENTS

SECTION                                                       HEADING                                        PAGE

SECTION 1.                 AUTHORIZATION OF NOTES.............................................................1

SECTION 2.                 SALE AND PURCHASE OF NOTES.........................................................1

SECTION 3.                 CLOSING............................................................................1

SECTION 4.                 CONDITIONS TO CLOSING..............................................................2

       Section 4.1.            Representations and Warranties.................................................2
       Section 4.2.            Performance; No Default........................................................2
       Section 4.3.            Compliance Certificates........................................................2
       Section 4.4.            Opinions of Counsel............................................................2
       Section 4.5.            Purchase Permitted by Applicable Law, Etc......................................3
       Section 4.6.            Related Transactions...........................................................3
       Section 4.7.            Payment of Special Counsel Fees................................................3
       Section 4.8.            Private Placement Number.......................................................3
       Section 4.9.            Changes in Corporate Structure.................................................3
       Section 4.10.           Proceedings and Documents......................................................3

SECTION 5.                 REPRESENTATIONS AND WARRANTIES OF THE COMPANY......................................4

       Section 5.1.            Organization; Power and Authority..............................................4
       Section 5.2.            Authorization, Etc.............................................................4
       Section 5.3.            Disclosure.....................................................................4
       Section 5.4.            Organization and Ownership of Shares of Subsidiaries...........................4
       Section 5.5.            Financial Statements...........................................................5
       Section 5.6.            Compliance with Laws, Other Instruments, Etc...................................5
       Section 5.7.            Governmental Authorizations, Etc...............................................6
       Section 5.8.            Litigation; Observance of Agreements, Statutes and Orders......................6
       Section 5.9.            Taxes..........................................................................6
       Section 5.10.           Title to Property; Leases......................................................6
       Section 5.11.           Licenses, Permits, etc.........................................................7
       Section 5.12.           Compliance with ERISA..........................................................7
       Section 5.13.           Private Offering by the Company................................................8
       Section 5.14.           Use of Proceeds; Margin Regulations............................................8
       Section 5.15.           Existing Indebtedness and Investments; Future Liens............................8
       Section 5.16.           Foreign Assets Control Regulations, Etc........................................9
       Section 5.17.           Status under Certain Statutes..................................................9
       Section 5.18.           Environmental Matters..........................................................9

SECTION 6.                 REPRESENTATIONS OF THE PURCHASER...................................................10

       Section 6.1.            Purchase for Investment........................................................10

                                      -i-
   3

                                                                                                       
       Section 6.2.            Source of Funds................................................................10

SECTION 7.                 INFORMATION AS TO COMPANY; STATUS OF SUBSIDIARIES..................................11

       Section 7.1.            Financial and Business Information.............................................11
       Section 7.2.            Officer's Certificate..........................................................14
       Section 7.3.            Inspection.....................................................................15
       Section 7.4.            Change in Status of Subsidiaries...............................................15

SECTION 8.                 PREPAYMENT OF THE NOTES............................................................15

       Section 8.1.            Required Prepayments...........................................................15
       Section 8.2.            Optional Prepayments with Make-Whole Amount....................................16
       Section 8.3.            Allocation of Partial Prepayments..............................................16
       Section 8.4.            Maturity; Surrender, Etc.......................................................16
       Section 8.5.            Purchase of Notes..............................................................16
       Section 8.6.            Make-Whole Amount..............................................................16

SECTION 9.                 AFFIRMATIVE COVENANTS..............................................................18

       Section 9.1.            Compliance with Law............................................................18
       Section 9.2.            Insurance......................................................................18
       Section 9.3.            Maintenance of Properties......................................................18
       Section 9.4.            Payment of Taxes and Claims....................................................19
       Section 9.5.            Corporate Existence, etc.......................................................19
       Section 9.6.            Ranking........................................................................19

SECTION 10.                NEGATIVE COVENANTS.................................................................19

       Section 10.1            Fixed Charges Coverage Ratio...................................................19
       Section 10.2            Consolidated Debt..............................................................19
       Section 10.3            Debt of Restricted Subsidiaries................................................19
       Section 10.4            Consolidated Adjusted Net Worth................................................20
       Section 10.5            Liens..........................................................................21
       Section 10.6            Mergers and Consolidations.....................................................23
       Section 10.7            Sale of Assets; Sale of Stock..................................................23
       Section 10.8            Nature of Business.............................................................25
       Section 10.9            Transactions with Affiliates...................................................25

SECTION 11.                EVENTS OF DEFAULT..................................................................25

SECTION 12.                REMEDIES ON DEFAULT, ETC...........................................................27

       Section 12.1.           Acceleration...................................................................27
       Section 12.2.           Other Remedies.................................................................28
       Section 12.3.           Rescission.....................................................................28
       Section 12.4.           No Waivers or Election of Remedies, Expenses, Etc..............................28

SECTION 13.                REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES......................................28

                                      -ii-
   4

                                                                                                       
       Section 13.1.           Registration of Notes..........................................................28
       Section 13.2.           Transfer and Exchange of Notes.................................................29
       Section 13.3.           Replacement of Notes...........................................................29

SECTION 14.                PAYMENTS ON NOTES..................................................................30

       Section 14.1.           Place of Payment...............................................................30
       Section 14.2.           Home Office Payment............................................................30

SECTION 15.                EXPENSES, ETC......................................................................30

       Section 15.1.           Transaction Expenses...........................................................30
       Section 15.2.           Survival.......................................................................31

SECTION 16.                SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.......................31

SECTION 17.                AMENDMENT AND WAIVER...............................................................31

       Section 17.1.           Requirements...................................................................31
       Section 17.2.           Solicitation of Holders of Notes...............................................31
       Section 17.3.           Binding Effect, Etc............................................................32
       Section 17.4.           Notes Held by Company, Etc.....................................................32

SECTION 18.                NOTICES............................................................................32

SECTION 19.                REPRODUCTION OF DOCUMENTS..........................................................33

SECTION 20.                CONFIDENTIAL INFORMATION...........................................................33

SECTION 21.                SUBSTITUTION OF PURCHASER..........................................................34

SECTION 22.                MISCELLANEOUS......................................................................35

       Section 22.1.           Successors and Assigns.........................................................35
       Section 22.2.           Payments Due on Non-Business Days..............................................35
       Section 22.3.           Severability...................................................................35
       Section 22.4.           Construction...................................................................35
       Section 22.5.           Counterparts...................................................................35
       Section 22.6.           Governing Law..................................................................35

SCHEDULE A                 --    INFORMATION RELATING TO PURCHASERS

SCHEDULE B                 --    DEFINED TERMS

SCHEDULE 4.9               --    Changes in Corporate Structure

                                      -iii-
   5

                                                        
SCHEDULE 5.3               --    Disclosure Materials

SCHEDULE 5.4               --    Subsidiaries of the Company and Ownership of Subsidiary Stock

SCHEDULE 5.5               --    Financial Statements

SCHEDULE 5.8               --    Certain Litigation

SCHEDULE 5.11              --    Patents, etc.

SCHEDULE 5.14              --    Use of Proceeds

SCHEDULE 5.15              --    Existing Debt, Investments and Liens

SCHEDULE 8.1               --    Required Prepayments

EXHIBIT 1                  --    Form of 6.55% Senior Note due April 15, 2013

EXHIBIT 4.4(a)             --    Form of Opinion of Special Counsel for the Company

EXHIBIT 4.4(b)             --    Form of Opinion of Special Counsel for the Purchasers

                                      -iv-
   6

                         OIL-DRI CORPORATION OF AMERICA
                            410 NORTH MICHIGAN AVENUE
                             CHICAGO, ILLINOIS 60611

                      6.55% Senior Notes due April 15, 2013

                                                                     Dated as of
                                                                  April 15, 1998

TO THE PURCHASERS LISTED IN 
     THE ATTACHED SCHEDULE A:

Ladies and Gentlemen:

         Oil-Dri Corporation of America, a Delaware corporation (the "Company"),
agrees with the Purchasers listed in the attached Schedule A (the "Purchasers")
as follows:

SECTION  1.   AUTHORIZATION OF NOTES.

         The Company will authorize the issue and sale of $25,000,000 aggregate
principal amount of its 6.55% Senior Notes due April 15, 2013 (the "Notes", such
term to include any such notes issued in substitution therefor pursuant to
Section 13 of this Agreement (as hereinafter defined)). The Notes shall be
substantially in the form set out in Exhibit 1, with such changes therefrom, if
any, as may be approved by each Purchaser and the Company. Certain capitalized
terms used in this Agreement are defined in Schedule B; references to a
"Schedule" or an "Exhibit" are, unless otherwise specified, to a Schedule or an
Exhibit attached to this Agreement.

                                      -1-
   7

SECTION 2.    SALE AND PURCHASE OF NOTES.

         Subject to the terms and conditions of this Agreement, the Company will
issue and sell to each Purchaser and each Purchaser will purchase from the
Company, at the Closing provided for in Section 3, Notes in the principal amount
specified opposite such Purchaser's name in Schedule A at the purchase price of
100% of the principal amount thereof. The obligations of each Purchaser
hereunder are several and not joint obligations and each Purchaser shall have no
obligation and no liability to any Person for the performance or nonperformance
by any other Purchaser hereunder.

SECTION 3.    CLOSING.

         The sale and purchase of the Notes to be purchased by each Purchaser
shall occur at the offices of Chapman and Cutler, 111 West Monroe Street,
Chicago, Illinois 60603, at 10:00 A.M. Chicago time, at a closing (the
"Closing") on April 23, 1998 or on such other Business Day thereafter on or
prior to May 15, 1998 as may be agreed upon by the Company and the Purchasers.
At the Closing the Company will deliver to each Purchaser the Notes to be
purchased by such Purchaser in the form of a single Note (or such greater number
of Notes in denominations of at least $500,000 as such Purchaser may request)
dated the date of the Closing and registered in such Purchaser's name (or in the
name of such Purchaser's nominee), against delivery by such Purchaser to the
Company or its order of immediately available funds in the amount of the
purchase price therefor by wire transfer of immediately available funds for the
account of the Company to account number 367-985-9, Harris Trust & Savings Bank,
ABA #071000288, Chicago, Illinois. If at the Closing the Company shall fail to
tender such Notes to any Purchaser as provided above in this Section 3, or any
of the conditions specified in Section 4 shall not have been fulfilled to any
Purchaser's satisfaction, such Purchaser shall, at such Purchaser's election, be
relieved of all further obligations under this Agreement, without thereby
waiving any rights such Purchaser may have by reason of such failure or such
nonfulfillment.

SECTION 4.    CONDITIONS TO CLOSING.

         The obligation of each Purchaser to purchase and pay for the Notes to
be sold to such Purchaser at the Closing is subject to the fulfillment to such
Purchaser's satisfaction, prior to or at the Closing, of the following
conditions:

Section 4.1.  Representations and Warranties. The representations and warranties
of the Company in this Agreement shall be correct when made and at the time of
the Closing.

Section 4.2.  Performance; No Default. The Company shall have performed and
complied with all agreements and conditions contained in this Agreement required
to be performed or complied with by it prior to or at the Closing, and after
giving effect to the issue and sale of the Notes (and 

                                      -2-
   8

the application of the proceeds thereof as contemplated by Schedule 5.14), no
Default or Event of Default shall have occurred and be continuing.

Section 4.3.  Compliance Certificates.

                   (a) Officer's Certificate. The Company shall have delivered
         to such Purchaser an Officer's Certificate, dated the date of the
         Closing, certifying that the conditions specified in Sections 4.1, 4.2
         and 4.9 have been fulfilled.

                   (b) Secretary's Certificate. The Company shall have delivered
         to such Purchaser a certificate certifying as to the resolutions
         attached thereto and other corporate proceedings relating to the
         authorization, execution and delivery of the Notes and this Agreement.

Section 4.4.  Opinions of Counsel. Such Purchaser shall have received opinions 
in form and substance satisfactory to such Purchaser, dated the date of the
Closing (a) from Sonnenschein Nath & Rosenthal, counsel for the Company,
covering the matters set forth in Exhibit 4.4(a) and covering such other matters
incident to the transactions contemplated hereby as such Purchaser or such
Purchaser's counsel may reasonably request (and the Company hereby instructs its
counsel to deliver such opinion to such Purchaser) and (b) from Chapman and
Cutler, the Purchaser's special counsel in connection with such transactions,
covering the matters set forth in Exhibit 4.4(b) and covering such other matters
incident to such transactions as such Purchaser may reasonably request.

Section 4.5.  Purchase Permitted by Applicable Law, Etc. On the date of the
Closing each purchase of Notes shall (a) be permitted by the laws and
regulations of each jurisdiction to which each Purchaser is subject, without
recourse to provisions (such as Section 1405(a)(8) of the New York Insurance
Law) permitting limited investments by insurance companies without restriction
as to the character of the particular investment, (b) not violate any applicable
law or regulation (including, without limitation, Regulation T, U or X of the
Board of Governors of the Federal Reserve System) and (c) not subject any
Purchaser to any tax, penalty or liability under or pursuant to any applicable
law or regulation, which law or regulation was not in effect on the date hereof.
If requested by any Purchaser, such Purchaser shall have received an Officer's
Certificate certifying as to such matters of fact as such Purchaser may
reasonably specify to enable such Purchaser to determine whether such purchase
is so permitted.

Section 4.6.  Related Transactions. The Company shall have consummated the sale 
of the entire principal amount of the Notes scheduled to be sold on the date of
Closing pursuant to this Agreement.

Section 4.7.  Payment of Special Counsel Fees. Without limiting the provisions 
of Section 15.1, the Company shall have paid on or before the Closing the fees,
charges and disbursements of the Purchasers' special counsel referred to in
Section 4.4 to the extent reflected in a statement of such counsel rendered to
the Company at least one Business Day prior to the Closing.

                                      -3-
   9

Section 4.8.  Private Placement Number. A Private Placement Number issued by
Standard & Poor's CUSIP Service Bureau (in cooperation with the Securities
Valuation Office of the National Association of Insurance Commissioners) shall
have been obtained for the Notes.

Section 4.9.  Changes in Corporate Structure. Except as specified in Schedule 
4.9, the Company shall not have changed its jurisdiction of incorporation or
been a party to any merger or consolidation and shall not have succeeded to all
or any substantial part of the liabilities of any other entity, at any time
following the date of the most recent financial statements referred to in
Schedule 5.5.

Section 4.10. Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated by this Agreement and all
documents and instruments incident to such transactions shall be satisfactory to
such Purchaser and such Purchaser's special counsel, and such Purchaser and such
Purchaser's special counsel shall have received all such counterpart originals
or certified or other copies of such documents as such Purchaser or such
Purchaser's special counsel may reasonably request.

SECTION 5.    REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

         The Company represents and warrants to each Purchaser that:

Section 5.1.  Organization; Power and Authority. The Company is a corporation 
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation, and is duly qualified as a foreign corporation
and is in good standing in each jurisdiction in which such qualification is
required by law, other than those jurisdictions as to which the failure to be so
qualified or in good standing could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. The Company has the
corporate power and authority to own or hold under lease the properties it
purports to own or hold under lease, to transact the business it transacts and
proposes to transact, to execute and deliver this Agreement and the Notes and to
perform the provisions hereof and thereof.

Section 5.2.  Authorization, Etc. This Agreement and the Notes have been duly
authorized by all necessary corporate action on the part of the Company, and
this Agreement constitutes, and upon execution and delivery thereof each Note
will constitute, a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by (a) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and (b) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).

Section 5.3.  Disclosure. The Company, through its agent, BancAmerica Robertson
Stephens has delivered to each Purchaser a copy of a Confidential Private
Placement Memorandum, dated March, 1998 (the "Memorandum"), relating to the
transactions contemplated hereby. The Memorandum fairly describes, in all
material respects, the general nature of the business and 

                                      -4-
   10

principal properties of the Company and its Restricted Subsidiaries. Except as
disclosed in Schedule 5.3, this Agreement, the Memorandum, the documents,
certificates or other writings delivered to you by or on behalf of the Company
in connection with the transactions contemplated hereby and the financial
statements listed in Schedule 5.5, taken as a whole, do not contain any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein not misleading in light of the circumstances under
which they were made. Except as disclosed in the Memorandum or as expressly
described in Schedule 5.3, or in one of the documents, certificates or other
writings identified therein, or in the financial statements listed in Schedule
5.5, since July 31, 1997, there has been no change in the financial condition,
operations, business, properties or prospects of the Company or any of its
Restricted Subsidiaries except changes that individually or in the aggregate
could not reasonably be expected to have a Material Adverse Effect.

Section 5.4.  Organization and Ownership of Shares of Subsidiaries. (a) Schedule
5.4 contains (except as noted therein) a complete and correct list (i) of the
Company's Subsidiaries, showing, as to each Subsidiary, its status (whether a
Restricted or Unrestricted Subsidiary), the correct name thereof, the
jurisdiction of its organization, and the percentage of shares of each class of
its capital stock or similar equity interests outstanding owned by the Company
and each other Subsidiary, (ii) of the Company's Affiliates, other than
Subsidiaries, and (iii) of the Company's directors and senior officers.

           (b) All of the outstanding shares of capital stock or similar equity
interests of each Restricted Subsidiary shown in Schedule 5.4 as being owned by
the Company and its Subsidiaries have been validly issued, are fully paid and
nonassessable and are owned by the Company or another Subsidiary free and clear
of any Lien (except as otherwise disclosed in Schedule 5.4).

           (c) Each Restricted Subsidiary identified in Schedule 5.4 is a
corporation or other legal entity duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization, and is duly
qualified as a foreign corporation or other legal entity and is in good standing
in each jurisdiction in which such qualification is required by law, other than
those jurisdictions as to which the failure to be so qualified or in good
standing could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. Each such Restricted Subsidiary has the
corporate or other power and authority to own or hold under lease the properties
it purports to own or hold under lease and to transact the business it transacts
and proposes to transact.

           (d) No Restricted Subsidiary is a party to, or otherwise subject to
any legal restriction or any Material agreement (other than this Agreement, the
agreements listed on Schedule 5.4 and customary limitations imposed by corporate
law statutes) restricting the ability of such Restricted Subsidiary to pay
dividends out of profits or make any other similar distributions of profits to
the Company or any of its Restricted Subsidiaries that owns outstanding shares
of capital stock or similar equity interests of such Restricted Subsidiary.

                                      -5-
   11

Section 5.5.  Financial Statements. The Company has delivered to each Purchaser
copies of the financial statements of the Company and its Subsidiaries listed on
Schedule 5.5. All of said financial statements (including in each case the
related schedules and notes) fairly present in all material respects the
consolidated financial position of the Company and its Subsidiaries as of the
respective dates specified in such financial statements and the consolidated
results of their operations and cash flows for the respective periods so
specified and have been prepared in accordance with GAAP consistently applied
throughout the periods involved except as set forth in the notes thereto
(subject, in the case of any interim financial statements, to normal year-end
adjustments).

Section 5.6.  Compliance with Laws, Other Instruments, Etc. The execution,
delivery and performance by the Company of this Agreement and the Notes will not
(a) contravene, result in any breach of, or constitute a default under, or
result in the creation of any Lien in respect of any property of the Company or
any Restricted Subsidiary under, any indenture, mortgage, deed of trust, loan,
purchase or credit agreement, lease, corporate charter or by-laws, or any other
agreement or instrument to which the Company or any Restricted Subsidiary is
bound or by which the Company or any Restricted Subsidiary or any of their
respective properties may be bound or affected, (b) conflict with or result in a
breach of any of the terms, conditions or provisions of any order, judgment,
decree, or ruling of any court, arbitrator or Governmental Authority applicable
to the Company or any Restricted Subsidiary or (c) violate any provision of any
statute or other rule or regulation of any Governmental Authority applicable to
the Company or any Restricted Subsidiary.

Section 5.7.  Governmental Authorizations, Etc. No consent, approval or
authorization of, or registration, filing or declaration with, any Governmental
Authority is required in connection with the execution, delivery or performance
by the Company of this Agreement or the Notes.

Section 5.8.  Litigation; Observance of Agreements, Statutes and Orders. (a)
Except as disclosed in Schedule 5.8, there are no actions, suits or proceedings
pending or, to the knowledge of the Company, threatened against or affecting the
Company or any Restricted Subsidiary or any property of the Company or any
Restricted Subsidiary in any court or before any arbitrator of any kind or
before or by any Governmental Authority that, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect.

           (b) Neither the Company nor any Restricted Subsidiary is in default
under any term of any agreement or instrument to which it is a party or by which
it is bound, or any order, judgment, decree or ruling of any court, arbitrator
or Governmental Authority or is in violation of any applicable law, ordinance,
rule or regulation (including without limitation Environmental Laws) of any
Governmental Authority, which default or violation, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.

Section 5.9.  Taxes. The Company and its Restricted Subsidiaries have filed all
tax returns that are required to have been filed in any jurisdiction, and have
paid all taxes shown to be due and payable on such returns and all other taxes
and assessments levied upon them or their properties, assets, income or
franchises, to the extent such taxes and assessments have become due and 

                                      -6-
   12

payable and before they have become delinquent, except for any taxes and
assessments (a) the amount of which is not individually or in the aggregate
Material or (b) the amount, applicability or validity of which is currently
being contested in good faith by appropriate proceedings and with respect to
which the Company or a Restricted Subsidiary, as the case may be, has
established adequate reserves in accordance with GAAP. The Company knows of no
basis for any other tax or assessment that could reasonably be expected to have
a Material Adverse Effect. The charges, accruals and reserves on the books of
the Company and its Restricted Subsidiaries in respect of Federal, state or
other taxes for all fiscal periods are adequate. The Federal income tax
liabilities of the Company and its Restricted Subsidiaries have been determined
by the Internal Revenue Service and paid for all fiscal years up to and
including the fiscal year ended July 31, 1994.

Section 5.10. Title to Property; Leases. The Company and its Restricted
Subsidiaries have good and sufficient title to their respective properties that
individually or in the aggregate are Material, including all such properties
reflected in the most recent audited balance sheet referred to in Schedule 5.5
or purported to have been acquired by the Company or any Restricted Subsidiary
after said date (except as sold or otherwise disposed of in the ordinary course
of business), in each case free and clear of Liens prohibited by this Agreement.
All leases that individually or in the aggregate are Material are valid and
subsisting and are in full force and effect in all material respects.

Section 5.11. Licenses, Permits, etc.  Except as disclosed in Schedule 5.11,

           (a) the Company and its Restricted Subsidiaries own or possess all
licenses, permits, franchises, authorizations, patents, copyrights, service
marks, trademarks and trade names, or rights thereto, that individually or in
the aggregate are Material, without known conflict with the rights of others;

           (b) to the best knowledge of the Company, no product of the Company
or any Restricted Subsidiary infringes in any Material respect any license,
permit, franchise, authorization, patent, copyright, service mark, trademark,
trade name or other right owned by any other Person; and

           (c) to the best knowledge of the Company, there is no Material
violation by any Person of any right of the Company or any of its Restricted
Subsidiaries with respect to any patent, copyright, service mark, trademark,
trade name or other right owned or used by the Company or any of its Restricted
Subsidiaries.

Section 5.12. Compliance with ERISA. (a) The Company and each ERISA Affiliate
have operated and administered each Plan in compliance with all applicable laws
except for such instances of noncompliance as have not resulted in and could not
reasonably be expected to result in a Material Adverse Effect. Neither the
Company nor any ERISA Affiliate has incurred any liability pursuant to Title I
or IV of ERISA or the penalty or excise tax provisions of the Code relating to
employee benefit plans (as defined in Section 3 of ERISA), and no event,
transaction or condition has occurred or exists that could reasonably be
expected to result in the incurrence 

                                      -7-
   13

of any such liability by the Company or any ERISA Affiliate, or in the
imposition of any Lien on any of the rights, properties or assets of the Company
or any ERISA Affiliate, in either case pursuant to Title I or IV of ERISA or to
such penalty or excise tax provisions or to Section 401(a)(29) or 412 of the
Code, other than such liabilities or Liens as would not be individually or in
the aggregate Material.

           (b) The present value of the aggregate benefit liabilities under each
of the Plans (other than Multiemployer Plans), determined as of the end of such
Plan's most recently ended plan year on the basis of the actuarial assumptions
specified for funding purposes in such Plan's most recent actuarial valuation
report, did not exceed the aggregate current value of the assets of such Plan
allocable to such benefit liabilities. The term "benefit liabilities' has the
meaning specified in Section 4001 of ERISA and the terms "current value" and
"present value" have the meanings specified in Section 3 of ERISA.

           (c) The Company and its ERISA Affiliates have not incurred withdrawal
liabilities (and are not subject to contingent withdrawal liabilities) under
Section 4201 or 4204 of ERISA in respect of Multiemployer Plans that
individually or in the aggregate are Material.

           (d) The expected postretirement benefit obligation (determined as of
the last day of the Company's most recently ended fiscal year in accordance with
Financial Accounting Standards Board Statement No. 106, without regard to
liabilities attributable to continuation coverage mandated by Section 4980B of
the Code) of the Company and its Subsidiaries is not Material.

           (e) The execution and delivery of this Agreement and the issuance and
sale of the Notes hereunder will not involve any transaction that is subject to
the prohibitions of Section 406 of ERISA or in connection with which a tax could
be imposed pursuant to Section 4975(c)(1)(A)-(D) of the Code. The representation
by the Company in the first sentence of this Section 5.12(e) is made in reliance
upon and subject to the accuracy of each Purchaser's representation in Section
6.2 as to the sources of the funds to be used to pay the purchase price of the
Notes to be purchased by such Purchaser.

Section 5.13. Private Offering by the Company. Neither the Company nor anyone
acting on its behalf has offered the Notes or any similar securities for sale
to, or solicited any offer to buy any of the same from, or otherwise approached
or negotiated in respect thereof with, any Person other than the Purchasers and
not more than 35 other Institutional Investors, each of which has been offered
the Notes at a private sale for investment. Neither the Company nor anyone
acting on its behalf has taken, or will take, any action that would subject the
issuance or sale of the Notes to the registration requirements of Section 5 of
the Securities Act.

Section 5.14. Use of Proceeds; Margin Regulations. The Company will apply the
proceeds of the sale of the Notes as set forth in Schedule 5.14. No part of the
proceeds from the sale of the Notes hereunder will be used, directly or
indirectly, for the purpose of buying or carrying any margin stock within the
meaning of Regulation U of the Board of Governors of the Federal Reserve System
(12 CFR 221), or for the purpose of buying or carrying or trading in any
securities under 

                                      -8-
   14

such circumstances as to involve the Company in a violation of Regulation X of
said Board (12 CFR 224) or to involve any broker or dealer in a violation of
Regulation T of said Board (12 CFR 220). Margin stock does not constitute more
than 0.0% of the value of the consolidated assets of the Company and its
Subsidiaries and the Company does not have any present intention that margin
stock will constitute more than 0.0% of the value of such assets. As used in
this Section, the terms "margin stock" and "purpose of buying or carrying" shall
have the meanings assigned to them in said Regulation U.

Section 5.15. Existing Indebtedness and Investments; Future Liens. (a) Except as
described therein, Schedule 5.15 sets forth a complete and correct list of all
outstanding Debt and Investments of the Company and its Restricted Subsidiaries
as of January 31, 1998, since which date there has been no Material change in
the amounts, interest rates, sinking funds, installment payments or maturities
of the Debt or Investments of the Company or its Restricted Subsidiaries, as the
case may be. Neither the Company nor any Restricted Subsidiary is in default and
no waiver of default is currently in effect, in the payment of any principal or
interest on any Debt of the Company or such Restricted Subsidiary and no event
or condition exists with respect to any Debt of the Company or any Restricted
Subsidiary that would permit (or that with notice or the lapse of time, or both,
would permit) one or more Persons to cause such Debt to become due and payable
before its stated maturity or before its regularly scheduled dates of payment.

           (b) Except as disclosed in Schedule 5.15, neither the Company nor any
Restricted Subsidiary has agreed or consented to cause or permit in the future
(upon the happening of a contingency or otherwise) any of its property, whether
now owned or hereafter acquired, to be subject to a Lien not permitted by
Section 10.5.

Section 5.16. Foreign Assets Control Regulations, Etc. Neither the sale of the
Notes by the Company hereunder nor its use of the proceeds thereof will violate
the Trading with the Enemy Act, as amended, or any of the foreign assets control
regulations of the United States Treasury Department (31 CFR, Subtitle B,
Chapter V, as amended) or any enabling legislation or executive order relating
thereto.

Section 5.17. Status under Certain Statutes. Neither the Company nor any
Restricted Subsidiary is an "investment company" registered or required to be
registered under the Investment Company Act of 1940, as amended, or is subject
to regulation under the Public Utility Holding Company Act of 1935, as amended,
the ICC Termination Act of 1995, as amended, or the Federal Power Act, as
amended.

Section 5.18. Environmental Matters. Neither the Company nor any Restricted
Subsidiary has knowledge of any claim or has received any notice of any claim,
and no proceeding has been instituted raising any claim against the Company or
any of its Restricted Subsidiaries or any of their respective real properties
now or formerly owned, leased or operated by any of them or other assets,
alleging any damage to the environment or violation of any Environmental Laws,
except, in each case, such as could not reasonably be expected to result in a
Material Adverse Effect. Further:

                                      -9-
   15

                   (a) neither the Company nor any Restricted Subsidiary has
         knowledge of any facts which would give rise to any claim, public or
         private, of violation of Environmental Laws or damage to the
         environment emanating from, occurring on or in any way related to real
         properties now or formerly owned, leased or operated by any of them or
         to other assets or their use, except, in each case, such as could not
         reasonably be expected to result in a Material Adverse Effect;

                   (b) neither the Company nor any of its Restricted
         Subsidiaries has stored any Hazardous Materials on real properties now
         or formerly owned, leased or operated by any of them and has not
         disposed of any Hazardous Materials in a manner contrary to any
         Environmental Laws in each case in any manner that could reasonably be
         expected to result in a Material Adverse Effect; and

                   (c) all buildings on all real properties now owned, leased or
         operated by the Company or any of its Restricted Subsidiaries are in
         compliance with applicable Environmental Laws, except where failure to
         comply could not reasonably be expected to result in a Material Adverse
         Effect.

SECTION 6.    REPRESENTATIONS OF THE PURCHASER.

Section 6.1.  Purchase for Investment. Each Purchaser represents that it is
purchasing the Notes for its own account or for one or more separate accounts
maintained by it or for the account of one or more pension or trust funds (in
each case, for which such Purchaser has the exclusive power to make investment
decisions) and not with a view to the distribution thereof, provided that the
disposition of such Purchaser's or such pension or trust funds' property shall
at all times be within such Purchaser's or such pension or trust funds' control.
Each Purchaser understands that the Notes have not been registered under the
Securities Act and may be resold only if registered pursuant to the provisions
of the Securities Act or if an exemption from registration is available, except
under circumstances where neither such registration nor such an exemption is
required by law, and that the Company is not required to register the Notes.

Section 6.2.  Source of Funds. Each Purchaser represents that at least one of 
the following statements is an accurate representation as to each source of
funds (a "Source") to be used by it to pay the purchase price of the Notes to be
purchased by it hereunder:

                   (a) the Source is an "insurance company general account"
         within the meaning of Department of Labor Prohibited Transaction
         Exemption ("PTE") 95-60 (issued July 12, 1995) and there is no employee
         benefit plan, treating as a single plan, all plans maintained by the
         same employer or employee organization, with respect to which the
         amount of the general account reserves and liabilities for all
         contracts held by or on behalf of such plan, exceeds ten percent (10%)
         of the total reserves and liabilities of such general account
         (exclusive of separate account liabilities) plus surplus, as set forth
         in the NAIC Annual Statement filed with such Purchaser's state of
         domicile; or

                                      -10-
   16

                   (b) the Source is either (i) an insurance company pooled
         separate account, within the meaning of PTE 90-1 (issued January 29,
         1990), or (ii) a bank collective investment fund, within the meaning of
         the PTE 91-38 (issued July 12, 1991) and, except as such Purchaser has
         disclosed to the Company in writing pursuant to this paragraph (b), no
         employee benefit plan or group of plans maintained by the same employer
         or employee organization beneficially owns more than 10% of all assets
         allocated to such pooled separate account or collective investment
         fund; or

                   (c) the Source constitutes assets of an "investment fund"
         (within the meaning of Part V of the QPAM Exemption) managed by a
         "qualified professional asset manager" or "QPAM" (within the meaning of
         Part V of the QPAM Exemption), no employee benefit plan's assets that
         are included in such investment fund, when combined with the assets of
         all other employee benefit plans established or maintained by the same
         employer or by an affiliate (within the meaning of Section V(c)(1) of
         the QPAM Exemption) of such employer or by the same employee
         organization and managed by such QPAM, exceed 20% of the total client
         assets managed by such QPAM, the conditions of Part I(c) and (g) of the
         QPAM Exemption are satisfied, neither the QPAM nor a person controlling
         or controlled by the QPAM (applying the definition of "control" in
         Section V(e) of the QPAM Exemption) owns a 5% or more interest in the
         Company and (i) the identity of such QPAM and (ii) the names of all
         employee benefit plans whose assets are included in such investment
         fund have been disclosed to the Company in writing pursuant to this
         paragraph (c); or

                   (d) the Source is a governmental plan; or

                   (e) the Source is one or more employee benefit plans, or a
         separate account or trust fund comprised of one or more employee
         benefit plans, each of which has been identified to the Company in
         writing pursuant to this paragraph (e); or

                   (f) the Source does not include assets of any employee
         benefit plan, other than a plan exempt from the coverage of ERISA.

If any Purchaser or any subsequent transferee of the Notes indicates that such
Purchaser or such transferee is relying on any representation contained in
paragraph (b), (c) or (e) above, the Company shall deliver on the date of
Closing and on the date of any applicable transfer a certificate, which shall
either state that (i) it is neither a party in interest nor a "disqualified
person" (as defined in Section 4975(e)(2) of the Code) with respect to any plan
identified pursuant to paragraphs (b) or (e) above, or (ii) with respect to any
plan, identified pursuant to paragraph (c) above, neither it nor any "affiliate"
(as defined in SectionV(c) of the QPAM Exemption) has at such time, and during
the immediately preceding one year, exercised the authority to appoint or
terminate said QPAM as manager of any plan identified in writing pursuant to
paragraph (c) above or to negotiate the terms of said QPAM's management
agreement on behalf of any such identified plan. As used in this Section 6.2,
the terms "employee benefit plan", "governmental plan", "party in interest" and
"separate account" shall have the respective meanings assigned to such terms in
Section 3 of ERISA.

                                      -11-
   17

SECTION 7.    INFORMATION AS TO COMPANY; STATUS OF SUBSIDIARIES.

Section 7.1.  Financial and Business Information. The Company shall deliver to
each holder of Notes that is an Institutional Investor:

                  (a) Quarterly Statements -- within 45 days after the end of
         each quarterly fiscal period in each fiscal year of the Company (other
         than the last quarterly fiscal period of each such fiscal year),
         duplicate copies of,

                            (i) a consolidated  balance sheet of the Company and
                  its Subsidiaries as at the end of such quarter, and

                           (ii) consolidated statements of income and cash flows
                  of the Company and its Subsidiaries, for such quarter and (in
                  the case of the second and third quarters) for the portion of
                  the fiscal year ending with such quarter,

         setting forth in each case in comparative form the figures for the
         corresponding periods in the previous fiscal year, all in reasonable
         detail, prepared in accordance with GAAP applicable to quarterly
         financial statements generally, and certified by a Senior Financial
         Officer as fairly presenting, in all material respects, the financial
         position of the companies being reported on and their results of
         operations and cash flows, subject to changes resulting from year-end
         adjustments, provided that delivery within the time period specified
         above of copies of the Company's Quarterly Report on Form 10-Q prepared
         in compliance with the requirements therefor and filed with the
         Securities and Exchange Commission shall be deemed to satisfy the
         requirements of this Section 7.1(a);

                   (b)     Annual  Statements  -- within 90 days after the end
         of each fiscal year of the  Company, duplicate copies of,

                            (i)     a  consolidated  balance sheet of the 
                  Company and its  Subsidiaries, as at the end of such year, and

                           (ii) consolidated statements of income, changes in
                  stockholders' equity and cash flows of the Company and its
                  Subsidiaries, for such year,

         setting forth in each case in comparative form the figures for the
         previous fiscal year, all in reasonable detail, prepared in accordance
         with GAAP, and accompanied by an opinion thereon of Blackman Kallick
         Bartelstein, LLP, or of independent certified public accountants of
         recognized national standing, which opinion shall state that such
         financial statements present fairly, in all material respects, the
         financial position of the companies being reported upon and their
         results of operations and cash flows and have been prepared in
         conformity with GAAP, and that the examination of such accountants in
         connection with such financial statements has been made in accordance
         with generally accepted auditing standards, and that such audit
         provides a reasonable basis for such 

                                      -12-
   18

         opinion in the circumstances, provided that the delivery within the
         time period specified above of the Company's Annual Report on Form 10-K
         for such fiscal year (together with the Company's annual report to
         stockholders, if any, prepared pursuant to Rule 14a-3 under the
         Exchange Act) prepared in compliance with the requirements therefor and
         filed with the Securities and Exchange Commission shall be deemed to
         satisfy the requirements of this Section 7.1(b);

                   (c) Additional Financial Statements -- if as of the end of
         any quarterly fiscal period of the Company, the total assets of the
         Unrestricted Subsidiaries exceed 10% of Consolidated Assets or the
         total revenues of the Unrestricted Subsidiaries exceed 10% of
         Consolidated Revenues for the four fiscal quarters then ending, the
         financial statements required to be provided under Section 7.1(a) or
         (b), as the case may be, shall be accompanied by:

                            (i) a consolidated balance sheet of the Unrestricted
                  Subsidiaries as at the end of such quarter or fiscal year, as
                  the case may be, together with a consolidating balance sheet
                  for the Company and its Subsidiaries, and

                           (ii) consolidated statements of income, changes in
                  stockholders' equity and cash flows of the Unrestricted
                  Subsidiaries, for such quarter (and (in the case of the second
                  and third quarters) for the portion of the fiscal year ending
                  with such quarter) or fiscal year, as the case may be,
                  together with consolidating statements of income, changes in
                  stockholders' equity (annual only) and cash flows of the
                  Company and its Subsidiaries for such period,

         all in reasonable detail, prepared in accordance with GAAP applicable
         to quarterly or annual financial statements, as the case may be,
         generally, and certified by a Senior Financial Officer as fairly
         presenting, in all material respects, the financial position of the
         companies being reported on and their results of operations and cash
         flows, subject in the case of quarterly financial statements to changes
         resulting from year-end adjustments.

                   (d) SEC and Other Reports -- promptly upon their becoming
         available, one copy of (i) each financial statement, report, notice or
         proxy statement sent by the Company or any Subsidiary to public
         securities holders generally, and (ii) each regular or periodic report,
         each registration statement that shall have become effective (without
         exhibits except as expressly requested by such holder), and each final
         prospectus and all amendments thereto filed by the Company or any
         Subsidiary with the Securities and Exchange Commission and of all press
         releases and other statements made available generally by the Company
         or any Subsidiary to the public concerning developments that are
         Material;

                   (e) Notice of Default or Event of Default -- promptly, and in
         any event within five days after a Responsible Officer becoming aware
         of the existence of any Default or Event of Default or that any Person
         has given any notice or taken any action 

                                      -13-
   19

         with respect to a claimed default hereunder or that any Person has
         given any notice or taken any action with respect to a claimed default
         of the type referred to in Section 11(f), a written notice specifying
         the nature and period of existence thereof and what action the Company
         is taking or proposes to take with respect thereto;

                   (f) ERISA Matters -- promptly, and in any event within five
         days after a Responsible Officer becoming aware of any of the
         following, a written notice setting forth the nature thereof and the
         action, if any, that the Company or an ERISA Affiliate proposes to take
         with respect thereto:

                            (i) with respect to any Plan, any reportable event,
                  as defined in Section 4043(b) of ERISA and the regulations
                  thereunder, for which notice thereof has not been waived
                  pursuant to such regulations as in effect on the date hereof;
                  or

                           (ii) the taking by the PBGC of steps to institute, or
                  the threatening by the PBGC of the institution of, proceedings
                  under Section 4042 of ERISA for the termination of, or the
                  appointment of a trustee to administer, any Plan, or the
                  receipt by the Company or any ERISA Affiliate of a notice from
                  a Multiemployer Plan that such action has been taken by the
                  PBGC with respect to such Multiemployer Plan; or

                          (iii) any event, transaction or condition that could
                  result in the incurrence of any liability by the Company or
                  any ERISA Affiliate pursuant to Title I or IV of ERISA or the
                  penalty or excise tax provisions of the Code relating to
                  employee benefit plans, or in the imposition of any Lien on
                  any of the rights, properties or assets of the Company or any
                  ERISA Affiliate pursuant to Title I or IV of ERISA or such
                  penalty or excise tax provisions, if such liability or Lien,
                  taken together with any other such liabilities or Liens then
                  existing, could reasonably be expected to have a Material
                  Adverse Effect; and

                   (g) Notices from Governmental Authority -- promptly, and in
         any event within 30 days of receipt thereof, copies of any notice to
         the Company or any Subsidiary from any Federal or state Governmental
         Authority relating to any order, ruling, statute or other law or
         regulation that could reasonably be expected to have a Material Adverse
         Effect; and

                   (h) Requested Information -- with reasonable promptness, such
         other data and information relating to the business, operations,
         affairs, financial condition, assets or properties of the Company or
         any of its Subsidiaries or relating to the ability of the Company to
         perform its obligations hereunder and under the Notes as from time to
         time may be reasonably requested by any such holder of Notes.

Section 7.2.  Officer's Certificate. Each set of financial statements delivered
to a holder of Notes pursuant to Section 7.1(a) or Section 7.1(b) hereof shall
be accompanied by a certificate of a Senior Financial Officer setting forth:

                                      -14-
   20

                   (a) Covenant Compliance -- the information (including
         detailed calculations) required in order to establish whether the
         Company was in compliance with the requirements of Section 10.1 through
         Section 10.5 hereof, inclusive, and of Section 10.7 hereof, during the
         quarterly or annual period covered by the statements then being
         furnished (including with respect to each such Section, where
         applicable, the calculations of the maximum or minimum amount, ratio or
         percentage, as the case may be, permissible under the terms of such
         Sections, and the calculation of the amount, ratio or percentage then
         in existence); and

                   (b) Event of Default -- a statement that such officer has
         reviewed the relevant terms hereof and has made, or caused to be made,
         under his or her supervision, a review of the transactions and
         conditions of the Company and its Subsidiaries from the beginning of
         the quarterly or annual period covered by the statements then being
         furnished to the date of the certificate and that such review shall not
         have disclosed the existence during such period of any condition or
         event that constitutes a Default or an Event of Default or, if any such
         condition or event existed or exists (including, without limitation,
         any such event or condition resulting from the failure of the Company
         or any Subsidiary to comply with any Environmental Law), specifying the
         nature and period of existence thereof and what action the Company
         shall have taken or proposes to take with respect thereto.

Section 7.3.  Inspection. The Company shall permit the representatives of each
holder of Notes that is an Institutional Investor:

                   (a) No Default -- if no Default or Event of Default then
         exists, at the expense of such holder and upon reasonable prior notice
         to the Company, to visit the principal executive office of the Company,
         to discuss the affairs, finances and accounts of the Company and its
         Subsidiaries with the Company's officers, and (with the consent of the
         Company, which consent will not be unreasonably withheld) its
         independent public accountants, and (with the consent of the Company,
         which consent will not be unreasonably withheld) to visit the other
         offices and properties of the Company and each Subsidiary, all at such
         reasonable times and as often as may be reasonably requested in
         writing; and

                   (b) Default -- if a Default or Event of Default then exists,
         at the expense of the Company, to visit and inspect any of the offices
         or properties of the Company or any Subsidiary, to examine all their
         respective books of account, records, reports and other papers, to make
         copies and extracts therefrom, and to discuss their respective affairs,
         finances and accounts with their respective officers and independent
         public accountants (and by this provision the Company authorizes said
         accountants to discuss the affairs, finances and accounts of the
         Company and its Subsidiaries), all at such times and as often as may be
         requested.

Section 7.4.  Change in Status of Subsidiaries. So long as no Default or Event
of Default shall have occurred and be continuing, the Company may at any time
and from time to time, upon not 

                                      -15-
   21

less than 30 days' prior written notice given to each Holder, designate a
previously Restricted Subsidiary as an Unrestricted Subsidiary or a previously
Unrestricted Subsidiary as a Restricted Subsidiary, provided that immediately
after such designation and after giving effect thereto no Default or Event of
Default shall have occurred and be continuing, and provided further that the
status of such Subsidiary had not been changed more than twice.

SECTION 8.    PREPAYMENT OF THE NOTES.

Section 8.1.  Required Prepayments. On April 15, 2003 and on each April 15
thereafter to and including April 15, 2012 the Company will prepay the principal
amount set forth opposite such date on Schedule 8.1 (or such lesser principal
amount as shall then be outstanding) of the Notes at 100% of the principal
amount so prepaid and without payment of the Make-Whole Amount or any premium,
provided that upon any partial prepayment of the Notes pursuant to Section 8.2
the principal amount of each required prepayment of the Notes becoming due under
this Section 8.1 on and after the date of such prepayment shall be reduced in
the same proportion as the aggregate unpaid principal amount of the Notes is
reduced as a result of such prepayment.

Section 8.2.  Optional Prepayments with Make-Whole Amount. The Company may, at
its option, upon notice as provided below, prepay at any time all, or from time
to time any part of, the Notes, in a principal amount of not less than $500,000
in the case of a partial prepayment, at 100% of the principal amount so prepaid,
together with interest accrued thereon to the date of such prepayment, plus the
Make-Whole Amount determined for the prepayment date with respect to such
principal amount. The Company will give each holder of Notes written notice of
each optional prepayment under this Section 8.2 not less than 30 days and not
more than 60 days prior to the date fixed for such prepayment. Each such notice
shall specify such date, the aggregate principal amount of the Notes to be
prepaid on such date, the principal amount of each Note held by such holder to
be prepaid (determined in accordance with Section 8.3), and the interest to be
paid on the prepayment date with respect to such principal amount being prepaid,
and shall be accompanied by a certificate of a Senior Financial Officer as to
the estimated Make-Whole Amount due in connection with such prepayment
(calculated as if the date of such notice were the date of the prepayment),
setting forth the details of such computation. Two Business Days prior to such
prepayment, the Company shall deliver to each holder of Notes a certificate of a
Senior Financial Officer specifying the calculation of such Make-Whole Amount as
of the specified prepayment date.

Section 8.3.  Allocation of Partial Prepayments. In the case of each partial
prepayment of the Notes, the principal amount of the Notes to be prepaid shall
be allocated among all of the Notes at the time outstanding in proportion, as
nearly as practicable, to the respective unpaid principal amounts thereof not
theretofore called for prepayment.

Section 8.4.  Maturity; Surrender, Etc. In the case of each prepayment of Notes
pursuant to this Section 8, the principal amount of each Note to be prepaid
shall mature and become due and payable on the date fixed for such prepayment,
together with interest on such principal amount accrued to such date and the
applicable Make-Whole Amount, if any. From and after such date, unless the
Company shall fail to pay such principal amount when so due and payable,
together 

                                      -16-
   22

with the interest and Make-Whole Amount, if any, as aforesaid, interest on such
principal amount shall cease to accrue. Any Note paid or prepaid in full shall
be surrendered to the Company and cancelled and shall not be reissued, and no
Note shall be issued in lieu of any prepaid principal amount of any Note.

Section 8.5.  Purchase of Notes. The Company will not and will not permit any
Restricted Subsidiary or Affiliate to purchase, redeem, prepay or otherwise
acquire, directly or indirectly, any of the outstanding Notes except upon the
payment or prepayment of the Notes in accordance with the terms of this
Agreement, and the Notes. The Company will promptly cancel all Notes acquired by
it, any Restricted Subsidiary or any Affiliate pursuant to any payment,
prepayment or purchase of Notes pursuant to any provision of this Agreement and
no Notes may be issued in substitution or exchange for any such Notes.

Section 8.6.  Make-Whole Amount. The term "Make-Whole Amount" means, with 
respect to any Note, an amount equal to the excess, if any, of the Discounted
Value of the Remaining Scheduled Payments with respect to the Called Principal
of such Note over the amount of such Called Principal, provided that the
Make-Whole Amount shall in no event be less than zero. For the purposes of
determining the Make-Whole Amount, the following terms have the following
meanings:

                  "Called Principal" means, with respect to any Note, the
         principal of such Note that is to be prepaid pursuant to Section 8.2 or
         has become or is declared to be immediately due and payable pursuant to
         Section 12.1, as the context requires.

                  "Discounted Value" means, with respect to the Called Principal
         of any Note, the amount obtained by discounting all Remaining Scheduled
         Payments with respect to such Called Principal from their respective
         scheduled due dates to the Settlement Date with respect to such Called
         Principal, in accordance with accepted financial practice and at a
         discount factor (applied on the same periodic basis as that on which
         interest on the Notes is payable) equal to the Reinvestment Yield with
         respect to such Called Principal.

                  "Reinvestment Yield" means, with respect to the Called
         Principal of any Note, 0.50% plus the yield to maturity implied by (i)
         the yields reported, as of 10:00 A.M. (New York City time) on the
         second Business Day preceding the Settlement Date with respect to such
         Called Principal, on the display designated as "Gov't PX" on the
         Bloomberg Financial Market Services (or such other display as may
         replace such display on the Bloomberg Financial Market Services) for
         actively traded U.S. Treasury securities having a maturity equal to the
         Remaining Average Life of such Called Principal as of such Settlement
         Date, or (ii) if such yields are not reported as of such time or the
         yields reported as of such time are not ascertainable, the Treasury
         Constant Maturity Series Yields reported, for the latest day for which
         such yields have been so reported as of the second Business Day
         preceding the Settlement Date with respect to such Called Principal, in
         Federal Reserve Statistical Release H.15 (519) (or any comparable
         successor publication) for actively traded U.S. Treasury securities
         having a constant maturity equal to the Remaining Average Life of such
         Called Principal as of such Settlement Date. Such 

                                      -17-
   23

         implied yield will be determined, if necessary, by (a) converting U.S.
         Treasury bill quotations to bond-equivalent yields in accordance with
         accepted financial practice and (b) interpolating linearly between (1)
         the on the run U.S. Treasury security with the maturity closest to and
         greater than the Remaining Average Life and (2) the on the run U.S.
         Treasury security with the maturity closest to and less than the
         Remaining Average Life.

                  "Remaining Average Life" means, with respect to any Called
         Principal, the number of years (calculated to the nearest one-twelfth
         year) obtained by dividing (i) such Called Principal into (ii) the sum
         of the products obtained by multiplying (a) the principal component of
         each Remaining Scheduled Payment with respect to such Called Principal
         by (b) the number of years (calculated to the nearest one-twelfth year)
         that will elapse between the Settlement Date with respect to such
         Called Principal and the scheduled due date of such Remaining Scheduled
         Payment.

                  "Remaining Scheduled Payments" means, with respect to the
         Called Principal of any Note, all payments of such Called Principal and
         interest thereon that would be due after the Settlement Date with
         respect to such Called Principal if no payment of such Called Principal
         were made prior to its scheduled due date, provided that if such
         Settlement Date is not a date on which interest payments are due to be
         made under the terms of the Notes, then the amount of the next
         succeeding scheduled interest payment will be reduced by the amount of
         interest accrued to such Settlement Date and required to be paid on
         such Settlement Date pursuant to Section 8.2 or 12.1.

                  "Settlement Date" means, with respect to the Called Principal
         of any Note, the date on which such Called Principal is to be prepaid
         pursuant to Section 8.2 or has become or is declared to be immediately
         due and payable pursuant to Section 12.1, as the context requires.

SECTION 9.    AFFIRMATIVE COVENANTS.

         The Company covenants that so long as any of the Notes are outstanding:

Section 9.1.  Compliance with Law. The Company will and will cause each of its
Restricted Subsidiaries to comply with all laws, ordinances or governmental
rules or regulations to which each of them is subject, including, without
limitation, Environmental Laws, and will obtain and maintain in effect all
licenses, certificates, permits, franchises and other governmental
authorizations necessary to the ownership of their respective properties or to
the conduct of their respective businesses, in each case to the extent necessary
to ensure that non-compliance with such laws, ordinances or governmental rules
or regulations or failures to obtain or maintain in effect such licenses,
certificates, permits, franchises and other governmental authorizations could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

                                      -18-
   24

Section 9.2.  Insurance. The Company will and will cause each of its Restricted
Subsidiaries to maintain, with financially sound and reputable insurers,
insurance with respect to their respective properties and businesses against
such casualties and contingencies, of such types, on such terms and in such
amounts (including deductibles, co-insurance and self-insurance, if adequate
reserves are maintained with respect thereto) as is customary in the case of
entities of established reputations engaged in the same or a similar business
and similarly situated.

Section 9.3.  Maintenance of Properties. The Company will and will cause each of
its Restricted Subsidiaries to maintain and keep, or cause to be maintained and
kept, their respective properties in good repair, working order and condition
(other than ordinary wear and tear), so that the business carried on in
connection therewith may be properly conducted at all times, provided that this
Section shall not prevent the Company or any Restricted Subsidiary from
discontinuing the operation and the maintenance of any of its properties if such
discontinuance is desirable in the conduct of its business and the Company has
concluded that such discontinuance could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

Section 9.4.  Payment of Taxes and Claims. The Company will and will cause each
of its Subsidiaries to file all tax returns required to be filed in any
jurisdiction and to pay and discharge all taxes shown to be due and payable on
such returns and all other taxes, assessments, governmental charges, or levies
imposed on them or any of their properties, assets, income or franchises, to the
extent such taxes and assessments have become due and payable and before they
have become delinquent and all claims for which sums have become due and payable
that have or might become a Lien on properties or assets of the Company or any
Subsidiary, provided that neither the Company nor any Subsidiary need pay any
such tax or assessment or claims if (i) the amount, applicability or validity
thereof is contested by the Company or such Subsidiary on a timely basis in good
faith and in appropriate proceedings, and the Company or a Subsidiary has
established adequate reserves therefor in accordance with GAAP on the books of
the Company or such Subsidiary or (ii) the nonpayment of all such taxes,
assessments and claims in the aggregate could not reasonably be expected to have
a Material Adverse Effect.

Section 9.5.  Corporate Existence, etc. The Company will at all times preserve 
and keep in full force and effect its corporate existence, except as otherwise
permitted by Section 10.6. The Company will at all times preserve and keep in
full force and effect the corporate existence of each of its Restricted
Subsidiaries (unless merged into the Company or another Restricted Subsidiary)
and all rights and franchises of the Company and its Restricted Subsidiaries
unless, in the good faith judgment of the Company, the termination of or failure
to preserve and keep in full force and effect such corporate existence, right or
franchise could not, individually or in the aggregate, have a Material Adverse
Effect.

Section 9.6.  Ranking. The Company will ensure that, at all times, all 
liabilities of the Company under the Notes will rank in right of payment either
pari passu or senior to all other Debt of the Company except for Debt which is
preferred as a result of being secured as permitted by Section 10.5 (but then
only to the extent of such security).

                                      -19-
   25

SECTION 10.   NEGATIVE COVENANTS.

         The Company covenants that so long as any of the Notes are outstanding:

Section 10.1  Fixed Charges Coverage Ratio. The Company will not, at any time,
permit the Fixed Charges Coverage Ratio to be less than 1.5 to 1.

Section 10.2  Consolidated Debt. The Company will not permit Consolidated Debt 
to exceed 55% of Consolidated Total Capitalization, as calculated on the last
day of each fiscal quarter of the Company.

Section 10.3  Debt of Restricted Subsidiaries. The Company will not at any time
permit any Restricted Subsidiary to, directly or indirectly, create, incur,
assume, guarantee, have outstanding, or otherwise become or remain directly or
indirectly liable with respect to, any Debt other than:

                   (a) Debt of a Restricted Subsidiary outstanding on the date
         hereof and disclosed in Schedule 5.15, provided that such Debt may not
         be extended, renewed or refunded except as otherwise permitted by this
         Agreement;

                   (b) Debt of a Restricted  Subsidiary owed to the Company or 
         another  Restricted  Subsidiary; and

                   (c) Debt of a Restricted Subsidiary outstanding at the time
         such Restricted Subsidiary becomes a Subsidiary, provided that,

                            (i) such Debt shall not have been incurred in
                  contemplation of such Restricted Subsidiary becoming a 
                  Subsidiary, and

                           (ii) immediately after such Restricted Subsidiary
                  becomes a Subsidiary no Default or Event of Default shall
                  exist,

         and any extension, renewal or refunding thereof, provided that the
         principal amount thereof outstanding immediately before giving effect
         to such extension, renewal or refunding is not increased and no Default
         or Event of Default exists at the time of such extension, renewal or
         refunding; and

                   (d) Debt of a Restricted Subsidiary in addition to that
         otherwise permitted by the foregoing provisions of this Section 10.3,
         provided that on the date the Restricted Subsidiary incurs or otherwise
         becomes liable with respect to any such additional Debt and immediately
         after giving effect thereto and the concurrent retirement of any other
         Debt,

                            (i) no Default or Event of Default exists, and

                                      -20-
   26

                           (ii) Priority Debt does not exceed 20% of
                  Consolidated Total Capitalization,

         provided that Debt of Restricted Subsidiaries in respect of industrial
         revenue bonds, secured by Liens permitted by Section 10.5(h) and
         guaranteed by the Company shall not be included in Priority Debt for
         purposes of determining compliance with this Section 10.3(d).

Any Person which becomes a Restricted Subsidiary after the date hereof shall for
all purposes of this Section 10.3 be deemed to have created, assumed or incurred
at the time it becomes a Restricted Subsidiary all Debt of such corporation
existing immediately after it becomes a Restricted Subsidiary.

Section 10.4  Consolidated Adjusted Net Worth. The Company will not, at any 
time, permit Consolidated Adjusted Net Worth to be less than the sum of (a)
$50,000,000, plus (b) an aggregate amount equal to 25% of its Consolidated Net
Income (but, in each case, only if a positive number) for each completed fiscal
quarter beginning with the fiscal quarter ended October 31, 1998.

Section 10.5  Liens. The Company will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly create, incur, assume or
permit to exist (upon the happening of a contingency or otherwise) any Lien on
or with respect to any property or asset (including, without limitation, any
document or instrument in respect of goods or accounts receivable) of the
Company or any such Restricted Subsidiary, whether now owned or held or
hereafter acquired, or any income or profits therefrom, or assign or otherwise
convey any right to receive income or profits, except:

                   (a) Liens for taxes, assessments or other governmental
         charges which are not yet due and payable or the payment of which is
         not at the time required by Section 9.4;

                   (b) statutory Liens of landlords and Liens of carriers,
         warehousemen, mechanics, materialmen and other similar Liens, in each
         case, incurred in the ordinary course of business for sums not yet due
         and payable;

                   (c) Liens (other than any Lien imposed by ERISA) incurred or
         deposits made in the ordinary course of business (i) in connection with
         workers' compensation, unemployment insurance and other types of social
         security or retirement benefits, or (ii) to secure (or to obtain
         letters of credit that secure) the performance of tenders, statutory
         obligations, surety bonds, appeal bonds, bids, leases (other than
         Capital Leases), performance bonds, purchase, construction or sales
         contracts and other similar obligations, in each case not incurred or
         made in connection with the borrowing of money, the obtaining of
         advances or credit or the payment of the deferred purchase price of
         property;

                                      -21-
   27

                   (d) any attachment or judgment Lien, unless the judgment it
         secures shall not, within 60 days after the entry thereof, have been
         discharged or execution thereof stayed pending appeal, or shall not
         have been discharged within 60 days after the expiration of any such
         stay;

                   (e) leases or subleases granted to others, easements,
         rights-of-way, restrictions and other similar charges or encumbrances,
         in each case incidental to, and not interfering with, the ordinary
         conduct of the business of the Company or any of its Restricted
         Subsidiaries, provided that such Liens do not, in the aggregate,
         materially detract from the value of such property;

                   (f) Liens on property or assets of the Company or any of its
         Restricted Subsidiaries securing Debt owing to the Company or to
         another Restricted Subsidiary;

                   (g) Liens existing on the date of Closing and securing the
         Debt of the Company and its Restricted Subsidiaries and described in
         Schedule 5.15;

                   (h) any Lien created to secure all or any part of the
         purchase price, or to secure Debt incurred or assumed to pay all or any
         part of the purchase price or cost of construction, of property (or any
         improvement thereon) acquired or constructed by the Company or a
         Restricted Subsidiary after the date of the Closing, provided that,

                            (i) any such Lien shall extend solely to the item or
                  items of such property (or improvement thereon) so acquired or
                  constructed and, if required by the terms of the instrument
                  originally creating such Lien, other property (or improvement
                  thereon) which is an improvement to or is acquired for
                  specific use in connection with such acquired or constructed
                  property (or improvement thereon) or which is real property
                  being improved by such acquired or constructed property (or
                  improvement thereon),

                           (ii) the principal amount of the Debt secured by any
                  such Lien shall at no time exceed an amount equal to the
                  lesser of (A) the cost to the Company or such Restricted
                  Subsidiary of the property (or improvement thereon) so
                  acquired or constructed and (B) the fair market value (as
                  determined in good faith by the board of directors of the
                  Company) of such property (or improvement thereon) at the time
                  of such acquisition or construction, and

                          (iii) any such Lien shall be created contemporaneously
                  with, or within 180 days after, the acquisition or
                  construction of such property;

                   (i) any Lien existing on property of a Person immediately
         prior to its being consolidated with or merged into the Company or a
         Restricted Subsidiary or its becoming a Restricted Subsidiary, or any
         Lien existing on any property acquired by the Company or any Restricted
         Subsidiary at the time such property is so acquired (whether or not the
         Debt secured thereby shall have been assumed), provided that (y) no
         such Lien shall have 

                                      -22-
   28

         been created or assumed in contemplation of such consolidation or
         merger or such Person's becoming a Restricted Subsidiary or such
         acquisition of property, and (z) each such Lien shall extend solely to
         the item or items of property so acquired and, if required by the terms
         of the instrument originally creating such Lien, other property which
         is an improvement to or is acquired for specific use in connection with
         such acquired property;

                   (j) any Lien renewing, extending or refunding any Lien
         permitted by paragraphs (g), (h) or (i) of this Section 10.5, provided
         that (i) the principal amount of Debt secured by such Lien immediately
         prior to such extension, renewal or refunding is not increased or the
         maturity thereof reduced, (ii) such Lien is not extended to any other
         property, and (iii) immediately after such extension, renewal or
         refunding no Default or Event of Default would exist;

                   (k) other Liens securing the Debt of the Company or any
         Restricted Subsidiary not otherwise permitted by paragraphs (a) through
         (j), provided that at the time the Company or such Restricted
         Subsidiary incurs or otherwise becomes liable for such Debt, Priority
         Debt does not exceed 20% of Consolidated Total Capitalization, provided
         further that Debt of Restricted Subsidiaries in respect of industrial
         revenue bonds secured by Liens permitted by Section 10.5(h) and
         guaranteed by the Company shall not be included in Priority Debt for
         purposes of determining compliance with this Section 10.5(k).

Section 10.6  Mergers and Consolidations. The Company will not, and will not
permit any Restricted Subsidiary to, consolidate with or be a party to a merger
with any other Person; provided, however, that:

                   (a) any Restricted Subsidiary may merge or consolidate with
         or into the Company or any other Restricted Subsidiary so long as in
         any merger or consolidation involving the Company, the Company shall be
         the surviving or continuing corporation; and

                   (b) the Company may consolidate or merge with any other
         corporation if (i) the surviving entity is a solvent corporation
         organized and existing under the laws of the United States of America,
         any State thereof or the District of Columbia, (ii) the surviving
         entity (if other than the Company) expressly assumes in writing the
         Company's obligation under the Notes and this Agreement, (iii) the
         surviving entity delivers to the holders of the Notes an opinion of
         nationally recognized independent counsel to the effect that all
         agreements or instruments effecting such assumption are enforceable in
         accordance with their terms and comply with the terms hereof, and (iv)
         at the time of such consolidation or merger and after giving effect
         thereto no Default or Event of Default shall have occurred and be
         continuing.

Section 10.7  Sale of Assets; Sale of Stock. (a) The Company will not, and will
not permit any Restricted Subsidiary to, sell, lease, transfer, abandon or
otherwise dispose of assets (except 

                                      -23-
   29

assets sold for fair market value (x) in the ordinary course of business or (y)
in a Sale and Leaseback Transaction); provided that the foregoing restrictions
do not apply to:

                  (1) the sale, lease, transfer or other disposition of assets
         of a Restricted Subsidiary to the Company or a Wholly-Owned Restricted
         Subsidiary;

                  (2) the sale of assets for cash or other property to a Person
         or Persons if all of the following conditions are met:

                            (i) such assets (valued at net book value at the
                  time of such sale) do not, together with all other assets of
                  the Company and its Restricted Subsidiaries previously
                  disposed of (valued at net book value at the time of such
                  disposition) (other than in the ordinary course of business or
                  in a Sale and Leaseback Transaction) during the same fiscal
                  year exceed 15% of Consolidated Assets (which Consolidated
                  Assets shall be determined as of the last day of the fiscal
                  year ending on, or most recently ended prior to, such sale);
                  and

                           (ii) in the opinion of the Company's Board of
                  Directors, the sale is for fair market value and is in the
                  best interests of the Company.

         provided, however, that for purposes of the foregoing calculation,
         there shall not be included any assets the proceeds of which were or
         are applied within 180 days of the date of sale of such assets to
         either (A) the acquisition of fixed assets useful and intended to be
         used in the operation of the business of the Company and its Restricted
         Subsidiaries within the limitations of Section 10.8 and having a fair
         market value (as determined in good faith by the Board of Directors of
         the Company) at least equal to that of the assets so disposed of, or
         (B) the prepayment at any applicable prepayment premium, of Debt of the
         Company or its Restricted Subsidiaries selected by the Company (other
         than Debt owing to the Company, any of its Subsidiaries or any
         Affiliate and Debt in respect of any revolving credit or similar credit
         facility providing the Company or any of its Restricted Subsidiaries
         with the right to obtain loans or other extensions of credit from time
         to time, except to the extent that in connection with such payment of
         Debt the availability of credit under such credit facility is
         permanently reduced by an amount not less than the amount of such
         proceeds applied to the payment of such Debt). It is understood and
         agreed by the Company that any such proceeds paid and applied to the
         prepayment of the Notes as hereinabove provided shall be prepaid as and
         to the extent provided in Section 8.2.

         (b) The Company will not permit any Restricted Subsidiary to issue or
sell any shares of stock of any class (including as "stock" for the purposes of
this Section 10.7, any warrants, rights or options to purchase or otherwise
acquire stock or other Securities exchangeable for or convertible into stock) of
such Restricted Subsidiary to any Person other than the Company or a
Wholly-Owned Restricted Subsidiary, except for the purpose of qualifying
directors, or except in satisfaction of the validly pre-existing preemptive
rights of minority stockholders in connection with the simultaneous issuance of
stock to the Company and/or a Restricted Subsidiary whereby 

                                      -24-
   30

the Company and/or such Restricted Subsidiary maintain their same proportionate
interest in such Restricted Subsidiary.

         (c) The Company will not sell, transfer or otherwise dispose of any
shares of stock of any Restricted Subsidiary (except to qualify directors) or
any Debt of any Restricted Subsidiary, and will not permit any Restricted
Subsidiary to sell, transfer or otherwise dispose of (except to the Company or a
Wholly-Owned Restricted Subsidiary) any shares of stock or any Debt of any other
Restricted Subsidiary, unless:

                   (1) simultaneously with such sale, transfer, or disposition,
         all shares of stock and all Debt of such Restricted Subsidiary at the
         time owned by the Company and by every other Restricted Subsidiary
         shall be sold, transferred or disposed of as an entirety;

                   (2) said shares of stock and Debt are sold, transferred or
         otherwise disposed of to a Person, for a cash consideration and on
         terms reasonably deemed by the Board of Directors of the Company to be
         adequate and satisfactory;

                   (3) the Restricted Subsidiary being disposed of shall not
         have any continuing investment in the Company or any other Restricted
         Subsidiary not being simultaneously disposed of; and

                   (4) such sale or other disposition is permitted by Section 
         10.7(a).

Section 10.8  Nature of Business. Neither the Company nor any Restricted
Subsidiary will engage in any business if, as a result, the general nature of
the business, taken on a consolidated basis, which would then be engaged in by
the Company and its Restricted Subsidiaries would be substantially changed from
the general nature of the business engaged in by the Company and its Restricted
Subsidiaries on the date of Closing.

Section 10.9Transactions with Affiliates. The Company will not and will not
permit any Restricted Subsidiary to enter into directly or indirectly any
transaction or group of related transactions (including without limitation the
purchase, lease, sale or exchange of properties of any kind or the rendering of
any service) with any Affiliate, except in the ordinary course and pursuant to
the reasonable requirements of the Company's or such Restricted Subsidiary's
business and upon fair and reasonable terms no less favorable to the Company or
such Restricted Subsidiary than would be obtainable in a comparable arm's-length
transaction with a Person not an Affiliate.

SECTION 11.   EVENTS OF DEFAULT.

         An "Event of Default" shall exist if any of the following conditions or
events shall occur and be continuing:

                                      -25-
   31

                   (a) the Company defaults in the payment of any principal or
         Make-Whole Amount, if any, on any Note when the same becomes due and
         payable, whether at maturity or at a date fixed for prepayment or by
         declaration or otherwise; or

                   (b) the Company defaults in the payment of any interest on
         any Note for more than five Business Days after the same becomes due
         and payable; or

                   (c) the Company defaults in the performance of or compliance
         with any term contained in Section 10; or

                   (d) the Company defaults in the performance of or compliance
         with any term contained herein (other than those referred to in
         paragraphs (a), (b) and (c) of this Section 11) and such default is not
         remedied within 30 days after the earlier of (i) a Responsible Officer
         obtaining actual knowledge of such default and (ii) the Company
         receiving written notice of such default from any holder of a Note (any
         such written notice to be identified as a "notice of default" and to
         refer specifically to this paragraph (d) of Section 11); or

                   (e) any representation or warranty made in writing by or on
         behalf of the Company or by any officer of the Company in this
         Agreement or in any writing furnished in connection with the
         transactions contemplated hereby proves to have been false or incorrect
         in any Material respect on the date as of which made; or

                   (f) (i) the Company or any Significant Subsidiary is in
         default (as principal or as guarantor or other surety) in the payment
         of any principal of or premium or make-whole amount or interest on any
         Indebtedness that is outstanding in an aggregate principal amount of at
         least $5,000,000 beyond any period of grace provided with respect
         thereto, or (ii) the Company or any Significant Subsidiary is in
         default in the performance of or compliance with any term of any
         evidence of any Indebtedness in an aggregate outstanding principal
         amount of at least $5,000,000 or of any mortgage, indenture or other
         agreement relating thereto or any other condition exists, and as a
         consequence of such default or condition such Indebtedness has become,
         or has been declared (or one or more Persons are entitled to declare
         such Indebtedness to be), due and payable before its stated maturity or
         before its regularly scheduled dates of payment; or

                   (g) the Company or any Significant Subsidiary (i) is
         generally not paying, or admits in writing its inability to pay, its
         debts as they become due, (ii) files, or consents by answer or
         otherwise to the filing against it of, a petition for relief or
         reorganization or arrangement or any other petition in bankruptcy, for
         liquidation or to take advantage of any bankruptcy, insolvency,
         reorganization, moratorium or other similar law of any jurisdiction,
         (iii) makes an assignment for the benefit of its creditors, (iv)
         consents to the appointment of a custodian, receiver, trustee or other
         officer with similar powers with respect to it or with respect to any
         substantial part of its property, (v) is adjudicated as insolvent or to
         be liquidated, or (vi) takes corporate action for the purpose of any of
         the foregoing; or

                                      -26-
   32

                   (h) a court or Governmental Authority of competent
         jurisdiction enters an order appointing, without consent by the Company
         or any of its Significant Subsidiaries, a custodian, receiver, trustee
         or other officer with similar powers with respect to it or with respect
         to any substantial part of its property, or constituting an order for
         relief or approving a petition for relief or reorganization or any
         other petition in bankruptcy or for liquidation or to take advantage of
         any bankruptcy or insolvency law of any jurisdiction, or ordering the
         dissolution, winding-up or liquidation of the Company or any of its
         Significant Subsidiaries, or any such petition shall be filed against
         the Company or any of its Significant Subsidiaries and such petition
         shall not be dismissed within 60 days; or

                   (i) a final judgment or judgments for the payment of money
         aggregating in excess of $5,000,000 are rendered against one or more of
         the Company and its Significant Subsidiaries and which judgments are
         not, within 60 days after entry thereof, bonded, discharged or stayed
         pending appeal, or are not discharged within 60 days after the
         expiration of such stay; or

                   (j) If (i) any Plan shall fail to satisfy the minimum funding
         standards of ERISA or the Code for any plan year or part thereof or a
         waiver of such standards or extension of any amortization period is
         sought or granted under Section 412 of the Code, (ii) a notice of
         intent to terminate any Plan shall have been or is reasonably expected
         to be filed with the PBGC or the PBGC shall have instituted proceedings
         under Section 4042 of ERISA to terminate or appoint a trustee to
         administer any Plan or the PBGC shall have notified the Company or any
         ERISA Affiliate that a Plan may become a subject of any such
         proceedings, (iii) the aggregate "amount of unfunded benefit
         liabilities" (within the meaning of Section 4001(a)(18) of ERISA) under
         all Plans, determined in accordance with Title IV of ERISA, shall
         exceed 5% of Consolidated Net Worth, (iv) the Company or any ERISA
         Affiliate shall have incurred or is reasonably expected to incur any
         liability pursuant to Title I or IV of ERISA or the penalty or excise
         tax provisions of the Code relating to employee benefit plans, (v) the
         Company or any ERISA Affiliate withdraws from any Multiemployer Plan,
         or (vi) the Company or any Subsidiary establishes or amends any
         employee welfare benefit plan that provides post-employment welfare
         benefits in a manner that would increase the liability of the Company
         or any Subsidiary thereunder; and any such event or events described in
         clauses (i) through (vi) above, either individually or together with
         any other such event or events, could reasonably be expected to have a
         Material Adverse Effect.

As used in Section 11(j), the terms "employee benefit plan" and "employee
welfare benefit plan" shall have the respective meanings assigned to such terms
in Section 3 of ERISA.

SECTION 12.   REMEDIES ON DEFAULT, ETC.

Section 12.1. Acceleration. (a) If an Event of Default with respect to the
Company described in paragraph (g) or (h) of Section 11 (other than an Event of
Default described in clause (i) of paragraph (g) or described in clause (vi) of
paragraph (g) by virtue of the fact that such clause 

                                      -27-
   33

encompasses clause (i) of paragraph (g)) has occurred, all the Notes then
outstanding shall automatically become immediately due and payable.

           (b) If any other Event of Default has occurred and is continuing, the
Required Holders may at any time at their option, by notice or notices to the
Company, declare all the Notes then outstanding to be immediately due and
payable.

           (c) If any Event of Default described in paragraph (a) or (b) of
Section 11 has occurred and is continuing, any holder or holders of Notes at the
time outstanding affected by such Event of Default may at any time, at its or
their option, by notice or notices to the Company, declare all the Notes held by
it or them to be immediately due and payable.

         Upon any Note's becoming due and payable under this Section 12.1,
whether automatically or by declaration, such Note will forthwith mature and the
entire unpaid principal amount of such Note, plus (i) all accrued and unpaid
interest thereon and (ii) the Make-Whole Amount determined in respect of such
principal amount (to the full extent permitted by applicable law), shall all be
immediately due and payable, in each and every case without presentment, demand,
protest or further notice, all of which are hereby waived. The Company
acknowledges, and the parties hereto agree, that each holder of a Note has the
right to maintain its investment in the Notes free from repayment by the Company
(except as herein specifically provided for) and that the provision for payment
of a Make-Whole Amount by the Company in the event that the Notes are prepaid or
are accelerated as a result of an Event of Default, is intended to provide
compensation for the deprivation of such right under such circumstances.

Section 12.2. Other Remedies. If any Default or Event of Default has occurred 
and is continuing, and irrespective of whether any Notes have become or have
been declared immediately due and payable under Section 12.1, the holder of any
Note at the time outstanding may proceed to protect and enforce the rights of
such holder by an action at law, suit in equity or other appropriate proceeding,
whether for the specific performance of any agreement contained herein or in any
Note, or for an injunction against a violation of any of the terms hereof or
thereof, or in aid of the exercise of any power granted hereby or thereby or by
law or otherwise.

Section 12.3. Rescission. At any time after any Notes have been declared due and
payable pursuant to clause (b) or (c) of Section 12.1, the Required Holders, by
written notice to the Company, may rescind and annul any such declaration and
its consequences if (a) the Company has paid all overdue interest on the Notes,
all principal of and Make-Whole Amount, if any, on any Notes that are due and
payable and are unpaid other than by reason of such declaration, and all
interest on such overdue principal and Make-Whole Amount, if any, and (to the
extent permitted by applicable law) any overdue interest in respect of the
Notes, at the Default Rate, (b) all Events of Default and Defaults, other than
non-payment of amounts that have become due solely by reason of such
declaration, have been cured or have been waived pursuant to Section 17, and (c)
no judgment or decree has been entered for the payment of any monies due
pursuant hereto or to the Notes. No rescission and annulment under this Section
12.3 will extend to or affect any subsequent Event of Default or Default or
impair any right consequent thereon.

                                      -28-
   34

Section 12.4. No Waivers or Election of Remedies, Expenses, Etc. No course of
dealing and no delay on the part of any holder of any Note in exercising any
right, power or remedy shall operate as a waiver thereof or otherwise prejudice
such holder's rights, powers or remedies. No right, power or remedy conferred by
this Agreement or by any Note upon any holder thereof shall be exclusive of any
other right, power or remedy referred to herein or therein or now or hereafter
available at law, in equity, by statute or otherwise. Without limiting the
obligations of the Company under Section 15, the Company will pay to the holder
of each Note on demand such further amount as shall be sufficient to cover all
costs and expenses of such holder incurred in any enforcement or collection
under this Section 12, including, without limitation, reasonable attorneys'
fees, expenses and disbursements.

SECTION 13.   REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.

Section 13.1. Registration of Notes. The Company shall keep at its principal
executive office a register for the registration and registration of transfers
of Notes. The name and address of each holder of one or more Notes, each
transfer thereof and the name and address of each transferee of one or more
Notes shall be registered in such register. Prior to due presentment for
registration of transfer, the Person in whose name any Note shall be registered
shall be deemed and treated as the owner and holder thereof for all purposes
hereof, and the Company shall not be affected by any notice or knowledge to the
contrary. The Company shall give to any holder of a Note that is an
Institutional Investor promptly upon request therefor, a complete and correct
copy of the names and addresses of all registered holders of Notes.

Section 13.2. Transfer and Exchange of Notes. Upon surrender of any Note at the
principal executive office of the Company for registration of transfer or
exchange (and in the case of a surrender for registration of transfer, duly
endorsed or accompanied by a written instrument of transfer duly executed by the
registered holder of such Note or its attorney duly authorized in writing and
accompanied by the address for notices of each transferee of such Note or part
thereof), the Company shall execute and deliver, at the Company's expense
(except as provided below), one or more new Notes (as requested by the holder
thereof) in exchange therefor, in an aggregate principal amount equal to the
unpaid principal amount of the surrendered Note. Each such new Note shall be
payable to such Person as such holder may request and shall be substantially in
the form of Exhibit 1. Each such new Note shall be dated and bear interest from
the date to which interest shall have been paid on the surrendered Note or dated
the date of the surrendered Note if no interest shall have been paid thereon.
The Company may require payment of a sum sufficient to cover any stamp tax or
governmental charge imposed in respect of any such transfer of Notes. Notes
shall not be transferred in denominations of less than $500,000, provided that
if necessary to enable the registration of transfer by a holder of its entire
holding of Notes, one Note may be in a denomination of less than $500,000. Any
transferee, by its acceptance of a Note registered in its name (or the name of
its nominee), shall be deemed to have made the representation set forth in
Section 6.2.

Section 13.3. Replacement of Notes. Upon receipt by the Company of evidence
reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of any Note 

                                      -29-
   35

(which evidence shall be, in the case of an Institutional Investor, notice from
such Institutional Investor of such ownership and such loss, theft, destruction
or mutilation), and

                   (a) in the case of loss, theft or destruction, of indemnity
         reasonably satisfactory to it (provided that if the holder of such Note
         is, or is a nominee for, an original Purchaser or another holder of a
         Note with a minimum net worth of at least $100,000,000, such Person's
         own unsecured agreement of indemnity shall be deemed to be
         satisfactory), or

                   (b)     in the case of mutilation, upon surrender and 
         cancellation thereof,

the Company at its own expense shall execute and deliver, in lieu thereof, a new
Note, dated and bearing interest from the date to which interest shall have been
paid on such lost, stolen, destroyed or mutilated Note or dated the date of such
lost, stolen, destroyed or mutilated Note if no interest shall have been paid
thereon.

SECTION 14.   PAYMENTS ON NOTES.

Section 14.1. Place of Payment. Subject to Section 14.2, payments of principal,
Make-Whole Amount, if any, and interest becoming due and payable on the Notes
shall be made in Chicago, Illinois at the principal office of the Company in
such jurisdiction. The Company may at any time, by notice to each holder of a
Note, change the place of payment of the Notes so long as such place of payment
shall be either the principal office of the Company in such jurisdiction or the
principal office of a bank or trust company in such jurisdiction.

Section 14.2. Home Office Payment. So long as any Purchaser or such Purchaser's
nominee shall be the holder of any Note, and notwithstanding anything contained
in Section 14.1 or in such Note to the contrary, the Company will pay all sums
becoming due on such Note for principal, Make-Whole Amount, if any, and interest
by the method and at the address specified for such purpose on Schedule A to
this Agreement, or by such other method or at such other address as such
Purchaser shall have from time to time specified to the Company in writing for
such purpose, without the presentation or surrender of such Note or the making
of any notation thereon, except that upon written request of the Company made
concurrently with or reasonably promptly after payment or prepayment in full of
any Note, such Purchaser shall surrender such Note for cancellation, reasonably
promptly after any such request, to the Company at its principal executive
office or at the place of payment most recently designated by the Company
pursuant to Section 14.1. Prior to any sale or other disposition of any Note
held by any Purchaser or such Purchaser's nominee such Purchaser will, at its
election, either endorse thereon the amount of principal paid thereon and the
last date to which interest has been paid thereon or surrender such Note to the
Company in exchange for a new Note or Notes pursuant to Section 13.2. The
Company will afford the benefits of this Section 14.2 to any Institutional
Investor that is the direct or indirect transferee of any Note purchased by any
Purchaser under this Agreement and that has made the same agreement relating to
such Note as such Purchaser has made in this Section 14.2.

                                      -30-
   36

SECTION 15.   EXPENSES, ETC.

Section 15.1. Transaction Expenses. Whether or not the transactions contemplated
hereby are consummated, the Company will pay all costs and expenses (including
reasonable attorneys' fees of a single special counsel representing the
Purchasers as a group and, if reasonably required, local or other counsel)
incurred by the Purchasers and/or holders of Notes in connection with such
transactions and in connection with any amendments, waivers or consents under or
in respect of this Agreement or the Notes (whether or not such amendment, waiver
or consent becomes effective), including, without limitation: (a) the costs and
expenses incurred in enforcing or defending (or determining whether or how to
enforce or defend) any rights under this Agreement or the Notes or in responding
to any subpoena or other legal process or informal investigative demand issued
in connection with this Agreement or the Notes, or by reason of being a holder
of any Note, and (b) the costs and expenses, including financial advisors' fees,
incurred in connection with the insolvency or bankruptcy of the Company or any
Subsidiary or in connection with any work-out or restructuring of the
transactions contemplated hereby and by the Notes. The Company will pay, and
will save each Purchaser and each other holder of a Note harmless from, all
claims in respect of any fees, costs or expenses if any, of brokers and finders
(other than those retained by such Purchaser or holder).

Section 15.2. Survival. The obligations of the Company under this Section 15 
will survive the payment or transfer of any Note, the enforcement, amendment or
waiver of any provision of this Agreement or the Notes, and the termination of
this Agreement.

SECTION 16.   SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.

         All representations and warranties contained herein shall survive the
execution and delivery of this Agreement and the Notes, the purchase or transfer
by any Purchaser of any Note or portion thereof or interest therein and the
payment of any Note, and may be relied upon by any subsequent holder of a Note,
regardless of any investigation made at any time by or on behalf of such
Purchaser or any other holder of a Note. All statements contained in any
certificate or other instrument delivered by or on behalf of the Company
pursuant to this Agreement shall be deemed representations and warranties of the
Company under this Agreement. Subject to the preceding sentence, this Agreement
and the Notes embody the entire agreement and understanding between each
Purchaser and the Company and supersede all prior agreements and understandings
relating to the subject matter hereof.

SECTION 17.   AMENDMENT AND WAIVER.

Section 17.1. Requirements. This Agreement and the Notes may be amended, and the
observance of any term hereof or of the Notes may be waived (either
retroactively or prospectively), with (and only with) the written consent of the
Company and the Required Holders, except that (a) no amendment or waiver of any
of the provisions of Section 1, 2, 3, 4, 5, 6 or 21 hereof, or any defined term
(as it is used therein), will be effective as to any Purchaser unless consented
to by such Purchaser in writing, and (b) no such amendment or waiver may,
without the written 

                                      -31-
   37

consent of the holder of each Note at the time outstanding affected thereby, (i)
subject to the provisions of Section 12 relating to acceleration or rescission,
change the amount or time of any prepayment or payment of principal of, or
reduce the rate or change the time of payment or method of computation of
interest or of the Make-Whole Amount on, the Notes, (ii) change the percentage
of the principal amount of the Notes the holders of which are required to
consent to any such amendment or waiver, or (iii) amend any of Sections 8,
11(a), 11(b), 12, 17 or 20.

Section 17.2. Solicitation of Holders of Notes.

           (a) Solicitation. The Company will provide each holder of the Notes
(irrespective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is required, to
enable such holder to make an informed and considered decision with respect to
any proposed amendment, waiver or consent in respect of any of the provisions
hereof or of the Notes. The Company will deliver executed or true and correct
copies of each amendment, waiver or consent effected pursuant to the provisions
of this Section 17 to each holder of outstanding Notes promptly following the
date on which it is executed and delivered by, or receives the consent or
approval of, the requisite holders of Notes.

           (b) Payment. The Company will not directly or indirectly pay or cause
to be paid any remuneration, whether by way of supplemental or additional
interest, fee or otherwise, or grant any security, to any holder of Notes as
consideration for or as an inducement to the entering into by any holder of
Notes of any waiver or amendment of any of the terms and provisions hereof
unless such remuneration is concurrently paid, or security is concurrently
granted, on the same terms, ratably to each holder of Notes then outstanding
even if such holder did not consent to such waiver or amendment.

Section 17.3. Binding Effect, Etc. Any amendment or waiver consented to as
provided in this Section 17 applies equally to all holders of Notes and is
binding upon them and upon each future holder of any Note and upon the Company
without regard to whether such Note has been marked to indicate such amendment
or waiver. No such amendment or waiver will extend to or affect any obligation,
covenant, agreement, Default or Event of Default not expressly amended or waived
or impair any right consequent thereon. No course of dealing between the Company
and the holder of any Note nor any delay in exercising any rights hereunder or
under any Note shall operate as a waiver of any rights of any holder of such
Note. As used herein, the term "this Agreement" and references thereto shall
mean this Agreement as it may from time to time be amended or supplemented.

Section 17.4. Notes Held by Company, Etc. Solely for the purpose of determining
whether the holders of the requisite percentage of the aggregate principal
amount of Notes then outstanding approved or consented to any amendment, waiver
or consent to be given under this Agreement or the Notes, or have directed the
taking of any action provided herein or in the Notes to be taken upon the
direction of the holders of a specified percentage of the aggregate principal
amount of Notes then outstanding, Notes directly or indirectly owned by the
Company or any of its Affiliates or any Restricted Subsidiary shall be deemed
not to be outstanding.

                                      -32-
   38

SECTION 18.   NOTICES.

         All notices and communications provided for hereunder shall be in
writing and sent (a) by telefacsimile if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery service
(charges prepaid), or (b) by registered or certified mail with return receipt
requested (postage prepaid), or (c) by a recognized overnight delivery service
(with charges prepaid). Any such notice must be sent:

                   (i) if to a Purchaser or such Purchaser's nominee, to such
         Purchaser or such Purchaser's nominee at the address specified for such
         communications on Schedule A to this Agreement, or at such other
         address as such Purchaser or such Purchaser's nominee shall have
         specified to the Company in writing,

                  (ii) if to any other holder of any Note, to such holder at
         such address as such other holder shall have specified to the Company
         in writing, or

                 (iii) if to the Company, to the Company at its address set
         forth at the beginning hereof to the attention of Chief Financial
         Officer, or at such other address as the Company shall have specified
         to the holder of each Note in writing.

Notices under this Section 18 will be deemed given only when actually received.

SECTION 19.   REPRODUCTION OF DOCUMENTS.

         This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by each Purchaser at the Closing (except the
Notes themselves), and (c) financial statements, certificates and other
information previously or hereafter furnished to each Purchaser, may be
reproduced by such Purchaser by any photographic, photostatic, microfilm,
microcard, miniature photographic or other similar process and such Purchaser
may destroy any original document so reproduced. The Company agrees and
stipulates that, to the extent permitted by applicable law, any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by such Purchaser in the
regular course of business) and any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence. This
Section 19 shall not prohibit the Company or any other holder of Notes from
contesting any such reproduction to the same extent that it could contest the
original, or from introducing evidence to demonstrate the inaccuracy of any such
reproduction.

SECTION 20.   CONFIDENTIAL INFORMATION.

         For the purposes of this Section 20, "Confidential Information" means
information delivered to any Purchaser by or on behalf of the Company or any
Subsidiary in connection with the transactions contemplated by or otherwise
pursuant to this Agreement that is proprietary in

                                      -33-
   39

nature and that was clearly marked or labeled or otherwise adequately identified
when received by such Purchaser as being confidential information of the Company
or such Subsidiary, provided that such term does not include information that
(a) was publicly known or otherwise known to such Purchaser prior to the time of
such disclosure, (b) subsequently becomes publicly known through no act or
omission by such Purchaser or any Person acting on such Purchaser's behalf, (c)
otherwise becomes known to such Purchaser other than through disclosure by the
Company or any Subsidiary or (d) constitutes financial statements delivered to
such Purchaser under Section 7.1 that are otherwise publicly available. Each
Purchaser will maintain the confidentiality of such Confidential Information in
accordance with procedures adopted by such Purchaser in good faith to protect
confidential information of third parties delivered to such Purchaser, provided
that such Purchaser may deliver or disclose Confidential Information to (i) such
Purchaser's directors, trustees, officers, employees, agents, attorneys and
affiliates (to the extent such disclosure reasonably relates to the
administration of the investment represented by such Purchaser's Notes), (ii)
such Purchaser's financial advisors and other professional advisors who agree to
hold confidential the Confidential Information substantially in accordance with
the terms of this Section 20, (iii) any other holder of any Note, (iv) any
Institutional Investor to which such Purchaser sells or offers to sell such Note
or any part thereof or any participation therein (if such Person has agreed in
writing prior to its receipt of such Confidential Information to be bound by the
provisions of this Section 20), (v) any Person from which such Purchaser offers
to purchase any security of the Company (if such Person has agreed in writing
prior to its receipt of such Confidential Information to be bound by the
provisions of this Section 20), (vi) any federal or state regulatory authority
having jurisdiction over such Purchaser, (vii) the National Association of
Insurance Commissioners or any similar organization, or any nationally
recognized rating agency that requires access to information about such
Purchaser's investment portfolio, or (viii) any other Person to which such
delivery or disclosure may be necessary or appropriate (w) to effect compliance
with any law, rule, regulation or order applicable to such Purchaser, (x) in
response to any subpoena or other legal process, (y) in connection with any
litigation to which such Purchaser is a party or (z) if an Event of Default has
occurred and is continuing, to the extent such Purchaser may reasonably
determine such delivery and disclosure to be necessary or appropriate in the
enforcement or for the protection of the rights and remedies under such
Purchaser's Notes and this Agreement. Each holder of a Note, by its acceptance
of a Note, will be deemed to have agreed to be bound by and to be entitled to
the benefits of this Section 20 as though it were a party to this Agreement. On
reasonable request by the Company in connection with the delivery to any holder
of a Note of information required to be delivered to such holder under this
Agreement or requested by such holder (other than a holder that is a party to
this Agreement or its nominee), such holder will enter into an agreement with
the Company embodying the provisions of this Section 20.

SECTION 21.   SUBSTITUTION OF PURCHASER.

         Each Purchaser shall have the right to substitute any one of such
Purchaser's Affiliates as the purchaser of the Notes that such Purchaser has
agreed to purchase hereunder, by written notice to the Company, which notice
shall be signed by both such Purchaser and such Purchaser's Affiliate, shall
contain such Affiliate's agreement to be bound by this Agreement and shall
contain a confirmation by such Affiliate of the accuracy with respect to it of
the representations 

                                      -34-
   40

set forth in Section 6. Upon receipt of such notice, wherever the word
"Purchaser" is used in this Agreement (other than in this Section 21), such word
shall be deemed to refer to such Affiliate in lieu of such Purchaser. In the
event that such Affiliate is so substituted as a purchaser hereunder and such
Affiliate thereafter transfers to such Purchaser all of the Notes then held by
such Affiliate, upon receipt by the Company of notice of such transfer, wherever
the word "Purchaser" is used in this Agreement, such word shall no longer be
deemed to refer to such Affiliate, but shall refer to such Purchaser, and such
Purchaser shall have all the rights of an original holder of the Notes under
this Agreement.

SECTION 22.   MISCELLANEOUS.

Section 22.1. Successors and Assigns. All covenants and other agreements
contained in this Agreement by or on behalf of any of the parties hereto bind
and inure to the benefit of their respective successors and assigns (including,
without limitation, any subsequent holder of a Note) whether so expressed or
not.

Section 22.2. Payments Due on Non-Business Days. Anything in this Agreement or
the Notes to the contrary notwithstanding, any payment of principal of or
Make-whole Amount or interest on any Note that is due on a date other than a
Business Day shall be made on the next succeeding Business Day without including
the additional days elapsed in the computation of the interest payable on such
next succeeding Business Day.

Section 22.3. Severability. Any provision of this Agreement that is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall (to the full extent permitted by law)
not invalidate or render unenforceable such provision in any other jurisdiction.

Section 22.4. Construction. Each covenant contained herein shall be construed
(absent express provision to the contrary) as being independent of each other
covenant contained herein, so that compliance with any one covenant shall not
(absent such an express contrary provision) be deemed to excuse compliance with
any other covenant. Where any provision herein refers to action to be taken by
any Person, or which such Person is prohibited from taking, such provision shall
be applicable whether such action is taken directly or indirectly by such
Person.

Section 22.5. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one instrument. Each counterpart may consist of a number of copies
hereof, each signed by less than all, but together signed by all, of the parties
hereto.

Section 22.6. Governing Law. This Agreement shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the law of
the State of Illinois excluding choice-of-law principles of the law of such
State that would require the application of the laws of a jurisdiction other
than such State.

                                      -35-
   41

                                    * * * * *

         The execution hereof by the Purchasers shall constitute a contract
among the Company and the Purchasers for the uses and purposes hereinabove set
forth. This Agreement may be executed in any number of counterparts, each
executed counterpart constituting an original but all together only one
agreement.

                                                Very truly yours,

                                                OIL-DRI CORPORATION OF AMERICA

                                                By
                                                    Its

                                      -36-
   42

Accepted as of April 15, 1998

                                                TEACHERS INSURANCE AND ANNUITY 
                                                   ASSOCIATION OF AMERICA

                                                By
                                                    Its
                                                       ------------------------

   43

                                                CONNECTICUT GENERAL LIFE 
                                                   INSURANCE COMPANY

                                                By CIGNA Investments, Inc.

                                                   By
                                                     ------------------------
                                                     Its
                                                        ---------------------

    NAME AND ADDRESS                                       PRINCIPAL AMOUNT OF
     OF PURCHASERS                                        NOTES TO BE PURCHASED

TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA          $14,000,000
730 Third Avenue
New York, New York  10017-3263

Payments

All payments on account of the Notes shall be made in immediately available
funds at the opening of business on the due date by electronic funds transfer
through the Automated Clearing House System to:

         Chase Manhattan Bank
         New York, New York
         ABA No. 021-000-021
         Account Number:  900-9-000200
         For Further Credit to the TIAA Account Number:  G07040
         Reference:      PPN: 677864 A@9; Oil-Dri Corporation of America;
                         Maturity Date:  April 15, 2013; Interest Rate:  6.55%
                         per annum; P&I breakdown

Address for Notices Related to Payment

Contemporaneous with the above electronic funds transfer, mail or send by
facsimile written confirmation of each such payment to be addressed as set forth
below including the following information: (1) the full name, private placement
number, interest rate, maturity date of the Notes; (2) the allocation of payment
between principal, interest, Make-Whole Amount and any special payment; and (3)
the name and address of the bank from which such electronic funds transfer was
sent, to:

                                      -37-
   44

         Teachers Insurance and Annuity Association of America
         730 Third Avenue
         New York, NY  10017
         Attention:  Securities Accounting Division
         Telephone Number:  (212) 916-4188
         Facsimile Number:  (212) 916-6955

Addresses for all other Notices:

         Teachers Insurance and Annuity Association of America
         730 Third Avenue
         New York, New York  10017
         Attention:  Diane Hom, Securities Division, Private Placements
         Telephone Number:  (212) 916-6748 or (212) 490-9000 (general number)
         Facsimile Number:  (212) 916-6667

Name of Nominee in which Notes are to be issued:  None

Taxpayer I.D. Number:  13-1624203

          NAME AND ADDRESS                            PRINCIPAL AMOUNT OF
           OF PURCHASERS                             NOTES TO BE PURCHASED

CONNECTICUT GENERAL LIFE INSURANCE COMPANY                 $5,000,000
c/o CIGNA Investments, Inc.                                $3,000,000
900 Cottage Grove Road                                     $3,000,000
Hartford, Connecticut  06152-2307
Attention:  Private Securities
  Division  - S-307
Fax:  860-726-7203

Payments

All payments on or in respect of the Notes to be by Federal Funds Wire Transfer
to:

         Chase NYC/CTR/
         BNF=CIGNA Private Placements/AC=9009001802
         ABA #021000021
         OBI=Oil-Dri Corporation of America, Senior Notes, 6.55%, due April 15,
         2013, PPN 677864 A@ 9 (as among principal, premium and interest of the
         payment being made); contact name and phone.

                                      -38-
   45

Address for Notices Related to Payments:

         CIG & Co.
         c/o CIGNA Investments, Inc.
         Attention:  Securities Processing S-309
         900 Cottage Grove Road
         Hartford, Connecticut  06152-2309

         CIG & Co.
         c/o CIGNA Investments, Inc.
         Attention:  Private Securities - S-307
         Operations Group
         900 Cottage Grove Road
         Hartford, Connecticut  06152-2307
         Fax:  860-726-7203

         with a copy to:

         Chase Manhattan Bank, N.A.
         Private Placement Servicing
         P. O. Box 1508
         Bowling Green Station
         New York, New York  10081
         Attention:  CIGNA Private Placements
         Fax:  212-552-3107/1005

Address for All Other Notices:

         CIG & Co.
         c/o CIGNA Investments, Inc.
         Attention:  Private Securities Division - S-307
         900 Cottage Grove Road
         Hartford, Connecticut  06152-2307
         Fax:  860-726-7203

Name of Nominee in which Notes are to be issued: CIG & Co.

Taxpayer I.D. Number for CIG & Co.:  13-3574027

Taxpayer I.D. Number for Connecticut General Life Insurance Company:  06-0303370

                                      -39-
   46

                                  DEFINED TERMS

         As used herein, the following terms have the respective meanings set
forth below or set forth in the Section hereof following such term:

         "Affiliate" means any Person (other than a Restricted Subsidiary) (i)
which directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, the Company, (ii) which
beneficially owns or holds 10% or more of any class of the Voting Stock of the
Company, (iii) 10% or more of the Voting Stock (or in the case of a Person which
is not a corporation, 10% or more of the equity interest) of which is
beneficially owned or held by the Company or a Subsidiary or (iv) any officer or
director of such Person. As used in this definition, "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise. Unless the context
otherwise clearly requires, any reference to an "Affiliate" is a reference to an
Affiliate of the Company.

         "Business Day" means (a) for the purposes of Section 8.6 only, any day
other than a Saturday, a Sunday or a day on which commercial banks in New York
City are required or authorized to be closed, and (b) for the purposes of any
other provision of this Agreement, any day other than a Saturday, a Sunday or a
day on which commercial banks in the City of New York, New York or Chicago,
Illinois are required or authorized to be closed.

         "Capital Lease" means, at any time, a lease with respect to which the
lessee is required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.

         "Capital Lease Obligation" means, with respect to any Person and a
Capital Lease, the amount of the obligation of such Person as the lessee under
such Capital Lease which would, in accordance with GAAP, appear as a liability
on a balance sheet of such Person.

         "Closing" is defined in Section 3.

         "Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the rules and regulations promulgated thereunder from time to time.

         "Company" means Oil-Dri Corporation of America, a Delaware corporation.

         "Confidential Information" is defined in Section 20.

         "Consolidated Adjusted Net Worth" means, at any time, (a) Consolidated
Net Worth, minus (b) the excess, if any, of (i) the aggregate amount of all
outstanding Restricted Investments over (ii) 20% of Consolidated Net Worth.

         "Consolidated Assets" means, at any time, the total assets of the
Company and its Restricted Subsidiaries which would be shown as assets on a
consolidated balance sheet of the Company and its Restricted Subsidiaries as of
such time prepared in accordance with GAAP, after eliminating all amounts
properly attributable to minority interests, if any, in the stock and surplus of
Restricted Subsidiaries.

                                  SCHEDULE 4.9
                          (to Note Purchase Agreement)

                                      -40-
   47

         "Consolidated Debt" means, as of any date of determination, the total
of all Debt of the Company and its Restricted Subsidiaries outstanding on such
date, after eliminating all offsetting debits and credits between the Company
and its Restricted Subsidiaries and all other items required to be eliminated in
the course of the preparation of consolidated financial statements of the
Company and its Restricted Subsidiaries in accordance with GAAP.

         "Consolidated Income Available for Fixed Charges" means, with respect
to any period, Consolidated Net Income for such period plus all amounts deducted
in the computation thereof on account of (a) Fixed Charges and (b) taxes imposed
on or measured by income or excess profits.

         "Consolidated Net Income" means, with reference to any period, the net
income (or loss) of the Company and its Restricted Subsidiaries for such period
(taken as a cumulative whole), as determined in accordance with GAAP, after
eliminating all offsetting debits and credits between the Company and its
Restricted Subsidiaries and all other items required to be eliminated in the
course of the preparation of consolidated financial statements of the Company
and its Restricted Subsidiaries in accordance with GAAP, provided that there
shall be excluded:

                   (a) the income (or loss) of any Person accrued prior to the
         date it becomes a Restricted Subsidiary or is merged into or
         consolidated with the Company or a Restricted Subsidiary, and the
         income (or loss) of any Person, substantially all of the assets of
         which have been acquired in any manner, realized by such other Person
         prior to the date of acquisition,

                   (b) the income (or loss) of any Person (other than a
         Restricted Subsidiary) in which the Company or any Restricted
         Subsidiary has an ownership interest, except to the extent that any
         such income has been actually received by the Company or such
         Restricted Subsidiary in the form of cash dividends or similar cash
         distributions,

                   (c) the undistributed earnings of any Subsidiary to the
         extent that the declaration or payment of dividends or similar
         distributions by such Subsidiary is not at the time permitted by the
         terms of its charter or any agreement, instrument, judgment, decree,
         order, statute, rule or governmental regulation applicable to such
         Subsidiary,

                   (d) any restoration to income of any contingency reserve
         (excluding a contingency reserve established in the ordinary course of
         business, such as reserves for uncollectable accounts), except to the
         extent that provision for such reserve was made out of income accrued
         during such period,

                   (e) any aggregate net gain (but not any aggregate net loss)
         during such period arising from the sale, conversion, exchange or other
         disposition of capital assets (such term to include, without
         limitation, (i) all non-current assets and, without duplication, (ii)

                                  SCHEDULE 4.9
                          (to Note Purchase Agreement)

                                      -41-
   48

         the following, whether or not current: all fixed assets, whether
         tangible or intangible, all inventory sold in conjunction with the
         disposition of fixed assets, and all Securities),

                   (f) any gains resulting from any write-up of any assets (but
         not any loss resulting from any write-down of any assets),

                   (g) any net gain from the collection of the proceeds of life
         insurance policies,

                   (h) any gain arising from the acquisition of any Security, or
         the extinguishment, under GAAP, of any Debt, of the Company or any
         Subsidiary,

                   (i) any net income or gain (but not any net loss) during such
         period from (i) any change in accounting principles in accordance with
         GAAP, (ii) any prior period adjustments resulting from any change in
         accounting principles in accordance with GAAP, (iii) any extraordinary
         items, or (iv) any discontinued operations or the disposition thereof,

                   (j) any deferred credit representing the excess of equity in
         any Restricted Subsidiary at the date of acquisition over the cost of
         the investment in such Restricted Subsidiary,

                   (k) in the case of a successor to the Company by
         consolidation or merger or as a transferee of its assets, any earnings
         of the successor corporation prior to such consolidation, merger or
         transfer of assets, and

                   (l) any portion of such net income that cannot be freely
         converted into United States Dollars.

         "Consolidated Net Worth" means, at any time,

                   (a) the sum of (i) the par value (or value stated on the
         books of the corporation) of the capital stock (but excluding treasury
         stock and capital stock subscribed and unissued) of the Company and its
         Restricted Subsidiaries plus (ii) the amount of the paid-in capital and
         retained earnings of the Company and its Restricted Subsidiaries, in
         each case as such amounts would be shown on a consolidated balance
         sheet of the Company and its Restricted Subsidiaries as of such time
         prepared in accordance with GAAP, minus

                   (b) to the extent included in clause (a), all amounts
         properly attributable to minority interests, if any, in the stock and
         surplus of Restricted Subsidiaries.

         "Consolidated Revenues" means, for any period, the total revenues of
the Company and its Restricted Subsidiaries determined in accordance with GAAP.

                                  SCHEDULE 4.9
                          (to Note Purchase Agreement)

                                      -42-
   49

         "Consolidated Total Capitalization means, at any time, the sum of 
Consolidated Adjusted Net Worth and Consolidated Debt.

         "Debt" means, with respect to any Person, without duplication,

                   (a) its liabilities for borrowed money;

                   (b) its liabilities for the deferred purchase price of
         property acquired by such Person (excluding accounts payable arising in
         the ordinary course of business but including, without limitation, all
         liabilities created or arising under any conditional sale or other
         title retention agreement with respect to any such property);

                   (c) its Capital Lease Obligations;

                   (d) all liabilities for borrowed money secured by any Lien
         with respect to any property owned by such Person (whether or not it
         has assumed or otherwise become liable for such liabilities); and

                   (e) any Guaranty of such Person with respect to liabilities
         of a type described in any of clauses (a) through (d) hereof.

Debt of any Person shall include all obligations of such Person of the character
described in clauses (a) through (e) to the extent such Person remains legally
liable in respect thereof notwithstanding that any such obligation is deemed to
be extinguished under GAAP.

         "Default" means an event or condition the occurrence or existence of
which would, with the lapse of time or the giving of notice or both, become an
Event of Default.

         "Default Rate" means 8.55% per annum.

         "Environmental Laws" means any and all Federal, state, local, and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including but
not limited to those related to hazardous substances or wastes, air emissions
and discharges to waste or public systems.

         "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder
from time to time in effect.

         "ERISA Affiliate" means any trade or business (whether or not
incorporated) that is treated as a single employer together with the Company
under Section 414 of the Code.

                                  SCHEDULE 4.9
                          (to Note Purchase Agreement)

                                      -43-
   50

         "Event of Default" is defined in Section 11.

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

         "Fixed Charges" means, with respect to any period, the sum of (a)
Interest Charges for such period and (b) Lease Rentals for such period.

         "Fixed Charges Coverage Ratio" means, at any time, the ratio of (a)
Consolidated Income Available for Fixed Charges for the period of four
consecutive fiscal quarters ending on, or most recently ended prior to, such
time to (b) Fixed Charges for such period of four consecutive fiscal quarters.

         "GAAP" means generally accepted accounting principles as in effect from
time to time in the United States of America.

         "Governmental Authority" means

                   (a) the government of

                            (i) the United States of America or any State or 
                  other political subdivision thereof, or

                           (ii) any jurisdiction in which the Company or any
                  Subsidiary conducts all or any part of its business, or which
                  asserts jurisdiction over any properties of the Company or any
                  Subsidiary, or

                   (b) any entity exercising executive, legislative, judicial,
         regulatory or administrative functions of, or pertaining to, any such
         government.

         "Guaranty" means, with respect to any Person, any obligation (except
the endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
indebtedness, dividend or other obligation of any other Person in any manner,
whether directly or indirectly, including (without limitation) obligations
incurred through an agreement, contingent or otherwise, by such Person:

                   (a) to purchase such indebtedness or obligation or any 
         property constituting security therefor;

                   (b) to advance or supply funds (i) for the purchase or
         payment of such indebtedness or obligation, or (ii) to maintain any
         working capital or other balance sheet condition or any income
         statement condition of any other Person or otherwise to advance or make
         available funds for the purchase or payment of such indebtedness or
         obligation;

                                  SCHEDULE 4.9
                          (to Note Purchase Agreement)

                                      -44-
   51

                   (c) to lease properties or to purchase properties or services
         primarily for the purpose of assuring the owner of such indebtedness or
         obligation of the ability of any other Person to make payment of the
         indebtedness or obligation; or

                   (d) otherwise to assure the owner of such indebtedness or
         obligation against loss in respect thereof.

In any computation of the indebtedness or other liabilities of the obligor under
any Guaranty, the indebtedness or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor.

         "Hazardous Material" means any and all pollutants, toxic or hazardous
wastes or any other substances that might pose a hazard to health or safety, the
removal of which may be required or the generation, manufacture, refining,
production, processing, treatment, storage, handling, transportation, transfer,
use, disposal, release, discharge, spillage, seepage, or filtration of which is
or shall be restricted, prohibited or penalized by any applicable law
(including, without limitation, asbestos, urea formaldehyde foam insulation and
polychlorinated biphenyls).

         "Holder" or "holder" means, with respect to any Note, the Person in
whose name such Note is registered in the register maintained by the Company
pursuant to Section 13.1.

         "Indebtedness" with respect to any Person means, at any time, without 
duplication,

                   (a) its liabilities for borrowed money and its redemption 
         obligations in respect of mandatorily redeemable Preferred Stock;

                   (b) its liabilities for the deferred purchase price of
         property acquired by such Person (excluding accounts payable arising in
         the ordinary course of business but including all liabilities created
         or arising under any conditional sale or other title retention
         agreement with respect to any such property);

                   (c) all liabilities appearing on its balance sheet in
         accordance with GAAP in respect of Capital Leases;

                   (d) all liabilities for borrowed money secured by any Lien
         with respect to any property owned by such Person (whether or not it
         has assumed or otherwise become liable for such liabilities);

                   (e) all its liabilities in respect of letters of credit or
         instruments serving a similar function issued or accepted for its
         account by banks and other financial institutions (whether or not
         representing obligations for borrowed money);

                   (f) Swaps of such Person; and

                                  SCHEDULE 4.9
                          (to Note Purchase Agreement)

                                      -45-
   52

                   (g) any Guaranty of such Person with respect to liabilities
         of a type described in any of clauses (a) through (f) hereof.

Indebtedness of any Person shall include all obligations of such Person of the
character described in clauses (a) through (g) to the extent such Person remains
legally liable in respect thereof notwithstanding that any such obligation is
deemed to be extinguished under GAAP.

         "Interest Charges" means, with respect to any period, the sum (without
duplication) of the following (in each case, eliminating all offsetting debits
and credits between the Company and its Restricted Subsidiaries and all other
items required to be eliminated in the course of the preparation of consolidated
financial statements of the Company and its Restricted Subsidiaries in
accordance with GAAP): (a) all interest in respect of Debt of the Company and
its Restricted Subsidiaries (including imputed interest on Capital Lease
Obligations) deducted in determining Consolidated Net Income for such period,
less interest income of the Company and its Restricted Subsidiaries included in
Consolidated Net Income for such period and (b) all debt discount and expense
amortized or required to be amortized in the determination of Consolidated Net
Income for such period.

         "Investment" means any investment, made in cash or by delivery of
property, by the Company or any of its Restricted Subsidiaries (i) in any
Person, whether by acquisition of stock, Debt or other obligation or Security,
or by loan, Guaranty, advance, capital contribution or otherwise, or (ii) in any
property.

         "Institutional Investor" means (a) any original purchaser of a Note,
(b) any holder of a Note holding more than 5% of the aggregate principal amount
of the Notes then outstanding, and (c) any bank, trust company, savings and loan
association or other financial institution, any pension plan, any investment
company, any insurance company, any broker or dealer, or any other similar
financial institution or entity, regardless of legal form.

         "Lease Rentals" means, with respect to any period, the sum of the
minimum amount of rental and other obligations required to be paid during such
period by the Company or any Restricted Subsidiary as lessee under all leases of
real or personal property (other than Capital Leases), excluding any amounts
required to be paid by the lessee (whether or not therein designated as rental
or additional rental) (a) which are on account of maintenance and repairs,
insurance, taxes, assessments, water rates and similar charges, or (b) which are
based on profits, revenues or sales realized by the lessee from the leased
property or otherwise based on the performance of the lessee.

         "Lien" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of any
vendor, lessor, lender or other secured party to or of such Person under any
conditional sale or other title retention agreement or Capital Lease, upon or
with respect to any property or asset of such Person (including in the case of
stock, stockholder agreements, voting trust agreements and all similar
arrangements).

                                  SCHEDULE 4.9
                          (to Note Purchase Agreement)

                                      -46-
   53

         "Make-Whole Amount" is defined in Section 8.6.

         "Material" means material in relation to the business, operations,
affairs, financial condition, assets, properties or prospects of the Company and
its Restricted Subsidiaries taken as a whole.

         "Material Adverse Effect" means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or properties of the
Company and its Restricted Subsidiaries taken as a whole, or (b) the ability of
the Company to perform its obligations under this Agreement and the Notes, or
(c) the validity or enforceability of this Agreement or the Notes.

         "Memorandum" is defined in Section 5.3.

         "Multiemployer Plan" means any Plan that is a "multiemployer plan" (as
such term is defined in Section 4001(a)(3) of ERISA).

         "Notes" is defined in Section 1.

         "Officer's Certificate" means a certificate of a Senior Financial
Officer or of any other officer of the Company whose responsibilities extend to
the subject matter of such certificate.

         "PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.

         "Person" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.

         "Plan" means an "employee benefit plan" (as defined in Section 3(3) of
ERISA) that is or, within the preceding five years, has been established or
maintained, or to which contributions are or, within the preceding five years,
have been made or required to be made, by the Company or any ERISA Affiliate or
with respect to which the Company or any ERISA Affiliate may have any liability.

         "Preferred Stock" means any class of capital stock of a corporation
that is preferred over any other class of capital stock of such corporation as
to the payment of dividends or the payment of any amount upon liquidation or
dissolution of such corporation.

         "Priority Debt" means, without duplication, the sum of (a) all Debt of
the Company secured by any Lien permitted under Section 10.5(k), and (b) all
Debt of Restricted Subsidiaries (except Debt held by the Company or a
Wholly-Owned Restricted Subsidiary).

                                  SCHEDULE 4.9
                          (to Note Purchase Agreement)

                                      -47-
   54

         "property" or "properties" means, unless otherwise specifically
limited, real or personal property of any kind, tangible or intangible, choate
or inchoate.

         "Purchasers" is defined in the introductory paragraph in this
Agreement.

         "QPAM Exemption" means Prohibited Transaction Class Exemption 84-14
issued by the United States Department of Labor.

         "Required Holders" means, at any time, the holders of at least a
majority in principal amount of the Notes at the time outstanding (exclusive of
Notes then owned by the Company or any of its Affiliates or any Restricted
Subsidiary).

         "Responsible Officer" means any Senior Financial Officer and any other
officer of the Company with responsibility for the administration of the
relevant portion of this Agreement.

         "Restricted Investments" means all Investments except the following:

                   (a) property to be used in the ordinary course of business of
         the Company and its Restricted Subsidiaries;

                   (b) current assets arising from the sale of goods and
         services in the ordinary course of business of the Company and its
         Restricted Subsidiaries;

                   (c) Investments in one or more Restricted Subsidiaries or any
         Person that concurrently with such Investment becomes a Restricted
         Subsidiary;

                   (d) Investments existing on the date of Closing and disclosed
         in Schedule 5.15;

                   (e) Investments in direct obligations of the United States of
         America or any agency or instrumentality of the United States of
         America, the payment or guarantee of which constitutes a full faith and
         credit obligation of the United States of America, in either case,
         maturing within three years from the date of acquisition thereof;

                   (f) Investments in tax-exempt obligations of any state of the
         United States of America, or any municipality of any such state, in
         each case rated "AA" or better by S&P, or "Aa2" or better by Moody's or
         an equivalent rating by any other credit rating agency of recognized
         national standing, provided that such obligations mature within 365
         days from the date of acquisition thereof;

                   (g) Investments in certificates of deposit and bankers'
         acceptances maturing within one year from the date of issuance thereof,
         issued by a bank or trust company 

                                  SCHEDULE 4.9
                          (to Note Purchase Agreement)

                                      -48-
   55

         organized under the laws of the United States of America or any State
         thereof having capital, surplus and undivided profits aggregating at
         least $200,000,000; provided that at the time of acquisition thereof by
         the Company or a Restricted Subsidiary, the senior unsecured long-term
         debt of such bank or trust company or of the holding company of such
         bank or trust company is rated "AA" or better by S&P or "Aa2" or better
         by Moody's or an equivalent rating by any other credit rating agency of
         recognized national standing;

                   (h) Investments in commercial paper of corporations organized
         under the laws of the United States of America or any state thereof
         maturing in 270 days or less from the date of issuance which, at the
         time of acquisition by the Company or any Restricted Subsidiary, is
         accorded a rating of "A-1" or better by S&P or "P-1" by Moody's or an
         equivalent rating by any other credit rating agency of recognized
         national standing;

                   (i) Investments in publicly traded shares of any open-ended
         mutual fund, the aggregate asset value of which "marked to market" is
         at least $225,000,000, which is managed by a fund manager of recognized
         national standing, and which invests not less than 90% of its assets in
         obligations described in clauses (e) through (h) hereof; provided that
         any such Investments will be classified as current assets in accordance
         with GAAP; and

                   (j) treasury stock of the Company.

As of any date of determination, each Restricted Investment shall be valued at
the greater of:

                   (x) the amount at which such Restricted Investment is shown
         on the books of the Company or any of its Restricted Subsidiaries (or
         zero if such Restricted Investment is not shown on any such books); and

                   (y) either

                            (i) in the case of any Guaranty of the obligation of
                  any Person, the amount which the Company or any of its
                  Restricted Subsidiaries has paid on account of such obligation
                  less any recoupment by the Company or such Restricted
                  Subsidiary of any such payments, or

                           (ii) in the case of any other Restricted Investment,
                  the excess of (x) the greater of (A) the amount originally
                  entered on the books of the Company or any of its Restricted
                  Subsidiaries with respect thereto and (B) the cost thereof to
                  the Company or its Restricted Subsidiary over (y) any return
                  of capital (after income taxes applicable thereto) upon such
                  Restricted Investment through the sale or other liquidation
                  thereof or part thereof or otherwise.

                                  SCHEDULE 4.9
                          (to Note Purchase Agreement)

                                      -49-
   56

         As used in this definition of "Restricted Investments": "Moody's" means
Moody's Investors Service, Inc. and "S&P" means Standard & Poor's Ratings Group,
a division of McGraw-Hill, Inc.

         In valuing any Investments for the purpose of any determination of
"Consolidated Net Worth", (i) at any time when an entity becomes a Restricted
Subsidiary, all Investments of such entity at such time shall be deemed to have
been made by such entity, as a Restricted Subsidiary, at such time and (ii) all
Investments of the Company and its Restricted Subsidiaries in a Restricted
Subsidiary which is redesignated as an Unrestricted Subsidiary pursuant to
Section 7.4 of this Agreement shall be deemed to have been made immediately
after such redesignation.

         "Restricted Subsidiary" means any Subsidiary which is not an
Unrestricted Subsidiary.

         "Sale and Leaseback Transaction" means, with respect to a Person and
property, a transaction or series of transactions pursuant to which such Person
sells such property with the intent at the time of entering into such
transaction or transactions of leasing such property for a term in excess of six
months.

         "Security" shall have the same meaning as in Section 2(a)(1) of the
Securities Act.

         "Securities Act" means the Securities Act of 1933, as amended from time
to time.

         "Senior Financial Officer" means the chief financial officer, principal
accounting officer, treasurer or comptroller of the Company.

         "Significant Subsidiary" means at any time any Subsidiary that would at
such time constitute a "significant subsidiary" (as such term is defined in
Regulation S-X of the Securities and Exchange Commission as in effect on the
date of the Closing) of the Company.

         "Subsidiary" means, as to any Person, any corporation, association or
other business entity in which such Person or one or more of its Subsidiaries or
such Person and one or more of its Subsidiaries owns sufficient equity or voting
interests to enable it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership or joint venture if more
than a 50% interest in the profits or capital thereof is owned by such Person or
one or more of its Subsidiaries or such Person and one or more of its
Subsidiaries (unless such partnership can and does ordinarily take major
business actions without the prior approval of such Person or one or more of its
Subsidiaries). Unless the context otherwise clearly requires, any reference to a
"Subsidiary" is a reference to a Subsidiary of the Company.

         "Swaps" means, with respect to any Person, payment obligations with
respect to interest rate swaps, currency swaps and similar obligations
obligating such Person to make payments, whether periodically or upon the
happening of a contingency. For the purposes of this 

                                  SCHEDULE 4.9
                          (to Note Purchase Agreement)

                                      -50-
   57

Agreement, the amount of the obligation under any Swap shall be the amount
determined in respect thereof as of the end of the then most recently ended
fiscal quarter of such Person, based on the assumption that such Swap had
terminated at the end of such fiscal quarter, and in making such determination,
if any agreement relating to such Swap provides for the netting of amounts
payable by and to such Person thereunder or if any such agreement provides for
the simultaneous payment of amounts by and to such Person, then in each such
case, the amount of such obligation shall be the net amount so determined.

         "Unrestricted Subsidiary" shall mean a Subsidiary designated as such by
the Company in the most recent notice (or, prior to any such notice, on Schedule
5.4) with respect to such Subsidiary given by the Company pursuant to and in
accordance with the provisions of Section 7.4.

         "Voting Stock" shall mean Securities of any class or classes, the
holders of which are ordinarily, in the absence of contingencies, entitled to
elect a majority of the corporate directors (or Persons performing similar
functions).

         "Wholly-Owned Restricted Subsidiary" means, at any time, any Restricted
Subsidiary one hundred percent (100%) of all of the equity interests (except
directors' qualifying shares) and voting interests of which are owned by any one
or more of the Company and the Company's other Wholly-Owned Restricted
Subsidiaries at such time.

                         CHANGES IN CORPORATE STRUCTURE

                                      None

                              DISCLOSURE MATERIALS

                                      None

                         SUBSIDIARIES OF THE COMPANY AND
                          OWNERSHIP OF SUBSIDIARY STOCK

SECTION 5.4(a)(i) -- SUBSIDIARIES

         See attached schedule of the Company's subsidiaries including location
and state of incorporation. All subsidiaries are 100% directly or indirectly
owned by the Company. All subsidiaries of the Company are designated as
Restricted Subsidiaries.

SECTION 5.4(a)(ii) -- AFFILIATES

         The Company owns an 18% interest in Kamterter II, L.L.C., a Nebraska
Limited Liability Company which was formed in January 1998 for the purpose of
acquiring, creating, developing, owning and commercializing certain patent
rights and technical know-how in the seed priming and enhancement business. The
Company's Investment in Kamterter II, L.L.C. is $182,479.

                                  SCHEDULE 4.9
                          (to Note Purchase Agreement)

                                      -51-
   58

SECTION 5.4(a)(iii) -- DIRECTORS AND SENIOR OFFICERS

         The Company's directors and senior officers effective as April 20, 1998
are as follows:

DIRECTORS
         Richard M. Jaffee, Chairman
         Daniel S. Jaffee, President and Chief Executive Officer
         Robert D. Jaffee, Retired Chairman, Amco Corporation
         J. Steven Cole, President, Cole & Associates, Chairman, Sav-A-Life 
           Systems, Inc.
         Arnold W. Donald, Senior Vice President, Monsanto Company
         Ronald B. Gordon, Chief Executive Officer, Beiersdorf North America, 
           Inc.
         Edgar J. Jannotta, Senior Director, William Blair & Company, L.L.C.
         Joseph C. Miller, Vice Chairman
         Haydn H. Murray, Professor Emeritus of Geology, Indiana University
         Allan H. Selig, President, Milwaukee Brewers Baseball Club, Inc., 
           President and Chairman, Selig Executive Leasing, Inc.

SENIOR OFFICERS
         Richard M. Jaffee, Chairman
         Daniel S. Jaffee, President and Chief Executive Officer
         Joseph Miller, Vice Chairman
         Michael L. Goldberg, Executive Vice President and Chief Financial 
           Officer
         Richard V. Hardin, Group Vice President, Technology
         Norman B. Gershon, Vice President, International Operations
         Thomas Cofsky, Vice President, Logistics, Quality & Service
         William O. Thompson, Vice President, Manufacturing
         Steven M. Levy, Vice President and General Manager, Consumer Products 
           Division
         Louis T. Bland, Jr. Vice President, Human Resources and Corporate 
           Secretary
         Brian P. Curtis, General Counsel and Assistant Secretary

    (Organization Chart Showing Oil-Dri Corporation's Legal Entity Structure)

                              FINANCIAL STATEMENTS

                                  SCHEDULE 5.3
                          (to Note Purchase Agreement)

                                      -52-

   59

A.       Oil-Dri Corporation of America SEC Form 10-Q for the fiscal quarter
         ended January 31, 1998.

B.       Oil-Dri Corporation of America Annual Report to Shareholders for the
         fiscal years ended July 31, 1993 through 1997.

C.       Oil-Dri Corporation of America SEC Form 10-K for the fiscal year ended
         July 31, 1997.

D.       Oil-Dri Corporation of America proxy statement dated November 3, 1997.

                                  SCHEDULE 5.3
                          (to Note Purchase Agreement)

                                      -53-
   60

                               CERTAIN LITIGATION

                                      None
                                  PATENTS, ETC.

                                      None
                                 USE OF PROCEEDS

         The Company intends to use the proceeds of the Notes for the following:

                  *Acquire the Fuller's Earth business from American Colloid
                  Company, a subsidiary of AMCOL International Corporation on
                  April 20, 1998 ($15 million),

                  Repay interim borrowing from Harris Trust and Savings Bank
                  used to complete the Robert D. Jaffee Class B share repurchase
                  on April 1, 1998 ($3.5 million),

                  Capital improvements and other general corporate purposes

- -------------

* Proceeds will first be applied to this purpose.

                  EXISTING INDEBTEDNESS, INVESTMENTS AND LIENS

                                  SCHEDULE 5.14
                          (to Note Purchase Agreement)

                                      -54-
   61

NOTES PAYABLE AS OF JANUARY 31, 1998

                                                                                                              
TOWN OF BLUE MOUNTAIN, MISSISSIPPI
         Industrial Revenue Bonds, Series 1988 Due 10/1/08                                                       $ 2,500,000
TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA
         $8,000,000 9.38% Senior Notes Due 11/15/01                                                              $ 3,300,000
TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA
         $6,500,000 7.17% Senior Notes Due 8/15/04                                                               $ 6,500,000
HARRIS TRUST AND SAVINGS BANK
         $5,000,000 7.78% Term Loan Due 6/20/03                                                                  $ 4,500,000
STARR HILL AND DOROTHY HILL
         $360,000 Promissory Note Due 4/17/00                                                                    $   120,000
RICHARD L. AND PATRICIA BAILEY
         $360,000 Promissory Note Due 4/17/00                                                                    $   120,000

OTHER                                                                                                            $   106,571
                                                                                                                 -----------

                           TOTAL                                                                                 $17,146,571
                                                                                                                 ===========

Note:    On April 1, 1998, the Company drew $3,500,000 against its line of
         credit agreement with Harris Trust and Savings Bank.

                              REQUIRED PREPAYMENTS

         REQUIRED PREPAYMENT DATE                PRINCIPAL AMOUNT OF NOTES TO BE PREPAID
                                                                 
              April 15, 2003                                    $1,500,000
              April 15, 2004                                    $1,500,000
              April 15, 2005                                    $1,500,000
              April 15, 2006                                    $3,000,000
              April 15, 2007                                    $4,000,000
              April 15, 2008                                    $4,000,000
              April 15, 2009                                    $1,500,000
              April 15, 2010                                    $3,000,000
              April 15, 2011                                    $2,000,000
              April 15, 2012                                    $1,500,000

                                      -55-
   62

                                 [FORM OF NOTE]

                         OIL-DRI CORPORATION OF AMERICA

                      6.55% SENIOR NOTE DUE April 15, 2013

No.  [_______]                                                           [Date]
$[__________]                                                    PPN 677864 A@9

         FOR VALUE RECEIVED, the undersigned, OIL-DRI CORPORATION OF AMERICA
(herein called the "Company"), a corporation organized and existing under the
laws of the State of Delaware, hereby promises to pay to [_____________________]
or registered assigns, the principal sum of [______________] DOLLARS on April
15, 2013 with interest (computed on the basis of a 360-day year of twelve 30-day
months) (a) on the unpaid balance thereof at the rate of 6.55% per annum from
the date hereof, payable semiannually, on the 15th day of each April and October
in each year, commencing with the April or October next succeeding the date
hereof, until the principal hereof shall have become due and payable, and (b) to
the extent permitted by law on any overdue payment (including any overdue
prepayment) of principal, any overdue payment of interest and any overdue
payment of any Make-Whole Amount (as defined in the Note Purchase Agreement
referred to below), payable semiannually as aforesaid (or, at the option of the
registered holder hereof, on demand), at the rate of 8.55% per annum.

         Payments of principal of, interest on and any Make-Whole Amount with
respect to this Note are to be made in lawful money of the United States of
America at the principal office of the Company in Chicago, Illinois or at such
other place as the Company shall have designated by written notice to the holder
of this Note as provided in the Note Purchase Agreement referred to below.

         This Note is one of a series of Senior Notes (herein called the
"Notes") issued pursuant to the Note Purchase Agreement, dated as of April 15,
1998 (as from time to time amended, the "Note Purchase Agreement"), between the
Company and the respective Purchasers named therein and is entitled to the
benefits thereof. Each holder of this Note will be deemed, by its acceptance
hereof, (i) to have agreed to the confidentiality provisions set forth in
Section 20 of the Note Purchase Agreement and (ii) to have made the
representation set forth in Section 6.2 of the Note Purchase Agreement.

         This Note is a registered Note and, as provided in the Note Purchase
Agreement, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.

                                 EXHIBIT 4.4(b)
                          (to Note Purchase Agreement)

                                      -56-
   63

         The Company will make required prepayments of principal on the dates
and in the amounts specified in the Note Purchase Agreement. This Note is also
subject to optional prepayment, in whole or from time to time in part, at the
times and on the terms specified in the Note Purchase Agreement. This Note is
not otherwise subject to prepayment.

         If an Event of Default, as defined in the Note Purchase Agreement,
occurs and is continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner, at the price (including any
applicable Make-Whole Amount) and with the effect provided in the Note Purchase
Agreement.

         This Note shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the law of the State of Illinois
excluding choice-of-law principles of the law of such State that would require
the application of the laws of a jurisdiction other than such State.

                                            OIL-DRI CORPORATION OF AMERICA

                                            By
                                               Its

                                      -57-
   64

                       FORM OF OPINION OF SPECIAL COUNSEL
                                 TO THE COMPANY

                            Matters to Be Covered in
                    Opinion of Special Counsel to the Company

            1. Each of the Company and its Subsidiaries (other than Subsidiaries
incorporated outside the United States of America) being duly incorporated,
validly existing and in good standing in its respective jurisdiction of
incorporation and in the case of the Company having requisite corporate power
and authority to issue and sell the Notes and to execute and deliver the
documents.

            2. Each of the Company and its Significant Subsidiaries being duly
qualified and in good standing as a foreign corporation in appropriate
jurisdictions except where the failure to so qualify to be in good standing
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.

            3. Due authorization and execution of the documents and such
documents being legal, valid, binding and enforceable.

            4. No conflicts with charter documents, laws, orders or other
agreements.

            5. All consents required to issue and sell the Notes and to execute
and deliver the documents having been obtained.

            6. No litigation questioning validity of documents.

            7. The Notes not requiring registration under the Securities Act of
1933, as amended; no need to qualify an indenture under the Trust Indenture Act
of 1939, as amended.

            8. No violation of Regulations T, U or X of the Federal Reserve
Board.

            9. Company not an "investment company", or a company "controlled" by
an "investment company", under the Investment Company Act of 1940, as amended.

                                 EXHIBIT 4.4(b)
                          (to Note Purchase Agreement)

                                      -58-
   65

                       FORM OF OPINION OF SPECIAL COUNSEL
                                TO THE PURCHASERS

                            Matters to Be Covered in
                  Opinion of Special Counsel to the Purchasers

            1. The Company being duly incorporated, validly existing and in good
standing and having requisite corporate power and authority to issue and sell
the Notes and to execute and deliver the documents.

            2. Due authorization and execution of the documents and such
documents being legal, valid, binding and enforceable.

            3. The Notes not requiring registration under the Securities Act of
1933, as amended; no need to qualify an indenture under the Trust Indenture Act
of 1939, as amended.

                                 EXHIBIT 4.4(b)
                          (to Note Purchase Agreement)

                                      -59-
   1

                                                                      Exhibit 11

                 OIL-DRI CORPORATION OF AMERICA AND SUBSIDIARIES
                        Computation of Earnings Per Share
             (in thousands of dollars except for per share amounts)

                                                                       (in thousands, except per share amounts)
                                                                 ----------------------------------------------------
                                                                   Three Months Ended            Nine Months Ended
                                                                        April 30                     April 30
                                                                 ------------------------    ------------------------
                                                                    1998          1997          1998          1997
                                                                 ----------    ----------    ----------    ----------
                                                                                                      
Net (loss) income available to
         Stockholders (numerator)                                $    1,389    $    1,164    $    3,165    $    5,358
                                                                 ==========    ==========    ==========    ==========

Shares Calculation (denominator):

Average shares outstanding -                                      6,052,808     6,546,899     6,196,851     6,641,655
basic
Effect of Dilutive Securities:

Potential Common Stock
         relating to stock options                                   17,474        35,475        34,775         2,773
                                                                 ----------    ----------    ----------    ----------

Average shares outstanding-
         assuming dilution                                        6,070,282     6,582,374     6,231,626     6,644,428
                                                                 ==========    ==========    ==========    ==========

Earnings per share-basic                                         $     0.23    $     0.18    $     0.51    $     0.81
                                                                 ==========    ==========    ==========    ==========

Earnings per share-assuming dilution                             $     0.23    $     0.18    $     0.51    $     0.81
                                                                 ==========    ==========    ==========    ==========

  

 5

                   9-MOS
                          JUL-31-1998
                               APR-30-1998
                                       9,962,000
                                 1,161,000
                               22,739,000
                                 (414,000)
                                 12,150,000
                            52,190,000
                                      11,736,000
                              61,669,000
                             130,998,000
                       13,461,000
                                     41,972,000
                                0
                                          0
                                       724,000
                                  70,130,000
               130,998,000
                                    118,995,000
                           118,995,000
                                       81,615,000
                               81,615,000
                            31,437,000
                               264,000
                           1,253,000
                              4,426,000
                                 1,261,000
                          3,165,000
                                       0
                                      0
                                            0
                                 3,165,000
                                     0.51
                                     0.51