PROSPECTUS
OIL-DRI CORPORATION OF AMERICA
500,000 SHARES OF COMMON STOCK ($.10 PAR VALUE PER SHARE), OR IF
CLASS A COMMON STOCK IS ISSUED AND PUBLICLY TRADED, THEN CLASS A
COMMON STOCK ($.10 PAR VALUE PER SHARE)

          This Prospectus  relates to up to 500,000 shares of Common Stock, $.10
     par value per share ("Common Stock"),  or if Class A Common Stock is issued
     and publicly  traded,  then Class A Common Stock,  $.10 par value ("Class A
     Common  Stock" and  referred to  collectively  with the Common Stock as the
     "Stock") of Oil-Dri  Corporation of America (the  "Company"),  which may be
     offered  and  sold  to  permissible  transferees  of  participants  in  the
     Company's  1995  Long-Term  Incentive  Plan (the  "Plan")  pursuant  to the
     applicable terms, including, any applicable price terms of (i) nonqualified
     stock options  ("Options"),  (ii) stock appreciation  rights ("SARs"),  and
     (iii)  performance  units  ("Performance   Units")  or  performance  shares
     ("Performance  Shares"),  granted to such participants under the Plan. Such
     Options,  SARs,  Performance  Units and Performance  Shares are referred to
     collectively  as "Stock  Awards."  Some or all of the Stock  Awards  may be
     transferred by  participants  for no  consideration  in accordance with the
     Plan and the grant  documents  specifying  the terms and conditions of such
     Stock Awards.  This  Prospectus also relates to the offer and sale of Stock
     pursuant  to such Stock  Awards to the  beneficiaries  of such  permissible
     transferees,  or other  persons duly  authorized  by law to adminis ter the
     estate or assets of such  persons.  Certain  types of Awards under the Plan
     (incentive stock options and restricted  stock) cannot be transferred,  and
     accordingly,  this  Prospectus  does not  relate to any  issuance  of Stock
     pursuant to such awards.

          Shares of  Common  Stock are  traded  on the New York  Stock  Exchange
     ("NYSE")  under the symbol "ODC".  On June 27, 1997, the closing sale price
     of the  Common  Stock on the NYSE was  $16.125  per  share.  As of the date
     hereof, no Class A Common Stock has been issued.

          No person has been  authorized to give any  information or to make any
     representations,   other  than  those  contained  in  this  Prospectus,  in
     connection with the offering made hereby,  and if given or made, such other
     information  or  representations  must not be relied  upon as  having  been
     authorized by the Company.  Neither the delivery of this Prospectus nor any
     sale made hereunder shall, under any circumstances,  create any implication
     that there has been no change in the affairs of the Company  since the date
     hereof.  This Prospectus does not constitute an offer to sell securities in
     any jurisdiction to any person to whom it would be unlawful to make such an
     offer in such jurisdiction.

          THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
           SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
            COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
           OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
               OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
                     TO THE CONTRARY IS A CRIMINAL OFFENSE.
                                
                  THE DATE OF THIS PROSPECTUS IS JUNE 30, 1997.

                                TABLE OF CONTENTS

Available Information
Documents Incorporated by Reference
The Company
Description of the Plan
Use of Proceeds
Plan of Distribution
Legal Matters
Experts

                              AVAILABLE INFORMATION

          The  Company  is  subject  to the  informational  requirements  of the
     Securities  Exchange Act of 1934, as amended (the "Exchange  Act"),  and in
     accordance   therewith  files  periodic  reports,   proxy  and  information
     statements  and  other  information,   with  the  Securities  and  Exchange
     Commission  (the  "SEC")  pursuant  to the  Exchange  Act,  relating to its
     business,  financial statements and other matters. Such reports,  proxy and
     information statements and other information can be inspected and copied at
     the public reference facilities  maintained by the SEC at 450 Fifth Street,
     N.W., Washington,  D.C. 20549, and at the SEC's regional offices at 75 Park
     Place,  New York,  N.Y.  10007 and 500 West Madison,  Suite 1400,  Chicago,
     Illinois  60621,  and copies of such material can also be obtained from the
     Public Reference  Section of the SEC, 450 Fifth Street,  N.W.,  Washington,
     D.C. 20549, at prescribed  rates. The Commission  maintains a Web Site that
     contains  reports,  proxy and information  statements and other information
     regarding  registrants that file  electronically  with the Commission.  The
     address of such site is http:\\www.sec.gov.

          This  Prospectus does not contain all the information set forth in the
     Registration Statement on Form S-3 (the "Registration  Statement") filed by
     the  Company  with the SEC with  respect  to the  securities  to which  the
     Prospectus  relates,  certain parts of which are omitted in accordance with
     the rules and regulations of the SEC. For further  information with respect
     to the  Company  and the  Stock,  reference  is  made  to the  Registration
     Statement  including  the exhibits  thereto,  which may be inspected at the
     above  referenced  public  reference  facilities  of  the  SEC.  Statements
     contained  herein  concerning  the  provisions  of  any  document  are  not
     necessarily  complete and in each instance reference is made to the copy of
     the document filed as an exhibit or schedule to the Registration Statement.
     Each such  statement  is qualified in its entirety by reference to the copy
     of the applicable documents filed with the SEC.

          The Common Stock is traded on the New York Stock Exchange (the "NYSE")
     and reports  and proxy  statements  and other  information  concerning  the
     Company also can be inspected at the offices of the NYSE,  20 Broad Street,
     New York, New York 10005.

                       DOCUMENTS INCORPORATED BY REFERENCE

          The Company has  incorporated  by reference  into this  Prospectus the
     following  documents:  (1) the Company's annual report on Form 10-K for the
     fiscal year ended July 31, 1996;  (2) the  Company's  quarterly  reports on
     Form 10-Q for the fiscal  quarters  ended  October 31, 1996 and January 31,
     1997;  and (3) the  description  of the Company's  Common Stock and Class A
     Common Stock under the caption  "Description of Common Stock, Class B Stock
     and Class A Common Stock in the Company's Proxy Statement dated November 9,
     1994."

          All documents  subsequently  filed by the Company pursuant to Sections
     13(a),  13(c), 14 and 15(d) of the Exchange Act prior to the termination of
     the offering  made hereby shall be deemed to be  incorporated  by reference
     herein  and to be a part  hereof  from  the  date  of the  filing  of  such
     documents.  Any statement contained in a document incorporated or deemed to
     be  incorporated  by  reference  herein  shall be deemed to be  modified or
     superseded  for purposes of this  Prospectus to the extent that a statement
     contained  herein modifies or supersedes  such statement.  Any statement so
     modified  or  superseded  shall not be  deemed,  except as so  modified  or
     superseded, to constitute a part of this Prospectus.

          The Company  will deliver  without  charge to each person to whom this
     Prospectus is delivered upon the written or oral request of such person,  a
     copy of any and all of the most recent reports,  proxy statements and other
     communications   distributed  to  the  Company's  stockholders   generally,
     together  with  any or  all of the  information  that  is  incorporated  by
     reference  in this  Prospectus  (other than  exhibits  to such  information
     unless such exhibits are  specifically  incorporated  by reference into the
     information that this Prospectus incorporates).

          Requests  for any of the  documents  described  under this  caption or
     additional  information  regarding the Plan or the administrators should be
     directed  in  writing to  Oil-Dri  Corporation  of  America,  c/o  Employee
     Benefits  Manager,  410 N. Michigan Avenue,  Chicago,  Illinois 60611 or by
     calling (312) 321- 1515.

                                   THE COMPANY

          The Company is a leader in  developing,  manufacturing  and  marketing
     sorbent  products  and  related  services  for  the  consumer,  industrial,
     environmental,  agricultural and fluids purification markets. The Company's
     products  are  principally  produced  from clay  minerals  and, to a lesser
     extent, other sorbent materials. Consumer products, consisting primarily of
     cat  litter,  are  sold  through  the  grocery  products   industry,   mass
     merchandising,   warehouse   clubs,   and  pet  specialty  retail  outlets.
     Industrial and environmental products,  consisting primarily of oil, grease
     and water sorbents  (both clay and nonclay),  are sold to  distributors  of
     industrial   cleanup  and  automotive   products,   environmental   service
     companies,  and  retail  outlets.   Agricultural  products,  which  include
     carriers for crop protection chemicals and fertilizers, drying agents, soil
     conditioners,  pellet  binders for animal feeds and  flowability  aids, are
     sold to manufacturers  of agricultural  chemicals and distributors of other
     agricultural products.  Fluids purification products,  consisting primarily
     of bleaching,  filtration and  clarification  clays, are sold to processors
     and refiners of edible and petroleum-based oils.

          The Company's  sorbent  technologies  include  absorbent and adsorbent
     products.  Absorbents, like sponges, draw liquids up into their many pores.
     Examples of the Company's  absorbent  products are CAT'S PRIDEr Premium Cat
     Litter and other cat litters,  OIL-DRI ALL PURPOSEr mineral floor absorbent
     and AGSORBr granular agricultural chemical carriers.

          Adsorbent products attract liquids, impurities, metals and surfactants
     to themselves and form low level chemical bonds.  The Company's  adsorbents
     are used for  cleanup  and  filtration  mediums.  The  Company's  adsorbent
     products  include  OIL-DRI LITEr Sorbents for industrial and  environmental
     cleanup, PURE-FLOr, PURE-FLOr SUPREME, PERFORMO and SELECTO Bleaching Clays
     for edible oils, fats and tallows, and ULTRA-CLEARr  Clarification Aids for
     petroleum based oils and by-products.

          The  Company's  principal  executive  offices  are  located  at 410 N.
     Michigan Avenue,  Suite 400, Chicago,  Illinois,  60611,  telephone:  (312)
     321-1515.

                                
                             DESCRIPTION OF THE PLAN

GENERAL INFORMATION

          This description  summarizes certain material  provisions of the Plan,
     and as such,  it does not purport to be complete  and is  qualified  in its
     entirety by  reference  to the Plan.  Terms used  herein and not  otherwise
     defined shall have the respective meanings set forth in the Plan.

INTRODUCTION

          The Plan is a program under which the Company can, among other things,
     grant  selected  employees  Stock  Awards  which  give the  recipients  the
     opportunity to benefit from appreciation in the market price of the Stock.

          The Plan  authorizes  500,000 shares of Stock to be issued pursuant to
     the Plan.  As of the date  hereof,  334,125  shares of  Common  Stock  were
     subject to existing  Options that had been granted  under the Plan and 2000
     shares of restricted  Stock had been granted under the Plan.  The Plan will
     terminate on August 10, 2005,  but the Board can  terminate it effective as
     of an earlier date.  However,  a  termination  of the Plan would not affect
     outstanding Stock Awards.

          An aggregate of 500,000  shares of Stock,  has been made available and
     reserved  for  delivery by the Company on account of the  exercise of Stock
     Awards and payment of benefits in connection with Stock Awards.  Subject to
     the foregoing  limit,  shares of Stock held as treasury  shares may be used
     for or in connection  with Stock Awards.  The Plan further  provides  that,
     notwithstanding  any other provision therein, no individual employee may be
     granted Options and stock appreciation rights to purchase more than 125,000
     shares of Stock. Performance units denominated in dollars reduce the number
     of shares of Stock  available for further Stock Awards by the dollar amount
     of the  performance  units  granted  divided by the fair market  value of a
     share of Stock on the date  preceding the grant;  other Stock Awards reduce
     the  availability of Stock by the number of shares of Stock covered by such
     Stock Awards.

          "Stock" means Class A Common Stock, $.10 par value per share, or if no
     Class A Common Stock is issued and publicly traded on any securities market
     as defined in the Plan, then Common Stock, par value $.10 per share, of the
     Company. Class A Common Stock is equal in all respects on a per share basis
     to the Common  Stock,  except as to voting rights and stock splits or stock
     dividends the Common Stock has one vote per share; the Class A Common Stock
     is non-voting,  except for limited voting rights  required by Delaware law.
     (Class B Stock of the Company,  which cannot be issued under the Plan,  has
     ten votes per share.) In a stock split or stock dividend, holders of Common
     Stock would  receive  Common  Stock,  holders of Class A Common Stock would
     receive  Class A Common  Stock,  and holders of Class B Stock would receive
     Class B Stock.

          The Company believes that the Plan is not subject to any provisions of
     the  Employee  Retirement  Income  Security  Act of  1974.  The Plan is not
     qualified  under Section  401(a) of the Internal  Revenue Code of 1986 (the
     "Internal Revenue Code").

PURPOSE

          The  purposes  of the Plan  are:  (i) to  provide a means by which key
     employees of the Company and its subsidiaries  ("Subsidiaries") can acquire
     and maintain Stock ownership, thereby strengthening their commitment to the
     success of the  Company  and its  Subsidiaries  and their  desire to remain
     employed by the Company and its  Subsidiaries,  focusing their attention on
     managing the Company as an equity owner,  and aligning their interests with
     those of the Company's  Stockholders and (ii) to enable the Company and its
     Subsidiaries  to  attract  and  retain key  employees  and to provide  such
     employees with additional  incentive and reward  opportunities  designed to
     encourage  them to enhance  the  profitable  growth of the  Company and its
     Subsidiaries.

ELIGIBILITY

          Stock  Awards may be granted  under the Plan,  to any  employee of the
     Company or of any Subsidiary, at the discretion of a committee of the Board
     of Directors  ("Committee").  (See  "Adminis  tration.")  In selecting  the
     individuals to whom Stock Awards are granted, as well as in determining the
     number  of  shares  subject  to  each  grant,   the  Committee  takes  into
     consideration  such factors as it deems  relevant to accomplish the purpose
     of the Plan. (See "Purpose.")

STOCK AWARDS

     Options

          The  Committee,  within its  discretion,  may grant  Options under the
     Plan.  When granted an Option,  a Grantee  will receive an Award  Agreement
     which will specify the principal terms of the Option, such as the number of
     shares of Stock subject to the Option,  the Option exercise price per share
     of Stock,  when the Option can be exercised,  and when the Option  expires.
     The term of all  Options  shall be a period of not more than ten years from
     the grant date.

          Pursuant  to the Plan,  the Option  price may not be less than 100% of
     the fair market value of the Stock on the date an Option is granted.

          Holders of Options may exercise Options in one or more installments as
     determined by the Committee  commencing not earlier than one year after the
     date of grant by delivering a written notice to the Company of the Holders'
     intent to  purchase  a  specific  number of shares of Stock  subject to the
     Option.  (See also "Change in Control.")  The Option price may be paid with
     cash, or (with the consent of the  Committee)  with Common Stock or Class A
     Common Stock (valued at fair market  value,  as defined in the Plan, on the
     last business day immediately  preceding the date of exercise),  or through
     simultaneous  sale through a broker of shares of Stock acquired on exercise
     (as permitted  under  Regulation T of the Federal  Reserve  Board),  or any
     combination thereof.

     Stock Appreciation Rights

          The  Committee  may, in its  discretion,  also grant SARs which may be
     granted on a stand-alone basis or in tandem with shares of Stock subject to
     an Option  under the Plan.  If SARs are  granted in tandem  with  shares of
     Stock subject to an Option under the Plan, then, unless otherwise specified
     in the applicable Award Agreement, a Holder's SARs shall terminate upon the
     exercise,  expiration,  termination,  forfeiture  or  cancellation  of such
     Option.

          The amount received by a Holder upon the exercise of each SAR (subject
     to any ceiling that may be imposed by the Committee)  shall be equal to the
     fair market value of a share of Stock on the date of exercise reduced by an
     amount  equal to (i) the  exercise  price of a Plan  Option,  when SARs are
     granted in tandem with such Options,  or (ii) for all other SARs,  the fair
     market value of a share of Stock on the date the SAR is granted unless,  in
     either  case,  the  Committee  specified  a  higher  amount  in  the  Award
     Agreement. Amounts payable in connection with the exercise of SARs shall be
     paid in cash,  provided that the Committee may pay benefits with respect to
     any  particular  SAR  exercise  wholly or  partly  in Stock.  SARs will not
     generally be  exercisable  earlier than the first  anniversary of the grant
     date, and, to the extent identified with a Plan Option, may be exercised to
     the  extent  such  Option  has  become  exercisable.  (See also  "Change in
     Control".) Unless otherwise  provided in the Award Agreement,  the exercise
     of SARs identified with Plan Options shall result in the forfeiture of such
     Option to the extent of the exercise.

     Performance Units and Performance Shares

          The  Committee  may, in its  discretion,  grant  Performance  Units or
     Performance  Shares  under  the Plan to  provide  a  benefit  if  specified
     performance  goals  determined  by the  Committee  are  achieved  during  a
     designated  measuring  period  of not less than one year nor more than five
     years.

          If the minimum performance goals are met during the applicable period,
     a  Performance  Unit will be deemed  exercised on the date it first becomes
     exercisable.  (See also  "Change in  Control.")  The amount  received  by a
     Holder upon exercise of a Performance Unit shall be equal to the product of
     (i) the Unit  Value (as  defined  below)  multiplied  by (ii) a  percentage
     designated by the Committee with respect to the level of performance  goals
     achieved during the applicable  measuring period. The Unit Value may be, as
     specified by the Committee,  (i) a dollar  amount,  or (ii) the fair market
     value of a share of Stock on the date the Performance  Unit is granted,  or
     (iii) the fair market value of a share of Stock on the exercise date of the
     Performance Unit, plus, if provided in the Award Agreement,  an amount (the
     "Dividend  Equivalent Amount") equal to the fair market value of the number
     of shares of stock that would have been  purchased if each dividend paid on
     a share of Stock on or after the Grant Date and on or before  the  exercise
     date were  invested  in shares of Stock,  at a purchase  price equal to its
     fair market value on the dividend  payment date, or (iv) an amount equal to
     the fair  market  value of a share  of  Stock on the  exercise  date of the
     Performance  Unit (plus if  specified  in the Award  Agreement,  a Dividend
     Equivalent  Amount) reduced by the fair market value of a share of Stock on
     the Grant Date of the Performance Unit.

          Amounts payable in connection  with the exercise of Performance  Units
     shall be paid in cash, provided that the Committee may retain discretion in
     the Award  Agreement to have benefits  paid with respect to any  particular
     Unit wholly or partly in Stock.

          If the minimum performance goals are met during the applicable period,
     the Holder of  Performance  Shares shall  receive  shares of Stock equal in
     number to the product of (i) the number of Performance  Shares specified in
     the Award  Agreement,  multiplied  by (ii) a percentage  designated  by the
     Committee  with respect to the level of performance  goals achieved  during
     the applicable  measuring period.  The Committee may determine that cash be
     paid instead of some or all of such shares of Stock.  The amount of cash so
     payable  shall be determined by the fair market value of such shares on the
     business day  preceding the date such cash is to be paid.  Any  Performance
     Shares with respect to which  performance  goals have not been  achieved by
     the end of the applicable measuring period shall expire.

TRANSFERABILITY

          In general,  a Grantee may not sell or  otherwise  transfer  any Stock
     Award granted under the Plan. However,  each Stock Award may be transferred
     by will, or the laws of descent and distribution or pursuant to a qualified
     domestic  relations  order (as defined by the Internal  Revenue Code),  and
     each Stock Award may be transferred by the Grantee for no  consideration to
     any of the following permissible  transferees:  any member of the Grantee's
     Immediate  Family,  and any  general  or  limited  partnership  each of the
     partners of which are members of the Grantee's  Immediate  Family and which
     prohibits a transfer of all or any part of any interest in the  partnership
     except to the  partnership  or to any of the  foregoing;  and to such other
     person or entity,  and on such terms and conditions,  as the Committee,  in
     its  discretion,  may  permit  (collectively,  "Permissible  Transferees").
     "Immediate  Family"  means,  with  respect to a  particular  Grantee,  that
     Grantee's  spouse,  any  parent and any lineal  descendent  (including  any
     adopted child) of any parent of that Grantee or of that  Grantee's  spouse,
     and any trustee, guardian or custodian for any of the foregoing.

          Any transferred Award remains subject to the same terms and conditions
     that applied before the Transfer. This generally means that the Holder of a
     transferred Award has the same rights and obligations as the Grantee of the
     Award before the transfer;  however,  the term of an Award will be affected
     in the  same  manner  by  the  termination  of  employment  of the  Grantee
     regardless  of whether  the  Grantee  transferred  the Award  prior to such
     termination. (See "Termination of Employment.")

          This  Prospectus  relates  to up to  500,000  shares  of  Stock of the
     Company which may be offered and sold to Permissible  Transferees  pursuant
     to Stock Awards that may be transferred to such Permissible  Transferees as
     described  in  the  immediately   preceding  paragraph.   As  used  herein,
     "Participant  Transferor"  refers to the Plan  participant  who transferred
     Stock Awards held by a particular Permissible Transferee.

          Once a Stock Award has been  transferred to a Permissible  Transferee,
     it may  not be  subsequently  transferred  by  the  Permissible  Transferee
     without the consent of the Committee.

          A Stock Award may be exercised by a Permissible Transferee at any time
     from the time  first  set by the  Committee  in the  original  grant to the
     Participant  Transferor  until the close of business on the expiration date
     of the Stock  Award (as may be  affected  by the  Participant  Transferor's
     employment status as described below).  Payment pursuant to Stock Awards by
     Permissible  Transferees  may be made in the same manner as described above
     for Grantees under the Plan.

TERMINATION OF EMPLOYMENT

          The Award Agreement pertaining to each Stock Award shall set forth the
     terms and  conditions  applicable to such Stock Award upon a termination of
     employment of the Participant Transferor.  Because Stock Awards transferred
     to Permissible Transferees continue to be governed by the terms of the Plan
     and the original Stock Award, their exercisability continues to be affected
     by the  Participant  Transferor's  employment  status.  If the  Participant
     Transferor's  employment is  terminated as a result of (i) the  Participant
     Transferor's  conviction  of a  felony  which  is,  in the  opinion  of the
     Committee,  likely to result in injury of a material  nature to the Company
     or a  Subsidiary,  or  (ii)  the  gross  and  habitual  negligence  by  the
     Participant  Transferor in the performance of the Participant  Transferor's
     duties to the Company or its  Subsidiaries,  any  unexercised  Stock Awards
     shall thereupon terminate.

FEDERAL INCOME TAX CONSEQUENCES

          The following  discussion is limited to United States  federal  income
     tax laws applicable as of May, 1997 to Grantees and Permissible Transferees
     who are both citizens and residents of the United States. The United States
     federal  income tax treatment of Stock Awards  granted to other Grantees or
     transferred to other Permissible  Transferees may differ. In addition,  the
     tax laws of other  countries may provide for different tax  consequences to
     Grantees or Permissible Transferees who are subject to such laws. The Stock
     Awards  granted  under the Plan may also be subject  to  various  state and
     local taxes which vary from  location to location.  The  specific  federal,
     state and local tax  treatment  will vary  depending  upon a  Grantee's  or
     Permissible Transferee's individual  circumstances.  The general principles
     for federal  income  taxation of Stock Awards  transferred  to  Permissible
     Transferees are not fully  developed.  The Company's  understanding  of how
     such Stock Awards may be taxed is set forth below. Grantees and Permissible
     Transferees  are urged to consult with their tax advisors to determine  how
     the general principles apply to their individual  circumstances,  how state
     and local tax laws apply, and how transfers affect gift and estate taxes.

     Options

          General  Rule.  Generally,  a Grantee  receiving  an  Option  does not
     realize any taxable  income for federal  income tax purposes at the time of
     grant. The gift of an Option to a Permissible Transferee will not result in
     taxable  income to the  Grantee or the  Permissible  Transferee.  (However,
     Grantees  should  consult their tax advisors  regarding the gift and estate
     tax  implications  of such a  transfer.)  Upon  exercise of an Option,  the
     excess of the fair market  value of the Stock on the date of exercise  over
     the  Option  exercise  price will be  taxable  to the  Grantee as  ordinary
     income,  whether or not the Option has been  transferred  to a  Permissible
     Transferee.   Thus,  it  is  important  to  recognize  that  if  the  stock
     appreciation is substantial,  the Grantee could have substantial income tax
     liability  resulting  from the  exercise  of the Option by the  Permissible
     Transferee.  A  Grantee  who has not  transferred  the  Option  will have a
     capital gain (or loss) upon the  subsequent  sale of the Stock in an amount
     equal to the sale price  reduced by the fair  market  value of the Stock on
     the date the Grantee exercised the Option. If shares acquired upon exercise
     of an Option by a Permissible Transferee are later sold or exchanged,  then
     the difference between the sales price and the Permissible Transferee's tax
     basis for the shares will  generally be taxable as long-term or  short-term
     capital  gain or loss (if the stock is a capital  asset of the  Permissible
     Transferee)  depending  upon  whether the Stock has been held for more than
     one year after the exercise date. The tax basis for the shares in the hands
     of the  Permissible  Transferee  would be the exercise price for the Option
     plus the amount of the income  recognized  by the Grantee (or the estate of
     the Grantee,  as the case may be) at the time of exercise.  In either case,
     the holding period for purposes of determining whether the capital gain (or
     loss) is a long- or short-term  capital gain (or loss) will commence on the
     date the Option is exercised.

          Permissible  Transferees  should consult their tax advisors  regarding
     the tax treatment of the exercise of transferred  Options involving the use
     of  previously-acquired  stock  to pay all or part of the  Option  exercise
     price. Tax advisors should also be consulted  regarding the income taxation
     of Option exercises which take place after the death of the Grantee.

          The Company is entitled to a tax  deduction  in the same amount and in
     the same year in which the Grantee  recognizes  ordinary  income  resulting
     from the exercise of an Option.

     SARs, Performance Units, Performance Shares

          Generally, a Grantee receiving an SAR, Performance Unit or Performance
     Share does not realize any taxable  income for federal  income tax purposes
     at the time of grant.  The gift of an SAR,  Performance Unit or Performance
     Share to a Permissible  Transferee will not result in taxable income to the
     Grantee or the Permissible  Transferee.  (However,  Grantees should consult
     their tax advisors regarding the gift and estate tax implications of such a
     transfer.) Any cash received by a Permissible Transferee in connection with
     the exercise of an SAR,  Performance Unit or Performance Share and the fair
     market  value  of any  Stock  received  in  connection  with  the  exercise
     generally will be taxable as ordinary  income to the Grantee at the time of
     exercise.  Thus, it is important to recognize  that if the amount paid to a
     Permissible Transferee in connection with such exercise is substantial, the
     Grantee  could have  substantial  income tax liability  resulting  from the
     exercise of a Stock Award by the Permissible Transferee.

          The Company  will be  entitled to a deduction  at the time the Grantee
     recognizes  ordinary  income in the amount  equal to the amount of ordinary
     income recognized by the Grantee.

     Tax Withholding

          Upon  exercise  of a Stock  Award  by a  Permissible  Transferee,  any
     federal, state or local withholding taxes arising from the exercise are the
     obligation of the  Participant  Transferor.  The Company may require that a
     Grantee pay an amount sufficient to cover all withholding tax requirements.
     Normally,   the  Participant   Transferee  may  satisfy  this   withholding
     obligation by writing a check to the Company or by another method permitted
     by the Company.

RESALE RESTRICTIONS

          Subject  to the Plan,  and any  restrictions  that may be  imposed  in
     connection with a Stock Award,  Permissible  Transferees who acquire shares
     of Stock  pursuant to the Plan  generally may resell the Stock so acquired.
     Permissible  Transferees  who may be deemed to be affiliates of the Company
     pursuant to Rule 405 under the Securities Act of 1933 (generally  speaking,
     principal  stockholders,  executive  officers and directors of the Company)
     who receive Stock may resell the Stock so acquired in  accordance  with the
     requirements  of Rule 144  promulgated  under the  Securities  Act of 1933,
     without,  however,  being subject to the holding period requirement of Rule
     144.  Purchases and sales of the Stock by directors and executive  officers
     of the Company and  beneficial  owners of more than 10% of the Common Stock
     (including,  for this purpose,  Common Stock  issuable  upon  conversion of
     Class B Stock beneficially owned by such a beneficial owner) of the Company
     (whether  acquired  hereunder or otherwise  acquired by such  persons) may,
     under  certain  circumstances,  subject such persons to possible  liability
     under Section 16(b) of the Securities Exchange Act of 1934.

CHANGE IN CONTROL

          In the event of a Change in  Control,  all Stock  Awards  will  become
     immediately and fully exercisable.  In such event, the benefit payable with
     respect to a Performance Unit or Performance Share for which the applicable
     measuring  period has not ended  would be equal to the  product of the Unit
     Value  multiplied  successively  by  (i)  the  fractional  portion  of  the
     applicable  measuring  period  elapsed at the date of the Change in Control
     and (ii) the greater of the target  percentage  related to the  Performance
     Unit or Performance Share or the maximum percentage,  if any, that would be
     earned  under the terms of the Award  Agreement  assuming  that the rate at
     which the performance goals have been achieved as of the date of the Change
     of Control would continue until the end of the measuring period.

          If the Committee in its discretion  determines  that the exercise of a
     Stock  Award  would  preclude  the use of pooling of  interests  accounting
     following an  anticipated  sale of the Company and that such  preclusion of
     pooling would have a material  adverse  effect on such sale,  the Committee
     may take action it deems  appropriate  to preserve the  pooling,  including
     either  unilaterally  canceling  the  Stock  Award  prior to the  Change of
     Control or causing  the Company to pay the Stock  Award  rights  benefit in
     Stock if it determines that such payment would not preclude the pooling.

          Under the Plan,  a "Change  in  Control"  shall  occur,  with  certain
     exceptions,  if (1) the  Class B Stock  of the  Company  together  with the
     Common  Stock held by all the  beneficial  owners of Class B Stock has less
     than 50% of the Voting  Power of the  Company,  and (a) any person or group
     (other than a Subsidiary  or any employee  benefit plan of the Company or a
     Subsidiary) is or becomes the beneficial owner of securities of the Company
     representing 20% or more of the combined voting power of the Company's then
     outstanding  securities;  or (b) there  shall cease to be a majority of the
     Board of  Directors of the Company  consisting  of  individuals  who at the
     effective  date of the Plan  constituted  the Board  and any new  directors
     whose  election by the Board or  nomination  for election by the  Company's
     stockholders was approved by a vote of at least two-thirds of the directors
     then still in office who either were directors at the effective date of the
     Plan or whose  election  or  nomination  for  election  was  previously  so
     approved;  or  (2)  the  stockholders  of the  Company  approve  a  merger,
     consolidation or  reorganization of the Company if the beneficial owners of
     the Company's voting  securities  approving the transaction do not own more
     than 60% of the then outstanding shares of Common Stock and combined Voting
     Power  of  the  Company's   outstanding   voting   securities   after  such
     transaction;  or (3) the  stockholders  of the  Company  approve  a plan of
     complete  liquidation  or  dissolution,   or  approve  the  sale  or  other
     disposition of all or substantially all of the assets of the Company.

ADMINISTRATION

          The Plan is  administered  by the  Committee,  which is located at the
     Company's principal executive office. The Committee is composed of not less
     than  three  directors  of  the  Company  who  are  disinterested   persons
     ("Disinterested  Persons")  within  the  meaning  of Rule  16b-3  under the
     Exchange Act;  provided,  however,  that:  (i)  membership on the Committee
     shall be subject to such changes as the Board deems  appropriate  to permit
     transactions pursuant to the Plan to be exempt from liability under Section
     16(b) of the  Exchange  Act and Rule 16b-3  thereunder;  and (ii) the Board
     may, in its discretion,  reserve to itself or delegate to another committee
     of  the  Board  any  or all of  the  authority  and  responsibility  of the
     Committee  with  respect to Stock Awards to Grantees who are not subject to
     potential liability under Section 16(b) of the Exchange Act with respect to
     transactions  involving  equity  securities  of the Company at the time any
     such delegated authority or responsibility is exercised.

          Consistent  with recent changes in Rule 16b-3,  the Board has provided
     that the Plan will be administered by the Committee, three members of which
     are  Disinterested  Persons who will exercise all authority with respect to
     Plan-related  transactions  involving  persons  subject  to  Section  16(b)
     (generally,  directors,  executive  officers  and  10%  stockholders).  The
     Committee also includes one additional  director who  participates in other
     Committee  actions;  such  additional  member is Paul J.  Miller,  who is a
     partner of Sonnenschein Nath & Rosenthal, General Counsel to the Company.

          The members of the Committee are appointed by the Board for such terms
     as the  Board  determines,  and may be  removed  by the  Board at any time.
     Vacancies in the Committee are filled by the Board.

          The Committee may equitably adjust the terms and price of Stock Awards
     under the Plan to reflect a stock  dividend,  stock  split,  reverse  stock
     split, share combination, change in capitalization,  merger, consolidation,
     asset spin-off,  reorganization, or similar event, of or by the Company. In
     the event of change in  capitalization  the  Committee  may also  equitably
     adjust the total number of shares of Stock available for Stock Awards under
     the Plan.

          The Committee also has  discretionary  authority,  among other things,
     to: (i) grant Stock  Awards;  (ii)  determine  whether or not certain Stock
     Awards are  identified  with other Stock Awards,  and, if so,  whether they
     shall be exercisable  cumulatively  with, or  alternatively  to, such Stock
     Awards;  (iii) interpret the Plan and make all determinations  necessary or
     advisable  for  administration  of the  Plan;  (iv) make or  rescind  rules
     relating to the Plan, including the exercisability and nonforfeitability of
     Stock Awards upon the termination of employment of a Grantee; (v) determine
     terms of Award Agreements, including Performance Goals, if any, which terms
     need not be  identical  and  modify or  cancel  Award  Agreements  with the
     consent of the  Grantee  (except  that the  consent  of the  Grantee is not
     required for any modification to a Stock Award which has not been exercised
     if the  modification  (a) does  not  adversely  affect  the  rights  of the
     Grantee,  or (b) is necessary  or  advisable  because of any new or changed
     law,  regulation,  ruling or judicial decision);  (vi) accelerate or extend
     the exercisability of, and accelerate or waive restrictions  applicable to,
     any Stock Award;  (vii) make such  adjustments  or  modifications  to Stock
     Awards to Grantees  working  outside the United States as are necessary and
     advisable  to fulfill  the  purposes  of the Plan;  and (viii)  impose such
     additional  conditions,  restrictions,  and  limitations  upon  the  grant,
     exercise or retention of Stock Awards as it may deem appropriate, including
     requiring  simultaneous  exercise of related  identified Stock Awards,  and
     limiting  the  percentage  of Stock  Awards  which may from time to time be
     exercised by a Grantee.

          The determination of the Committee on all matters relating to the Plan
     or any Award  Agreement  shall be final.  No member of the Committee may be
     held personally liable for any action, determination or interpretation made
     in good faith with respect to the Plan or any Stock Award thereunder.

AMENDMENT OF THE PLAN

          The Board can  modify  the Plan,  without  approval  of the  Company's
     stockholders, except as such stockholder approval may be required under the
     listing  requirements  of any stock exchange on which are listed any of the
     Company's equity securities.

                                 USE OF PROCEEDS

          The Company intends to use any proceeds  received from the exercise of
     Stock Awards for general corporate purposes.

                              PLAN OF DISTRIBUTION

          As described elsewhere in this Prospectus, the shares of Stock offered
     hereby shall be issued by the Company in  accordance  with the terms of the
     Plan. (See "Use of Proceeds".)

                                  LEGAL MATTERS

          The legality of the Stock covered  hereby has been passed upon for the
     Company by Sonnenschein Nath & Rosenthal. Sonnenschein Nath & Rosenthal has
     also advised the Company concerning certain Federal income tax consequences
     related  to Stock  Awards  under  the Plan and the  transfer  and  exercise
     thereof.  Paul J. Miller a partner of Sonnenschein Nath & Rosenthal ("SNR")
     is a director of the Company and owns 7,878 shares of the Company's  Common
     Stock  (including  shares  owned by his  spouse  and  children).  Other SNR
     attorneys  working  on this  matter own no shares of the  Company's  Common
     Stock.
                           
                                     EXPERTS

          The consolidated  financial  statements of the Company included in the
     Company's  Annual Report on Form 10-K for the year ended July 31, 1996 have
     been audited by Blackman Kallick Bartelstein LLP, independent  auditors, as
     set forth in their report thereon included therein, and incorporated herein
     by reference.  Such  consolidated  financial  statements  are  incorporated
     herein by reference in reliance  upon such report given upon the  authority
     of such firm as experts in accounting and auditing.