EXHIBIT 10.9:

July 12, 2006

 
 
Oil-Dri Corporation of America
410 North Michigan Avenue, Suite 400
Chicago, Illinois 60611

                              Re: First Amendment to Note Agreement

Ladies and Gentlemen:

     Reference is made to the Note Agreement (the “Note Agreement”), dated as of
December 16, 2005, among you, on one hand, and The Prudential Insurance Company
of America (“PICA”) and Prudential Retirement Insurance and Annuity Company
(“PRIAC” and, collectively with PICA, the “Prudential Parties”) on the other
hand. Capitalized terms used herein that are not otherwise defined herein shall
have the meaning specified in the Note Agreement.

     The Company has requested certain modifications to the Note Agreement, and
the Prudential Parties have agreed to such modifications on the terms and
conditions set forth herein. Accordingly, and in accordance with the provisions
of paragraph 11C of the Note Agreement, the parties hereto agree as follows:

     SECTION 1.  Amendment. From and after the Effective Date (as defined in
Section 2 hereof), the Note Agreement is amended as follows:

     1.1  Clause (xi) of paragraph 6C of the Note Agreement is hereby amended
and restated in its entirety as follows:

     “(xi)     other Liens securing the Debt of the Company or any Restricted
Subsidiary not otherwise  permitted by paragraphs (i) through (x), 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 paragraph
6C(viii) and guaranteed by the Company shall not be included in Priority Debt
for purposes of determining compliance with this paragraph 6C(xi).
Notwithstanding the foregoing, at no time shall any Lien otherwise permitted
under this paragraph 6C(xi) secure any obligations under the Credit Agreement or
any other working capital credit facility of the Company. Further, Priority Debt
outstanding solely under the Canadian Credit Agreement in an aggregate amount
not to exceed 1,500,000 Canadian Dollars, which otherwise would be permitted
under this paragraph 6C(xi), may be secured by Liens solely in the assets of the
Canadian Borrower.”

  

     1.2  Paragraph 10B of the Note Agreement is hereby amended by adding the
following new definition in alphabetical order:

     “Canadian Borrower” shall mean Favorite Products Company Limited (La
Compagnie de Produits Favorite Limitée), a company organized under the laws of
the Province of Québec.

   

     “Canadian Credit Agreement” shall mean that certain Acknowledgement of
Debt/Revolving Term Credit Agreement, dated as of or about July 12, 2006, and
related security agreements by and between the Canadian Borrower and National
Bank of Canada .

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     SECTION 2.  Representations and Warranties. The Company and each Guarantor
represents and warrants that (a) each representation and warranty set forth in
paragraph 8 of the Note Agreement and the other Transaction Documents to which
it is a party, is true and correct as of the date of execution and delivery of
this letter by the Company or such Guarantor with the same effect as if made on
such date (except to the extent such representations and warranties expressly
refer to an earlier date, in which case they were true and correct as of such
earlier date and except that the representations and warranties contained in
paragraph 8B of the Note Agreement shall be deemed to refer to the most recent
statements furnished pursuant to clauses (i) and (ii), respectively, of
paragraph 5A of the Note Agreement); (b) both before and after giving effect to
the amendments set forth in Section 1 hereof, no Event of Default or Default
exists or has occurred and is continuing on the date hereof; and (c) neither the
Company nor any Guarantor has paid or agreed to pay, and neither the Company nor
any Guarantor will pay or agree to pay, any fees or other consideration to any
Person in connection with the amendments referenced in Sections 3(ii) and 3(iii)
hereof. The Prudential Parties hereby confirm to the Company that they have
received actual notice and copies of the Existing Note Agreement Amendment
contemplated by the Note Agreement, and the related Guaranty.

     SECTION 3. Conditions Precedent. This amendments in Section 1 of this
letter shall become effective as of the date (the “Effective Date”) upon which
each Prudential Party shall have received original counterparts or, if
satisfactory to such Prudential Party, certified or other copies of all of the
following, each duly executed and delivered by the party or parties thereto, in
form and substance satisfactory to such Prudential Party, dated the date hereof
unless otherwise indicated, and on the date hereof in full force and effect:

     (i)     this letter executed by the Company each of the Loan Parties;    
     (ii)    the written waiver or consent of Harris, N. A. with respect to the
Canadian Credit Agreement; and   

     (iii)    the Company’s certification that the Purchasers under the Existing
Note Agreement have received actual notice of the Canadian Credit Agreement and
have confirmed that no waiver or consent from them is required under the
Existing Note Agreement.

     SECTION 4.  Covenant. Promptly upon conclusion of the Canadian Credit
Agreement, Company shall deliver to the Purchaser a copy of the Canadian Credit
Agreement, together with copies of all instruments, documents and agreements
delivered in connection therewith, certified by an Officer’s Certificate as
correct and complete; and

     SECTION 5.  Reference to and Effect on Note Agreement. As of the Effective
Date, each reference to the Note Agreement in any other document, instrument or
agreement shall mean and be a reference to the Note Agreement as modified by
this letter. Except as specifically set forth in Section 1 hereof, the Note
Agreement shall remain in full force and effect and is hereby ratified and
confirmed in all respects. The Company hereby represents and warrants that all
necessary or required consents to this letter have been obtained and are in full
force and effect. Except as specifically stated in this letter, the execution,
delivery and effectiveness of this letter shall not (a) amend the Note
Agreement, any Note or any of the other Transaction Documents, (b) operate as a
waiver of any right, power or remedy of the holder of any Note, (c) constitute a
waiver of, or consent to any departure from, any provision of the Note
Agreement, any Note or any of the other Transaction Documents at any time or (d)
be construed as a course of dealing or other implication that any holder of any
Note has agreed to or is prepared to grant any consents or agree to any
amendments to the Note Agreement, any Note or any of the other Transaction
Documents in the future, whether or not under similar circumstances.

     SECTION 6.  Expenses. The Company hereby confirms its obligations under the
Note Agreement, whether or not the transactions hereby contemplated are
consummated, to pay, promptly after request by the holders of the Notes, all
reasonable out-of-pocket costs and expenses, including attorneys’ fees and
expenses, incurred by any holder of the Notes in connection with this letter or
the transactions contemplated hereby, in enforcing any rights under this letter,
or in responding to any subpoena or other legal process or informal
investigative demand issued in connection with this letter or the transactions
contemplated hereby. The obligations of the Company under this Section 6 shall
survive transfer by any holder of a Note of any Note and payment of any Note.

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     SECTION 7.  Reaffirmation. Each Guarantor hereby ratifies and reaffirms all
of its payment and performance obligations, contingent or otherwise, under the
Guaranty Agreement and each of the other Transaction Documents to which it is a
party. Each Guarantor hereby consents to the terms and conditions of this letter
and reaffirms its obligations and liabilities under or with respect to the Note
Agreement as amended by this letter (including, without limitation, any
additional Guaranteed Obligations (as defined in the Guaranty Agreement)
resulting from this letter.

     SECTION 8.  Governing Law. THIS LETTER SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO
PRINCIPLES OF CONFLICT OF LAWS OF SUCH STATE WHICH WOULD OTHERWISE CAUSE THIS
LETTER TO BE CONSTRUED OR ENFORCED OTHER THAN IN ACCORDANCE WITH THE LAWS OF THE
STATE OF ILLINOIS.

     SECTION 9.  Counterparts; Section Titles. This letter may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute but one and the
same instrument. Delivery of an executed counterpart of a signature page to this
letter by facsimile shall be effective as delivery of a manually executed
counterpart of this letter. The section titles contained in this letter are and
shall be without substance, meaning or content of any kind whatsoever and are
not a part of the agreement between the parties hereto.

  Very truly yours,        THE PRUDENTIAL INSURANCE COMPANY  OF AMERICA       
By:  /s/ Anthony Coletta     Vice President      PRUDENTIAL RETIREMENT
INSURANCE     AND ANNUITY COMPANY    By:  Prudential Investment Management,
Inc.,    as investment manager      By:  /s/ Anthony Coletta      Vice
President 

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Accepted and Agreed:    OIL-DRI CORPORATION OF AMERICA      By: /s/ Jeffrey M.
Libert     Name:  Jeffrey M. Libert    Title:  Vice President, Finance, and
Treasurer      OIL-DRI CORPORATION OF GEORGIA,  a Georgia corporation      By:
/s/ Jeffrey M. Libert     Name:  Jeffrey M. Libert    Title:  Vice President   
OIL-DRI PRODUCTION COMPANY,  a Mississippi corporation      By: /s/ Jeffrey M.
Libert     Name:  Jeffrey M. Libert    Title:  Vice President    OIL-DRI
CORPORATION OF NEVADA,  a Nevada corporation      By: /s/ Jeffrey M. Libert    
Name:  Jeffrey M. Libert    Title:  Vice President    MOUNDS PRODUCTION COMPANY,
LLC,  an Illinois limited liability company      By: MOUNDS MANAGEMENT, INC., 
Its Managing Member      By: /s/ Jeffrey M. Libert     Name:  Jeffrey M. Libert 
  Title:  Vice President    MOUNDS MANAGEMENT, INC.,  a Delaware corporation   
  By: /s/ Jeffrey M. Libert     Name:  Jeffrey M. Libert    Title:  Vice
President 

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BLUE MOUNTAIN PRODUCTION COMPANY,  a Mississippi corporation      By: /s/
Jeffrey M. Libert         Name:  Jeffrey M. Libert    Title:  Vice President   
TAFT PRODUCTION COMPANY,  a Delaware corporation      By: /s/ Jeffrey M. Libert
    Name:  Jeffrey M. Libert    Title:  Vice President 

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