EXHIBIT 10.12

                                                                 Conformed Copy





                         AMCOL International Corporation




                       ___________________________________

                                Second Amendment
                          Dated as of December 15, 1998



                                       to



                                 Note Agreement
                           Dated as of October 1, 1994

                       ___________________________________




                   Re: $25,000,000 7.36% Series A Senior Notes
                                Due June 30, 1999
                     $10,000,000 7.83% Series B Senior Notes
                                Due June 30, 2002
                     $15,000,000 8.10% Series C Senior Notes
                                Due June 30, 2006
                                       and
                     $17,140,000 9.68% Series D Senior Notes
                              Due November 1, 1999


<PAGE>



                         AMCOL International Corporation
                              1500 West Shure Drive
                        Arlington Heights, Illinois 60004


                                Second Amendment

                          Dated as of December 15, 1998

                                       To

                             Note Purchase Agreement

                           Dated as of October 1, 1994



                   Re: $25,000,000 7.36% Series A Senior Notes
                                Due June 30, 1999
                     $10,000,000 7.83% Series B Senior Notes
                                Due June 30, 2002
                     $15,000,000 8.10% Series C Senior Notes
                                Due June 30, 2006
                     $17,140,000 9.68% Series D Senior Notes
                              Due November 1, 1999

Principal Life Insurance Company
711 High Street
Des Moines, Iowa  50392-0301

     Reference is made to the Note  Purchase  Agreement,  dated as of October 1,
1994 (the  "Note  Agreement"),  between  the  undersigned,  AMCOL  International
Corporation, a Delaware corporation,  formerly known as American Colloid Company
(the  "Company"),  and  Principal  Life  Insurance  Company,  formerly  known as
Principal  Mutual Life Insurance  Company (the  "Noteholder").  Unless otherwise
herein defined or the context hereof shall otherwise require,  capitalized terms
used in this Second  Amendment (the or this "Second  Amendment")  shall have the
respective meanings specified in the Note Agreement.


                                    Recitals:

     A. The Company and the  Noteholder  have  heretofore  entered into the Note
Agreement.  The Company has  heretofore  issued the  $25,000,000  7.36% Series A
Senior Notes due June 30, 1999 (the "Series A Notes"),  $10,000,000 7.83% Series
B Senior  Notes due June 30,  2002 (the  "Series B  Notes"),  $15,000,000  8.10%
Series C Senior Notes due June 30, 2006 (the  "Series C Notes") and  $17,140,000
9.68% Series D Senior Notes Due November 1, 1999 (the "Series D Notes," together
with the Series A Notes, the Series B Notes and the Series C Notes, the "Notes")
pursuant  to the Note  Agreement.  The  Noteholder  is the holder of 100% of the
outstanding principal amount of the Notes.
<PAGE>

     B. The Company and the Noteholder now desire to amend the Note Agreement in
the respects, but only in the respects, hereinafter set forth.

     C. All requirements of law have been fully complied with and all other acts
and things  necessary to make this Second  Amendment a valid,  legal and binding
instrument  according to its terms for the purposes  herein  expressed have been
done or performed.

     Now, therefore,  upon the full and complete  satisfaction of the conditions
precedent to the effectiveness of this Second Amendment set forth in section 3.1
hereof, and in consideration of good and valuable  consideration the receipt and
sufficiency of which is hereby  acknowledged,  the Company and the Noteholder do
hereby agree as follows:

Section 1.           Amendments.

     Section 1.1. Sections 5.16(e),  (f), (g), (h) and (i) of the Note Agreement
shall be and are hereby  amended in their  entirety  and as so amended  shall be
restated to read as follows:

                    "(e) [Intentionally Reserved];

                    "(f)  investments in, and loans and advances to,  Subsidiary
                    Guarantors;

                    "(g)  investments in, and loans and advances to,  Restricted
                    Subsidiaries  (other than  Subsidiary  Guarantors)  provided
                    such  investments,  loans  and  advances  at  any  one  time
                    outstanding do not exceed the sum of (i)  $100,000,000  plus
                    (ii) the  amount (if any) by which (A)  $50,000,000  exceeds
                    (B) the aggregate amount  outstanding on investments,  loans
                    and advances  permitted  solely by virtue of section 5.16(i)
                    hereof;

                    "(h) acquisitions, provided, that (i) no Default or Event of
                    Default  exists or would exist after  giving  effect to such
                    acquisition,  (ii) the board of directors or other governing
                    body of such Person whose  property or Voting Stock is being
                    so acquired has approved the terms of such  acquisition  and
                    (iii) prior to each acquisition requiring consideration from
                    the Company and its  Subsidiaries  in excess of $10,000,000,
                    (x) there  shall have been  delivered  to the  Noteholder  a
                    certificate  signed by the chief  financial  officer  of the
                    Company,   demonstrating  that,  taking  into  account  such
                    acquisition  and its  effects,  the  Company  will remain in
                    compliance  with the  covenants  set forth in  section  5.6,
                    section  5.7 and  section  5.8 hereof as of the date of such
                    acquisition  and,  based  on  projections  believed  by  the
                    Company  to  be   reasonable,   at  all  times   during  the
                    twelve-month  period following such date and certifying that
                    no  Default  or  Event  of  Default  has   occurred  and  is
                    continuing hereunder as of the date of and immediately after
<PAGE>

                    giving effect to such  acquisition and (y) such  certificate
                    is true and correct; and

                    "(i) any other investments, loans and advances not otherwise
                    permitted  by this  Section  in an  aggregate  amount not to
                    exceed $50,000,000."

          Section 1.2.  Section 5 of the Note  Agreement  shall be and is hereby
     amended by adding the following new Section 5.18 at the end thereof:

               "Section 5.18. Year 2000  Assessment.  The Company shall take all
          actions  necessary  and commit  adequate  resources to assure that its
          computer-based  and other systems (and those of all  Subsidiaries) are
          able to effectively  process  dates,  including  dates before,  on and
          after January 1, 2000, without experiencing any Year 2000 Problem that
          could cause a material  adverse  effect on the  business or  financial
          affairs of the Company (or of the Company and its  Subsidiaries  taken
          on  a  consolidated  basis).  At  the  request  of  the  Purchaser  or
          subsequent  holders  of  the  Notes,  the  Company  will  provide  the
          Purchaser or subsequent  holders of the Notes with written  assurances
          and  substantiations  (including,  but not  limited to, the results of
          internal or external audit reports  prepared in the ordinary course of
          business) reasonably  acceptable to the Purchaser as to the capability
          of  the  Company  and  its  Subsidiaries  to  conduct  its  and  their
          businesses  and  operations  before,  on and after  January  1,  2000,
          without  experiencing a Year 2000 Problem  causing a material  adverse
          effect on the business or financial  affairs of the Company (or of the
          Company and its Subsidiaries taken on a consolidated basis)."

     Section 1.3. Section 8 of the Note Agreement shall be and is hereby amended
by adding the following definition in the appropriate alphabetical position:

               "'Year 2000  Problem'  means any  significant  risk that computer
          hardware,   software,  or  equipment  containing  embedded  microchips
          essential to the business or  operations  of the Company or any of its
          Subsidiaries  will not, in the case of dates or time periods occurring
          after December 31, 1999, function at least as efficiently and reliably
          as in the case of times or time periods  occurring  before  January 1,
          2000, including the making of accurate leap year calculations."
<PAGE>

Section 2.           Representations and Warranties of the Company.

     To induce the  Noteholder  to execute  and deliver  this  Second  Amendment
(which  representations  shall survive the execution and delivery of this Second
Amendment), the Company represents and warrants to the Noteholder that:

          (a) this  Second  Amendment  has been duly  authorized,  executed  and
     delivered by it and this Second Amendment  constitutes the legal, valid and
     binding  obligation,  contract  and  agreement  of the Company  enforceable
     against it in  accordance  with its  terms,  except as  enforcement  may be
     limited by bankruptcy,  insolvency,  reorganization,  moratorium or similar
     laws or  equitable  principles  relating to or limiting  creditors'  rights
     generally;

          (b)  the  Note  Agreement,   as  amended  by  this  Second  Amendment,
     constitutes the legal, valid and binding obligation, contract and agreement
     of the Company  enforceable  against it in accordance  with its  respective
     terms,  except as  enforcement  may be limited by  bankruptcy,  insolvency,
     reorganization, moratorium or similar laws or equitable principles relating
     to or limiting creditors' rights generally;

          (c) the  execution,  delivery and  performance  by the Company of this
     Second  Amendment (i) has been duly  authorized by all requisite  corporate
     action,  (ii) does not require the consent or approval of any  governmental
     or  regulatory  body or  agency,  and (iii)  will not (A)  violate  (1) any
     provision  of  law,  statute,  rule or  regulation  or its  Certificate  of
     Incorporation or Bylaws, (2) any order of any court or any rule, regulation
     or order of any other  agency  or  government  binding  upon it, or (3) any
     provision of any indenture,  agreement or other instrument to which it is a
     party or by which its properties or assets are or may be bound,  including,
     without limitation, the Credit Agreement, as amended to date, or (B) result
     in a breach or  constitute  (alone  or with due  notice or lapse of time or
     both) a default under any indenture, agreement or other instrument referred
     to in clause (iii)(A)(3) of this section 2.1(c);

          (d) the Company is conducting a comprehensive review and assessment of
     the computer applications of the Company and its Subsidiaries and is making
     inquiry  of their  material  suppliers,  service  vendors  (including  data
     processors) and customers, with respect to any defect in computer software,
     data bases, hardware, controls and peripherals related to the occurrence of
     the year 2000 or the use at any time of any date  which is  before,  on and
     after  December 31, 1999, in connection  therewith.  Based on the foregoing
     review,  assessment and inquiry,  the Company  believes that no such defect
     could  reasonably  be  expected  to have a material  adverse  effect on the
     business  or  financial  affairs of the  Company (or of the Company and its
     Subsidiaries taken on a consolidated basis);

          (e) as of the date  hereof  and after  giving  effect  to this  Second
     Amendment, no Default or Event of Default has occurred which is continuing;
     and
<PAGE>

          (f) all the representations  and warranties  contained in Section 3 of
     the Note Agreement and Exhibit C thereto are true and correct with the same
     force and effect as if made by the Company on and as of the date hereof.

Section 3.           Conditions to Effectiveness of This Second Amendment.

     This Second  Amendment shall not become  effective  until, and shall become
effective when, each and every one of the following  conditions  shall have been
satisfied:

          (a) the  Noteholder  shall  have  received  a written  consent to this
     Second Amendment duly executed by the Subsidiary Guarantors,  which consent
     shall be in form and substance satisfactory to such Noteholder;

          (b) the Noteholder  shall have received  evidence  satisfactory  to it
     that the Credit Agreement, as amended, is in full force and effect;

          (c) the  representations  and  warranties  of the Company set forth in
     Section 2 hereof are true and correct on and with respect to the date
     hereof;

          (d) the  Noteholder  shall  have  received  the  favorable  opinion of
     counsel to the  Company  as to the  matters  set forth in  section  2.1(a),
     section 2.1(b) and section  2.1(c)  hereof,  which opinion shall be in form
     and substance satisfactory to such Noteholder; and

          (e)  all  documents  and  proceedings  shall  be  satisfactory  to the
     Noteholder and its special counsel.

Upon  receipt  of all of the  foregoing,  this  Second  Amendment  shall  become
effective.

Section 4. Payment of Noteholder's Counsel Fees and Expenses.

     The Company agrees to pay upon demand,  the reasonable fees and expenses of
Chapman  and  Cutler,  counsel  to  the  Noteholder,   in  connection  with  the
negotiation,  preparation,  approval,  execution  and  delivery  of this  Second
Amendment.

Section 5. Miscellaneous.

     Section  5.1.  Construction.  This Second  Amendment  shall be construed in
connection  with and as part of the Note  Agreement,  and except as modified and
expressly amended by this Second Amendment,  all terms, conditions and covenants
contained in the Note  Agreement and the Notes are hereby  ratified and shall be
and remain in full force and effect.

     Section 5.2. Notices. Any and all notices, requests, certificates and other
instruments  executed and  delivered  after the  execution  and delivery of this
Second  Amendment  may  refer  to the Note  Agreement  without  making  specific
reference to this Second  Amendment but
<PAGE>
nevertheless all such references  shall include this Second Amendment unless the
context otherwise requires.

     Section 5.3. Headings.  The descriptive headings of the various Sections or
parts of this Second Amendment are for convenience only and shall not affect the
meaning or construction of any of the provisions hereof.

     Section 5.4.  Governing Law. This Second Amendment shall be governed by and
construed in accordance
with Illinois law.

     Section  5.5.  The  execution  hereof by you shall  constitute  a  contract
between us for the uses and  purposes  hereinabove  set forth,  and this  Second
Amendment  may  be  executed  in  any  number  of  counterparts,  each  executed
counterpart constituting an original, but all together only one agreement.

                             AMCOL International Corporation (formerly known as
                                       American Colloid Company)


                                       By /s/ Paul G. Shelton
                                         Its Senior Vice President



The foregoing is hereby
accepted and agreed to
as of the date first
above written:

                                        Principal Life Insurance Company

                                        By /s/ Sarah J. Pitts
                                          Its Counsel

                                        By /s/ James C. Fifield
                                          Its Counsel
<PAGE>

                              Guarantors' Consent

     The  undersigned are party to that certain  Guaranty  Agreement dated as of
October 1, 1994 (as supplemented,  the "Guaranty Agreement"), and hereby consent
to the amendment of the Note  Purchase  Agreement as set forth above and confirm
that such Guaranty  Agreement and all of the  obligations  thereunder  remain in
full force and effect.  Without  limiting the generality of the  foregoing,  the
undersigned acknowledge and agree that all references to the "Note Agreement" in
the  Guaranty  Agreement  shall be deemed  references  to the Note  Agreement as
amended by the Second  Amendment to Note  Agreement  and further  agree that any
reference  in such  Guaranty to the  Company's  former name,  "American  Colloid
Company"  shall be amended to be  references  to the  Company's  new name "AMCOL
International  Corporation".  The undersigned  further agree that the consent of
the  undersigned to any further  amendments of the Note  Agreement  shall not be
required as a result of this consent having been obtained, except to the extent,
if any, required by the Guaranty Agreement referred to above.

         Dated as of December 15, 1998.

                                               Ameri-Co Carriers, Inc.


                                               By /s/ Paul G. Shelton
                                                 Its President

                                               Nationwide Freight Service, Inc.


                                               By /s/ Paul G. Shelton
                                                 Its President

                                               Chemdal Corporation


                                               By /s/ Paul G. Shelton
                                                 Its Treasurer

                                               Superior Absorbents, Inc.


                                                By /s/ Paul G. Shelton
                                                   Its Treasurer
<PAGE>
                                           Montana Minerals Development Company


                                                 By /s/ Paul G. Shelton
                                                   Its Treasurer

                                           Chemdal International Corporation


                                                 By /s/ Paul G. Shelton
                                                   Its Treasurer

                                           Regeneration Technologies, Inc.
                                             (f.k.a. AMCOL International Corp.)


                                                 By /s/ Paul G. Shelton
                                                    Its Treasurer

                                            Colloid Environmental Technologies
                                             Company

                                                  By /s/ Paul G. Shelton
                                                     Its Treasurer

                                             American Colloid Company (f.k.a.
                                              AES Acquisition, Inc.and American
                                              Colloid Mineral Company)

                                                   By /s/ Paul G. Shelton
                                                      Its Treasurer

                                              Nanocor, Inc.


                                                    By /s/ Paul G. Shelton
                                                       Its Treasurer

                                              Volclay International Corporation


                                                     By /s/ Paul G. Shelton
                                                        Its Treasurer
<PAGE>

                                    Exhibit A

                              Domestic Subsidiaries


           Name                               Jurisdiction of Incorporation

Ameri-Co Carriers, Inc.                                         Nebraska

Nationwide Freight Service, Inc.                                Nebraska

Chemdal Corporation                                             Delaware

Superior Absorbents, Inc.                                       Delaware

Montana Minerals Development Company                            Montana

Chemdal International Corporation                               Delaware

Regeneration Technologies, Inc. (f.k.a. AMCOL International     Delaware
   Corp.)

Colloid Environmental Technologies Company                      Delaware

American Colloid Company (f.k.a. AES Acquisition, Inc. and      Delaware
   American Colloid Mineral Company)

Nanocor, Inc.                                                   Delaware

Volclay International Corporation                               Delaware
<PAGE>