Exhibit 10.1 The CIT Group/ Equipment Financing P.O. Box 490 650 CIT Drive Livingston, NJ 07039-0490 May 14, 1997 Via Fax and Mail Mr. Jim Jones V.P. and Treasurer LSB Industries 16 South Pennsylvania Ave. Oklahoma City, OK 73107 Dear Mr. Jones: Reference is made to (a) that certain Loan and Security Agreement, dated October 31, 1994 (as Amended, the "Agreement") , between DSN Corporation, an Oklahoma corporation ("Debtor") and The CIT Group/Equipment Financing, Inc., a New York corporation ("CIT") and (b) the defined terms within. Debtor has advised CIT that LSB Industries, Inc. (LSB), a guarantor of Debtor's obligation to CIT, was not in compliance with: Section 6.10 of the Agreement, in that, as of March 31, 1997, LSB did not maintain a tangible net worth of $67,000,000.00 and $78,000,000.00 after adding treasury stock. Further, LSB did not maintain a Leverage requirement of 3.00x (actual as of March 31, 1997 was 3.37x) Debtor has requested, that not withstanding anything to the contrary in the Agreement, the CIT waive the above instances of non-compliance and agree to reset LSB's covenant level requirements for the remainder of 1997. The new Covenants are as follows: Minimum Tangible Net Worth (after subtracting Treasury Stock) (000's omitted) June, 1997 $61,750 September, 1997 62,522 December, 1997 60,647 Minimum Tangible Net Worth (before subtracting Treasrury Stock) June 1997 $72,000 September, 1997 75,000 December, 1997 76,000 Maximum Leverage Allowed June, 1997 3.11x September, 1997 2.96x December, 1997 3.02x CIT hereby waives, as of this date, the above instances of non-compliance, provided that such waiver is subject to the following conditions: (1) that this waiver is stricly limited to the specific covenants under section 6.10 of the Agreement, as amended, set forth above and is strictly limited only to such instances of non-compliance through and including March 31, 1997. (2) that Debtor pay a fee in the amount of $10,000.00 within 5 business days of the above date to cover waiver and amendment. The amended covenants shall remain in place throughout 1997, after which they shall revert to the original levels as set forth in the Agreement. Sincerely, The CIT Group/Equipment Financing, Inc. By /s/ Anthony G. Joseph Anthony G. Joseph Vice President Acknowledged and Agreed: DSN Corporation By:______________________ Title____________________ LSB Industries By:______________________ Title:___________________