Document:

THIRD AMENDMENT
                 TO SECOND AMENDED AND RESTATED
                  LOAN AND SECURITY AGREEMENT

     THIS THIRD AMENDMENT TO SECOND AMENDED AND RESTATED LOAN AND
SECURITY  AGREEMENT (the "Amendment") is dated as  of  March  31,
2000,  and  entered  into by and between BANK  OF  AMERICA,  N.A.
("Lender") and LSB INDUSTRIES, INC. ("LSB"), SUMMIT MACHINE  TOOL
MANUFACTURING  CORP. ("Summit") and MOREY MACHINERY MANUFACTURING
CORPORATION  ("Morey") LSB, Summit and Morey  being  collectively
referred to herein as "Borrower").

     WHEREAS, Lender and Borrower have entered into that  certain
Second Amended and Restated Loan and Security Agreement dated  as
of  May  10,  1999,  which  was amended  by  that  certain  First
Amendment  to  Second  Amended and  Restated  Loan  and  Security
Agreement dated as of January 1, 2000 and by that certain  Second
Amendment  to  Second  Amended and  Restated  Loan  and  Security
Agreement  dated  as  of  March  1,  2000  (as  so  amended,  the
"Agreement");

     WHEREAS,  the  Borrower desires that the  Lender  amend  the
Agreement in certain respects; and

     WHEREAS, the Lender is willing to amend the Agreement and to
grant  Borrower's  requests  for an  amended  financial  covenant
subject to the terms and conditions contained herein;

     NOW,  THEREFORE,  in consideration of the mutual  conditions
and agreements set forth in the Agreement and this Amendment, and
other   good   and  valuable  consideration,  the   receipt   and
sufficiency  of  which  are  hereby  acknowledged,  the  parties,
intending to be legally bound, hereby agree as follows:

                           ARTICLE I

                          Definitions

     Section 1.01.  Definitions.  Capitalized terms used in  this
Amendment, to the extent not otherwise defined herein, shall have
the same meanings as in the Agreement, as amended hereby.

                           ARTICLE II

                           Amendments

     Section  2.01  Amendment to Section 9.16.  Section  9.16  of
the  Agreement  is  hereby amended to read  in  its  entirety  as
follows:

          "9.16      LSB  Net Worth.  The Net Worth  of  the  LSB
     Consolidated Borrowing Group will not be less than or, where
     a  deficit  amount is anticipated as indicated by  brackets,
     e.g. [  ], such deficit amount will not be greater than, the
     following  amounts (the "Covenant Amounts") at  the  end  of
     each of the Fiscal Quarters during the following Fiscal Year
     subject to the "adjustment" described below:

     Fiscal Quarters in the
     Following  Fiscal Year  1st Quarter 2nd Quarter 3rd  Quarter
 4th Quarter

     Fiscal Quarter during
     Fiscal Year Ending
     December 31, 2000  [$19,000,000] [$19,500,000] [$21,000,000]
[$23,500,000]

     Adjustment:   The  Covenant Amounts will be decreased  (i.e.
the  allowed  deficit will be reduced) if the actual  net  losses
resulting  from the disposition of LSB's Automotive Division  are
less  than  the  $10,000,000 amount currently reserved  for  such
losses.  In such event each Covenant Amount will decrease  by  an
amount equal to the difference between $10,000,000 and the actual
net losses.

                           ARTICLE III

         Ratifications, Representations and Warranties

     Section 3.01.  Ratifications.  The terms and provisions  set
forth   in   this  Amendment  shall  modify  and  supersede   all
inconsistent terms and provisions set forth in the Agreement and,
except  as  expressly modified and superseded by this  Amendment,
the  terms  and  provisions of the Agreement, including,  without
limitation,  all  financial  covenants  contained  therein,   are
ratified  and  confirmed and shall continue  in  full  force  and
effect.   Lender and Borrower agree that the Agreement as amended
hereby shall continue to be legal, valid, binding and enforceable
in accordance with its terms.

     Section  3.02.   Representations and  Warranties.   Borrower
hereby  represents  and warrants to Lender  that  the  execution,
delivery  and performance of this Amendment and all  other  loan,
amendment or security documents to which Borrower is or is to  be
a  party hereunder (hereinafter referred to collectively  as  the
"Loan   Documents")  executed  and/or  delivered  in   connection
herewith, have been authorized by all requisite corporate  action
on  the  part  of Borrower and will not violate the  Articles  of
Incorporation or Bylaws of Borrower.

                           ARTICLE IV

                      Conditions Precedent

     Section  4.01.   Conditions.   The  effectiveness  of   this
Amendment  is  subject  to  the  satisfaction  of  the  following
conditions  precedent (unless specifically waived in  writing  by
the Lender):

          (a)   Lender  shall have received all of the following,
     each  dated (unless otherwise indicated) as of the  date  of
     this Amendment, in form and substance satisfactory to Lender
     in its sole discretion:

             (i)     Company Certificate.  A certificate executed
          by  the  Secretary or Assistant Secretary  of  Borrower
          certifying  (A) that Borrower's Board of Directors  has
          met  and  adopted, approved, consented to and  ratified
          the  resolutions attached thereto which  authorize  the
          execution, delivery and performance by Borrower of  the
          Amendment and the Loan Documents, (B) the names of  the
          officers  of Borrower authorized to sign this Amendment
          and each of the Loan Documents to which Borrower is  to
          be  a  party hereunder, (C) the specimen signatures  of
          such  officers,  and (D) that neither the  Articles  of
          Incorporation nor Bylaws of Borrower have been  amended
          since the date of the Agreement;

           (ii)     No Material Adverse Change.  There shall have
          occurred  no  material adverse change in the  business,
          operations,  financial condition, profits or  prospects
          of  Borrower,  or in the Collateral since  January  31,
          2000,  and the Lender shall have received a certificate
          of Borrower's chief executive officer to such effect;

          (iii)       Other  Documents.   Borrower   shall   have
          executed   and  delivered  such  other  documents   and
          instruments  as  well as required  record  searches  as
          Lender may require.

          (b)  All corporate proceedings taken in connection with
     the  transactions  contemplated by this  Amendment  and  all
     documents,  instruments  and other  legal  matters  incident
     thereto  shall  be  satisfactory to  Lender  and  its  legal
     counsel, Jenkens & Gilchrist, a Professional Corporation.

                           ARTICLE V

                         Miscellaneous

     Section  5.01.  Survival of Representations and  Warranties.
All  representations and warranties made in the Agreement or  any
other  document or documents relating thereto, including, without
limitation, any Loan Document furnished in connection  with  this
Amendment,  shall  survive the execution  and  delivery  of  this
Amendment  and the other Loan Documents, and no investigation  by
Lender  or  any  closing  shall affect  the  representations  and
warranties or the right of Lender to rely thereon.

     Section 5.02.  Reference to Agreement.  The Agreement,  each
of  the  Loan  Documents,  and  any  and  all  other  agreements,
documents  or instruments now or hereafter executed and delivered
pursuant  to  the terms hereof or pursuant to the  terms  of  the
Agreement  as  amended hereby, are hereby  amended  so  that  any
reference therein to the Agreement shall mean a reference to  the
Agreement as amended hereby.

     Section   5.03.   Severability.   Any  provision   of   this
Amendment held by a court of competent jurisdiction to be invalid
or  unenforceable shall not impair or invalidate the remainder of
this  Amendment and the effect thereof shall be confined  to  the
provision so held to be invalid or unenforceable.

     Section 5.04.  APPLICABLE LAW.  THIS AMENDMENT AND ALL OTHER
LOAN  DOCUMENTS EXECUTED PURSUANT HERETO SHALL BE DEEMED TO  HAVE
BEEN  MADE  AND  TO BE PERFORMABLE IN THE STATE OF  OKLAHOMA  AND
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF OKLAHOMA.

     Section  5.05.  Successors and Assigns.  This  Amendment  is
binding  upon  and  shall  inure to the  benefit  of  Lender  and
Borrower  and their respective successors and assigns;  provided,
however,  that  Borrower may not assign or transfer  any  of  its
rights or obligations hereunder without the prior written consent
of  Lender.   Lender  may assign any or  all  of  its  rights  or
obligations hereunder without the prior consent of Borrower.

     Section 5.06.  Counterparts.  This Amendment may be executed
in one or more counterparts, each of which when so executed shall
be deemed to be an original, but all of which when taken together
shall constitute one and the same instrument.

     Section  5.07.   Effect of Waiver.  No  consent  or  waiver,
express or implied, by Lender to or of any breach of or deviation
from any covenant or condition of the Agreement or duty shall  be
deemed  a  consent  or waiver to or of any  other  breach  of  or
deviation from the same or any other covenant, condition or duty.
No  failure  on the part of Lender to exercise and  no  delay  in
exercising, and no course of dealing with respect to, any  right,
power,  or privilege under this Amendment, the Agreement  or  any
other  Loan Document shall operate as a waiver thereof, nor shall
any  single or partial exercise of any right, power, or privilege
under  this  Amendment, the Agreement or any other Loan  Document
preclude any other or further exercise thereof or the exercise of
any  other  right, power, or privilege.  The rights and  remedies
provided  for  in the Agreement and the other Loan Documents  are
cumulative and not exclusive of any rights and remedies  provided
by law.

     Section   5.08.   Headings.   The  headings,  captions   and
arrangements used in this Amendment are for convenience only  and
shall not affect the interpretation of this Amendment.

     Section 5.09.  Releases.  As a material inducement to Lender
to  enter  into  this Amendment, Borrower hereby  represents  and
warrants that there are no claims or offsets against, or defenses
or  counterclaims to, the terms and provisions of and  the  other
obligations  created or evidenced by the Agreement or  the  other
Loan  Documents.  Borrower hereby releases, acquits, and  forever
discharges  Lender, and its successors, assigns, and predecessors
in   interest,   their  parents,  subsidiaries   and   affiliated
organizations, and the officers, employees, attorneys, and agents
of  each  of  the foregoing (all of whom are herein  jointly  and
severally referred to as the "Released Parties") from any and all
liability, damages, losses, obligations, costs, expenses,  suits,
claims,  demands,  causes  of action for  damages  or  any  other
relief,  whether  or  not now known or suspected,  of  any  kind,
nature, or character, at law or in equity, which Borrower now has
or  may  have  ever  had  against any of  the  Released  Parties,
including,  but not limited to, those relating to  (a)  usury  or
penalties or damages therefor, (b) allegations that a partnership
existed   between   Borrower  and  the  Released   Parties,   (c)
allegations  of  unconscionable acts, deceptive trade  practices,
lack   of   good  faith  or  fair  dealing,  lack  of  commercial
reasonableness or special relationships, such as fiduciary, trust
or  confidential  relationships,  (d)  allegations  of  dominion,
control,  alter  ego, instrumentality, fraud,  misrepresentation,
duress,  coercion, undue influence, interference  or  negligence,
(e)   allegations  of  tortious  interference  with  present   or
prospective  business  relationships  or  of  antitrust,  or  (f)
slander,  libel  or  damage  to  reputation,  (hereinafter  being
collectively  referred to as the "Claims"), all of  which  Claims
are hereby waived.

     Section 5.10.  Expenses of Lender.  Borrower agrees  to  pay
on  demand  (i)  all  costs and expenses reasonably  incurred  by
Lender  in  connection  with  the  preparation,  negotiation  and
execution of this Amendment and the other Loan Documents executed
pursuant   hereto   and   any  and  all  subsequent   amendments,
modifications,  and  supplements hereto  or  thereto,  including,
without  limitation, the costs and fees of Lender's legal counsel
and  the  allocated cost of staff counsel and (ii) all costs  and
expenses  reasonably  incurred by Lender in connection  with  the
enforcement  or  preservation of any rights under the  Agreement,
this  Amendment  and/or other Loan Documents, including,  without
limitation, the costs and fees of Lender's legal counsel and  the
allocated cost of staff counsel.

     Section 5.11.  NO ORAL AGREEMENTS.  THIS AMENDMENT, TOGETHER
WITH  THE  OTHER LOAN DOCUMENTS AS WRITTEN, REPRESENT  THE  FINAL
AGREEMENTS   BETWEEN  LENDER  AND  BORROWER  AND   MAY   NOT   BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR  SUBSEQUENT
ORAL  AGREEMENTS  OF THE PARTIES.  THERE ARE  NO  UNWRITTEN  ORAL
AGREEMENTS BETWEEN LENDER AND BORROWER.

IN  WITNESS WHEREOF, the parties have executed this Amendment  on
the date first above written.

                        "BORROWER":

                        LSB INDUSTRIES, INC.

                        By:
                        Name:
                        Title:

                        SUMMIT MACHINE TOOL MANUFACTURING CORP.

                        By:
                        Name:
                        Title:

                        MOREY       MACHINERY       MANUFACTURING
                        CORPORATION

                        By:
                        Name:
                        Title:

                        "LENDER"

                        BANK OF AMERICA, NATIONAL ASSOCIATION

                        By:
                              Michael J. Jasaitis, Vice PresidentCLIMATECRAFT LOAN

                         LOAN AGREEMENT

         This    Agreement    made    this             day     of
,  1999, between The City of Oklahoma City, an Oklahoma Municipal
Corporation  (hereinafter "Lender"), and ClimateCraft,  Inc.,  an
Oklahoma corporation (hereinafter "Borrower").

Definitions

      Unless  specifically  provided  otherwise  or  the  context
otherwise requires, when used in the Loan Agreement:
(1)   "Act"  means the Housing and Community Development  Act  of
1974,  Pub. L. No. 93-383 codified as 42 U.S.C. 5301 et seq.,  as
amended, and regulations promulgated thereunder.
(2)  "Audits" means the regular audit of the Borrower, a copy  of
which may be requested by the Lender if required by HUD.
(3)   "Appropriate Draw Request" shall consist of a complete  and
accurate  statement by the Borrower on forms supplied  by  Lender
showing a complete and detailed breakdown of the total costs  and
expenses   incurred  by  Borrower  for  the  project  for   which
reimbursement is being requested.
(4)   "City"  means  the  City  of  Oklahoma  City,  an  Oklahoma
municipal corporation.
(5)  "Closing  Date"  means the date of execution  of  this  Loan
     Agreement by the City.
(6)      "Fiscal Agent" means the Chase Manhattan Bank, a banking
corporation organized and existing under the laws of the State of
New  York, or its successor in interest, or any successor  fiscal
agent appointed as provided in the Fiscal Agency Agreement.
(7)   "Fiscal Agency Agreement" a fiscal agency agreement between
the Lender and Chase  Manhattan Bank.
(8)   "HUD"  means the United States Department  of  Housing  and
Urban  Development and fiscal agents and other entities  involved
in Section 108 Loan Guarantee funding transactions with the City.
(9)   "HUD Note(s)" means the City's Note(s) to HUD secured by  a
Section 108 Loan Guarantee.
(10)  "Interim Loan" means Loan Funds advanced before the  Public
Offering Date.
(11)  "Interim  Loan Period" means the period  from  the  initial
advance of Loan Funds to the Public Offering Date.
(12)  "Loan  Funds"  or "Funds" means proceeds  of  the  sale  of
negotiable  securities sold at a public offering  by  Underwriter
and  secured  by  a Section 108 Loan Guarantee from  HUD  to  the
Underwriter.
(13)  "Loan  Documents" means this Loan Agreement, the Promissory
Note,   the   Mortgage,   Fiscal  Agency  Agreement   and   other
instruments, if any, securing repayment of the Loan.
(14)  "Low  and Moderate- Income Persons" means such  persons  as
defined in 24 CFR Part 570, Section 570.3.
(15) "Permanent Loan" means the cumulative Loan Funds secured  by
the City's Notes before and after the Public Offering Date.
(16)    "Project"   means   the   building   purchase,   building
rehabilitation, purchase of capital equipment, the first year  of
Section   108   debt  service  and  working   capital   for   the
establishment of a manufacturing facility in Oklahoma City.
(17)  "Project  Site" means the location of the Project  at  1427
N.W.  3rd Street, within the corporate boundaries of the City  of
Oklahoma  City,  Oklahoma,  as  more  particularly  described  in
Attachment "A".
(18)  "Promissory  Note" or "Note" means the promissory  note  of
even date herewith from Borrower to Lender evidencing the Loan.
(19)  "Public  Offering  Date"  means  the  date  on  which   the
Underwriter offers the City's HUD Notes.
(20)  "Secretary"  means  the  Secretary  of  Housing  and  Urban
Development  or any other official of HUD to whom  the  Secretary
has delegated authority pursuant to the Act.
(21)  "Section 108" means Section 108 of the Act, codified as  42
U.S.C. 5308, as amended, and regulations promulgated thereunder.
(22)  "Section  108  Loan  Guarantee" means  the  loan  guarantee
provided by HUD to Underwriter pursuant to the Act.
(23) "Underwriter" means Federal Short-Term U.S. Government Trust
or such other entity designated by HUD.
(24)  "Term"  means  the  term  of this  Agreement,  which  shall
commence  upon  the  Closing  Date and  shall  terminate  on  the
twentieth anniversary thereof.

                            RECITALS
      WHEREAS, Borrower has applied to the Lender for a  Loan  in
the  principal sum of Three Million Five Hundred Thousand Dollars
($3,500,000) from the proceeds of a Section 108 Loan Guarantee to
the  Lender, and Lender has agreed to make a loan of  such  funds
upon the terms and conditions set forth below; and

      WHEREAS, the purpose of this Loan is to assist the Borrower
in  the  purchase and rehabilitation of a manufacturing facility,
the  purchase of capital equipment, debt reserve for the  Section
108 loan and working capital; and

      WHEREAS, the Planning Department ("Planning") of the Lender
is  responsible within The City of Oklahoma City for the  receipt
and disbursement of the proceeds of Notes guaranteed by HUD under
a  Section  108 Loan Guarantee Program with the City pursuant  to
the Act; and

      WHEREAS, the development of the Project is expected to  add
119  new  employees to the Oklahoma City area economy within  the
next  three  years  and will provide other  public  benefits  and
qualify  for Section 108 assistance under 24 CFR 570.208(c);  and
the  Lender has agreed to provide Loan Funds to Borrower for  the
Project; and the Loan from the Lender to Borrower for the Project
will assist in the development of the Project; and

     WHEREAS, the Loan shall be evidenced by this Loan Agreement,
the Borrower's Promissory Note, the Fiscal Agency Agreement and
the Mortgage; and

      WHEREAS, the Lender is willing to make the Loan to Borrower
exclusively for the purposes hereinabove set forth, all upon  the
terms and conditions herein set forth; and

      WHEREAS,  the Lender makes no commitment to future  support
and  assumes  no obligation for future support of the  activities
contracted  for  herein, except as expressly set  forth  in  this
Agreement.

      NOW,  THEREFORE, in consideration of the foregoing Recitals
and  the  terms,  covenants and conditions,  representations  and
warranties contained herein, the parties hereto agree as follows:

                             TITLE I
                            THE LOAN
      1.1  The Loan.  In reliance upon Borrower's representations
and  warranties contained herein, and subject to  the  terms  and
conditions set forth herein, the Lender hereby agrees to  make  a
Loan  to  Borrower  in  the  sum of Three  Million  Five  Hundred
Thousand  Dollars ($3,500,000) exclusively for the  purposes  set
forth herein, which Loan shall be funded out of funds received by
the Lender through HUD from the sale of the HUD Note(s) under the
Section  108  Loan  Guarantee Program and from no  other  source.
Borrower shall have the right to receive Loan Funds only pursuant
to  the  terms and conditions of this Agreement and in accordance
with  the  Act,  and  then only to the extent  Section  108  Loan
proceeds  are  made  available to  the  Lender  by  HUD.   Should
anticipated  sources  of  Loan Funds become  unavailable  to  the
Lender,  the Lender shall within a reasonable time not to  exceed
ten  (10) working days notify Borrower in writing and the  Lender
shall  be  released from all liability for that  portion  of  the
Funds  to  be provided to Borrower by the Lender under this  Loan
Agreement which have not been received by the Lender from HUD.

      Lender shall advise Borrower of any scheduled sale  of  the
HUD  Notes to enable Borrower to arrange, at its sole option, for
the conversion to a Permanent Loan of amounts advanced during the
Interim  Loan Period that are outstanding as of the date  of  the
sale  of  the HUD Notes by including such amounts in the sale  of
the HUD Notes.

     1.2  Loan Documentation.  The Loan will be evidenced by this
Loan  Agreement,  the Note, the Fiscal Agency Agreement  and  the
Mortgage.

     1.3  Demand.  Lender may demand repayment of the Loan in the
event  of  the occurrence of an Event of Default hereunder  after
applicable grace periods.

     1.4  Lender's Expense. Borrower agrees and acknowledges that
all  Lender's expense with respect to the sale of the  bonds  for
permanent  financing and any additional charges imposed  by  HUD,
the  Fiscal Agency Agreement and the Custodial Accounts shall  be
deducted from the Loan Funds.
                           ARTICLE II
            BORROWER'S REPRESENTATIONS AND WARRANTIES
      In  order  to induce the Lender to make the Loan,  Borrower
represents  and  warrants (which representations  and  warranties
shall  be  true and correct as of the execution hereof and  shall
survive  the  execution and delivery of this Loan  Agreement)  as
follows:

      2.1   Organization  of Borrower; Authority  to  Enter  into
Agreement.  Borrower is an Oklahoma  corporation duly formed  and
validly in existence and in good standing pursuant to laws of the
State of Oklahoma and duly domesticated in the State of Oklahoma.
Borrower  has  the  right and power to purchase  and  occupy  the
Project  Site, and to develop the Project; and Borrower has  full
power and authority to enter into this Agreement.  The execution,
delivery  and  performance  of  this  Agreement  has  been   duly
authorized  by  all  necessary  corporate  action  and  no  other
authorization by Borrower is required for the execution, delivery
and performance of this Agreement.

      2.2   No  Litigation.  As of the date of execution of  this
Agreement, there are no actions, suits or proceedings pending, or
to  the knowledge of Borrower threatened against or affecting it,
its  controlling Board, or the Project in any court at law or  in
equity,  or before or by any governmental or municipal  authority
which  might have a materially adverse effect on the  ability  of
Borrower to perform its obligations hereunder.

      2.3     Right.  Borrower has certain rights in the  Project
Site  sufficient  to  enable  Borrower  to  develop  the  Project
thereon.

     2.4    Covenants, Zoning and Codes. Borrower has complied to
date   and   will   continue  to  comply  with   all   applicable
environmental   statutes  and  regulations  applicable   to   the
development  of the Project. All permits, consents, approvals  or
authorizations by, or registrations, declarations, withholding of
objections  or  filings with any governmental body  necessary  in
connection with the valid execution, delivery and performance  of
the Loan Documents, or presently necessary for the development of
the  Project, have been obtained, are valid, adequate and in full
force and effect or will be obtained prior to the commencement of
any  Project Activities for which a permit, consent, approval  or
authorization is necessary.  Development of the Project  will  in
all  material respects conform to and comply with all  covenants,
conditions,  restrictions and reservations affecting the  Project
Site  and  with all applicable zoning, environmental  protection,
use and building codes, laws, regulations and ordinances.

     2.5  Creation of Jobs.  Lender and the Secretary have relied
upon  representations  made  by  Borrower  that  the  Project  is
expected to create a specific number of permanent new job
opportunities, including a specific number of new permanent job
opportunities for Low and Moderate-Income Persons.  By its
execution of the Loan Documents to which Borrower is a party,
Borrower acknowledges its representation pertaining to the
creation of jobs and agrees to use its best efforts to create
approximately 119 new permanent jobs.  Borrower agrees to use its
best efforts to ensure that at least 51 percent of all new
permanent jobs resulting from the Project are made available to
Low and Moderate- income Persons.

      2.6  Compliance With Documents.  As of the date hereof  and
for  so long as this Agreement remains in effect, Borrower is and
shall  remain  in  full  compliance with all  of  the  terms  and
conditions  of the Loan Documents to which Borrower is  a  party,
and  no  Event  of  Default has or shall  have  occurred  and  be
continuing,  which,  with the lapse of  time  or  the  giving  of
notice, or both, would constitute such an Event of Default  under
the foregoing.

      2.7  Incorporation of Representations and Warranties.   The
request by Borrower for any payment of Loan Funds under the  Loan
Documents shall constitute a certification by Borrower  that  the
aforesaid representations and warranties are true and correct  as
of the date of such request.

                           ARTICLE III
              CONDITIONS PRECEDENT TO LOAN CLOSING
     The Lender's obligation to enter into and perform its duties
under  the  Loan  Documents shall be  subject  to  the  full  and
complete satisfaction of the following conditions precedent:

     3.1  Documents.  The Lender shall have received and approved
fully  executed originals of this Loan Agreement, the  Note,  and
the  Mortgage which shall have been duly authorized, executed and
delivered  by  Borrower and the owner of  the  Project  Site,  as
applicable .

      3.2  Evidence of Authority.  The Lender shall, upon written
request,  receive evidence satisfactory to it that  Borrower  and
the  persons signing on behalf of Borrower have the capacity  and
authority to execute and deliver the applicable Loan Documents on
behalf of Borrower.

      3.3   Insurance.  Borrower shall, for so long as  the  Loan
Documents  remain in effect, at its cost and expense,  carry  and
maintain  general public liability insurance against  claims  for
bodily   injury,  personal  injury,  death  and  property  damage
occurring  or  arising out of the Project, which insurance  shall
cover  such claims as may be occasioned by any act, omission,  or
negligence  of Borrower or its officers, agents, representatives,
assigns  or  servants  relating to the Project.   The  limits  of
liability  insurance, which may be required to be increased  from
time to time as deemed necessary by the Lender, with the approval
of  Borrower, which shall not be unreasonably withheld, shall  be
not less than One Million Dollars ($1,000,000.00) combined single
limit  personal  injury  and  property  damage  insurance.    The
insurance required above shall be issued by an insurance  company
or  companies  authorized  to do business  within  the  State  of
Oklahoma or by such other similar insurance coverage approved  by
the  Insurance Commissioner of the State of Oklahoma.  The Lender
shall  be  specifically  named as an additional  insured  as  its
interest may appear on all such policies, and any such policy  or
policies  shall  be  primary to any other valid  and  collectible
insurance.

                           ARTICLE IV
             CONDITIONS PRECEDENT TO LOAN DISBURSAL
      4.1  Conditions Precedent to Disbursal of Loan Funds.   The
Lender's obligation to disburse Loan Funds pursuant to the  terms
hereof shall, in addition to compliance with the terms of Article
III hereof, be subject to satisfaction of the following condition
precedent:
           (a)   The Lender shall have received and have  in  its
     possession  sufficient  proceeds  from  HUD  to   fund   the
     disbursal request of Borrower. Borrower acknowledges that it
     has  no  right  to the Loan Funds other than  to  have  them
     disbursed by the Lender in accordance with the terms of this
     Loan  Agreement and in accordance with the Act and then only
     to the extent the Lender has received funds from HUD.
           (b)   Receipt by Lender of an Appropriate Draw Request
     covering  the  sum  to be reimbursed  for eligible  expenses
     incurred to develop the Project.

      4.2   Conditions  Precedent to  Subsequent  Disbursal.   In
addition  to compliance with the conditions set forth in  Section
4.1  hereof,  Lender's obligation to make any dispersal  of  Loan
Funds   after   the  initial  dispersal  shall  be   subject   to
satisfaction of the following conditions precedent:
          (a)  Borrower shall be in full compliance and shall not
     be  in default hereunder that is continuing or under any  of
     the  Loan Documents, provided, however, that Lender may,  in
     its  sole discretion, elect to make advances notwithstanding
     the existence of a default, and any advance so made shall be
     deemed to have been made pursuant to the Loan Documents;
           (b)  Neither the Project nor the Project Site nor  any
     part  thereof shall have been materially damaged, destroyed,
     condemned  or  threatened with condemnation unless  Borrower
     shall show to Lender's satisfaction that the Project remains
     viable; and
          (c)  No order or notice shall been made by, or received
     from,  any governmental agency having jurisdiction,  stating
     that  the  development  of the Project  is  or  will  be  in
     violation   of  any  law,  ordinance,  code  or   regulation
     affecting the Project Site.

         4.3       Borrower's  Draw  Requests.  Subject  to   the
conditions  precedent in Section 4.1 (a), Lender agrees  that  it
will   make  every  reasonable  effort  to  disburse   the   Loan
installments  within  ten  (10)  days  after  receipt   of   each
Appropriate Draw Request from Borrower provided said Draw Request
is submitted on any Monday work day.

        4.4      Collateral. Borrower has executed  a  Promissory
Note  of  even  date  with this Loan Agreement  to  evidence  its
promise to repay the Loan. The Promissory Note will be secured by
a Mortgage on the Project Site.
ARTICLE V
BORROWER'S LOAN COVENANTS
     5.1  General.  From and after the date hereof and during the
Term, Borrower covenants and agrees that it will:
           (a)   Accomplish  the  project  and  provide  for  the
     "Creation of Jobs" as set forth in Section 2.5.
          (b)  Obtain and maintain the insurance required herein.

      5.2   Payment  of  Obligations.   Borrower  shall  pay  all
indebtedness,  taxes  and  other obligations  pertaining  to  the
Project or Project Site for which it is liable before they  shall
become  delinquent; provided, however, Borrower  shall  have  the
right  to  contest any such obligations in good faith, and  shall
not  be  obligated to pay any such obligation  so  long  as  such
contest has not been finally determined.

      5.3  Changes to Project.  There shall be no material change
to  the Project without the prior written approval of the Lender,
and,  to  the  extent that such approvals may  be  required,  the
appropriate governmental authorities.

     5.4  Compliance with Laws.  All work performed in connection
with Borrower's development of the Project and Borrower's use  of
the  proceeds of the Loan shall comply with the Act and all other
applicable  laws, ordinances, rules and regulations  of  federal,
state, county or municipal governments or agencies.

      5.5  Inspections.  Upon reasonable notice to Borrower,  the
Lender and the Secretary or their representatives shall have  the
right at all reasonable times during regular business hours  (and
at  any  time  in  the event of an emergency) to enter  upon  the
Project  Site and inspect the Project to determine that the  same
is   in  conformity  with  this  Loan  Agreement  and  all  laws,
ordinances, rules and regulations applicable to Borrower's use of
the   Loan  Funds.   The  Lender  and  the  Secretary  or   their
representatives shall have the further right, from time to  time,
to  inspect  Borrower's books and records relating to  Borrower's
use  of the Loan Funds.  Without limiting the foregoing, Borrower
shall   permit   the   Lender  and   the   Secretary   or   their
representatives to examine and copy all books, records and  other
papers  relating  to Borrower's use of the Loan Funds  to  insure
Borrower's  compliance with the Act and applicable provisions  of
24  CFR Part 570. The Lender agrees that subject to provisions of
the  Oklahoma Open Records Act, 51 Okla. Stat. 1991,   24.A.1  et
seq.  and  any  other  applicable law, to  keep  all  information
regarding  Borrower  and  its  operations  confidential,  and  to
provide  Borrower with prior notice and an opportunity to  object
to  any request for disclosure of such information, other than to
the Secretary or as otherwise required by law.

       5.6   Notify  the  Lender  of  Litigation  or  Complaints.
Borrower shall immediately notify the Lender in writing,  of  all
material  proceedings, litigations or claims which may  adversely
affect Borrower's rights hereunder or any part of the Project  or
Project Site, and of all material
complaints or charges made by any governmental authority
affecting Borrower, the Project, or the Project Site which may
require material changes in the development of the Project.

      5.7   Indemnify the Lender.  Borrower shall  indemnify  and
hold  the  Lender,  its elected and appointed officials  and  any
employees, harmless from all claims and causes of actions of  any
person  or entity which results in damages or injury incurred  by
the  Lender of whatsoever nature (excluding any consequential  or
incidental damages or damages, claims or causes of action due  to
the  Lender's  negligence or the Lender's  breach  of  this  Loan
Agreement),  caused  by  any acts or omissions  of  Borrower  and
arising  out of or in any way connected with this Loan Agreement,
the Project Site and or the development of the Project or arising
out   of  Borrower's  breach  of  the  provisions  of  this  Loan
Agreement,  including the cost and defense thereof using  counsel
approved  by  the  Lender,  which  such  approval  shall  not  be
unreasonably withheld.  Notwithstanding anything contained herein
to  the contrary, the foregoing indemnification given by Borrower
to  the  Lender  shall  not be effective or  enforceable  against
Borrower unless the Lender gives Borrower written notice  of  any
such  claims  or causes of action of said person or  entity  made
against  the Lender within ten (10) working days of the  Lender's
knowledge of such claims or causes of action, and the Lender does
not  commence  or  enter into any settlements or negotiations  of
settlement  with  any person or entity relating  to  the  matters
covered  by  Borrower's indemnification without Borrower's  prior
written  consent.   If  Borrower  fails  to  defend  or  commence
performance of its obligations under this indemnification  within
twenty  (20) days after written request by the Lender, the Lender
may   settle,  commence,  or  defend  any  action  or  proceeding
purporting  to  affect the rights, duties or liabilities  of  the
Lender, the parties to the Loan Document, or the Project Site  or
the  Project and Borrower shall pay all of the Lender's costs and
expense  incurred thereby on demand.  This section shall  survive
execution, delivery and performance of the Loan Documents.

      5.8   Further Assistance.  Borrower shall at any  time  and
from time to time upon request of the Lender take or cause to  be
taken  any action or execute, acknowledge, deliver or record  any
further  documents,  opinions, or  other  instruments  which  the
Lender  is  required  to do or obtain by  HUD  or  by  any  other
federal,  state or county regulatory agency or which  the  Lender
feels  are  required to carry out the intent of  the  Lender  and
Borrower under the Loan Documents.

      5.9   Upon  failure of Borrower to comply with any  of  the
foregoing Loan Covenants, after applicable grace periods  as  set
forth below, the Lender may declare an Event of Default hereunder
and  exercise its rights and remedies pursuant to Article  VI  of
this Agreement.

                           ARTICLE VI
                      DEFAULT AND REMEDIES
     6.1  Event of Default.  The occurrence of any of the
following events and failure to cure such occurrence within
stated periods shall constitute an Event of Default hereunder:
          (a)  Any breach by Borrower of any of the covenants and
     conditions of the Loan Documents, which breach is not cured
     by Borrower to the Lender's reasonable satisfaction within
     twenty (20) days from the receipt of written notice thereof;
     provided, however, that in the event of a breach or default
     by Borrower which is outside of the control of Borrower and
     which cannot be cured within said twenty (20) days, Borrower
     shall have commenced to cure its breach or default within
     said twenty (20) days and thereafter diligently proceed to
     cure its breach or default; or
          (b)  Any written representation, warranty or disclosure
     made to the Lender by Borrower that proves to be materially
     false or misleading as of the date when made; or
          (c)  Any material change in the development of the
     Project without the prior written approval of the Lender
     which change is not corrected or substantially corrected
     within twenty (20) days after receipt of written notice
     thereof from the Lender to Borrower; or
          (d)  Notwithstanding anything to the contrary contained
     herein, any violation by Borrower of the Act or any other
     laws, ordinances, rules or regulations applicable to the
     Project or Borrower's use of the Loan Funds shall
     immediately constitute an Event of Default hereunder.

     6.2  Remedies.  Upon the occurrence of any Event of Default
not timely cured as provided herein, all of the outstanding
principle balance and interest accrued thereon, if any, shall be
immediately due and payable and the Lender shall have recourse
against the collateral pledged as described in Section 4.4 hereof
to the extent such amount remains unpaid.

     6.3  Penalties. In the event of a default, interest at the
per annum rate established in the Note shall accrue on the total
principal amount of the Loan then outstanding, from the date of
the occurrence of such default until payment as required
hereunder shall have been made in full.

                           ARTICLE VII
                          MISCELLANEOUS
     7.1  No Waiver. No waiver of any default or breach by
Borrower under the Loan Documents shall be implied from any
failure by Lender to take action on account of such default if
such default persists or is repeated, and an express waiver shall
be operative only for the time and to the extent therein stated.
Waivers of any covenant, term or condition contained herein shall
not be construed as a waiver of any subsequent breach of the same
covenant, term or condition. The consent or approval by Lender
to, or of, any act by Borrower requiring further consent or
approval shall not be deemed to waive or render unnecessary the
consent or approval to, or of, any subsequent similar act.

     7.2  Successors and Assigns.  This Loan Agreement is made
and entered into for the sole protection and benefit of the
Lender and Borrower, their successors and assigns, and no other
person or persons shall have any right of action hereunder.  The
terms hereof shall inure to the
benefit of the successors and assigns of the parties hereto;
provided, however, that Borrower's interest hereunder cannot be
assigned or otherwise transferred without the prior written
consent of the Lender.

     7.3  Notices.  Any notice, demand or request required under
the Loan Document shall be given in writing at the addresses set
forth below by personal service, overnight courier providing a
receipt, or registered or certified first class mail, return
receipt requested.  The addresses may be changed by notice to the
other party given in the same manner as provided above.  If
notice is given by mail, it shall be deemed received on the
earlier of:  (i) receipt as shown on the return receipt, or (ii)
three (3) days after its deposit in the U.S. Mail.

               To The Borrower:    ClimateCraft, Inc.
                              P.O. Box 1538
                              1427 NW 3rd
                              Oklahoma City, OK 73101
               Attention:          Walter P. Mecozzi, P.E.
                              President

               Copy to:            Office of the General Counsel
                              LSB Industries, Inc.
                              16 South Pennsylvania
                              Oklahoma City, OK 73107
               Attention:          David M. Shear, Esq.

               To The Lender: The City of Oklahoma City
                              Planning Department
                              420 West Main
                              Oklahoma City, OK  73102
               Attention:          Garner Stoll, Planning
Director

     7.4  Time.  Time is of the essence of the Loan Document.

     7.5  Amendments.  No amendment, modification, or termination
of any provisions of any of the Loan Document shall in any event
be effective unless the same shall be in writing and signed by
the applicable parties.

     7.6  Headings.  The article and section headings in no way
define, limit, extend or interpret the scope of the Loan Document
or of any particular article or section thereof.

     7.7  Number and Gender. When the context in which the words
are used in the Loan Documents indicate that such is the intent,
words in the singular number shall include the plural and vice-
versa. References to any gender shall also include the other
gender if applicable under the circumstances.

     7.8  Validity.  The provisions of this Loan Agreement are
severable and if any word, sentence, clause, phrase, or other
portion of this Loan Agreement is, for any reason, held invalid
by any court of competent jurisdiction, such portion shall be
deemed a separate, distinct and independent provision and such
holding shall not affect the validity of the remaining portions
of this Loan Agreement.

     7.9  Governing Law.  This Loan Agreement shall be governed
by and construed in accordance with the laws of the State of
Oklahoma, except to the extent federal law applies.

     7.10 Survival of Warranties.  All agreements,
representations and warranties made herein survive the execution
and delivery of the Loan Document and the making of the Loan
hereunder and continue in full force and effect until the
obligations of Borrower under the Loan Documents are satisfied in
full.

     7.11 Venue and Forum.  In the event that any legal action
should be filed by either party against the other, the venue and
forum for such action shall be the District Court of Oklahoma
County, Oklahoma.

     7.12 Attorney's Fees. In the event Lender shall bring an
action to enforce the terms and conditions of the Loan Documents,
Lender, if prevailing, shall be entitled to recover all of its
costs and expenses, including, but not limited to, reasonable
attorney's fees as determined by the court.

     7.13 Duplicate Originals.  The Loan Agreement shall be
executed in more than one counterpart, each of the parties hereto
shall receive an original counterpart; provided, however, that
all originals together shall constitute one and the same
agreement.

     7.14 Other Federal Provisions. This Loan is subject to
applicable provisions contained in  24 CFR 570.

     IN WITNESS WHEREOF, Borrower and the Lender have executed
this Loan Agreement as of the date first written above by and
through their duly authorized representatives.

                              THE CITY OF OKLAHOMA CITY

                              Mayor
ATTEST:

City Clerk
APPROVED as to form and legality this       day of
, 1999.

                                                       Assistant
                              Municipal Counselor

                                    CLIMATECRAFT, INC.

                                                    By:

ATTEST:

                    CORPORATE ACKNOWLEDGMENT

STATE OF OKLAHOMA
COUNTY OF OKLAHOMA

On  this  ___  day  of  __________ , 1999  before  me  personally
appeared                                  to me known to  be  the
________________________ of ClimateCraft, Inc., that executed the
within and foregoing instrument, and acknowledged said instrument
to  be  the  free and voluntary act and deed of said corporation,
for  the uses and purposes therein mentioned, and on oath  stated
that  he/she was authorized to execute said instrument  and  that
the seal affixed is the corporate seal of said corporation.

In  Witness Whereof I have hereunto set my hand the day and  year
first above written.

_____________________________
                                                           NOTARY
PUBLIC

MY COMMISSION EXPIRES: _____________________

agrmnt\clcr\hud_99.lon
                         ATTACHMENT "A"

A tract of land lying in the East Half (E/2) of Section 32,
Township 12 North, Range 3 West of the Indian Meridian and being
a part of Parker & Colcord Addition, an addition to Oklahoma
City, Oklahoma County, Oklahoma, being described as follows:

     Beginning at the Southeast corner of Lot 11 in Block 4,
     Parker & Colcord Addition, thence South 90 00'00" West
     along the South line of said Block 4 a distance of
     357.30 feet to the Southwest corner of said Block 4;
     thence North 00 23'30" East along the West line of said
     Block 4 a distance of 147.50 feet to the North line of
     said Block 4, said North line also being the South line
     of the Northeast Quarter (NE/4) of said Section 32;
     thence South 90 00'00" West a distance of 25.00 feet to
     the West line of said Northeast Quarter (NE/4); thence
     North 00 23'30" East along the West line of said
     Northeast Quarter (NE/4) a distance of 422.87 feet to
     the South right-of-way line of the Chicago, Rock Island
     and Pacific Railway Company (formerly the Choctaw,
     Oklahoma & Gulf Railway); thence South 72 08'52" East
     along said South right-of-way line a distance of 398.70
     feet to the intersection thereof with the Northerly
     extension of the East line of said Lot 11; thence South
     00 08'26" West along said Northerly extension and along
     said East line a distance of 448.14 feet to the POINT
     OF BEGINNING.

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