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                  CONTINGENT SUBORDINATE COLLATERAL AGENCY AND
                             PAYING AGENCY AGREEMENT

         This  CONTINGENT   SUBORDINATE  COLLATERAL  AGENCY  AND  PAYING  AGENCY
AGREEMENT  (this  "Agreement")  is made and dated as of October  19, 2000 by and
among the Valhi, Inc., a Delaware  corporation,  ("Secured Party"),  SNAKE RIVER
SUGAR COMPANY,  an Oregon cooperative (the "Company"),  and FIRST SECURITY BANK,
NATIONAL  ASSOCIATION ("FSB"), as collateral agent for and representative of the
Secured Party with respect to the Pledged  Collateral (as  hereinafter  defined)
(in such capacity,  the "Collateral  Agent") and as paying agent for the Company
(in such capacity,  the "Paying  Agent").  The  Collateral  Agent and the Paying
Agent are sometimes referred to herein as the "Agent".

                             PRELIMINARY STATEMENTS

         A.  Pursuant  to those  certain  Note  Purchase  Agreements  (said Note
Purchase  Agreements,  as they may  hereafter  be amended  (the  "Note  Purchase
Agreements"),  each dated May 14, 1997,  and as amended as of November 30, 1998,
between  Grantor and the  purchasers  referred  to  therein,  Grantor has issued
$100,000,000 aggregate principal amount of its 10.80% Senior Notes due April 30,
2009 (said  Senior  Notes,  as they may  hereafter be amended,  supplemented  or
otherwise  modified from time to time,  being the "Senior Notes,"  together with
the debt associated therewith, the "Senior Debt").

         C. In connection with the Note Purchase Agreements, the Company and FSB
have entered into a Collateral  Agency and Paying Agency  Agreement  dated as of
May 14, 1997 (the "Agency  Agreement"),  a related Security  Agreement dated May
14, 1997 (the  "Security  Agreement")  and a related  Pledge  Agreement (the "SR
Pledge Agreement").

         D. The  Company and Secured  Party are parties to a  Subordinated  Loan
Agreement  dated January 3, 1997,  as amended and restated May 14, 1997,  and as
amended as of November 30, 1998, (said  Subordinated  Loan Agreement,  as it may
hereafter  be amended,  supplemented  or otherwise  modified  from time to time,
being the "Subordinated Loan Agreement").

         E.  The  Company  desires  that  certain  amendments  be  made  to  the
Subordinated Loan Agreement.

         F. It is a condition  precedent to the  amendment of even date herewith
to the  Subordinated  Loan  Agreement (the "Third  Amendment")  that the parties
hereto shall have undertaken the obligations contemplated by this Agreement.

         G.  Pursuant  to  a  Contingent  Subordinate  Pledge  Agreement  and  a
Contingent  Subordinate  Security  Agreement  both of even  date  herewith,  the
Company has assigned, contingent upon the occurrence of the earliest to occur of
the following (the "Grant Effectiveness Condition"): (i) the full payment of the
Secured  Obligations,  as defined in the Security Agreement (the "Senior Secured
Obligations"),  (ii) the date upon  which  Secured  Party  purchases  all of the
Senior  Notes upon an exercise of its rights under all of those  certain  Option
Agreements  between  Secured  Party,  the  Company and the holders of the Senior
Notes, and (iii) the date at which the outstanding balance of the Senior Secured
Obligations is less than the amount of cash or cash equivalents contained in the
Distributable  Cash  Collateral  Account  (as such term is  defined  in the Note
Purchase  Agreements),  and such cash or cash  equivalents have been irrevocably
and  indefeasibly  dedicated by the Company to, and are available solely for (as
evidenced by a written certificate from the Company to the holders of the Senior
Notes,  acknowledged by Secured Party) payment of the Senior Secured Obligations
at the sole and absolute discretion of the holders of the Senior Notes,  certain
rights to Secured  Party or its agent,  including  rights the  Company  may have
pursuant to certain documents  referred to in the Contingent  Subordinate Pledge
Agreement,  including (as each of the following documents is defined in the Note
Purchase  Agreements):  (i) the SPT  Guaranty;  (ii) the SPT  Pledge  Agreement,
together with all Pledged Collateral defined therein;  (iii) the Indemnification
Pledge  Agreement,  together with all Collateral  defined therein;  and (iv) the
Valhi Entity Pledge  Agreement,  to the Collateral Agent (the SPT Guaranty,  the
SPT Pledge Agreement,  the Indemnification Pledge Agreement and the Valhi Entity
Pledge   Agreement  being  referred  to  herein   collectively  as  the  "Pledge
Documents,"  and the "Pledged  Collateral" and  "Collateral"  referred to in the
Pledge Documents being referred to herein collectively as the "Collateral");

         NOW, THEREFORE, in consideration of the premises and in order to induce
Secured Party to enter into the Third  Amendment and for other good and valuable
consideration,  the receipt and adequacy of which are hereby  acknowledged,  the
Company hereby agrees with Secured Party and FSB as follows:

SECTION 1.  Definitions.  All capitalized  terms used herein without  definition
shall  have  the  meanings  assigned  to such  terms  in the  Subordinated  Loan
Agreement.  The following  terms used in this Agreement shall have the following
meanings:

                  "Affiliate"  shall,  at any  time,  and  with  respect  to any
Person,  (a) any other Person that at such time directly or  indirectly  through
one or more  intermediaries  Controls,  or is Controlled  by, or is under common
Control  with,  such first  Person,  and (b) any Person  beneficially  owning or
holding,  directly or  indirectly,  10% or more of any class of voting or equity
interests  of the  Company or any  Subsidiary  or any  corporation  of which the
Company  and  its  Subsidiaries  beneficially  own or  hold,  in the  aggregate,
directly or indirectly,  10% or more of any class of voting or equity interests.
As used  in  this  definition,  "Control"  means  the  possession,  directly  or
indirectly,  of the power to direct or cause the direction of the management and
policies of a Person,  whether  through the ownership of voting  securities,  by
contract or otherwise.

                  "Person"  shall  mean any  individual,  corporation,  company,
voluntary  association,   partnership,  trust,  unincorporated  organization  or
government (or any agency, instrumentality or political subdivision thereof).

                  "Proceeds"  shall mean all  amounts  paid or  payable  for the
benefit  of  Secured  Party or the  Collateral  Agent  pursuant  to, or upon the
exercise of remedies under, the Contingent Subordinate Pledge Agreement.

                  "Secured  Obligations"  means all  Obligations  secured by the
Pledge Documents.

SECTION 2.         Appointment and Duties of Collateral Agent.

a.  Appointment of Collateral  Agent.  Secured  Party,  by its execution of this
Agreement or its  acceptance of the benefits of this  Agreement,  the Contingent
Subordinate  Security Agreement and the Contingent  Subordinate Pledge Agreement
hereby appoints FSB as the collateral  agent as its agent and  attorney-in-fact,
effective immediately upon occurrence of the Grant Effectiveness  Condition,  to
do the following:

(i)      to enter into on behalf of, and act as agent for,  Secured  Party under
         the Pledge Documents;

(ii)     to timely prepare and provide to Secured Party and, as applicable,  the
         Company,  the notices,  certificates  and other documents called for in
         the Pledge Documents;

(iii)    to take all action expressly  required under the Pledge Documents or in
         written  instructions  from Secured Party to perfect,  and maintain the
         respective  perfection of, the Secured Parties'  security  interests in
         the Pledged Collateral covered by the Pledge Documents;

(iv)     to hold each item of Collateral  which is evidenced by a certificate or
         an  instrument  in its  possession in the State of Utah pursuant to the
         terms hereof on behalf and for the benefit of the Secured Party;

(v)      to sell the Collateral, to collect any proceeds therefrom, and to apply
         such  proceeds in accordance  with the terms of this  Agreement and the
         Pledge Documents;

(vi)     to receive  and/or release  Collateral in accordance  with the terms of
         the Pledge Documents; and

(vii)    to take such other actions as the Collateral Agent shall be directed to
         take,  either  by the  terms  of the  Pledge  Documents  or by  written
         instructions  of the Secured  Party,  to carry out the foregoing and to
         perform the duties and  obligations  set forth in the Pledge  Documents
         and to effect the purposes of this Agreement.

b. Acceptance by Collateral  Agent. The Collateral Agent hereby agrees to act as
agent for and  representative of the Secured Party,  effective  immediately upon
the occurrence of the Grant Effectiveness  Condition,  pursuant to the terms and
conditions of, and to fully and timely perform its duties under,  this Agreement
and the Pledge Documents until the satisfaction in full in cash and discharge of
the Secured  Obligations.  By its execution and delivery of this Agreement,  the
Collateral  Agent  accepts  its  appointment  as  Collateral  Agent,   effective
immediately upon occurrence of the Grant Effectiveness Condition, and agrees to,
among other things:  (i) take the actions and otherwise  exercise the rights and
perform the duties described in Section 2.a. above, (ii) notify Secured Party of
the  occurrence  of a Default or Event of Default of which it has  knowledge and
any material  adverse  change or  development  in the perfection of the security
interest of the Collateral  Agent,  for the benefit of the Secured Party, in the
Collateral  of which it has  knowledge;  (iii) execute and cause to be filed all
financing statements, if any, and other documents (including without limitation,
at the direction of the Secured  Party,  continuation  statements  and financing
statement  amendments)  necessary  or  appropriate  to perfect and  maintain the
security interest of the Collateral Agent, for the benefit of the Secured Party,
in the Collateral;  (iv) release  Collateral in accordance with the terms of the
Pledge  Documents;  (v) upon the  occurrence of a Default or Event of Default of
which it has  knowledge,  solicit  direction  from the  Secured  Party as to any
disposition or other action with respect to the Collateral;  (vi) effectuate any
actions called for by the Secured Party,  (vii) conduct any foreclosure or other
disposition of the Collateral in a commercially  reasonable manner in accordance
with the written  instructions of the Secured Party;  and (viii)  distribute the
proceeds from any such  foreclosure or other  disposition in accordance with the
Pledge Documents.

c.  Collateral to be held in State of Utah.  The  Collateral  Agent shall at all
times hold and maintain possession of the Collateral evidenced by instruments or
certificates in the State of Utah.

SECTION 3.         Appointment and Duties of Paying Agent.

a.  Appointment  of Paying Agent.  The Company and the Secured  Party,  by their
execution  of  this  Agreement  or  their  acceptance  of the  benefits  of this
Agreement  and  the  Pledge  Documents,  hereby  appoint  FSB as  Paying  Agent,
effective immediately upon the occurrence of the Grant Effectiveness  Condition,
to do the following:

(i)      to receive and hold payments of  principal,  interest and other amounts
         in respect of the Subordinated Loan Agreement (the  "Subordinated  Loan
         Payments") and apply such Subordinated  Loan Payments,  as set forth in
         this Agreement and the Subordinated Loan Agreement;

(ii)     to take such other  actions as the Paying  Agent  shall be  required to
         take by the terms of the Subordinated Loan Agreement,  to carry out the
         foregoing  and to perform the duties and  obligations  set forth in the
         Subordinated  Loan  Agreement  with  respect  to  the  payment  of  the
         Subordinated  Loan  Agreement  and  to  effect  the  purposes  of  this
         Agreement.

b. Acceptance by Paying Agent.  Effective immediately upon the occurrence of the
Grant  Effectiveness  Condition,  the Paying Agent hereby agrees to act as agent
for and  representative  of the Company and Secured Party  pursuant to the terms
and  conditions  of, and to fully and timely  perform  its  duties  under,  this
Agreement and the Subordinated Loan Agreement until the satisfaction in full and
discharge  of the Secured  Obligations.  By its  execution  and delivery of this
Agreement,  the Paying Agent accepts its  appointment as Paying Agent and agrees
to, among other things,  take the actions and otherwise  exercise the rights and
perform the duties described in this Section 3.

c. Duties of Paying  Agent.  Effective  immediately  upon the  occurrence of the
Grant Effectiveness  Condition,  the Paying Agent shall act as paying agent with
respect to the Subordinated Loan Agreement.  Further, effective immediately upon
the occurrence of an Grant Effectiveness  Condition, the Paying Agent shall make
payments of the Subordinated  Loan Payments to the Secured Party at the time, at
the  place  and  in the  manner  provided  therefor  in  the  Subordinated  Loan
Agreement.  In no  event  shall  the  failure  of the  Paying  Agent to make any
payments  hereunder or under the Subordinated Loan Agreement relieve the Company
of its  obligations to make due and punctual  payment or under the  Subordinated
Loan Agreement.

SECTION 4.  Instructions to Collateral  Agent;  Direction by Secured Party. Upon
occurrence of the Grant  Effectiveness  Condition,  the Collateral  Agent hereby
agrees to act with respect to the Pledged  Collateral  and otherwise  under this
Agreement  (other  than with  respect to  administrative  actions and actions to
preserve and protect the Pledged Collateral) only upon the written  instructions
of, or with the consent of, the Secured Party.

SECTION 5.        The Agent.

a.  Duties and  Responsibilities.  The Agent  shall have such  powers,  and such
duties  on  behalf  of the  Secured  Party,  as are  set  forth  herein,  in the
Subordinated Loan Agreement, the Contingent Subordinate Pledge Agreement and the
Contingent  Subordinate  Security  Agreement  and as are  reasonably  incidental
thereto.  Notwithstanding  any  provision  to the  contrary  elsewhere  in  this
Agreement,  the Subordinate Loan Agreement,  the Contingent Subordinate Security
Agreement or the Contingent  Subordinate  Pledge Agreement,  the Agent shall not
have any duties or responsibilities  except those expressly set forth herein, in
the Subordinated Loan Agreement,  the Contingent  Subordinate Security Agreement
and the Contingent Subordinate Pledge Agreement (together with such other powers
as are reasonably  incidental  thereto),  and no implied  covenants,  functions,
responsibilities,  duties,  obligations or  liabilities  shall be read into this
Agreement or the Pledge Documents or otherwise exist against the Agent.

b. Deletion of Duties, Etc. The Agent may exercise any of its powers and perform
any of its  duties  hereunder  or under the  Subordinated  Loan  Agreement,  the
Contingent  Subordinate Security Agreement or the Contingent  Subordinate Pledge
Agreement  by or through  agents or  employees  and shall be entitled to consult
with legal  counsel,  accountants  and other experts  selected by it. Any action
taken  or  omitted  to be  taken  or  suffered  in good  faith  by the  Agent in
accordance with the opinion of such counsel,  accountants or other experts shall
be full justification and protection to it.

c. Indemnification.  The Company, and to the extent the Company fails to perform
its obligation under this Section 5.c., the Secured Party hereby indemnifies the
Agent in its capacity as the Collateral  Agent and in its capacity as the Paying
Agent from and  against any and all claims,  liabilities,  obligations,  losses,
damages, penalties,  actions, judgments, suits, costs, expenses or disbursements
or any kind or  nature  whatsoever  which may be  imposed  on,  incurred  by, or
asserted against the Agent in connection with or arising out of any action taken
or  omitted  to be taken or  suffered  in good  faith by the  Agent  under  this
Agreement;  provided  that  neither the  Company nor the Secured  Party shall be
liable for any portion of any claims, liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from the gross negligence or willful  misconduct of the Agent. The agreements in
this  Section 5 shall  survive  the  payment of all  amounts  payable  under the
Subordinated Loan Agreement.

d. Exculpatory Provisions. Neither the Agent nor any of its officers, directors,
employees or agents shall be liable to the Secured Party for any action taken or
omitted  to be  taken  or  suffered  by it or them  hereunder  or in  connection
herewith,  except for its or their own gross  negligence or willful  misconduct.
The  Agent  shall  not be liable  to the  Secured  Party for the  effectiveness,
enforceability,  value, sufficiency, or validity of this Agreement, Subordinated
Loan Agreement, the Pledge Documents or of the Collateral.  Without limiting the
generality of the  foregoing,  the Agent shall not be responsible to the Secured
Party for any statements,  warranties or representations  made by the Company in
or in connection with the Pledge Documents or any other document relating to the
Collateral.   The  Agent  shall  be  entitled  to  rely  on  any  communication,
instrument,   paper  or  other  document,   including  without   limitation  any
certificates provided by the Company (absent manifest error),  believed by it to
be genuine and  correct  and to have been signed or sent by the proper  parties.
The Agent  shall be fully  justified  in failing or  refusing to take any action
under this Agreement unless it shall first have received written  direction from
the Secured Party. The Agent shall in all cases be fully protected in acting, or
in  refraining  from acting,  under this  Agreement  or the Pledge  Documents in
accordance  with the  written  consent or written  instructions  of the  Secured
Party. Except as expressly set forth in the Pledge Documents, the Agent shall be
under no duty or  responsibility to the Secured Party to ascertain or to inquire
into the  performance  or observance by the Company or any other party of any of
the provisions of the Subordinated  Loan Agreement,  the Pledge Documents or any
other document.

e. Standard of Care.  Except for the exercise of reasonable  care in the custody
of any  Collateral in its  possession  and the  accounting  for moneys  actually
received by it under the Pledge  Documents,  the Collateral  Agent shall have no
duty as to any Collateral it being  understood  that the Collateral  Agent shall
have no  responsibility  for (i)  ascertaining  or taking action with respect to
calls, conversions,  exchanges, maturities, tenders or other matters relating to
any  Collateral  whether  or not the  Collateral  Agent has or is deemed to have
knowledge of such  matters,  (ii) taking any  necessary  steps (other than steps
taken in  accordance  with the  standard  of care set  forth  above to  maintain
possession  of the  Collateral)  to preserve  rights  against  any parties  with
respect  to any  Collateral,  (iii)  taking  any  necessary  steps to collect or
realize upon the Secured  Obligations  or any  guarantee  therefor,  or any part
thereof,  or  any of the  Collateral  except  as  set  forth  in the  Contingent
Subordinate  Pledge  Agreement,  or (iv)  initiating  any action to protect  the
Collateral  against the possibility of a decline in market value. The Collateral
Agent  shall be deemed to have  exercised  reasonable  care in the  custody  and
preservation  of  Collateral in its  possession  if such  Collateral is accorded
treatment  substantially  equal to that which the  Collateral  Agent uses in the
custody and preservation of trust property.

f. Independent Credit Investigation.  Secured Party expressly  acknowledges that
the Agent has not made any  representations  or warranties to it and that no act
taken by the Agent shall be deemed to constitute any  representation or warranty
by the Agent to any such party. The Secured Party acknowledges that it has taken
and will  continue to take such  actions and to make such  investigations  as it
deems  necessary to inform  itself of the affairs of the Company,  and that,  in
entering  into this  Agreement  and the  Subordinate  Loan  Agreement it has not
relied and will not rely upon any  information or  representations  furnished or
given by the Agent.

g. The Agent in Its Individual Capacity.  FSB, in its individual  capacity,  and
its affiliates may accept deposits from, lend money to, and generally  engage in
any kind of business with the Company, Secured Party or LLC and their respective
affiliates as though FSB were not the Agent hereunder.

h.  Knowledge  of  Default,  etc.  The Agent shall be entitled to assume that no
Default,  Event of Default or  material  adverse  change or  development  in the
perfection  of the  security  interest  of the Agent in the  Collateral  exists,
unless the officers of the Agent immediately  responsible for matters concerning
this Agreement  shall have obtained actual  knowledge of such Default,  Event of
Default or material adverse change or development through the performance of the
Agent's  duties  hereunder  and under the Pledge  Documents  (including  without
limitation the performance of calculations  called for by the Pledge  Documents)
or shall have been  notified in writing by the Company or the Secured Party that
it considers that a Default, Event of Default or such material adverse change or
development exists and specifying the general nature thereof.

i. No Duty to Provide  Additional  Credit  Information;  No  Responsibility  for
Perfection or Priority of Liens. etc. Except as expressly set forth herein or in
the Pledge  Documents,  the Agent shall not have any duty or  responsibility  to
provide the Secured Party with any credit  information  concerning  the affairs,
financial  condition or business of the Company  which may at any time come into
the possession of the Agent (other than any such credit information specifically
provided to the Agent in  connection  with the Pledge  Documents or requested by
the Secured Party) or any  responsibility  for the perfection or priority of any
lien or the  failure by the Secured  Party to perform  any of their  obligations
under the Pledge  Documents;  provided  that,  upon the  request of the  Secured
Party,  the Agent  shall  file UCC  continuation  statements  in  respect of any
financing  statements  previously  filed pursuant  hereto or to any other Pledge
Document.

j.  Resignation  or  Removal  of the  Collateral  Agent.  FSB may  resign as the
Collateral  Agent  hereunder at any time by giving 30 days' prior written notice
thereof  to the  Secured  Party and may be  removed  at any time with or without
cause by an instrument in writing delivered to the Company and FSB and signed by
the Secured Party; provided no resignation or removal shall be effective until a
successor  Collateral Agent shall have accepted  appointment as set forth below.
Upon any such notice of resignation or removal,  the Secured Party shall, within
15 days of such resignation or removal,  appoint a, successor  Collateral Agent.
If an instrument of  acceptance by a successor  Collateral  Agent shall not have
been delivered to a resigning or removed  Collateral  Agent within 30 days after
notice  of  resignation  or  removal  has been  given as set forth  above,  such
resigning  or  removed  Collateral  Agent may  petition  any court of  competent
jurisdiction  for the  appointment  of a successor  Collateral  Agent.  Upon the
acceptance of any  appointment  as successor  Collateral  Agent,  that successor
shall  thereupon  establish  such accounts as are provided for in the Contingent
Subordinate  Pledge  Agreement,  shall take all actions as may be  necessary  or
appropriate  to perfect  the  security  interest  created  under the  Contingent
Subordinate  Pledge Agreement,  and shall thereupon succeed to and become vested
with all the rights,  powers,  privileges  and duties of the retiring or removed
Collateral  Agent, and the retiring or removed  Collateral Agent shall, upon the
payment of its charges hereunder,  promptly (i) transfer to such successor agent
all items of  Collateral  held by the  retiring  or  removed  Collateral  Agent,
together  with all records  and other  documents  necessary  or  appropriate  in
connection with the performance of the duties of the successor  Collateral Agent
under this Agreement,  and (ii) execute and deliver to such successor Collateral
Agent such amendments to financing  statements,  and take all such other actions
as may be necessary or  appropriate  in connection  with the  assignment to such
successor  Collateral Agent of the security  interests  created under the Pledge
Documents,   whereupon  the  refiring  or  removed  Collateral  Agent  shall  be
discharged from its duties and  obligations  under this Agreement and the Pledge
Documents.  After any  retiring or removed  Collateral  Agent's  resignation  or
removal  hereunder as Collateral  Agent,  the provisions of this Agreement shall
inure to its benefit as to any actions  taken or omitted to be taken by it under
this Agreement while it was the Collateral Agent hereunder.

k.  Resignation  or Removal of the Paying  Agent.  The Paying Agent shall at all
times be the same Person  that is the  Collateral  Agent  under this  Agreement.
Written notice of resignation by the Collateral Agent pursuant to paragraph 6.j.
above shall also  constitute  notice of  resignation  as Paying Agent under this
Agreement;  removal of the  Collateral  Agent  pursuant to paragraph  6.j. above
shall  also  constitute  removal  as Paying  Agent  under  this  Agreement;  and
appointment of a successor  Collateral Agent pursuant to paragraph j above shall
also  constitute  appointment of a successor  Paying Agent under this Agreement.
Upon the acceptance of any appointment as Collateral  Agent under paragraph 6.j.
above by a  successor  Collateral  Agent,  that  successor  Paying  Agent  shall
thereupon succeed to and become vested with all the rights,  powers,  privileges
and duties of the retiring or removed Paying Agent under this Agreement, and the
retiring or removed Paying Agent under this Agreement shall promptly transfer to
such successor Secured Party all sums held hereunder,  together with all records
and other documents  necessary or appropriate in connection with the performance
of the duties of the successor Paying Agent under this Agreement  whereupon such
retiring  or  removed  Paying  Agent  shall be  discharged  from its  duties and
obligations  under this Agreement.  After any retiring or removed Paying Agent's
resignation  or  removal  hereunder  as Paying  Agent,  the  provisions  of this
Agreement  shall inure to its  benefit as to any actions  taken or omitted to be
taken by it under this Agreement while it was Paying Agent hereunder.

l. Waiver. Any waiver, forbearance, failure or delay by the Agent in exercising,
or the exercise or  beginning  of exercise by the Agent of, any right,  power or
remedy,  simultaneous or later, shall not preclude the further,  simultaneous or
later  exercise  thereof  and every  right,  power or remedy of the Agent  shall
continue  in full  force  and  effect  until  such  right,  power or  remedy  is
specifically waived in a written instrument executed by the Agent.

m. Notice of Transfer.  Company shall  provide the Agent with written  notice of
any transfer of the  Subordinated  Loan within three (3) days of such  transfer.
Upon such  notice,  the  transferee  shall be entitled  to all  benefits of this
Agreement,  and the Agent shall treat such transferee as a Secured Party for all
purposes hereof.  Prior to such notice, the Agent shall be justified in treating
the prior  Secured  Party as the owner  thereof  and as a Secured  Party for all
purposes hereof and shall not be responsible for ascertaining whether a transfer
has occurred.

n. Fees; Expenses.  The Company shall pay to the Agent upon demand the amount of
any and all reasonable  costs and expenses,  including the  reasonable  fees and
expenses of its counsel and of any experts and agents,  that the Agent may incur
in connection with (i) the acceptance and  administration  of this Agreement and
its duties as Agent hereunder,  (ii) the custody or preservation of, or the sale
of, collection from or other realization upon, any of the Pledged  Collateral or
(iii) the exercises  and  enforcements  of any rights of the Agent  hereunder or
under the Pledge  Documents.  The  provisions of this Section 5.m. shall survive
the termination of this Agreement.

SECTION 6.  Delivery of  Subordinated  Loan  Agreement by Company.  On or before
October 19, 2000,  the Company  shall  deliver to the  Collateral  Agent a true,
correct and complete copy of the Subordinated  Loan Agreement as then in effect.
Immediately  after the  Subordinated  Loan  Agreement  shall have been  amended,
supplemented,  restated or otherwise  modified in any manner,  the Company shall
deliver  to the  Collateral  Agent a true,  correct  and  complete  copy of such
amendment,  supplement,  restatement or modification. The Collateral Agent shall
be entitled to assume that there has been no amendment, supplement,  restatement
or modification of the Subordinated  Loan Agreement,  unless the officers of the
Collateral Agent immediately  responsible for matters  concerning this Agreement
shall have obtained actual knowledge of such amendment, supplement,  restatement
or  modification  through the  performance of the Agent's  duties  hereunder and
under the  Pledge  Documents  or shall have  received a copy of such  amendment,
supplement, restatement or modification from the Company or Secured Party.

SECTION 7. Waiver of Set Off.  The Agent hereby  waives,  with respect to all of
its existing  and future  claims  against the  Company,  all existing and future
rights of set-off,  banker's  liens,  deduction or similar rights against any or
all of the  items  (and  proceeds  thereof)  that come  into its  possession  in
connection  with any Pledged  Collateral,  other than claims for amounts owed to
FSB solely in its capacity as the Collateral Agent hereunder.

SECTION 8.  Termination  of this  Agreement.  Except as  otherwise  specifically
provided herein, this Agreement shall terminate upon the satisfaction in full in
cash or discharge of all Secured  Obligations.  Without  limiting the foregoing,
the bankruptcy,  insolvency,  dissolution or other similar event or condition of
any  Person,  including  the  Company,  shall  not  operate  to  terminate  this
Agreement.

SECTION  9.  Continuation  of  Perfection.  Following  occurrence  of the  Grant
Effectiveness  Condition,  to the extent the  Collateral  Agent has  perfected a
security  interest in any of the  Collateral,  by way of  possession,  filing or
otherwise,  on behalf of the holders of the Senior Notes, the Collateral Agent's
perfection of said security  interest in the Collateral shall  immediately inure
to the  benefit of the  Secured  Party  under this  Agreement.  In order for the
Collateral  Agent to immediately  perfect a security  interest in the Collateral
for the benefit of the Secured Party upon occurrence of the Grant  Effectiveness
Condition,  the Company hereby  authorizes and instructs the Collateral Agent to
(i) retain possession of, on behalf of and for the benefit of Secured Party, any
Collateral in which the  Collateral  Agent has  previously  perfected a security
interest by way of possession  prior to  occurrence  of the Grant  Effectiveness
Condition and (ii) file amended, revised, continuation or new filing statements,
on behalf of and for the benefit of Secured  Party,  regarding any Collateral in
which the Collateral Agent has previously  perfected a security  interest by way
of filing prior to occurrence of the Grant Effectiveness Condition.

SECTION 10.        Miscellaneous.

a.  Assignment.  This  Agreement  shall be binding  upon and shall  inure to the
benefit of the parties and their  respective  permitted  successors and assigns,
but does not  otherwise  create,  and shall not be construed  as  creating,  any
rights  enforceable by any Person other than the Agent and the Secured  Parties,
in their respective capacities as such.

b. Amendments.  No amendment or waiver of any provision of this Agreement or the
Pledge  Agreement  shall in any event be  effective  unless the same shall be in
writing and shall have been  approved by the Secured Party and, as to Section 5,
the Agent.  No such amendment shall change any of the obligations of the Company
without the Company's written consent, which shall not be unreasonably withheld.

c. Severability.  If any provision of this Agreement, or the application thereof
to any Person,  place,  or  circumstance,  shall be held by a court of competent
jurisdiction  to be  invalid,  unenforceable,  or void,  the  remainder  of this
Agreement  and  such  provisions  as  applied  to  other  Persons,   places  and
circumstances shall remain in full force and effect.

d. Counterparts.  This Agreement may be executed in counterparts,  each of which
shall be deemed an original,  but all of which taken together  shall  constitute
one and the same instrument.

e. Direction by Secured Party.  Without the prior written consent of the Secured
Party, the Collateral Agent shall not (i) terminate this Agreement or the Pledge
Agreement,  (ii) release any of the Pledged  Collateral,  except as specifically
provided in the Pledge  Agreement or (iii)  subordinate  the  security  interest
granted in the Pledge Documents to any Person.

f. Full Subordination.  Notwithstanding anything herein to the contrary, (i) all
rights  granted to Secured  Party  pursuant  to this  Agreement  are subject and
subordinated  to all rights  granted in favor of FSB under the Agency  Agreement
and the  related  documents  and  (ii)  prior  to the  occurrence  of the  Grant
Effectiveness  Condition (or, in the case of the Grant  Effectiveness  Condition
described  in clause  (iii) of  Preliminary  Statement  G  hereof,  prior to the
satisfaction of the requirement set forth in Section 10(g) below), Secured Party
shall not  exercise any  remedies or initiate or pursue any  proceedings  of any
nature whatsoever against the Collateral, the Pledged Documents or the Company.

g. Dedication of Distributable Cash Collateral Account. Notwithstanding anything
to the contrary herein, at the first date upon which the outstanding  balance of
the  Senior  Secured  Obligations  is  less  than  the  amount  of  cash or cash
equivalents  contained in the Distributable Cash Collateral Account, the Company
hereby agrees to immediately  dedicate that portion,  and only that portion,  of
the  Distributable  Cash  Collateral  Account,   irrevocably  and  indefeasibly,
necessary for the full payment of the Senior Secured Obligations in such form as
reasonably   required  by  the  Holders  of  the  Senior   Notes  so  that  such
Distributable  Cash Collateral  Account will be available  solely for payment of
the  Senior  Secured  Obligations  at the sole and  absolute  discretion  of the
Holders of the Senior Note.  Secured Party hereby agrees and  acknowledges  that
upon the dedication of the  Distributable  Cash  Collateral  Account as provided
herein,   such   Distributable  Cash  Collateral  Account  will  not  constitute
Collateral pursuant to this Agreement.

h. Governing Law;  Terms.  THIS AGREEMENT AND THE RIGHTS AND  OBLIGATIONS OF THE
PARTIES  HEREUNDER  SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE  WITH,  THE  INTERNAL  LAWS OF THE STATE OF UTAH  (INCLUDING  WITHOUT
LIMITATION  SECTION  5-1401 OF THE GENERAL  OBLIGATIONS  LAW OF THE STATE OF NEW
YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT THAT
THE UCC  PROVIDES  THAT THE  VALIDITY OR  PERFECTION  OF THE  SECURITY  INTEREST
HEREUNDER,  OR REMEDIES HEREUNDER,  IN RESPECT OF ANY PARTICULAR  COLLATERAL ARE
GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF UTAH.

i. Consent to  Jurisdiction  and Service of Process.  ALL  JUDICIAL  PROCEEDINGS
BROUGHT  AGAINST  COLLATERAL  AGENT ARISING OUT OF OR RELATING TO THIS AGREEMENT
MAY BE BROUGHT IN ANY STATE OR FEDERAL  COURT OF COMPETENT  JURISDICTION  IN THE
STATE OF TEXAS, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT COLLATERAL AGENT
ACCEPTS  FOR  ITSELF  AND IN  CONNECTION  WITH  ITS  PROPERTIES,  GENERALLY  AND
UNCONDITIONALLY,  THE  NONEXCLUSIVE  JURISDICTION  OF THE  AFORESAID  COURTS AND
WAIVES ANY DEFENSE OF FORUM NON COVENANTS AND IRREVOCABLY  AGREES TO BE BOUND BY
ANY JUDGMENT  RENDERED  THEREBY IN CONNECTION  WITH THIS  AGREEMENT.  Collateral
Agent hereby  agrees that service of all process in any such  proceeding  in any
such  court  may be  made  by  registered  or  certified  mail,  return  receipt
requested,  to  Collateral  Agent,  such service  being hereby  acknowledged  by
Collateral  Agent to be  sufficient  for  personal  jurisdiction  in any  action
against  Collateral  Agent in any such court and to be otherwise  effective  and
binding service in every respect. Nothing herein shall affect the right to serve
process in any other  manner  permitted  by law or shall  limit the right of the
Secured Party to bring proceedings against Collateral Agent in the courts of any
other jurisdiction.

j.  Waiver  of Jury  Trial.  THE  PARTIES  HERETO  HEREBY  AGREE TO WAIVE  THEIR
RESPECTIVE  RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING  OUT OF TIES  AGREEMENT.  The  scope of this  waiver is  intended  to be
all-encompassing of any and all disputes that may be filed in any court and that
relate to the subject matter of this transaction,  including without  limitation
contract claims,  tort claims,  breach of duty claims,  and all other common law
and statutory  claim.  The parties hereto each acknowledge that this waiver is a
material inducement for each party to enter into a business  relationship,  that
each party has already relied on this waiver in entering into this Agreement and
that each will continue to rely on this waiver in their related future dealings.
The parties  hereto  further  warrant and represent  that each has reviewed this
waiver with its legal counsel,  and that each knowingly and  voluntarily  waives
its jury trial rights following  consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE,  MEANING THAT IT MAY NOT BE MODIFIED  EITHER  ORALLY OR IN WRITING,
AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,  RENEWALS, SUPPLEMENTS
OR MODIFICATIONS TO THIS AGREEMENT.  In the event of litigation,  this Agreement
may be filed as a written consent to a trial by the court.

k. Third Party Beneficiaries.  The holders from time to time of the Senior Notes
shall be third party beneficiaries of this Agreement, and no amendment, consent,
waiver or other  modification of the terms hereof may be entered into, issued or
granted without the prior written consent of such holders.

              [The remainder of this page intentionally left blank]

<PAGE>

                  IN WITNESS  WHEREOF,  the  parties  hereto  have  caused  this
Agreement to be duly executed and delivered by their proper and duly  authorized
officers as of the day and year first above written.

                                      FIRST   SECURITY   BANK,
                                      NATIONAL   ASSOCIATION,    as
                                      Collateral Agent and Paying Agent

                                      By: /s/ Val T. Orton

                                      Name:

                                      Title:
                                      SNAKE RIVER SUGAR COMPANY

                                      By: /s/ Lawrence L. Corry

                                      Name:

                                      Title:

                                      VALHI, INC.

                                      By: /s/ Steven L. Watson

                                      Name:

                                      Title:

ACKNOWLEDGED:

THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA

By:/s/ Joseph Alouf
   --------------------------------------------------

Name:
     ------------------------------------------------

Title:
      -----------------------------------------------

<PAGE>

CONNECTICUT GENERAL LIFE
INSURANCE COMPANY
By: CIGNA Investments, Inc.

By: /s/ Stephen H. Wilson
   --------------------------------------------------

Name:
     ------------------------------------------------

Title:
      -----------------------------------------------

LIFE INSURANCE COMPANY OF NORTH AMERICA
By: CIGNA Investments, Inc.

By: /s/ Stephen H. Wilson
   --------------------------------------------------

Name:
     ------------------------------------------------

Title:
      -----------------------------------------------

THE LINCOLN NATIONAL LIFE
INSURANCE COMPANY

By:      LINCOLN INVESTMENT MANAGEMENT, INC.
         Its Attorney-in-Fact

By: /s/Annette M. Teders
   --------------------------------------------------
Its:
    -------------------------------------------------

LINCOLN LIFE & ANNUITY COMPANY
OF NEW YORK

By:      LINCOLN INVESTMENT MANAGEMENT, INC.
         Its Attorney-in-Fact

By: /s/Annette M. Teders
   --------------------------------------------------
Its:
    -------------------------------------------------

<PAGE>

MINNESOTA LIFE INSURANCE COMPANY
By:  Advantus Capital Management, Inc.

By:/s/ Annette Masterson
   --------------------------------------------------

Name:
     ------------------------------------------------

Title:
      -----------------------------------------------First Amendment to
                             Subordination Agreement

                  This First Amendment dated as of October 19, 2000 (this "First
Amendment") to the  Subordination  Agreement dated as of May 14, 1997 is between
Snake River Sugar Company, an Oregon cooperative ("Borrower"),  and Valhi, Inc.,
a Delaware corporation  ("Subordinated  Creditor"), in favor of the holders from
time to time of the Senior Notes  referred to below (the "Senior Debt  Holders")
and First  Security  Bank,  National  Association,  as Collateral  Agent for the
Senior Debt Holders.

                             PRELIMINARY STATEMENTS

                  A. Pursuant to those certain Note  Purchase  Agreements,  each
dated May 14,  1997,  as amended as of  November  30, 1998 and as of October 19,
2000  (as  so  amended,   and  as  otherwise  amended,   amended  and  restated,
supplemented  or  otherwise  modified  from  time to time,  the  "Note  Purchase
Agreements"),  between Borrower and the Senior Debt Holders, Borrower has issued
to the Senior Debt Holders $100,000,000 aggregate principal amount of its 10.80%
Senior Notes due April 30, 2009 (the "Senior Notes").

                  B.  Pursuant  to a Loan  and  Security  Agreement  dated as of
January 3, 1997,  as amended and  restated by the  Subordinated  Loan  Agreement
dated as of May 14, 1997, and as further amended as of November 30, 1998 and the
date hereof (as so amended,  and as  otherwise  amended,  amended and  restated,
supplemented  or  otherwise  modified  from  time  to  time,  the  "Subordinated
Agreement"),  between Subordinated Creditor and Borrower, Borrower has issued to
Subordinated Creditor certain subordinated notes (the "Subordinated Notes").

                  C. Pursuant to the Subordination Agreement dated as of May 14,
1997 between Borrower and Subordinated  Creditor (the "Original  Agreement," the
terms  defined  therein and not  otherwise  defined  herein being used herein as
therein  defined),   Borrower  and  Subordinated   Creditor  have  made  certain
provisions  in favor of the Senior  Debt  Holders for the  subordination  of the
Subordinated Notes to the Senior Notes.

                  D. In  connection  with the Second  Amendment to Note Purchase
Agreements  between Borrower and the Senior Debt Holders (the "Second  Amendment
to Note  Purchase  Agreements")  and the Third  Amendment to  Subordinated  Loan
Agreement between Borrower and Subordinated Creditor,  each dated as of the date
hereof,  Borrower  and  Subordinated  Creditor  now desire to amend the Original
Agreement in the respects, but only in the respects, hereinafter set forth.

                  NOW, THEREFORE, upon the full and complete satisfaction of the
conditions  precedent to the  effectiveness of this First Amendment set forth in
Section 3 hereof,  and for good and  valuable  consideration,  the  receipt  and
sufficiency of which is hereby acknowledged,  Borrower and Subordinated Creditor
do hereby agree as follows:

Section 1.        Amendments

1.1 Section 4.a of the Original  Agreement shall be and hereby is amended in its
entirety as follows:

                  "a.  If   Subordinated   Creditor   receives  any  payment  or
Distribution of Assets of Borrower which  Subordinated  Creditor is not entitled
to retain or receive under the provisions of this Agreement or the  Subordinated
Agreement,  such payment or assets shall be delivered  forthwith by Subordinated
Creditor to the Collateral  Agent for the benefit of the Senior Debt Holders for
application to the Senior Debt, in the form received  except for the addition of
any  endorsement  or  assignment  necessary  to effect a transfer  of all rights
therein to the Collateral Agent for the benefit of the Senior Debt Holders.  The
Collateral  Agent for the  benefit of the  Senior  Debt  Holders is  irrevocably
authorized  by  Subordinated  Creditor  to supply any  required  endorsement  or
assignment which may have been omitted. Until so delivered,  any such payment or
collateral  shall be held by Subordinated  Creditor in trust for the Senior Debt
Holders."

1.2 The  definition  of  "Specified  Default"  appearing  in Section  1.c of the
Original  Agreement  shall be and is hereby  amended by deleting  the word "and"
appearing at the end of clause (v) thereof, deleting the punctuation mark "." at
the end of clause  (vi)  thereof  and  replacing  it with "; and" and adding the
following after clause (vi) thereof:

                           "(vii)   Sections 11(p), 11(q) and 11(r)."

Section 2.        Representations and Warranties of Company

                  Subordinated  Creditor  represents  and warrants to the Senior
Debt Holders (which  representation and warranty shall survive the execution and
delivery of this First  Amendment) that all the  representations  and warranties
contained  in Section 9 of the  Original  Agreement  are true and correct in all
material  respects  with the same  force and  effect as if made by  Subordinated
Creditor on and as of the date hereof;  except,  however,  that the Subordinated
Agreement  was amended  pursuant to the Second  Amendment to  Subordinated  Loan
Agreement dated as of November 30, 1998, and the Subordinated  Agreement will be
amended pursuant to the Third Amendment to Subordinated  Loan Agreement dated as
of the date hereof.

Section 3.        Conditions to Effectiveness of this First Amendment.

                  This First Amendment shall become effective in accordance with
Section 3 of the Second Amendment to Note Purchase Agreements.

Section 4.        Miscellaneous

4.1 This First  Amendment  shall be construed in connection  with and as part of
the Original  Agreement,  and except as modified and  expressly  amended by this
First Amendment, all terms, conditions,  and covenants contained in the Original
Agreement are hereby ratified and shall be and remain in full force and effect.

4.2 Any and all notices,  requests,  certificates and other instruments executed
and delivered after the execution and delivery of this First Amendment may refer
to the  Original  Agreement  without  making  specific  reference  to this First
Amendment,  but  nevertheless  all such  references  shall  include  this  First
Amendment unless the context otherwise requires.

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

4.4 This First Amendment shall be construed and enforced in accordance with, and
the  rights of the  parties  shall be  governed  by, the law of the State of New
York,  excluding  choice-of-law  principles of the law of such State which would
require the application of the laws of a jurisdiction other than such State.

4.5 This First  Amendment  may be executed in any number of  counterparts,  each
executed  counterpart  constituting  an  original,  but all  together  only  one
agreement.

                  [Remainder of page intentionally left blank]

<PAGE>

                  IN WITNESS WHEREOF,  Borrower and  Subordinated  Creditor have
caused this First Amendment to be duly executed and delivered for the benefit of
the Senior Debt Holders by their respective  officers  thereunto duly authorized
as of the date first written above.

                            SNAKE RIVER SUGAR COMPANY

                            By: /s/ David L. Budge

                            Name:
                            ---------------------------------------------

                            Title:
                            ---------------------------------------------

                            VALHI, INC.

                            By: /s/ Steven L. Watson

                            Name:
                            ---------------------------------------------

                            Title:
                            ---------------------------------------------

<PAGE>

Accepted this 19th day of October, 2000:

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

By: /s/ Joseph Alouf

Name:
      -----------------------------------------------

Title:
       ----------------------------------------------

<PAGE>

Accepted this 19th day of October, 2000:

CONNECTICUT GENERAL LIFE INSURANCE COMPANY

By CIGNA Investments, Inc.

By: /s/ Stephen H. Wilson
                         ----------------------------

Name:
      -----------------------------------------------

Title:
       ----------------------------------------------

<PAGE>

Accepted this 19th day of October, 2000:

LIFE INSURANCE COMPANY OF NORTH AMERICA

By CIGNA Investments, Inc.

By: /s/ Stephen H. Wilson

Name:
      -----------------------------------------------

Title:
       ----------------------------------------------

<PAGE>

Accepted this 19th day of October, 2000:

THE MINNESOTA LIFE INSURANCE COMPANY

By Advantus Capital Management, Inc.

By: /s/ Guy M. deLambert
      -----------------------------------------------

Name:
      -----------------------------------------------

Title:
       ----------------------------------------------

<PAGE>

Accepted this 19th day of October, 2000:

THE LINCOLN NATIONAL LIFE INSURANCE COMPANY

By Lincoln Investment Management, Inc.
Its Attorney-In-Fact

By: /s/ Annette Teders
                      -------------------------------

Name:
      -----------------------------------------------

Title:
       ----------------------------------------------

<PAGE>

Accepted this 19th day of October, 2000:

LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK

By Lincoln Investment Management, Inc.
Its Attorney-In-Fact

By: /s/ Annette M. Teders
                         ----------------------------

Name:
      -----------------------------------------------

Title:
       ----------------------------------------------

<PAGE>

Accepted this 19th day of October, 2000:

FIRST SECURITY BANK, NATIONAL ASSOCIATION,
as Collateral Agent

By: /s/ Val Orton
        ---------------------------------------------

Name:
        ---------------------------------------------

Title:
        ---------------------------------------------

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