VALHI INC /DE/
<DOCUMENT>
<TYPE>EX-10.7
<SEQUENCE>8
<FILENAME>0008.txt
<TEXT>


                               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:
        ---------------------------------------------


</TEXT>
</DOCUMENT>
