Document:

EXHIBIT 10.21

                                AMENDMENT NO. 5

                                      TO

                                LOAN AGREEMENT

      AMENDMENT NO. 5 ("Amendment No. 5") dated as of June 30, 2000 (the
"Amendment Date") to the Loan Agreement dated as of December 30, 1998, as
amended (the "Loan Agreement"), among HORIZON VESSELS, INC., a Delaware
corporation, HORIZON OFFSHORE CONTRACTORS, INC., a Delaware corporation
(together, the "Borrowers"), HORIZON OFFSHORE, INC., a Delaware corporation (the
"Parent Guarantor"), THE CIT GROUP/EQUIPMENT FINANCING, INC., a New York
corporation ("CIT"), HELLER FINANCIAL LEASING, INC., a Delaware corporation,
U.S. BANCORP LEASING & FINANCIAL, an Oregon corporation, SAFECO CREDIT COMPANY,
INC., a Washington corporation, TRANSAMERICA EQUIPMENT FINANCIAL SERVICE
CORPORATION, a Delaware corporation, PHOENIXCOR, INC., a Delaware corporation,
and DEUTSCHE FINANCIAL SERVICES CORPORATION, a Nevada corporation (collectively,
the "Lenders") and CIT as Agent for the Lenders (the "Agent").

                             W I T N E S S E T H:
                             -------------------

      WHEREAS, pursuant to the Loan Agreement, the Lenders made available to the
Borrowers a loan facility of up to USD 83,300,000, as evidenced by the amended
and restated secured promissory note of the Borrowers dated November 19, 1999;
and

      WHEREAS, the Borrowers wish to make certain repairs, modifications and
upgrades to certain of the Vessels; and

      WHEREAS, the Borrowers have requested that the loan facility be increased
up to a maximum amount of USD 91,397,845; and

      WHEREAS, the parties wish to amend the Loan Agreement to reflect the
foregoing and to amend certain provisions thereof.

      NOW THEREFORE, in consideration of the above recitals and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree to amend the Loan Agreement as follows:

      1. The Definitions of the Loan Agreement are hereby amended as follows:

            (a) A new definition of "Fleet Upgrade" is added to the Loan
      Agreement and reads as follows:
<PAGE>
            "Fleet Upgrade" means a repair, modification or upgrade to a Vessel
            in accordance with Schedule A to Amendment No. 5.

            (b) A new definition of "Fleet Upgrade Advance" is added to the Loan
      Agreement and reads as follows:

            "Fleet Upgrade Advance" means an Advance for the purpose of funding
            a Fleet Upgrade.

            (c) Each reference in the Loan Agreement to "Amendment Documents" is
      hereby amended to include the Amendment Documents listed in Section 8.1 of
      this Amendment No. 5.

            (d) Each reference in the Loan Agreement to the Note shall refer to
      the Amended and Restated Secured Promissory Note dated the date hereof by
      the Borrowers in favor of the Agent.

            (e) The definition of "Commitment" is hereby amended to read as
      follows:

            "Commitment" means USD 91,397,845.

            (f) The definition of "Fixed Rate" is hereby amended to read as
      follows:

            "Fixed Rate" means the sum of (i) the Treasury Rate, (ii) (1) in the
            case of Advances other than Fleet Upgrade Advances, 265 basis
            points, and (2) in the case of Fleet Upgrade Advances, 295 basis
            points, and (iii) the swap spread on the date the Fixed Rate is
            elected by the Borrowers as reported on page 883, or its successor,
            of the Dow Jones Telerate System.

      2. Section 1.1(c) of the Loan Agreement is hereby amended to read as
follows:

            "(c) The Loan, except for Fleet Upgrade Advances, shall be made in
            four (4) Advances. Subject to the limitation contained in Section
            1.1(a) above, Advances other than Fleet Upgrade Advances shall be in
            the following amounts:

                  (i)   First Advance - USD 50,000,000
                  (ii)  Second Advance - USD 5,000,000
                  (iii) Third Advance - USD 13,800,000
                  (iv)  Fourth Advance - USD 14,500,000

            The Fleet Upgrade Advances shall be made from time to time in the
            principal amount of no less than USD 500,000 per Fleet Upgrade
            Advance, subject to the limitation contained in Section 1.1(a)
            above. The aggregate principal amount of Fleet Upgrade Advances
            shall not exceed USD 8,097,845."

                                       2
<PAGE>
      3. Section 1.3(a) of the Loan Agreement is hereby amended to read as
follows:

          "(a)(i) The Borrowers shall jointly and severally repay the principal
                  amount of the first Advance in eighty-four (84) consecutive
                  monthly installments of USD 462,963, the amount of the second
                  Advance in eighty-four (84) consecutive monthly installments
                  of USD 46,296, the amount of the third Advance in eighty-four
                  (84) consecutive monthly installments of USD 127,778, and the
                  amount of the fourth Advance in seventy-three (73) consecutive
                  monthly installments of USD 154,490, with each such
                  installment to be paid by the Borrowers to the Agent on a date
                  commencing on the day which is thirty (30) days after the date
                  of such Advance, and on the same day of each month thereafter
                  and ending on the Maturity Date (each such date a "Payment
                  Date"); provided, however, that the final installment for each
                  Advance shall be in an amount sufficient to repay all amounts
                  of principal for such Advance and, provided further, that the
                  final payment on the Maturity Date shall be in an amount
                  sufficient to discharge the accrued and unpaid interest and
                  principal in respect of the Note.

            (ii)  The Borrowers shall jointly and severally repay the principal
                  amount of all outstanding Fleet Upgrade Advances in fifty-nine
                  (59) equal monthly installments of USD 96,403 each, commencing
                  January 30, 2001, and a single payment of all remaining
                  principal of and interest on the Fleet Upgrade Advances on
                  December 30, 2005."

      4. Section 1.4(b) of the Loan Agreement is hereby amended to read as
follows:

            (b)   The term "Interest Rate" shall mean, for an Interest Period
                  (as hereinafter defined), an interest rate per annum at the
                  rate (i) certified by the Lender to be the LIBOR Rate, plus,
                  for Advances other than Fleet Upgrade Advances, two and
                  sixty-five hundredths percent (2.65%) or, for Fleet Upgrade
                  Advances, two and ninety-five hundredths percent (2.95%), or
                  (ii) if the Borrowers have exercised the option contained in
                  Section 1.4(f) below, the Fixed Rate.

      5. Section 1.3(f)(i) of the Loan Agreement is hereby amended to read as
follows:

                  (i) If no election is received by the Agent, the Borrowers
                  shall pay interest at the LIBOR Rate plus 2.65% for Advances
                  other than Fleet Upgrade Advances, and at the LIBOR Rate plus
                  2.95% for the Fleet Upgrade Advances.

      6. A new Section 2.2(A) is hereby added to the Loan Agreement and reads as
follows:

                                       3
<PAGE>
                  Section 2.2A. CONDITIONS TO FLEET UPGRADE ADVANCES. The
                  Lenders' obligation to make any Fleet Upgrade Advance is
                  subject to the following conditions having been satisfied in
                  the opinion of the Lenders on or prior to the date of each
                  such Advance:

                        (a) Certification by a Responsible Officer that no Event
                  of Default or any event which with the giving of notice or the
                  passage of time would become an Event of Default has occurred
                  and is continuing;

                        (b) Certification by a Responsible Officer that (A) each
                  of the representations and warranties set forth in Article III
                  of the Loan Agreement are true and correct as of the date the
                  Fleet Upgrade Advance is requested as if made on such date;
                  (B) there have been no occurrences which have or would
                  adversely and materially affect the condition of the Vessels;
                  (C) the amount of the requested Advance is in accordance with
                  the plans and specifications for the Fleet Upgrades; and (D)
                  once the applicable shipyard, contractor or supplier is paid
                  there will be no liens or encumbrances on the vessel, its hull
                  or component parts for which the Fleet Upgrade Advance is
                  being requested, and such certificate shall attach the
                  invoices and receipts supporting the previous Fleet Upgrade
                  Advance, if any, to the satisfaction of the Agent;

                        (c) the Agent shall have received a report, in form and
                  substance satisfactory to Agent, of an independent surveyor,
                  inspector or naval architect, certifying that the work to be
                  paid by the previous Fleet Upgrade Advance, if any, has been
                  performed to the satisfaction of such inspector, surveyor or
                  naval architect, the costs of which report shall be borne by
                  the Borrowers; and

                        (d) a written report from an appraiser acceptable to the
                  Agent with respect to the Fleet Upgrades to be financed with
                  the requested Fleet Upgrade Advance, in form and substance
                  satisfactory to the Agent.

      7. Schedule 1 to the Loan Agreement is hereby replaced with Schedule 1
attached to this Amendment No. 5.

      8. CONDITIONS PRECEDENT.

      8.1 DOCUMENTS REQUIRED AS CONDITIONS PRECEDENT TO AMENDMENT NO. 5. The
effectiveness of the modifications to the Loan Agreement contemplated by this
Amendment No. 5 is subject to the condition precedent that the Agent shall have
received at or prior to the Amendment Date all of the following, each dated on
or before the Amendment Date and each in form and substance satisfactory to the
Agent and its counsel:

                                       4
<PAGE>
            (a) Each of the following documents (the "Amendment Documents")
      shall have been duly authorized and executed with original counterparts
      thereof delivered to the Agent:

                  (i) This Amendment No. 5;

                  (ii) Amended and Restated Secured Promissory Note;

                  (iii) Amendment No. 5 to the United States First Preferred
            Fleet Mortgage;

                  (iv) Amendment No. 5 to Vanuatu First Preferred Fleet
            Mortgage;

                  (v) Amendment and Ratification of Guaranty executed by the
            Guarantors;

                  (vi) Ratification of Security Agreement;

                  (vii) Ratification of Intercreditor Agreement;

                  (viii) Amendment No. 3 to Deed of Covenants; and

                  (ix) such further documents as the Lenders may reasonably
            request.

            (b) The representations and warranties contained in Section 3.1 of
      the Loan Agreement shall be true on the Amendment Date with the same
      effect as though such representations and warranties had been made on and
      as of such date, and no Event of Default specified in Article IV of the
      Loan Agreement and no event which, with the lapse of time or the giving of
      notice and the lapse of time specified in Article IV of the Loan
      Agreement, would become such an Event of Default, shall have occurred and
      be continuing.

      8.2 WAIVER OF CONDITIONS PRECEDENT. All of the conditions precedent
contained in this Section 8 are for the sole benefit of the Agent and the
Lenders and the Agent may waive any of them in its absolute discretion, and on
such conditions as it deems proper.

      9. REPRESENTATIONS OF THE BORROWERS AND GUARANTORS. The Borrowers and the
Guarantors represent and warrant that:

            (a) Each of the Borrowers and the Guarantors is a corporation, duly
      organized and validly existing in good standing under the laws of the
      State of Delaware, and has the requisite power and authority (i) to carry
      on its business as presently conducted; and (ii) to enter into and perform
      its obligations under the Amendment Documents.

            (b) The execution, delivery and performance by each of the Borrowers
      and the Guarantors of the Amendment Documents and any other instrument or
      agreement provided for by this Amendment No. 5 to which it is a party,
      have been duly authorized by all

                                       5
<PAGE>
      necessary corporate action, do not require stockholder approval other than
      such as has been duly obtained or given, do not or will not contravene any
      of the terms of its Certificate of Incorporation or Bylaws, and will not
      violate any provision of law or of any order of any court or governmental
      agency or constitute (with or without notice or lapse of time or both) a
      default under, or result (except as contemplated by this Amendment No. 5)
      in the creation of any security interests, lien, charge or encumbrance
      upon any of its properties or assets pursuant to, any agreement, indenture
      or other instrument to which it is a party or by which it may be bound
      other than is in favor of the Agent; the Amendment Documents have been
      duly executed and delivered by the Borrowers and the Guarantors and
      constitute the respective legal, valid and binding agreements, enforceable
      in accordance with the respective terms thereof as to which each of the
      Borrowers and the Guarantors is a party. The enforceability of this
      Amendment No. 5, however, is subject to all applicable bankruptcy,
      insolvency, reorganization, moratorium, and other laws affecting the
      rights or creditors and to general equity principles.

            (c) Except as set forth in the Loan Agreement, there are no suits or
      proceedings pending or to its knowledge threatened against or affecting
      any Borrower or Guarantors which if adversely determined would have a
      material adverse effect upon its business, financial condition or
      operations.

            (d) Other than such as have been obtained, no license, consent or
      approval of any Governmental Agency or other regulatory authority is
      required for the execution, delivery or performance of this Amendment No.
      5 or any other Amendment Document or any instrument contemplated herein or
      therein. The Borrowers are the holder of all certificates and
      authorizations of governmental authorities required by law to enable it to
      engage in the business transacted by them.

      10. EXPENSES. The Borrowers and the Guarantors agree to promptly, whether
or not the modifications to the Loan Agreement contemplated by this Amendment
No. 5 become effective, (x) reimburse the Agent for all fees and disbursements
of external counsel to the Agent and all reasonable out of pocket fees and
disbursements of the Agent incurred in connection with the preparation,
execution and delivery of this Amendment No. 5 and all other documents referred
to herein, and all amendments or waivers to or termination of this Amendment No.
5 or any agreement referred to herein; and (y) reimburse the Agent for all fees
and disbursements of internal and external counsel to the Agent and all
reasonable out of pocket fees, disbursements and travel-related expenses of the
Agent incurred in connection with the protection of the rights of the Agent
under this Amendment No. 5 and all other documents referred to herein, whether
by judicial proceedings or otherwise. The obligations of the Borrowers and the
Guarantors under this Section 10 shall survive payment of the Loan.

      11. Wherever and in each such place the term "Loan Agreement" is used
throughout the Loan Agreement, such term shall be read to mean the Loan
Agreement as amended by this Amendment No. 5.

                                       6
<PAGE>
      12. Except as specifically amended by this Amendment No. 5, all of the
terms and provisions of the Loan Agreement shall remain in full force and
effect.

      13. All capitalized terms used herein but not defined herein shall have
the meanings given to them in the Loan Agreement.

      14. THIS AMENDMENT NO. 5 TO LOAN AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.

      IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment
No. 5 to Loan Agreement on the date first written above.

                                    BORROWERS:

                                    HORIZON OFFSHORE CONTRACTORS, INC.

                                    By:____________________________________
                                    Name:__________________________________
                                    Title:_________________________________

                                    HORIZON VESSELS, INC.

                                    By:____________________________________
                                    Name:__________________________________
                                    Title:_________________________________

                                    PARENT GUARANTOR:

                                    HORIZON OFFSHORE, INC.

                                    By:___________________________________
                                    Name:_________________________________
                                    Title:________________________________

                                       7
<PAGE>
                                    LENDERS:

                                    THE CIT GROUP/EQUIPMENT FINANCING, INC.

                                    By:___________________________________
                                    Name:_________________________________
                                    Title:________________________________

                                    SAFECO CREDIT COMPANY, INC.

                                    By:___________________________________
                                    Name:_________________________________
                                    Title:________________________________

                                    U.S. BANCORP LEASING & FINANCIAL

                                    By:___________________________________
                                    Name:_________________________________
                                    Title:________________________________

                                    HELLER FINANCIAL LEASING, INC.

                                    By:___________________________________
                                    Name:_________________________________
                                    Title:________________________________

                                       8
<PAGE>
                                    TRANSAMERICA EQUIPMENT FINANCIAL SERVICE
                                    CORPORATION

                                    By:_____________________________________
                                    Name:___________________________________
                                    Title:__________________________________

                                    PHOENIXCOR, INC.

                                    By:_____________________________________
                                    Name:___________________________________
                                    Title:__________________________________

                                    DEUTSCHE FINANCIAL SERVICES CORPORATION

                                    By:____________________________________
                                    Name:__________________________________
                                    Title:_________________________________

                                    AGENT:

                                    THE CIT GROUP/EQUIPMENT FINANCING, INC.

                                    By:____________________________________
                                    Name:__________________________________
                                    Title:_________________________________

                                       9
<PAGE>
                                SCHEDULE 1 TO
                                LOAN AGREEMENT

      LENDER                     PORTION OF COMMITMENT

1.    The CIT Group/Equipment
      Financing, Inc.               USD   25,097,845

2.    Heller Financial
      Leasing, Inc.                 USD   15,000,000

3.    TransAmerica Equipment
      Financial Service Corp.       USD   17,000,000

4.    U. S. Bancorp Leasing
      & Financial                   USD   10,000,000

5.    Safeco Credit Company,
      Inc.                          USD    9,300,000

6.    Phoenixcor, Inc.              USD    5,000,000

7.    Deutsche Financial Services
      Corporation                   USD   10,000,000

                                       10EXHIBIT 10.1

                           CHANGE IN CONTROL AGREEMENT
                                  [THREE-YEAR]

      This CHANGE IN CONTROL AGREEMENT ("Agreement"), effective as of January 1,
2000 (the "Effective Date"), by and between Southwest Bancorporation of Texas,
Inc., a Texas corporation (the "Company"), and Paul B. Murphy, Jr. (the
"Executive");

                               W I T N E S S E T H:
                               -------------------

      WHEREAS, the Executive is a senior executive of the Company's wholly-owned
subsidiary, Southwest Bank of Texas National Association (the "Bank") and has
made and/or is expected to make or continue to make major contributions to the
profitability, growth and financial strength of the Company and the Bank;

      WHEREAS, references herein to the Executive's employment by the Company
shall also mean his or her employment by the Bank, and references herein to
payments of any nature to be made by the Company to the Executive shall mean
that either the Company will make such payments or it will cause the Bank to
make such payments to the Executive;

      WHEREAS, the Company desires to assure itself of both present and future
continuity of management in the event of a Change in Control (as defined
hereafter) and desires to establish certain minimum compensation rights of its
key senior executives, including the Executive, applicable in the event of a
Change in Control;

      WHEREAS, the Company wishes to ensure that its senior executives are not
practically disabled from discharging their duties upon a Change in Control;

      WHEREAS, this Agreement is not intended to alter materially the
compensation and benefits which the Executive could reasonably expect to receive
from the Company or the Bank absent a Change in Control and, accordingly,
although effective and binding as of the date hereof, this Agreement shall
become operative only upon the occurrence of a Change of Control; and

      WHEREAS, the Executive is willing to render services to the Company and
the Bank on the terms and subject to the conditions set forth in this Agreement;

      NOW, THEREFORE, the Company and the Executive agree as follows:

      1.    OPERATION OF AGREEMENT.

            a) This Agreement shall be effective and binding as of the Effective
      Date, but, anything in this Agreement to the contrary notwithstanding,
      this Agreement shall not be operative unless and until there shall have
      occurred a Change in Control. For purposes of this Agreement, a "Change in
      Control" shall have occurred if at any time during the Term (as that term
      is hereafter defined) any of the following events shall occur:

<PAGE>
                  (i) The Company is merged, consolidated or reorganized into or
            with or sells all or substantially all of its assets to another
            corporation or other legal person, and as a result of such merger,
            consolidation, reorganization or sale (i) less than a majority of
            the combined voting power of the then-outstanding securities of such
            corporation or person immediately after such transaction are held in
            the aggregate by the holders of Voting Stock (as that term is
            hereinafter defined) of the Company immediately prior to such
            transaction and (ii) it is intended that persons serving as
            Directors of the Company immediately prior to the transaction will
            constitute none of or less than a majority of the Directors of the
            other corporation or legal person after consummation of the
            transaction; or

                  (ii) If during any one (1) year period, individuals who at the
            beginning of any such period constitute the Directors of the Company
            cease for any reason to constitute at least a majority thereof,
            unless the election, or the nomination for election by the Company's
            shareholders, of each Director of the Company first elected during
            such period was approved by a vote of at least two-thirds of the
            Directors of the Company then still in office who were Directors of
            the Company at the beginning of any such period.

            (b) Upon occurrence of a Change in Control at any time during the
      Term, this Agreement shall become immediately operative.

            (c) The period during which this Agreement shall be in effect (the
      "Term") shall commence as of the date hereof and shall expire as of the
      later of (i) the close of business on December 31, 2002 and (ii) the
      expiration of the Period of Employment (as that term is hereinafter
      defined); provided, however, that (A) commencing on December 31, 2002 and
      the last day of each of the Company's Fiscal Years thereafter, the Term of
      this Agreement shall automatically be extended for an additional year
      unless, not later than the last day of the immediately preceding
      September, the Company or the Executive shall have given notice that it or
      he, as the case may be, does not wish to have the Term extended and (B)
      subject to Section 9 hereof, if, prior to a Change in Control, the
      Executive ceases for any reason to be an employee of the Company,
      thereupon the Term shall be deemed to have expired and this Agreement
      shall immediately terminate and be of no further effect.

      2.    EMPLOYMENT; PERIOD OF EMPLOYMENT.

            (a) Subject to the terms and conditions of this Agreement, upon the
      occurrence of a Change in Control, the Company shall continue the
      Executive in its employ and the Executive shall remain in the employ of
      the Company for the period set forth in Section 2(b) hereof (the "Period
      of Employment"), in the position and with substantially the same duties
      and responsibilities that he had immediately prior to the Change in
      Control, or to which the Company and the Executive may hereafter mutually
      agree in writing. Throughout the Period of Employment, the Executive shall
      devote substantially all of his time during normal

                                       -2-
<PAGE>
      business hours (subject to vacations, sick leave and other absences in
      accordance with the policies of the Company as in effect for senior
      executives immediately prior to the Change in Control) to the business and
      affairs of the Company, but nothing in this Agreement shall preclude the
      Executive from devoting reasonable periods of time during normal business
      hours to (i) serving as a director, trustee or member of or participant in
      any organization or business so long as such activity would not constitute
      Competitive Activity (as that term is hereafter defined) if conducted by
      the Executive after the Executive's Termination Date (as that term is
      hereafter defined), (ii) engaging in charitable and community activities,
      or (iii) managing his personal investments.

            (b) The Period of Employment shall commence on the date of an
      occurrence of a Change in Control and, subject only to the provisions of
      Section 4 hereof, shall continue until the earlier of (i) the expiration
      of the third anniversary of the occurrence of the Change in Control or
      (ii) the Executive's death; provided, however, that commencing on each
      anniversary of the Change of Control, the Period of Employment shall
      automatically be extended for an additional year unless, not later than 90
      calendar days prior to such anniversary date, the Company or the Executive
      shall have given notice that it or he or she, as the case may be, does not
      wish to have the Term extended.

      3.    COMPENSATION DURING PERIOD OF EMPLOYMENT.

            (a) Upon the occurrence of a Change in Control, the Executive shall
      receive during the Period of Employment (i) annual base salary at a rate
      not less than the Executive's annual fixed or base compensation payable
      monthly or otherwise as in effect for senior executives of the Company
      immediately prior to the occurrence of a Change in Control or such higher
      rate as may be determined from time to time by the Board of Directors of
      the Company (the "Board") or the Compensation Committee thereof (the
      "Committee") (which base salary at such rate is herein referred to as
      "Base Pay") and (ii) an annual cash bonus in an amount determined for the
      Executive in accordance with the Company's incentive compensation plan or
      plans in effect at the time of the Change in Control or in accordance with
      an annual bonus, incentive, profit-sharing, performance, discretionary pay
      or similar policy, plan, program or arrangement of the Company or any
      successor thereto providing benefits at least as great as the benefits
      payable thereunder prior to the Change in Control ("Incentive Pay");
      provided, however, that nothing herein shall preclude a change in the mix
      between Base Pay and Incentive Pay so long as the aggregate cash
      compensation received by the Executive in any one calendar year is not
      reduced in connection therewith or as a result thereof and, provided
      further, however, that in no event shall any increase in the Executive's
      aggregate cash compensation or any portion thereof in any way diminish any
      other obligation of the Company under this Agreement.

            (b) For his service pursuant to Section 2(a) hereof, during the
      Period of Employment the Executive shall, if and on the same basis as he
      participated therein immediately prior to the Change in Control, be a full
      participant in, and shall be entitled to the perquisites, benefits and
      service credit for benefits as provided under any and all employee
      retirement income and welfare benefit policies, plans, programs or
      arrangements

                                      -3-
<PAGE>
      in which senior executives of the Company participate, including without
      limitation any stock option, stock purchase, stock appreciation, savings,
      pension, supplemental executive retirement or other retirement income or
      welfare benefit, deferred compensation, incentive compensation, group
      and/or executive life, accident, health, dental, medical/hospital or other
      insurance (whether funded by actual insurance or self-insured by the
      Company), disability, salary continuation, expense reimbursement and other
      employee benefit policies, plans, programs or arrangements that may now
      exist or any equivalent successor policies, plans, programs or
      arrangements that may be adopted hereafter by the Company providing
      perquisites, benefits and service credit for benefits at least as great as
      are payable thereunder prior to a Change in Control (collectively,
      "Employee Benefits"); provided, however, that the Executive's rights
      thereunder shall be governed by the terms thereof and shall not be
      enlarged hereunder or otherwise affected hereby. Subject to the proviso in
      the immediately preceding sentence, if and to the extent such perquisites,
      benefits or service credit for benefits are not payable or provided under
      any such policy, plan, program or arrangement as a result of the amendment
      or termination thereof, then the Company shall itself pay or provide
      therefor. Nothing in this Agreement shall preclude improvement or
      enhancement of any such Employee Benefits, provided that no such
      improvement shall in any way diminish any other obligation of the Company
      under this Agreement.

            (c) The Company has determined that the amounts payable pursuant to
      this Section 3 constitute reasonable compensation. Accordingly,
      notwithstanding any other provision hereof, unless such action would be
      expressly prohibited by applicable law, if any amount paid or payable
      pursuant to this Section 3 is subject to the excise tax imposed by Section
      4999 of the Internal Revenue Code of 1986, as amended (the "Code"), the
      Company will pay to the Executive an additional amount in cash equal to
      the amount necessary to cause the aggregate remuneration received by the
      Executive under this Section 3, including such additional cash payment
      (net of all federal, state and local income taxes and all taxes payable as
      the result of the application of Sections 280G and 4999 of the Code) to be
      equal to the aggregate remuneration the Executive would have received
      under this Section 3, excluding such additional payment (net of all
      federal, state and local income taxes), as if Sections 280G and 4999 of
      the Code (and any successor provisions thereto) had not been enacted into
      law.

      4.    TERMINATION FOLLOWING A CHANGE IN CONTROL.

            (a) In the event of the occurrence of a Change in Control, this
      Agreement may be terminated by the Company during the Period of Employment
      only upon the occurrence of one or more of the following events:

                  (i) If the Executive is unable to perform the essential
            functions of his job (with or without reasonable accommodation)
            because he has become permanently disabled within the meaning of,
            and actually begins to receive disability benefits pursuant to, the
            long-term disability plan in effect for senior executives or, if
            applicable, employees of the Company immediately prior to the Change
            in Control; or

                                      -4-
<PAGE>
                  (ii) For "Cause", which for purposes of this Agreement shall
            mean that, prior to any termination pursuant to Section 4(b) hereof,
            the Executive shall have committed:

                        (A) Gross negligence or willful misconduct in connection
                  with his duties or in the course of his employment with the
                  Company;

                        (B) an act of fraud, embezzlement or theft in connection
                  with his duties or in the course of his employment with the
                  Company;

                        (C) intentional wrongful damage to property of the
                  Company;

                        (D) intentional wrongful disclosure of secret processes
                  or confidential information of the Company;

                        (E) intentional wrongful engagement in any Competitive
                  Activity; or

                        (F) an act leading to a conviction of a felony or a
                  misdemeanor involving moral turpitude.

            For purposes of this Agreement, no act, or failure to act, on the
      part of the Executive shall be deemed "intentional" if it was due
      primarily to an error in judgment or negligence, but shall be deemed
      "intentional" only if done, or omitted to be done, by the Executive not in
      good faith and without reasonable belief that his action or omission was
      in the best interest of the Company. Notwithstanding the foregoing, the
      Executive shall not be deemed to have been terminated for "Cause"
      hereunder unless and until there shall have been delivered to the
      Executive a copy of a resolution duly adopted by the affirmative vote of
      not less than three-quarters of the Board then in office at a meeting of
      the Board called and held for such purpose (after reasonable notice to the
      Executive and an opportunity for the Executive, together with his counsel,
      to be heard before the Board), finding that, in the good faith opinion of
      the Board, the Executive had committed an act set forth above in this
      Section 4(a)(ii) and specifying the particulars thereof in detail. Nothing
      herein shall limit the right of the Executive or his beneficiaries to
      contest the validity or propriety of any such determination.

            (b) in the event of the occurrence of a Change in Control, this
      Agreement may be terminated by the Executive during the Period of
      Employment with the right to benefits as provided in Section 5 hereof upon
      the occurrence of one or more of the following events:

                  (i) Any termination by the Company of the employment of the
            Executive for any reason other than for Cause or as a result of the
            death of the Executive or by reason of the Executive's disability
            and the actual receipt of disability benefits in accordance with
            Section 4(a)(i) hereof; or

                                      -5-
<PAGE>
                  (ii) Termination by the Executive of his employment with the
            Company within three years after the Change in Control upon the
            occurrence of any of the following events:

                        (A) A reduction in the aggregate of the Executive's Base
                  Pay and Incentive Pay received from the Company, or the
                  termination of the Executive's rights to any Employee Benefits
                  to which he was entitled immediately prior to the Change in
                  Control or a reduction in scope or value thereof without the
                  prior written consent of the Executive, any of which is not
                  remedied within 10 calendar days after receipt by the Company
                  of written notice from the Executive of such change, reduction
                  or termination, as the case may be;

                        (B) The liquidation, dissolution, merger, consolidation
                  or reorganization of the Company or transfer of all or a
                  significant portion of its business and/or assets, unless the
                  successor or successors (by liquidation, merger,
                  consolidation, reorganization or otherwise) to which all or a
                  significant portion of its business and/or assets have been
                  transferred (directly or by operation of law) shall have
                  assumed all duties and obligations of the Company under this
                  Agreement pursuant to Section 11 hereof;

                        (C) The Company requires the Executive to have his
                  principal location of work changed to any location which is in
                  excess of 50 miles from the location thereof immediately prior
                  to the Change of Control or to travel away from his office in
                  the course of discharging his responsibilities or duties
                  hereunder significantly more (in terms of either consecutive
                  days or aggregate days in any calendar year) than was required
                  of him prior to the Change of Control without, in either case,
                  his prior consent;

                        (D) Any material breach of this Agreement by the Company
                  or any successor thereto; or

                        (E) The removal of the Executive as a Director of the
                  Company (or any successor thereto), if the Executive shall
                  have been a Director of the Company immediately prior to the
                  Change in Control.

            (c) A termination by the Company pursuant to Section 4(a) hereof or
      by the Executive pursuant to Section 4(b) hereof shall not affect any
      rights which the Executive may have pursuant to any agreement, policy,
      plan, program or arrangement of the Company providing Employee Benefits,
      which rights shall be governed by the terms thereof. If this Agreement or
      the employment of the Executive is terminated under circumstances in which
      the Executive is not entitled to any payments under Sections 3 or 5
      hereof, the Executive shall have no further obligation or liability to the
      Company hereunder with respect to his prior or any future employment by
      the Company.

                                      -6-
<PAGE>
      5.    SEVERANCE COMPENSATION.

            (a) If, following the occurrence of a Change in Control, the Company
      shall terminate the Executive's employment during the Period of Employment
      other than pursuant to Section 4(a) hereof, or if the Executive shall
      terminate his employment pursuant to Section 4(b) hereof, the Company
      shall pay to the Executive the amount specified in Section 5(a)(i) hereof
      within ten business days after the date (the "Termination Date") that the
      Executive's employment is terminated (the effective date of which shall be
      the date of termination, or such other date that may be specified by the
      Executive if the termination is pursuant to Section 4(b) hereof):

                  (i) In lieu of any further payments to the Executive for
            periods subsequent to the Termination Date, but without affecting
            the rights of the Executive referred to in Section 5(b) hereof, a
            lump sum payment (the "Severance Payment") in an amount equal to the
            present value (using a discount rate required to be utilized for
            purposes of computations under Section 280G of the Code or any
            successor provision thereto, or if no such rate is so required to be
            used, a rate equal to the then-applicable interest rate prescribed
            by the Pension Benefit Guarantee Corporation for benefit valuations
            in connection with non-multiemployer pension plan terminations
            assuming the immediate commencement of benefit payments (the
            "Discount Rate")) of the sum of (A) the aggregate Base Pay (at the
            highest rate in effect during the Term prior to the Termination
            Date) for three years, plus (B) the aggregate Incentive Pay for
            three years (based upon the greatest amount of Incentive Pay paid or
            payable to the Executive for any year during the three calendar
            years preceding the year in which the Termination Date occurs);
            provided, however, that in no event will the "present value" (as
            determined under Section 280G of the Code or any successor provision
            thereto) of the amount otherwise payable hereunder, when added to
            the "present value" (as determined under Section 280G of the Code or
            any successor provision thereto) of any other "parachute payments"
            (as that term is defined in Section 280G of the Code (without regard
            to Section 280G(b)(2)(A)(ii) thereof) or any successor provision
            thereto) from the Company, exceed an amount (the "299% Amount")
            equal to 299% of the Executive's "base amount" (as that term is
            defined in Section 280G of the Code or any successor provision
            thereto) and if the amount otherwise payable hereunder would exceed
            the 299% Amount, the Severance Payment shall be reduced to the
            extent necessary so that the aggregate present value determined in
            the previous clause does not exceed the 299% Amount.

                  (ii) The determination of whether any amount otherwise payable
            under Section 5(a)(i) causes the 299% Amount to be exceeded shall be
            made, if requested by the Executive or the Company, by tax counsel
            selected by the Company and reasonably acceptable to the Executive.
            The costs of obtaining such determination shall be borne by the
            Company. The fact that the Executive shall have his right to the
            Severance Payment reduced as a result of the existence of the
            limitations contained in this Section 5(a) shall not limit or
            otherwise affect any rights of the

                                      -7-
<PAGE>
            Executive to any Employee Benefit, or other right arising other than
            pursuant to this Agreement. Without limiting the generality of the
            foregoing, upon the Executive's termination of employment as
            provided in this Section 5, the Company shall pay over to him all
            vested benefits to which he is entitled under and in accordance with
            the terms of the Company's employee savings, stock ownership,
            supplemental executive retirement and similar Plans in the event
            such payments are not otherwise made in accordance with the terms of
            such plans.

                  (iii) Except to the extent that the payments or benefits
            pursuant to this Section 5(a)(iii) would result in a reduction of
            the amount of the Severance Payment because they would exceed the
            299% Amount, (A) for the remainder of the Period of Employment the
            Company shall arrange to provide the Executive with Employee
            Benefits substantially similar to those which the Executive was
            receiving or entitled to receive immediately prior to the
            Termination Date (and if and to the extent that such benefits shall
            not or cannot be paid or provided under any policy, plan, program or
            arrangement of the Company solely due to the fact that the Executive
            is no longer an officer or employee of the Company, then the Company
            shall itself pay or provide for the payment to the Executive, his
            dependents and beneficiaries, such Employee Benefits) and (B)
            without limiting the generality of the foregoing, the remainder of
            the Period of Employment shall be considered service with the
            Company for the purpose of service credits under the Company's
            retirement income, supplemental executive retirement and other
            benefit plans of the Company applicable to the Executive or his
            beneficiaries immediately prior to the Termination Date. Without
            otherwise limiting the purposes or effect of Section 6 hereof,
            Employee Benefits payable to the Executive pursuant to this Section
            5(a)(iii) by reason of any "welfare benefit plan" of the Company (as
            the term "welfare benefit plan" is defined in Section 3(1) of the
            Employee Retirement Income Security Act of 1974, as amended) shall
            be reduced to the extent comparable welfare benefits are actually
            received by the Executive from another employer during such period
            following the Executive's Termination Date until the expiration of
            the Period of Employment.

                  (iv) Notwithstanding any provision of the Section 5(a) to the
            contrary, in the event the benefits intended to be provided to the
            Executive pursuant to Section 5(a)(iii) hereof are required to be
            reduced in whole or in part because the value of such Employee
            Benefits, when added to the amount of the Severance Payment under
            Section 5(a)(i), would exceed 299% Amount, the Executive shall have
            the option to elect to receive, in lieu of all or a portion of the
            Severance Payment provided in Section 5(a)(i) hereof, one or more
            Employee Benefits, provided that (A) prior to the receipt of any
            payment under Section 5(a)(i) hereof, the Executive Benefit or
            Employee Benefits so elected to be received, and (B) in no event
            shall the "aggregate present value of the payments in the nature of
            compensation" (as that phrase is used in Section 280G of the Code)
            received by the Executive as a result of the receipt of such
            Employee Benefits, when added to the remaining portion of the
            Severance Payment, if any, to be received by the Executive, exceed
            the 299% Amount.

                                      -8-
<PAGE>
                  (v) In addition to all other compensation due to the
            Executive, the following shall occur immediately following the
            occurrence of a Change in Control:

                        (A) all Company stock options held by the Executive
                  prior to a Change in Control shall become fully exercisable,
                  regardless of whether or not the vesting conditions set forth
                  in the relevant stock option agreements have been satisfied in
                  full; and

                        (B) all restrictions on any restricted Company stock
                  granted to the Executive prior to a Change in Control shall be
                  removed and the stock shall be freely transferable, regardless
                  of whether the conditions set forth in the relevant restricted
                  stock agreements have been satisfied in full.

      (b) Upon written notice given by the Executive to the Company prior to the
receipt of any payment pursuant to Section 5(a) hereof, the Executive, at his
sole option, without reduction to reflect the present value of such amounts as
aforesaid, may elect to have all or any of the Severance Payment payable
pursuant to Section 5(a)(i) hereof paid to him on a quarterly or monthly basis
during the remainder of the Period of Employment.

      (c) There shall be no right of set-off or counterclaim in respect of any
claim, debt or obligation against any payment to or benefit for the Executive
provided for in this Agreement.

      (d) Without limiting the rights of the Executive at law or in equity, if
the Company fails to make any payment required to be made hereunder on a timely
basis, the Company shall pay interest on the amount thereof at an annualized
rate of interest equal to the then-applicable Discount Rate or, if lesser, the
highest rate allowed by applicable usury laws.

      6. NO MITIGATION OBLIGATION. The Company hereby acknowledges that it will
be difficult, and may be impossible, for the Executive to find reasonably
comparable employment following the Termination Date and that the noncompetition
covenant contained in Section 7 hereof will further limit the employment
opportunities for the Executive. Accordingly, the parties hereto expressly agree
that the payment of the severance compensation by the Company to the Executive
in accordance with the terms of this Agreement will be liquidated damages, and
that the Executive shall not be required to mitigate the amount of any payment
provided for in this Agreement by seeking other employment or otherwise, nor
shall any profits, income, earnings or other benefits from any source whatsoever
create any mitigation, offset, reduction or any other obligation on the part of
the Executive hereunder or otherwise, except as expressly provided in Section
5(a)(iii) hereof.

      7. COMPETITIVE ACTIVITY. During a period ending one year following the
Termination Date, if the Executive shall have received or shall be receiving
benefits under Section 5(a) hereof, the Executive shall not, without the prior
written consent by the Company, directly or indirectly engage in the business of
commercial banking in competition with the business of the Company within Harris
County, Fort Bend County and Montgomery County, Texas and any other geographical
area served by the Company during the twelve (12) month period immediately
preceding termination

                                      -9-
<PAGE>
of employment nor will the Executive engage, within this geographical area, in
the design, development, distribution, or sale of a product or service in
competition with any product or service being marketed or planned by the Company
at such time, the plans, designs or specifications of which have been revealed
to the Executive. The Executive acknowledges that these limited prohibitions are
reasonable as to time, geographical area and scope of activities to be
restrained and that the limited prohibitions do not impose a greater restraint
than is necessary to protect the Company's goodwill, proprietary information and
other business interests. "Competitive Activity" shall mean the prohibitions set
forth above in this Section 7, but shall not include (i) the mere ownership of
securities in any such enterprise and exercise of rights appurtenant thereto or
(ii) participation in management of any such enterprise or business operation
thereof other than in connection with the competitive operation of such
enterprise.

      8. LEGAL FEES AND EXPENSES. In the event of a breach of this Agreement by
the Company, it is the intent of the Company that the Executive not be required
to incur the expenses associated with the enforcement of his rights under this
Agreement by litigation or other legal action because the cost and expense
thereof would substantially detract from the benefits intended to be extended to
the Executive hereunder. Accordingly, if the Company fails to comply with any of
its obligations under this Agreement or in the event that the Company or any
other person takes any action to declare this Agreement void or unenforceable,
or institutes any litigation designed to deny, or to recover from, the Executive
the benefits intended to be provided to the Executive hereunder, the Company
irrevocably authorizes the Executive from time to time to retain counsel of his
choice, at the expense of the Company as hereafter provided, to represent the
Executive in connection with the initiation or defense of any litigation or
other legal action, whether by or against the Company or any Director, officer,
shareholder or other person affiliated with the Company, in any jurisdiction.
Notwithstanding any existing or prior attorney-client relationship between the
Company and such counsel, the Company irrevocably consents to the Executive's
entering into an attorney-client relationship with such counsel (other than
Vinson & Elkins L.L.P.), and in that connection the Company and the Executive
agree that a confidential relationship shall exist between the Executive and
such counsel. The Company shall pay or cause to be paid and shall be solely
responsible for any and all attorneys' and related fees and expenses incurred by
the Executive as a result of the Company's failure to perform this Agreement or
any provision thereof or as a result of the Company or any person contesting the
validity or enforceability of this Agreement or any provision thereof as
aforesaid. If the Company should prevail in any litigation regarding this
Agreement, however, the Company shall not be responsible for any attorneys' and
related fees and expenses incurred by Employee in connection with such
litigation.

      9. EMPLOYMENT RIGHTS. Nothing expressed or implied in this Agreement shall
create any right or duty on the part of the Company or the Executive to have the
Executive remain in the employment of the Company prior to any Change in
Control; provided, however, that any termination of employment of the Executive
or removal of the Executive as an Officer of the Company following the
commencement of any discussion with a third person that ultimately results in a
Change in Control shall be deemed to be a termination or removal of the
Executive after a Change in Control for purposes of this Agreement.

                                      -10-
<PAGE>
      10. WITHHOLDING OF TAXES. The Company may withhold from any amounts
payable under this Agreement all federal, state, city or other taxes as shall be
required pursuant to any law or government regulation or ruling.

      11.   SUCCESSORS AND BINDING AGREEMENT.

            (a) The Company shall require any successor (whether direct or
      indirect, by purchase, merger, consolidation, reorganization or otherwise)
      to all or substantially all of the business and/or assets of the Company
      to execute an agreement pursuant to which the successor expressly assumes
      all of the liabilities and obligations of the Company hereunder and agrees
      to perform this Agreement in the same manner and to the same extent the
      Company would be required to perform if no such succession had taken
      place. This Agreement shall be binding upon and inure to the benefit of
      the Company and any successor to the Company, including without limitation
      any persons acquiring directly or indirectly all or substantially all of
      the business and/or assets of the Company whether by purchase, merger,
      consolidation, reorganization or otherwise (and such successor shall
      thereafter be deemed the "Company" for the purposes of this Agreement),
      but shall not otherwise be assignable, transferable or delegable by the
      Company.

            (b) This Agreement shall inure to the benefit of and be enforceable
      by the Executive's personal or legal representatives, executors,
      administrators, successors, heirs, distributees and/or legatees.

            (c) This Agreement is personal in nature and neither of the parties
      hereto shall, without the consent of the other, assign, transfer or
      delegate this Agreement or any rights or obligations hereunder except as
      expressly provided in Section 11(a) hereof. Without limiting the
      generality of the foregoing, the Executive's right to receive payments
      hereunder shall not be assignable, transferable or delegable, whether by
      pledge, creation of a security interest or otherwise, other than by a
      transfer by the Executive's will or by the laws of descent and
      distribution and, in the event of any attempted assignment or transfer
      contrary to this Section 11(c), the Company shall have no liability to pay
      any amount so attempted to be assigned, transferred or delegated.

            (d) The Company and the Executive recognize that each party will
      have no adequate remedy at law for breach by the other of any of the
      agreements contained herein and, in the event of any such breach, the
      Company and the Executive hereby agree and consent that the other shall be
      entitled to a decree of specific performance, mandamus or other
      appropriate remedy to enforce performance of this Agreement.

      12. NOTICE. For all purposes of this Agreement, all communications
provided for herein shall be in writing and shall be deemed to have been duly
given when delivered or three business days after having been mailed by United
States registered or certified mail, return receipt requested, postage prepaid,
addressed to the Company (to the attention of the Secretary of the Company) at
its principal executive office and to the Executive at his principal residence,
or to such other address

                                      -11-
<PAGE>
as any party may have furnished to the other in writing
and in accordance herewith, except that notices of change of address shall be
effective only upon receipt.

      13. GOVERNING LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Texas, without giving effect to the principles of conflict of laws of such
State.

      14. VALIDITY. If any provision of this Agreement or the application of any
provision hereof to any person or circumstances is held invalid, unenforceable
or otherwise illegal, the remainder of this Agreement and the application of
such provision to any other person or circumstances shall not be affected, and
the provision so held to be invalid, unenforceable or otherwise illegal shall be
reformed to the extent (and only to the extent) necessary to make it
enforceable, valid and legal.

      15. MISCELLANEOUS. No provisions of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing signed by the Executive and the Company. No waiver by either party
hereto at any time of any breach by the other party hereto or compliance with
any condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreements or representations,
oral or otherwise, expressed or implied with respect to the subject matter
hereof have been made by either party which are not set forth expressly in this
Agreement.

      16. PRIOR AGREEMENTS. This Agreement is voluntarily entered into and
supersedes and takes the place of any prior change in control, severance or
employment agreements between the parties hereto. The parties hereto expressly
agree and hereby declare that any and all prior change in control, severance or
employment agreements between the parties are terminated and of no force or
effect.

      17. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same agreement.

                                      -12-
<PAGE>
      IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date first above written.

                              SOUTHWEST BANCORPORATION OF TEXAS, INC.

                              By: ____________________________________________

                              EXECUTIVE:

                              ________________________________________________
                              Paul B. Murphy, Jr.

                                      -13-

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