<PAGE>   1


                                                                   EXHIBIT 10.33


                                 PROMISSORY NOTE


U.S. $1,409,040.00                Houston, Texas               September 2, 1998

          BARRY J. GALT ("Maker"), whose address is 1811 Kirby Drive, Houston,
Texas 77019, for value received, promises to pay to the order of SEAGULL ENERGY
CORPORATION, a Texas corporation ("Payee"), at its headquarters at 1700 First
City Tower, 1001 Fannin Street, Houston, Texas 77002, the principal sum of ONE
MILLION FOUR HUNDRED NINE THOUSAND FORTY and 00/100s U.S. DOLLARS (U.S.
$1,409,040.00), together with interest thereon at the rate of six and one-half
percent (6.50%) per annum (but in no event to exceed the maximum rate of
interest allowed by law), payable as hereinafter provided.

         THIS NOTE is due and payable in full on May 31, 2002, including all
accrued interest thereon; provided, however, that to the extent that any of the
shares of Payee's common stock, par value $0.10 per share ("Common Stock")
acquired by Maker pursuant to the Expiring Option (as defined below) or any of
the securities, property or other rights received by Maker in respect of such
shares or as a dividend or distribution thereon are sold, transferred or
otherwise disposed of by Maker (which sales, transfers or dispositions shall be
subject to the provisions of the Security Agreement described below), then Maker
shall, within five business days after each such sale, transfer or disposition,
prepay the principal and accrued interest then owing under this Note to the
extent of the amount of cash proceeds (net of brokerage commissions and any tax
liability of Maker as a result of such sale) resulting therefrom.

         ALL SUMS paid hereon (whether at maturity or pursuant to any mandatory
or voluntary prepayment) shall apply first to the satisfaction of accrued
interest and the balance to the unpaid principal. All past due principal and
interest on this Note shall bear interest at the maximum rate permitted by law
from maturity until paid. All sums called for, payable or to be paid hereunder
shall be paid in lawful money of the United States of America which at the time
of payment is legal tender for the payment of public and private debts therein.

         MAKER AGREES to use the proceeds from the loan evidenced hereby solely
for the purposes of exercising his option to purchase 192,000 shares of Common
Stock that expires September 20, 1998 (the "Expiring Option") and to pay any
applicable taxes imposed on Maker by reason of the exercise of the Expiring
Option. The Expiring Option is a nonqualified stock option granted to Maker on
September 20,1988, under the Seagull Energy Corporation 1986 Stock Option Plan
(Restated), originally covering 365,740 shares (which option was previously
exercised by Maker against 173,740 shares of Common Stock; and there are 192,000
shares of Common Stock for which the options is remaining) at a post-split
exercise price of $6.3125. The Seagull Energy Corporation 1986 Stock Option Plan
was approved by the shareholders of Payee on May 12, 1986.

         MAKER HEREBY waives presentment and demand for payment, notice of
intent to accelerate maturity, notice of acceleration of maturity, protest or
notice of protest and non-payment, bringing of suit

                               (Page 1 of 3 Pages)

<PAGE>   2


U.S. $__________                  Houston, Texas             [September] _, 1998


and diligence in taking any action to collect any sums owing hereunder and in
proceeding against any of the rights and properties securing payment hereof, and
agrees that its liability on this Note shall not be affected by any release of
or change in any security for the payment of this Note.

         IN THE EVENT of a default in the payment of any installment of either
principal or interest as provided for herein, or in the performance of any
agreement or covenant contained in any instrument securing payment hereof,
without the giving of any notice of any kind, the holder of this Note shall have
the right and option, to declare the unpaid balance of principal and accrued
interest on this Note at once due and payable and to foreclose or require
foreclosure of any and all liens securing payment hereof, and to exercise any
and all other rights and remedies it may have. Failure to exercise this option
upon any default shall not constitute a waiver of the right to exercise it in
the event of any subsequent default.

         IN ADDITION to the mandatory prepayment obligations described above,
Maker reserves the option of prepaying the principal of this note, in whole or
in part, at any time after the date hereof without penalty. Accrued and unpaid
interest with respect to such principal amount prepaid is due and payable on the
date of such prepayment.

         THIS NOTE is issued in connection with the terms of that certain
Employment and Consulting Agreement effective as of August 24, 1998, by and
among Maker and Payee and is entitled to the benefits and security afforded by a
Security Agreement dated as of September 2, 1998 between Maker and Payee (the
"Security Agreement").

         THIS NOTE is and shall be construed and governed under the laws of the
State of Texas.

         IT IS EXPRESSLY stipulated and agreed to be the intent of Maker and
Payee to at all times comply with the usury and other laws applicable to this
Note and the Security Agreement and any subsequent revisions, repeals, or
judicial interpretations thereof, to the extent any of the same are applicable
hereto. If such laws are ever revised, repealed, or judicially interpreted so as
to render usurious any amount called for under this Note or under the Security
Agreement, or contracted for, charged, or received with respect to the
indebtedness evidenced by this Note, or if Payee's exercise of the option herein
contained to accelerate the maturity of this Note or if any prepayment by Maker
results in Maker having paid any interest in excess of that permitted by law,
then it is Maker's and Payee's express intent that all excess amounts
theretofore collected by Payee be credited on the principal balance of this Note
(or, if the Note has been paid in full, refunded to Maker), and the provisions
of this Note and the Security Agreement immediately be deemed reformed and the
amounts thereafter collectable hereunder and thereunder reduced, without the
necessity of the execution of any new document, so as to comply with the then
applicable law, but so as to permit the recovery of the fullest amount otherwise
called for hereunder and thereunder.

         AT MATURITY, HOWEVER SUCH MATURITY COMES ABOUT, MAKER MUST REPAY THE
ENTIRE OUTSTANDING PRINCIPAL AMOUNT AND ALL UNPAID INTEREST ACCRUED UNDER THIS
NOTE. PAYEE IS

                               (Page 2 of 3 Pages)

<PAGE>   3


U.S. $__________                  Houston, Texas             [September] _, 1998

UNDER NO OBLIGATION TO REFINANCE OR RENEW THIS NOTE AT THAT TIME. MAKER,
THEREFORE, WILL BE REQUIRED TO MAKE PAYMENT OUT OF OTHER ASSETS THAT MAKER MAY
OWN OR WILL HAVE TO FIND ANOTHER LENDER WILLING TO LEND MAKER THE FUNDS TO MAKE
THE PAYMENT ON THIS NOTE.



                                       -------------------------------
                                          BARRY J. GALT

                              (Page 3 of 3 Pages)
<PAGE>   4
                               SECURITY AGREEMENT

                  (Common Stock of Seagull Energy Corporation)



                                   Executed by

                                  BARRY J. GALT

                                   in favor of

                           SEAGULL ENERGY CORPORATION

                                   dated as of

                                September 2, 1998


<PAGE>   5
                               SECURITY AGREEMENT

                   Common Stock of Seagull Energy Corporation

         THIS SECURITY AGREEMENT (this "Agreement") is made as of September 2,
1998, by BARRY J. GALT, a natural person, who resides at 1811 Kirby Drive,
Houston, Texas 77019 ("Pledgor") in favor of SEAGULL ENERGY CORPORATION, a Texas
corporation, with offices at 1700 First City Tower, 1001 Fannin Street, Houston,
Texas 77002 ("Secured Party").

         A. WHEREAS, Pledgor and Secured Party executed an Employment and
Consulting Agreement effective as of August 24, 1998 (such agreement, as may
from time to time be amended or supplemented, being hereinafter called the "EC
Agreement").

         B. WHEREAS, Secured Party has conditioned its obligations under the EC
Agreement upon the execution and delivery by Pledgor of this Agreement, and
Pledgor has agreed to enter into this Agreement.

         C. THEREFORE, in order to comply with the terms and conditions of the
EC Agreement, to secure the Obligations as hereinafter defined, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Pledgor hereby agrees with Secured Party as follows:

         Section 1. Pledge. Pledgor hereby pledges, assigns and grants to
Secured Party a security interest in and right of set-off against the assets
referred to in Section 2 (the "Collateral") to secure the prompt payment and
performance of the "Obligations" (as herein defined) and the performance by
Pledgor of this Agreement.

         Section 2. Collateral. The Collateral consists of the following types
or items of property:

                  (A) The following securities: One Hundred Ninety-Two Thousand
         (192,000) shares of the Common Stock of Seagull Energy Corporation
         ("Seagull Common Stock") represented by Certificate No. S75133 as
         delivered herewith and each such share having a par value of $0.10.

                  (B) (i) the certificates or instruments, if any, representing
         such securities, (ii) all dividends (cash, stock or otherwise), cash,
         securities, instruments, rights to subscribe, purchase or sell and all
         other rights and property from time to time received, receivable or
         otherwise distributed in respect of or in exchange for any or all of
         such securities, (iii) all replacements, additions to and substitutions
         for any of the property referred to in this Section 2, including,
         without limitation, claims against third parties and including without
         limitation pursuant to any merger, conversion, share exchange,
         recapitalization or other transaction, and (iv) the proceeds, interest,
         profits and other income of or on any of the property referred to in
         this Section 2.

         It is expressly contemplated that additional securities or other
property may from time to time be pledged, assigned or granted to Secured Party
as additional security for the Obligations, and the term "Collateral" as used
herein shall be deemed for all purposes hereof to include all such additional
securities and property, together with all other property of the types described
above related thereto.



                                      - 1 -

<PAGE>   6
         Section 3. Transfer of Collateral. All certificates or instruments
representing or evidencing the Pledged Securities shall be delivered to and held
pursuant hereto by Secured Party or a person or entity designated by Secured
Party and shall be in suitable form for transfer by delivery, or shall be
accompanied by duly executed instruments of transfer or assignment in blank.

         Section 4. Certain Definitions. As used in this Agreement, the
following terms shall have the following meanings, unless the context otherwise
requires:

                  "Agreement" means this Security Agreement, as the same may
         from time to time be amended or supplemented.

                  "Code" means the Uniform Commercial Code as presently in
         effect in the State of Texas, Business and Commerce Code, Chapters 1
         through 9. Unless otherwise indicated by the context herein, all
         uncapitalized terms (or terms that are otherwise uncapitalized in this
         Agreement but are capitalized at the beginning of a sentence) which are
         defined in the Code shall have their respective meanings as used in
         Chapters 8 and 9 of the Code.

                  "Event of Default" means any event specified in Section 15.

                  "Highest Lawful Rate" means the maximum rate of nonusurious
         interest allowed from time to time by applicable law.

                  "Obligations" means the promissory note of Pledgor dated
         September 2, 1998, payable to the order of Seagull Energy Corporation
         in the principal amount of One Million Four Hundred Nine Thousand Forty
         and 00/100 Dollars ($1,409,040), and any and all renewals, extensions
         for any period, rearrangements or enlargements. The Obligations shall
         also include all interest and any other sums payable by Pledgor to
         Secured Party in connection with the execution, administration or
         enforcement of Secured Party's rights and remedies hereunder or any
         other agreement with Pledgor.

                  "Pledged Securities" means all of the securities and other
         property (whether or not the same constitutes a "security" under the
         Code) referred to in Section 2 and all additional securities (as that
         term is defined in the Code), if any, constituting Collateral under
         this Agreement.

         Section 5. Representations. In order to induce Secured Party to accept
this Agreement, Pledgor represents and warrants to Secured Party (which
representations and warranties will survive the creation and payment of the
Obligations) that:

                  (A) Ownership of Collateral; Encumbrances; Valid and Binding
         Agreement. Pledgor is the legal and beneficial owner of the Collateral
         free and clear of any adverse claim, lien, security interest, option or
         other charge or encumbrance except for the security interest created by
         this Agreement, and Pledgor has full right, power and authority to
         pledge, assign and grant a security interest in the Collateral to
         Secured Party. This Agreement and the Obligations constitute legal,
         valid and binding obligations of Pledgor enforceable against Pledgor in
         accordance with their respective terms. The execution, delivery and
         performance of this Agreement or the Obligations will not violate the
         terms of any contract, agreement, law, regulation, order, injunction,
         judgment, decree or writ to which Pledgor is subject and do not require
         the consent or approval of any other person or entity.


                                      - 2 -

<PAGE>   7
                  (B) The pledge of Pledged Securities pursuant to this
         Agreement creates a valid and perfected first priority security
         interest in the Collateral, enforceable against Pledgor and all third
         parties and securing payment of the Obligations.

         Section 6. Covenants and Agreement. Pledgor will at all times comply
with the covenants and agreements contained in this Section 6, from the date
hereof and for so long as any part of the Obligations are outstanding.

                  (A) Sale, Disposition or Encumbrance of Collateral. Pledgor
         will not in any way encumber any of the Collateral (or permit or suffer
         any of the Collateral to be encumbered) or sell, pledge, assign, lend
         or otherwise dispose of or transfer any of the Collateral to or in
         favor of any person or entity other than Secured Party. Notwithstanding
         the foregoing, Pledgor may sell shares of Seagull Energy Corporation
         Common Stock that constitute Pledged Securities in open market
         brokerage transactions for cash but only if and to the extent that the
         cash proceeds (net of brokerage commissions and any tax liability of
         Pledgor as a result of such sale) are used to satisfy the mandatory
         prepayment obligations in accordance with the terms of the promissory
         note comprising the Obligations.

                  (B) Dividends, Distributions, Merger and Recapitalizations.
         Any and all dividends and interest paid in respect of the Collateral
         (as well as any other cash, securities, properties, rights or other
         assets constituting Collateral) shall be, and shall be forthwith
         delivered to Secured Party to hold as, Collateral and shall, if
         received by Pledgor, be received in trust for the benefit of Secured
         Party, be segregated from the other property or funds of Pledgor, and
         be forthwith delivered to Secured Party as Collateral in the same form
         as so received (with any necessary endorsement).

                  (C) Payment of Taxes and Liens. Pledgor will pay prior to
         delinquency all taxes, charges, liens and assessments against the
         Collateral.

                  (D) Further Assurances; Stock Powers. Upon the request of
         Secured Party, Pledgor shall (at Pledgor's expense) execute and deliver
         all such documents, including, without limitation, all documents
         necessary to comply with federal regulations relating to margin lending
         against securities, assignments, certificates, instruments, securities,
         financing statements, notifications to financial intermediaries or
         other third parties or other documents and give further assurances and
         do all other acts and things as Secured Party may reasonably request to
         perfect Secured Party's interest in the Collateral or to protect,
         enforce or otherwise effect Secured Party's rights and remedies
         hereunder. Pledgor shall also furnish to Secured Party such stock
         powers and other instruments as may be required by Secured Party to
         assure the transferability of the Collateral when and as often as may
         be requested by Secured Party.

                  (E) Voting and Other Consensual Rights. Except to the extent
         otherwise provided in Section 18(D), Pledgor shall be entitled to
         exercise any and all voting and other consensual rights pertaining to
         the Collateral or any part thereof for any purpose not inconsistent
         with the terms of this Agreement; provided however, that Pledgor shall
         not exercise or refrain from exercising any such right if such action
         would have a material adverse effect on the value of the Collateral or
         any part thereof, and, provided, further, that upon request of Secured
         Party at any time or from time to time, Pledgor shall give Secured
         Party prompt written notice of the manner in which Pledgor has
         exercised, or the reasons for refraining from exercising, any such
         right.



                                      - 3 -

<PAGE>   8
                  (F) Performance of Obligations. Pledgor will promptly and
         properly perform all of his obligations under this Agreement and any
         other agreement or contract of any kind now or hereafter existing as
         security for or in connection with the payment of the Obligations.

         Section 7. Non-judicial Enforcement. Secured Party may enforce its
rights with respect to the Collateral without prior judicial process or judicial
hearing, and to the extent permitted by law Pledgor expressly waives any and all
legal rights which might otherwise require Secured Party to enforce its rights
with respect to the Collateral by judicial process.

         Section 8. Attorney-in-Fact. Pledgor hereby irrevocably appoints
Secured Party as Pledgor's attorney-in-fact, with full authority in the place
and stead of Pledgor and in the name of Pledgor or otherwise, from time to time
in Secured Party's discretion, but at Pledgor's cost and expense and without
notice to Pledgor, to take any action and to execute any assignment,
certificate, financing statement, stock power, notification, document or
instrument which Secured Party may deem necessary or advisable to accomplish the
purposes of this Agreement, including, without limitation, to receive, endorse
and collect all instruments made payable to Pledgor representing any dividend,
interest payment or other distribution in respect of the Collateral or any part
thereof and to give full discharge for the same.

         Section 9. Discharge Encumbrances. Secured Party may, at its option,
discharge any taxes, liens, security interests or other encumbrances at any time
levied or placed on the Collateral. Pledgor agrees to reimburse Secured Party
upon demand for any payment so made, plus interest thereon from the date of
Secured Party's demand at the Highest Lawful Rate.

         Section 10. Transfer of Collateral. Secured Party may transfer any or
all of the Obligations, and upon any such transfer Secured Party may transfer
its interest in any or all of the Collateral and shall be fully discharged
thereafter from all liability therefor. Any transferee of the Collateral shall
be vested with all rights, powers and remedies of Secured Party hereunder.

         Section 11. Cumulative and Other Rights. The rights, powers and
remedies of Secured Party hereunder are in addition to all rights, powers and
remedies given by law or in equity. The exercise by Secured Party of any one or
more of the rights, powers and remedies herein shall not be construed as a
waiver of any other rights, powers and remedies, including, without limitation,
any other rights of set-off.

         Section 12. Disclaimer of Certain Duties.

                  (A) The powers conferred upon Secured Party by this Agreement
         are to protect its interest in the Collateral and shall not impose any
         duty upon Secured Party to exercise any such powers. Pledgor hereby
         agrees that Secured Party shall not be liable for, nor shall the
         indebtedness evidenced by the Obligations be diminished by, Secured
         Party's commercially reasonable delay or failure to collect upon,
         foreclose, sell, take possession of or otherwise obtain value for the
         Collateral.

                  (B) Secured Party shall be under no duty whatsoever to make or
         give any presentment, notice of dishonor, protest, demand for
         performance, notice of non-performance, notice of intent to accelerate,
         notice of acceleration, or other notice or demand in connection with
         any Collateral or the Obligations, or to take any steps necessary to
         preserve any rights against any Obligor or other person or entity.
         Pledgor waives any right of marshaling in respect of any and all
         Collateral, and waives any right to


                                      - 4 -

<PAGE>   9
         require Secured Party to proceed against any Obligor or other person or
         entity or enforce any other remedy which Secured Party now has or may
         hereafter have against any Obligor or other person or entity.

         Section 13. Waiver of Notice; Demand and Presentment. Pledgor hereby
waives any demand, notice of default, notice of acceleration of the maturity of
the Obligations, notice of intention to accelerate the maturity of the
Obligations, presentment, protest and notice of dishonor as to any action taken
by Secured Party in connection with this Agreement, or any instrument or
document.

         Section 14. Custody and Preservation of the Collateral. Secured Party
shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which comparable secured parties accord
comparable collateral, it being understood and agreed, however, that Secured
Party shall not have responsibility for (i) ascertaining or taking action with
respect to calls, conversions, exchanges, maturities, tenders or other matters
relative to any Collateral, whether or not Secured Party has or is deemed to
have knowledge of such matters, or (ii) taking any necessary steps to preserve
rights against persons or entities with respect to any Collateral.

         Section 15. Events of Default. Any of the following events shall 
constitute an Event of Default under this Agreement:

                  (A) Payments - Pledgor defaults in any payment due and owing
         pursuant to the Obligations;

                  (B) Representations and Warranties - any representation or
         warranty made by Pledgor to Secured Party proves to have been incorrect
         in any material respect as of the date thereof;

                  (C) Covenants - material default is made by Pledgor in the
         performance of any covenant or agreement contained in this Agreement or
         in any of the Obligations or in any other document now or hereafter
         executed in connection with or as security for the Obligations;

                  (D) Insolvency, etc. - Pledgor shall: (i) become insolvent,
         (ii) have a custodian, receiver or agent appointed or authorized to
         take charge of his properties, (iii) make an assignment for the benefit
         of creditors or call a meeting of creditors for the composition of
         debts, or (iv) be subject to the commencement of any proceeding in
         bankruptcy or under other insolvency laws; or

                  (E) Defaults on Other Obligations - (i) default by Pledgor in
         any payment of principal of or interest on any other indebtedness,
         guaranty or other obligation (whether to Secured Party or others)
         beyond any period of grace provided with respect thereto, or (ii) any
         material default by Pledgor in the performance of any other agreement,
         term or condition if the effect of such default is to cause such
         obligation to become due on demand or before its stated maturity or to
         permit the holder(s) of such obligation or the trustee(s) under any
         such agreement or instrument to cause such obligation to become due on
         demand or prior to its stated maturity, whether or not such default or
         failure to perform should be waived by the holder(s) of such obligation
         or such trustee(s).


                                      - 5 -
<PAGE>   10

         Section 16. Remedies. Upon the occurrence and during the continuance of
any Event of Default, Secured Party may take any or all of the following actions
without notice (except where expressly required below or as otherwise required
by law) or demand to Pledgor:

                  (A) Declare all or part of the indebtedness pursuant to the
         Obligations immediately due and payable and enforce payment of the same
         by Pledgor.

                  (B) Sell or otherwise dispose of any or all of the Collateral
         in any commercially reasonable manner as Secured Party may elect,
         pursuant to the provisions of the Code and other applicable law,
         including, without limitation, sell, in one or more sales and in one or
         more parcels, or otherwise dispose of any or all of the Collateral in
         any commercially reasonable manner as Secured Party may elect, in a
         public or private transaction, at any location as deemed reasonable by
         Secured Party either for cash or credit or for future delivery at such
         price as Secured Party may deem fair, and (unless prohibited by the
         Code, as adopted in any applicable jurisdiction) Secured Party may be
         the purchaser of any or all Collateral so sold and may apply upon the
         purchase price therefor any Obligations secured hereby. Any such sale
         or transfer by Secured Party either to itself or to any other person or
         entity shall be absolutely free from any claim or right by Pledgor,
         including any equity or right of redemption, stay or appraisal which
         Pledgor has or may have under any rule of law, regulation or statute
         now existing or hereafter adopted. Upon any such sale or transfer,
         Secured Party shall have the right to deliver, assign and transfer to
         the purchaser or transferee thereof the Collateral so sold or
         transferred. If Secured Party deems it advisable to do so, it may
         restrict the bidders or purchasers of any such sale or transfer to
         persons or entities who will represent and agree that they are
         purchasing the Collateral for their own account and not with the view
         to the distribution or resale of any of the Collateral. Secured Party
         may, at its discretion, provide for a public sale, and any such public
         sale shall be held at such time or times within ordinary business hours
         and at such place or places as Secured Party may fix in the notice of
         such sale. Secured Party shall not be obligated to make any sale
         pursuant to any such notice. Secured Party may, without notice or
         publication, adjourn any public or private sale by announcement at any
         time and place fixed for such sale, and such sale may be made at any
         time or place to which the same may be so adjourned. In the event any
         sale or transfer hereunder is not completed or is defective in the
         reasonable opinion of Secured Party, such sale or transfer shall not
         exhaust the rights of Secured Party hereunder, and Secured Party shall
         have the right to cause one or more subsequent sales or transfers to be
         made hereunder. If only part of the Collateral is sold or transferred
         such that the Obligations remain outstanding (in whole or in part),
         Secured Party's rights and remedies hereunder shall not be exhausted,
         waived or modified, and Secured Party is specifically empowered to make
         one or more successive sales or transfers until all the Collateral
         shall be sold or transferred and all the Obligations are paid. In the
         event that Secured Party elects not to sell the Collateral, Secured
         Party retains its rights to dispose of or utilize the Collateral or any
         part or parts thereof in any manner authorized or permitted by law or
         in equity, and to apply the proceeds of the same towards payment of the
         Obligations. Each and every method of disposition of the Collateral
         described in this subsection or in subsection (D) shall constitute
         disposition in a commercially reasonable manner.

                  (C) Apply proceeds of the disposition of the Collateral to the
         Obligations in any manner elected by Secured Party and permitted by the
         Code or otherwise permitted by law or in equity.

                  (D) Appoint any person or entity as agent to perform any act
         or acts necessary or incident to any sale or transfer by Secured Party
         of the Collateral.


                                     - 6 -
<PAGE>   11

                  (E) Exercise all other rights and remedies permitted by law or
         in equity.

         Section 17. Liability for Deficiency. If any sale or other disposition
of Collateral by Secured Party or any other action of Secured Party hereunder
results in reduction of the Obligations, such action will not release Pledgor
from its liability to Secured Party for any unpaid Obligations, together with
interest thereon, and the same shall be immediately due and payable to Secured
Party at Secured Party's address set forth in the opening paragraph hereof.

         Section 18. Pledged Securities. Upon the occurrence and during the 
continuance of an Event of Default:

                  (A) All rights of Pledgor to receive the dividends and
         interest payments which it would otherwise be authorized to receive and
         retain pursuant to Section 6(E) shall cease, and all such rights shall
         thereupon become vested in Secured Party who shall thereupon have the
         sole right to receive and hold as Collateral such dividends and
         interest payments, but Secured Party shall have no duty to receive and
         hold such dividends and interest payments and shall not be responsible
         for any failure to do so or delay in so doing.

                  (B) All dividends and interest payments which are received by
         Pledgor contrary to the provisions of this Section 18 shall be received
         in trust for the benefit of Secured Party, shall be segregated from
         other funds of Pledgor and shall be forthwith paid over to Secured
         Party as Collateral in the same form as so received (with any necessary
         indorsement).

                  (C) Secured Party may exercise any and all rights of
         conversion, exchange, subscription or any other rights, privileges or
         options pertaining to any of the Pledged Securities as if it were the
         absolute owner thereof, including without limitation, the right to
         exchange at its discretion, any and all of the Pledged Securities upon
         the merger, consolidation, reorganization, recapitalization or other
         readjustment of any issuer of such Pledged Securities or upon the
         exercise by any such issuer or Secured Party of any right, privilege or
         option pertaining to any of the Pledged Securities, and in connection
         therewith, to deposit and deliver any and all of the Pledged Securities
         with any committee, depositary, transfer agent, registrar or other
         designated agency upon such terms and conditions as it may determine,
         all without liability except to account for property actually received
         by it, but Secured Party shall have no duty to exercise any of the
         aforesaid rights, privileges or options and shall not be responsible
         for any failure to do so or delay in so doing.

                  (D) If the issuer of any Pledged Securities is the subject of
         bankruptcy, insolvency, receivership, custodianship or other
         proceedings under the supervision of any court or governmental agency
         or instrumentality, then all rights of Pledgor to exercise the voting
         and other consensual rights which Pledgor would otherwise be entitled
         to exercise pursuant to Section 6(E) with respect to the Pledged
         Securities issued by such issuer shall cease, and all such rights shall
         thereupon become vested in Secured Party who shall thereupon have the
         sole right to exercise such voting and other consensual rights, but
         Secured Party shall have no duty to exercise any such voting or other
         consensual rights and shall not be responsible for any failure to do so
         or delay in so doing.



                                      - 7 -
<PAGE>   12

         Section 19. Reasonable Notice. If any applicable provision of any law
requires Secured Party to give reasonable notice of any sale or disposition or
other action, Pledgor hereby agrees that five days' prior written notice shall
constitute reasonable notice thereof.

         Section 20. Notices. Any notice required or permitted to be given under
or in connection with this Agreement shall be in writing and shall be mailed by
first class or express mail, postage prepaid, or sent by telecopy or other
similar form of rapid written transmission or personally delivered to the
receiving party. All such communications shall be mailed, sent or delivered at
the address respectively indicated in the opening paragraph hereof or at such
other address as either party may have furnished the other party in writing. Any
communication so addressed and mailed shall be deemed to be given when so
mailed, any notice so sent by rapid written transmission shall be deemed to be
given when receipt of such transmission is acknowledged by the receiving
operator or equipment, and any communication so delivered in person shall be
deemed to be given when receipted for or actually received by Pledgor or Secured
Party, as the case may be.

         Section 21. Amendments and Waivers. Secured Party's acceptance of
partial or delinquent payments or any forbearance, failure or delay by Secured
Party in exercising any right, power or remedy hereunder shall not be deemed a
waiver of any obligation of Pledgor, or of any right, power or remedy of Secured
Party; and no partial exercise of any right, power or remedy shall preclude any
other or further exercise thereof. Secured Party may remedy any Event of Default
hereunder or in connection with the Obligations without waiving the Event of
Default so remedied. Pledgor hereby agrees that if Secured Party agrees to a
waiver of any provision hereunder, or an exchange of or release of the
Collateral, or the addition or release of any obligor or other person or entity,
any such action shall not constitute a waiver of any of Secured Party's other
rights or of Pledgor's obligations hereunder. This Agreement may be amended only
by an instrument in writing executed jointly by Pledgor and Secured Party.

         Section 22. Interest. It is the intention of the parties hereto to
conform strictly to usury laws applicable to Secured Party. Accordingly, if the
transactions contemplated hereby would be usurious under applicable state or
federal law, then, notwithstanding anything to the contrary in this Agreement or
in any other agreement entered into in connection with or as security for the
Obligations, it is agreed as follows: (i) the aggregate of all consideration
which constitutes interest under law applicable to Secured Party that is
contracted for, taken, reserved, charged or received under the Obligations, this
Agreement or under any of such other agreements or otherwise in connection with
the Obligations shall under no circumstances exceed the maximum amount allowed
by such applicable law, (ii) in the event that the maturity of the Obligations
is accelerated for any reason, or in the event of any required or permitted
prepayment, then such consideration that constitutes interest under law
applicable to Secured Party may never include more than such maximum amount, and
(iii) excess interest, if any, provided for in this Agreement or otherwise shall
be canceled automatically and, if theretofore paid, shall be credited by Secured
Party on the principal amount of the Obligations (or, to the extent that the
principal amount of the Obligations shall have been or would thereby be paid in
full, refunded by Secured Party to Pledgor). The right to accelerate the
maturity of the Obligations does not include the right to accelerate any
interest which has not otherwise accrued on the date of such acceleration, and
Secured Party does not intend to, and will not, collect any unearned interest in
the event of acceleration. All sums paid or agreed to be paid to Secured Party
for the use, forbearance or detention of sums included in the initial
Obligations shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread throughout the full term of the Obligations until
payment in full so that the rate or amount of interest on account of the initial
Obligations does not exceed the applicable 



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<PAGE>   13

usury ceiling, if any. To the extent that Article 5069-1.04 of the Texas Revised
Civil Statutes is relevant to Secured Party for the purpose of determining the
Highest Lawful Rate, Secured Party hereby elects to determine the applicable
rate ceiling under such Article by the indicated (weekly) rate ceiling from time
to time in effect, subject to Secured Party's right subsequently to change such
method in accordance with applicable law.

         Section 23. Governing Law; Jurisdiction. This Agreement and the
security interest granted hereby shall be construed in accordance with and
governed by the laws of the State of Texas, without giving effect to principles
of conflict of laws (except to the extent that the laws of any other
jurisdiction govern the perfection and priority of the security interests
granted hereby). Pledgor consents to and submits to in personam jurisdiction and
venue in the state district and county courts of the county wherein Secured
Party's offices are located at the address specified in the opening paragraph
hereof, and in the Federal District Courts of the district wherein such offices
of Secured Party are located. This submission to jurisdiction is nonexclusive
and does not preclude Secured Party from obtaining jurisdiction over Pledgor or
the Collateral in any court otherwise having jurisdiction.

         Section 24. Subrogation. Until all indebtedness in connection with the
Obligations shall have been paid in full, Pledgor shall have no right to
subrogation or to enforce any remedy or participate in any Collateral or
security whatsoever now or hereafter held by Secured Party.

         Section 25. Continuing Security Agreement.

                  (A) This Agreement shall constitute a continuing security
         agreement, and all representations and warranties, covenants and
         agreements shall, as applicable, apply to all future as well as
         existing transactions. Provisions of this Agreement, unless by their
         terms exclusive, shall be in addition to other agreements between the
         parties.

                  (B) Except as may be expressly applicable pursuant to Section
         9.505 of the Code, no action taken or omission to act by Secured Party
         hereunder, including, without limitation, any exercise of voting or
         consensual rights pursuant to Section 6(D) or any other action taken or
         inaction pursuant to Section 16, shall be deemed to constitute a
         retention of the Collateral in satisfaction of the Obligations or
         otherwise to be in full satisfaction of the Obligations, and the
         Obligations shall remain in full force and effect, until Secured Party
         shall have applied payments (including, without limitation, collections
         from Collateral) towards the Obligations in the full amount then
         outstanding or until such subsequent time as is hereinafter provided in
         subsection (C) below.

                  (C) To the extent that any payments on the Obligations or
         proceeds of the Collateral are subsequently invalidated, declared to be
         fraudulent or preferential, set aside or required to be repaid to a
         trustee, debtor in possession, receiver or other person or entity under
         any bankruptcy law, common law or equitable cause, then to such extent
         the Obligations so satisfied shall be revived and continue as if such
         payment or proceeds had not been received by Secured Party, and Secured
         Party's security interests, rights, powers and remedies hereunder shall
         continue in full force and effect. In such event, this Agreement shall
         be automatically reinstated if it shall theretofore have been
         terminated pursuant to.

         Section 26. Redelivery of Collateral. If any sale or transfer of
Collateral by Secured Party results in full satisfaction of the Obligations, and
after such sale or transfer and discharge there remains a surplus of 



                                      - 9 -
<PAGE>   14

proceeds, Secured Party will deliver to Pledgor such excess proceeds in a
commercially reasonable time; provided, however, that Secured Party shall not be
liable for any interest, cost or expense in connection with any reasonable delay
in delivering such proceeds to Pledgor.

         Section 27. Custody and Preservation of the Collateral. Secured Party
shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which comparable secured parties accord
comparable collateral, it being understood and agreed, however, that Secured
Party shall not have responsibility for (i) ascertaining or taking action with
respect to calls, conversions, exchanges, maturities, tenders or other matters
relative to any Collateral, whether or not Secured Party has or is deemed to
have knowledge of such matters, or (ii) taking any necessary steps to preserve
rights against persons or entities with respect to any Collateral.

         Section 28. Termination. The grant of a security interest hereunder and
all of Secured Party's rights, powers and remedies in connection therewith shall
remain in full force and effect until Secured Party has (i) retransferred and
delivered all Collateral in its possession to Pledgor, (ii) executed a
registration of release with respect to all Pledged Securities, if any, as to
which Secured Party held a registered pledge; and (iii) executed a written
release or termination statement and reassigned to Pledgor without recourse or
warranty any remaining Collateral and all rights conveyed hereby. Upon the
complete payment of the Obligations and the compliance by Pledgor with all
covenants and agreements hereof, Secured Party, at the written request of
Pledgor, will release, reassign and transfer the Collateral to Pledgor and
declare this Agreement to be of no further force or effect. Notwithstanding the
foregoing, the provisions of subsection 25(C) shall survive the termination of
this Agreement.


PLEDGOR:
                                  --------------------------------
                                  BARRY J. GALT


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