<PAGE>
 
                                                                    EXHIBIT 10.4
NationsBank


NationsBank of Texas, N.A.        Security Agreement

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                                                     Date: September 16, 1996
                                                                      
Between
                                  and
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Bank: (Secured Party)             Debtor/Pledgor:                         
                                                                          
NationsBank of Texas, N.A.        KTL, Inc.                               
Banking Center: Dallas            301 Commerce Street                     
 Commercial Banking               Suite 1101                              
901 Main Street, 7th Floor        Fort Worth, Tarrant County, Texas  76102 
P.O. Box 831000
Dallas, Dallas County,
 Texas 75283-1000
Attention: Mr. Russell P. 
 Hartsfield
                                  
(Address including county)        (Name and address including county) 

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Debtor/Pledgor is: [_] Individual [X] Corporation [_] Partnership  [_] Other
                                                                            ----
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Address is Debtor's:     [_] Residence       [_] Place of Business  
[X]  Chief Executive Office if more than one place of business.
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(This agreement contains some provisions preceded by boxes.  Mark only those
boxes beside provisions which will be applicable to this transaction.  A box
which is not marked means that the provision beside it is not applicable to this
transaction.)

A. Security Interest.  For good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged and subject to the applicable terms of
this agreement Debtor/Pledgor (hereinafter referred to as Debtor) assigns and
grants to Bank (also known as Secured Party), a security interest and lien in
the Collateral to secure the payment and the performance of the Obligation.

B. Collateral.  The security interest is granted in the following ("Collateral")
(Check as applicable)

1.
[X] Accounts.  Any and all accounts, accounts receivable, receivables, contract
rights, general intangibles, book debts, checks, notes, drafts, instruments,
chattel paper, acceptances, choses in action, any and all amounts due to Debtor
from a factor or other forms of obligations and receivables now existing or
hereafter arising out of the business of the Debtor, as well as any and all
returned, refused and repossessed goods, and the cash or non-cash proceeds
resulting therefrom.

[_] Inventory.  Any and all of Debtor's inventory, including without limitation
any and all goods held for sale or lease or being processed for sale or lease in
Debtor's business as now or hereafter conducted, whether now owned or
hereinafter acquired, including all materials, goods and work in process,
finished goods, and other tangible property held for sale or lease or furnished
or to be furnished under contracts of service or used or consumed in Debtor's
business, along with all documents (including documents of title) covering
inventory, all cash and non-cash proceeds from the sale of inventory including
proceeds from insurance and specifically including but not limited to (attach
Schedule if necessary):

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[X] Equipment.  Any and all of Debtor's furnishings and equipment, wherever
located, whether now owned or hereafter acquired, together with all increases,
parts, fittings, accessories, equipment, and special tools now or hereafter
affixed to any part thereof or used in connection therewith, and all products,
additions, substitutions, accessions, and all cash and non-cash proceeds,
including proceeds from insurance thereof and thereto, including without
limitation the following (attach Schedule if necessary):

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[X] Vehicles.  All present and future automobiles, trucks, truck tractors,
trailers, semi-trailers, or other motor vehicles or rolling stock, now owned or
hereafter acquired by Debtor, including, without limitation, the motor vehicles
listed on Schedule 1 attached hereto (collectively, "Vehicles").
          ----------                                 --------   

[_] Fixtures.  All of Debtor's fixture now existing or hereafter acquired,
together with all substitutes and replacements therefor, all accessions and
attachments thereto, and all tools, parts and equipment now or hereafter added
to or used in connection therewith.  These goods are or will become fixtures on
the following described real estate in                               County,
                                       ------------------------------        
                   (State), owned by:
------------------                    ------------------------------------------
[name of owner] more particularly described as follows:

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                                                                 [insert legal 
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description (or attach Exhibit) of property, not street address], including
without limitation the following (attach schedule if necessary):

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[_] Instruments and/or Investment Documents. The following described instruments
and documents including, without limitation, negotiable instruments, promissory
notes, and documents of title owned or to be owned by Debtor, certificates of
deposit, and all liens, security agreement, leases and other contracts securing
or otherwise relating to any of said instruments or documents, and all cash and
non-cash proceeds and products thereof and such additional property receivable
or distributed in respect of or in exchange for all or any of such instruments
or documents (attach Schedule if necessary):
                                             -----------------------------------

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[_] General Intangibles.  All patents, trademarks, service marks, trade secrets,
copyrights and exclusive licenses (whether issued or pending) and all documents,
applications, materials and other matters related thereto, all inventions, and
all manufacturing, engineering and production plans, drawings, specifications,
processes and systems, all trade names, computer programs, data bases, systems
and software (including source and object codes), goodwill, choses in action and
all other general intangibles of Debtor whether now owned or hereafter acquired
and all cash and non-cash proceeds thereof, including without limitation the
following described intangible personal property, and all chattel paper,
documents and instruments relating to such intangibles, including without
limitation (attach schedule if necessary):
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[_] Timber. All of Debtor's uncut timber growing or to be grown on the following
described property, and all cash and non-cash proceeds including proceeds from
insurance, and all products thereof (complete legal description of real property
required) (attached Exhibit if necessary):
                                           -------------------------------------

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[_] Other:
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                  (hereinafter referred to as "Goods" and all proceeds thereof).
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2. All substitutes and replacements for, accessions, attachments and other
additions to, tools, parts and equipment used in connection with, and proceeds
and products of, the above Collateral, including all income and benefits
resulting from any of the above, such as dividends payable or distributable in
cash, property or stock; interest, premium and principal payments; redemption
proceeds and subscription rights; all certificates of title, manufacturer's
statements of origin, other documents, accounts and chattel paper arising from
or related to the above Collateral, and returned or repossessed Collateral, any
of which, if received by Debtor, upon request after an event of default shall be
delivered immediately to Bank.

3. The balance of every deposit account of Debtor under control of Bank and any
other claim of Debtor against Bank, now or hereafter existing, liquidated or
unliquidated, and all money, instruments, securities, documents, chattel paper,
credits, claims, demands, income, and any other property, rights and interests
of Debtor which at any time shall come into the possession or custody or under
the control of Bank or any of its agents, affiliates or correspondents, for any
purpose, and the proceeds of any thereof.  Bank shall be deemed to have
possession of any of the Collateral in transit to or set apart for it or any of
its agents, affiliates or correspondents.

C. Obligation.

1. Description of Obligations.  The following obligations ("Obligation") are
secured by this agreement: (a) All debts, obligations, liabilities and
agreements of Debtor to Bank, now or hereafter existing, arising directly or
indirectly between Debtor and Bank whether absolute or contingent, joint or
several, secured or unsecured, due or not due, contractual or tortious,
liquidated or unliquidated, arising by operation of law or otherwise, and all
renewals, extensions or rearrangement of any of the above including, without
limitation, all obligations of Debtor pursuant to that certain Continuing and
Unconditional Guaranty dated February 1, 1996, between Debtor and Bank; (b)
Bank's participation in any loan or other debt of Debtor to another person; (c)
All costs incurred by Bank to obtain, preserve, perfect and enforce this
agreement and maintain, preserve, collect and enforce the Collateral; (d)
Interest on the above amounts as agreement between Bank and Debtor; (e) All
debt, obligations and liabilities of AmeriTruck Distribution Corp. (such party,
together with the Debtor named above, is hereinafter referred to collectively as
"Debtor") to Bank of the kinds described in this Item C, now existing or
hereafter arising including, without limitation, all obligations of Debtor
pursuant to that certain Loan Agreement dated February 1, 1996, between
AmeriTruck Distribution Corporation and Bank (the "Loan Agreement"); (f) All
                                                   --------------           
expenses of the Bank, including fees and expenses of the Bank's counsel,
incident to the enforcement of payment of all obligations of the Debtor by any
action or participation in, or in connection with a case or proceeding under the
Bankruptcy Code, or any successor statute thereto; (g) If the Debtor is not the
obligor of any of the Obligations, and in the event any amount paid to the Bank
on any Obligation is subsequently recovered from the Bank in or as a result of
any bankruptcy, insolvency or fraudulent conveyance proceeding, the Debtor shall
be liable to the Bank for the amounts so recovered up to the fair market value
of the Collateral whether or not the Collateral has been released or the
security interest terminated.  In the event the Collateral has been released or
the security interest terminated, the fair market value of the Collateral shall
be determined, at the Bank's option, as of the date the Collateral was released,
the security interest terminated, or said amounts were recovered; and (h) All
amounts which may be owed to Bank pursuant to all other loan documents executed
between Bank and any other Debtor.

D. Debtor's Warranties.  Debtor hereby represents and warrants to Bank as
follows:

1. Financing Statements.  Except as may be noted by schedule attached hereto and
incorporated herein by reference, no financing statement covering the Collateral
is or will be on file in any public office, except the financing statements
relating to this security interest, and no security interest, other than the one
herein created, has attached or been perfected in the Collateral or any part
thereof.

2. Ownership.  Debtor owns the Collateral free from any setoff, claim,
restriction, lien, security interest or encumbrance except liens for Permitted
Liens (as defined in the Loan Agreement).

3. Fixtures and Accessions.  None of the Collateral is affixed to real estate or
is an accession to any goods, or will become a fixture or accession, except as
expressly set out herein.

4. Claims of Debtors on Collateral.  All account debtors and other obligors
whose debts or obligations are part of the Collateral have no right to setoffs,
counterclaims or adjustments, and no defenses in connection therewith, except
for adjustments made in the ordinary course of Debtor's business.

5. Power and Authority.  Debtor has full power and authority to make this
agreement.

E. Debtor's Covenants.  Until full payment and performance of all Obligations
and termination or expiration of any obligation or commitment of Bank to make
advances or loans to Debtor, unless Bank otherwise consents in writing:

1. Obligation and This Agreement.  Debtor shall perform all of its agreements
herein and in any other agreements between it and Bank.

2. Ownership of Collateral.  Debtor shall defend the Collateral against all
claims and demands of all persons at any time claiming any interest therein
adverse to Bank. Debtor shall keep the Collateral free from all liens and
security interests except for Permitted Liens.

3. Insurance.  Debtor shall insure the Collateral with companies reasonably
acceptable to Bank and in accordance with the terms of the Loan Agreement.  All
insurance policies shall be written for the benefit of Debtor and Bank as their
interests may appear, payable to Bank as loss payee, or in other form
satisfactory to Bank, and such policies or

                                      -2-
<PAGE>
 
certificates evidencing the same shall be furnished to Bank.  All policies of
insurance shall provide for written notice to Bank at least 30 days prior to
cancellation.  Risk of loss or damage is Debtor's to the extent of any
deficiency in any effective insurance coverage.

4.   Maintenance.  Debtor shall keep all tangible Collateral in good condition.

5.   Bank's Costs.  Debtor shall pay all costs necessary to obtain, preserve,
perfect, defend and enforce this security interest, collect the Obligation, and
preserve, defend, enforce and collect the Collateral including but not limited
to taxes, assessments, insurance premiums, repairs, reasonable attorney's fees
and legal expenses, food, rent, storage costs and expenses of sales.  Whether
Collateral is or is not in Bank's possession, and without any obligation to do
so and without waiving Debtor's default for failure to make any such payment,
Bank at its option may pay any such costs and expenses, discharge encumbrances
on Collateral, and pay for insurance of Collateral, and such payment shall be a
part of the Obligation and bear interest at the rate set out in the Obligation.
Debtor agrees to reimburse Bank on demand for any costs so incurred.

6.   Information and Inspection.  Debtor shall (i) promptly furnish Bank any
information with respect to Collateral requested by Bank; (ii) allow Bank or its
representatives to inspect the Collateral, at any time upon reasonable notice
and wherever located, and to inspect and copy, or furnish Bank or its
representatives with copies of, all records relating to the Collateral and the
Obligation; (iii) furnish Bank or its representatives such information as Bank
may reasonably request to identify Collateral, at the time and in the form
requested by Bank; and (iv) deliver upon request to Bank shipping and delivery
receipts evidencing the shipment of goods and invoices evidencing the receipt
of, and the payment for, Collateral.

7.   Additional Documents.  Debtor shall sign and deliver any papers furnished
by Bank which are necessary or desirable in the judgment of Bank to obtain,
maintain and perfect the security interest hereunder and to enable Bank to
comply with the Federal Assignment of Claims Act or any other federal or state
law in order to obtain or perfect Bank's interest in Collateral or to obtain
proceeds of Collateral.

8.   Parties Liable on Collateral.  Debtor will preserve the liability of all
obligors on any Collateral, will preserve the priority of all security therefor,
and will deliver to Bank the original certificates of title on all motor
vehicles or other titled vehicles constituting the Collateral when and as
required by the Loan Agreement.  Bank shall have no duty to preserve such
liability or security, but may do so at the expense of Debtor, without waiving
Debtor's default.

9.   Right of Bank to Notify Debtors.  At any time after an event of default,
whether Debtor is or is not in default hereunder, Bank may notify persons
obligated on any Collateral to make payments directly to Bank and Bank may take
control of all proceeds of any Collateral.  Until Bank elects to exercise such
rights, Debtor, as agent of Bank, shall collect and enforce all payments owed on
Collateral.

10.  Records of Collateral.  Debtor at all times will maintain accurate books
and records covering the Collateral.  Debtor immediately will mark all books and
records with an entry showing the absolute assignment of all Collateral to Bank
and Bank is hereby given the right to audit the books and records of Debtor
relating to Collateral at any time upon reasonable notice and from time to time.
The amounts shown as owed to Debtor on Debtor's books and on any assignment
schedule will be the undisputed amounts owing and unpaid.

11.  Disposition of Collateral.  If disposition of any Collateral gives rise to
an account, chattel paper or instrument, Debtor immediately shall notify Bank,
and upon request of Bank after an event of default shall assign or indorse the
same to Bank.  No Collateral may be sold, leased, manufactured, processed or
otherwise disposed of by Debtor in any manner without the prior written consent
of Bank, except Collateral sold, leased, manufactured, processed or consumed in
the ordinary course of business.

12.  Accounts.  Each account held as Collateral will represent the valid and
legally enforceable obligation of third parties (subject to adjustments in the
ordinary course of Debtor's business), and shall not be evidenced by any
instrument or chattel paper.

13.  Location of Collateral.  Debtor shall give Bank written notice of each
office of Debtor in which records of Debtor pertaining to accounts held as
Collateral are kept, and each location at which Collateral is or will be kept,
and of any change of any such location.  If no such notice is given, all records
of Debtor pertaining to Collateral are and shall be kept at Debtor address shown
above.

14.  Notice of Changes.  Debtor will notify Bank immediately of any material
change in the Collateral, of a change in Debtor's residence or location, of a
change in any matter warranted or represented by Debtor in this agreement or
furnished to Bank, and of any event of default.

15.  Use and Removal of Collateral.  Debtor will not use the Collateral
illegally nor, unless previously indicated as a fixture, permit the Collateral
to be affixed in real or personal property without the prior written consent of
Bank.

16.  Possession of Collateral.  Except as provided in the Loan Agreement, Debtor
will deliver all other instruments, documents and chattel paper which are part
of the Collateral and in Debtor's possession to the Bank immediately, or if
hereafter acquired, immediately following acquisition, appropriately indorsed to
Bank's order, or with appropriate, executed powers.  Except as provided in the
Loan Agreement, Debtor waives presentment, notice of acceleration, demand,
notice of dishonor, protest, and all other notices with respect hereto.

17.  [Reserved].

18.  Change of Name/Status.  Without the written consent of Bank, Debtor shall
not change its name, change its corporate status, use any trade name or engage
in any business in which it was not engaged on the date of this agreement.

19.  Power of Attorney.  Debtor appoints Bank as Debtor's attorney-in-fact with
full power in Debtor's name and behalf to do every act which Debtor is obligated
to do or may be required to do hereunder, however, nothing in this paragraph
shall be construed to obligate Bank to take any action hereunder nor shall Bank
be liable to Debtor for failure to take any action hereunder.  This appointment
shall be deemed a power coupled with an interest and shall not be terminable as
long as the Obligations are outstanding and shall not terminate on the
disability or incompetence of the Debtor.

20.  Waivers by Debtor.  Except as provided in the Loan Agreement, Debtor waives
notice of the creation, advance, increase, existence, extension or renewal of,
and of any indulgence with respect to, the Obligation; waives presentment,
demand, notice of dishonor, and protest; waives notice of the amount of the
Obligation outstanding at any time, notice of any change in financial condition
of any person liable for the Obligation or any part thereof, notice of any event
of default, and all other notices respecting the Obligation; and agrees that
maturity of the Obligation and any part thereof may be accelerated, extended or
renewed one or more times by Bank in its discretion, without notice to Debtor.
Debtor waives any right to require that any action be brought against any other
person or to require that resort be had to any other security or to any balance
of any deposit account.  The Debtor further waives any right of subrogation or
to enforce any right of action against any other Debtor until the Obligation is
paid in full.

21.  Other Parties and Other Collateral.  No renewal or extension of or any
other indulgence with respect to the Obligation or any part thereof, no release
of any security, no release of any person (including any maker, indorser,
guarantor or surety) liable on the Obligation, no delay in enforcement of
payment, and no delay or omission or lack of diligence or care in exercising any
right or power with respect to the Obligation or any security therefor or
guaranty thereof or under this agreement shall in any manner impair or affect
the rights of Bank under the law, hereunder, or under any other agreement
pertaining to the Collateral.  Bank need not file suit or assert a claim for
personal judgment against any person for any part of the Obligation or seek to
realize upon any other security for the Obligation, before foreclosing or
otherwise realizing upon the Collateral for the purpose of paying the
Obligation.  Debtor waives any right to the benefit of or to require or control
application of any other security or proceeds thereof, and agrees that Bank
shall have no duty or obligation to Debtor to apply to the Obligation any such
other security or proceeds thereof.

22.  Collection and Segregation of Accounts.  Until the occurrence of an event
of default, the Bank hereby authorizes the Debtor to collect the Collateral,
subject to the direction and control of the Bank, but the Bank may, without
cause or notice, curtail or terminate said authority at any time.  Upon notice
by the Bank, whether oral or in writing, to the Debtor, the Debtor shall
forthwith upon receipt of all checks, drafts, cash, and other remittances in
payment of or on account of the Collateral, deposit the same in one or more
special accounts maintained with the Bank over which the Bank alone shall have
the power of withdrawal.  The remittance of the proceeds of such Collateral
shall not, however,

                                      -3-

<PAGE>
 
constitute payment or liquidation of such Collateral until the Bank shall
receive good funds for such proceeds.  Funds placed in such special accounts
shall be held by the Bank as security for all Obligations secured hereunder.
These proceeds shall be deposited in precisely the form received, except for the
indorsement of the Debtor where necessary to permit collection of items, which
indorsement the Debtor agrees to make, and which indorsement the Bank is also
hereby authorized, as attorney-in-fact, to make on behalf of the Debtor.  In the
event the Bank has notified the Debtor to make deposits to a special account,
pending such deposit, the Debtor agrees that it will not commingle any such
checks, drafts, cash or other remittances with any funds or other property of
the Debtor, but will hold them separate and apart therefrom, and upon an express
trust for the Bank until deposit thereof is made in the special account.  The
Bank will, from time to time, apply the whole or any part of the Collateral
funds on deposit in this special account against such Obligations as are accrued
hereby as the Bank may in its sole discretion elect.  At the sole election of
the Bank, any portion of said funds on deposit in the special account which the
Bank shall elect not to apply to the Obligations, may be paid over by the Bank
to the Debtor.

23.  Compliance with State and Federal Laws.  Debtor will comply with all State
and Federal laws and regulations applicable to its business, whether now in
effect or hereafter enacted including but not limited to the wage and hours laws
and relating to the use or disposal of hazardous materials and wastes.

24.  Vehicles.  Debtor shall cause Bank's security interest in all Vehicles to
be properly noted on all certificates of title issued or outstanding with
respect to such Vehicles.

F.   Rights and Powers of Bank.

1.   General.  Bank, after default, without liability to Debtor may: obtain from
any person information regarding Debtor or Debtor's business, which information
any such person also may furnish without liability to Debtor; require Debtor to
give possession or control of any Collateral to Bank; indorse as Debtor's agent
any instruments, documents or chattel paper in Collateral or representing
proceeds of Collateral; contact account debtors directly to verify information
furnished by Debtor; take control of proceeds, including stock received as
dividends or by reason of stock splits; release Collateral in its possession to
any Debtor, temporarily or otherwise; reject as unsatisfactory any property
hereafter offered by Debtor as Collateral; set standards from time to time to
govern what may be used as after acquired Collateral; take control of funds
generated by the Collateral, such as cash dividends, interest and proceeds or
refunds from insurance, and use same to reduce any part of the Obligation and
exercise all other rights which an owner of such Collateral may exercise, except
the right to vote or dispose of Collateral before an event of default; at any
time transfer any of the Collateral or evidence thereof into its own name or
that of its nominee; and demand, collect, convert, redeem, receipt for, settle,
compromise, adjust, sue for, foreclose or realize upon Collateral, in its own
name or in the name of Debtor, as Bank may determine.  Bank shall not be liable
for failure to collect any account or instruments, or for any act or omission on
the part of the Bank, its officers, agents or employees, except willful
misconduct and gross negligence.  The foregoing rights and powers of Bank will
be in addition to, and not a limitation upon, any rights and powers of Bank
given by law, elsewhere in this agreement, in the Loan Agreement or otherwise.
If Debtor fails to maintain any required insurance, to the extent permitted by
applicable law Bank may (but is not obligated to) purchase single interest
insurance coverage for the Collateral which insurance may at Bank's option (i)
protect only Bank and not provide any remuneration or protection for Debtor
directly and (ii) provide coverage only after the Obligation has been declared
due as herein provided.  The premiums for any such insurance purchased by Bank
shall be a part of the Obligation and shall bear interest as provided in B.1.d.
hereof.

2.   Convertible Collateral.  Bank, may present for conversion any Collateral
which is convertible into any other instrument or investment security or a
combination thereof with cash, but Bank shall not have any duty to present for
conversion any Collateral unless it shall have received from Debtor detailed
written instructions to that effect at a time reasonably far in advance of the
final conversion date to make such conversion possible.

G.   Default.

1.   Event of Default.  An event of default shall occur if: (i) an Event of
Default as defined in the Loan Agreement shall occur and be continuing; or (ii)
there is a loss, theft, damage or destruction of any material portion of the
Collateral for which there is no insurance coverage or for which, in the opinion
of the Bank there is insufficient insurance coverage.

2.   Rights and Remedies. If any Event of Default shall occur, then, in each and
every such case, the Bank may, without presentment, demand, or protest; notice
of default, dishonor, demand, non-payment, or protest; notice of intent to
accelerate all or any part of the Obligation; notice of acceleration of all or
any part of the Obligation; or notice of any other kind, all of which Debtor
hereby expressly waives, (except for any notice required under this agreement,
any other loan document or applicable law); at any time thereafter exercise
and/or enforce any of the following rights and remedies:

a)   Possession and Collection of Collateral. At its option: (i) take possession
or control of, store, lease, operate, manage, sell or otherwise dispose of, all
or any part of the Collateral; (ii) notify all parties under any account or
contract right forming all or any part of the Collateral to make any payments
otherwise due to the Debtor directly to the Bank; (iii) in the Bank's own name,
or in the name of the Debtor, demand, collect, receive, sue for, and give
receipts and releases for, any and all amounts due under such accounts and
contract rights; (iv) indorse as the agent of the Debtor any check, note,
chattel paper, documents, or instruments forming all or any part of the
Collateral; (v) make formal application for transfer to the Bank (or to any
assignee of the Bank to any purchaser of any of the Collateral) of all of the
Debtor's permits, licenses, approvals, agreements, and the like relating to the
Collateral or to the Debtor's business; (vi) take any other action which the
Bank deems necessary or desirable to protect and realize upon its security
interest in the Collateral; and (vii) in addition to the foregoing, and not in
substitution therefor, exercise any one or more of the rights and remedies
exercisable by the Bank under any other provision of this agreement, under any
of the other loan documents, or as provided by applicable law (including,
without limitation, the Uniform Commercial Code as in effect in Texas
(hereinafter referred to as the "UCC")). In taking possession of the Collateral
the Bank may enter the Debtor's premises and otherwise proceed without legal
process, if this can be done without breach of the peace. The Debtor shall, upon
the Bank's demand, promptly make the Collateral or other security available to
the Bank at a place designated by the Bank, which place shall be reasonably
convenient to both parties.

The Bank shall not be liable for, nor be prejudiced by, any loss, depreciation
or other damages to the Collateral, unless caused by the Bank's willful and
malicious act.  The Bank shall have no duty to take any action to preserve or
collect the Collateral.

b)   Receiver.  Obtain the appointment of a receiver for all or any of the
Collateral, the Debtor hereby consenting to the appointment of such a receiver
and agreeing not to oppose any such appointment.

c)   Right of Set Off. Without notice or demand to the Debtor, set off and apply
against any and all of the Obligations any and all deposits (general or special,
time or demand, provisional or final) and any other indebtedness, at any time
held or owing by the Bank to or for the credit of the account of the Debtor.

Bank shall be entitled to immediate possession of all books and records
evidencing any Collateral or pertaining to chattel paper covered by this
agreement and it or its representatives shall have the authority to enter upon
any premises upon which any of the same, or any Collateral, may be situated and
remove the same therefrom without liability.  Bank may surrender any insurance
policies in Collateral and receive the unearned premium thereon.  Debtor shall
be entitled to any surplus and shall be liable to Bank for any deficiency.  The
proceeds of any disposition after default available to satisfy the Obligation
shall be applied to the Obligation in such order and in such manner as Bank in
its discretion shall decide.

H.   General.

1.   Parties Bound. Bank's rights hereunder shall inure to the benefit of its
successors and assigns, and in the event of any assignment or transfer of any of
the Obligation or the Collateral, Bank thereafter shall be fully discharged from
any responsibility with respect to the Collateral so assigned or transferred,
but Bank shall retain all rights and powers hereby given with respect to any of
the Obligation or Collateral not so assigned or transferred. All
representations, warranties and agreements of Debtor if more than one are joint
and several and all shall be binding upon the personal representatives, heirs,
successors and assigns of Debtor.

2.   Waiver. No delay of Bank in exercising any power or right shall operate as
a waiver thereof; nor shall any single or partial exercise of any power or right
preclude other or further exercise thereof or the exercise of any other power of
right. No waiver by Bank of any right hereunder or of any default by Debtor
shall be binding upon Bank unless in writing, and no failure by Bank to exercise
any power or right hereunder or waiver of any default by Debtor shall operate as
a waiver of any other or further exercise of such right or power or of any
further default. Each right, power and remedy of the Bank as provided for in any
of the loan documents, or which shall now or hereafter exist at law or in equity
or by statute or otherwise, shall be cumulative and concurrent and shall be in
addition to every other such right, power or remedy. The exercise or beginning
of the exercise by the Bank of any one or more of such rights, powers or
remedies shall not preclude the simultaneous or later exercise by the Bank of
any or all other such rights, powers or remedies.

                                      -4-
<PAGE>
 
3.   Agreement Continuing.  This agreement shall constitute a continuing
agreement, applying to all future as well as existing transactions, whether or
not of the character contemplated at the date of this agreement, and if all
transactions between Bank and Debtor shall be closed at any time, shall be
equally applicable to any new transactions thereafter. Provisions of this
agreement, unless by their terms exclusive, shall be in addition to other
agreements between the parties.  Time is of the essence of this agreement.

4.   Definitions.  Unless the context indicates otherwise, definitions in the
UCC apply to words and phrases in this agreement; if UCC definitions conflict,
Article 9 definitions apply.

5.   Notice.  Notice shall be deemed reasonable if mailed postage prepaid at
least 5 days before the related action (or if the UCC elsewhere specifies a
longer period, such longer period) to the address of Debtor given above.

6.   Modifications.  No provision hereof shall be modified or limited except by
a written agreement expressly referring hereto and to the provisions so modified
or limited and signed by the Debtor and Bank, nor by course of conduct, usage of
trade.

7.   Partial Invalidity.  The unenforceability or invalidity of any provision of
this security agreement shall not affect the enforceability or validity of any
other provision herein and the invalidity or unenforceability of any provision
of any loan document to any person or circumstance shall not affect the
enforceability or validity of such provision as it may apply to other persons or
circumstances.

8.   Gender and Number.  Where appropriate, the use of one gender shall be
construed to include the others or any of them; and the singular number shall be
construed to include the plural, and vice versa.

9.   Applicable Law and Venue.  This agreement has been delivered in the State
of Texas, and except for the creation, perfection and priority of the liens and
security interests created hereby in the Collateral, which shall be governed by
the laws of the state provided in Section 9-103 of the Uniform Commercial Code,
this agreement shall be construed in accordance with the laws of that State. It
is performable by Debtor in the county or city of Bank's address set out above
and Debtor expressly waives any objection as to venue in any such location.
Wherever possible each provision of this agreement shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this agreement shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition of invalidity,
without invalidating the remainder of such provisions or the remaining
provisions of this agreement.

10.  Financing Statement.  To the extent permitted by applicable law, a carbon,
photographic or other reproduction of this security agreement or any financing
statement covering the Collateral shall be sufficient as a financing statement.

11.  Counterparts.  This agreement may be executed in any number of
counterparts, each of which shall be considered to be an original, but all of
which shall constitute one in the same instrument.  As used herein "this
agreement" shall include all attachments and addenda.

12.  Limitation.  It is the intention of Debtor and Bank that the amount of the
Obligation secured by Debtor by this agreement shall be in, but not in excess
of, the maximum amount permitted by fraudulent conveyance, fraudulent transfer
or similar laws applicable as to Debtor.  Accordingly, notwithstanding anything
to the contrary contained in this agreement or any other agreement or instrument
executed in connection with the payment of any of the Obligation, the amount of
the Obligation secured by this agreement shall be limited to that amount which
after giving effect thereto would not (i) render Debtor insolvent, (ii) result
in the fair saleable value of the assets of Debtor being less than the amount
required to pay its debts and other liabilities (including contingent
liabilities) as they mature, or (iii) leave Debtor with unreasonably small
capital to carry out its business as now conducted and as proposed to be
conducted, including its capital needs, as such concepts described in (i), (ii)
and (iii) herein are determined under applicable law, if the obligations of
Debtor hereunder would otherwise be set aside, terminated, annulled or avoided
for such reason by a court of competent jurisdiction in a proceeding actually
pending before such court.  For purposes of this agreement, the term "applicable
law" means as to Debtor each statute, law, ordinance, regulation, order,
judgment, injunction or decree of the United States or any state or
commonwealth, any municipality, any foreign country, or any territory,
possession or tribunal applicable to Debtor.

13.  ARBITRATION.  ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES HERETO
INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR ANY RELATED AGREEMENTS OR INSTRUMENTS, INCLUDING ANY CLAIM BASED ON OR
ARISING FROM AN ALLEGED TORT, SHALL BE DETERMINED BY BINDING ARBITRATION IN
ACCORDANCE WITH THE FEDERAL ARBITRATION ACT (OR IF NOT APPLICABLE, THE
APPLICABLE STATE LAW), THE RULES OF PRACTICE AND PROCEDURE FOR THE ARBITRATION
OF COMMERCIAL DISPUTES OF JUDICIAL ARBITRATION AND MEDIATION SERVICES, INC.
(J.A.M.S.) AND THE "SPECIAL RULES" SET FORTH BELOW.  IN THE EVENT OF ANY
INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL.  JUDGMENT UPON ANY ARBITRATION
AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION.  ANY PARTY TO THIS
AGREEMENT MAY BRING AN ACTION, INCLUDING A SUMMARY OR EXPEDITED PROCEEDING, TO
COMPEL ARBITRATION OF ANY CONTROVERSY OR CLAIM TO WHICH THIS AGREEMENT APPLIES
IN ANY COURT HAVING JURISDICTION OVER SUCH ACTION.

A.   SPECIAL RULES.  THE ARBITRATION SHALL BE CONDUCTED IN THE CITY OF THE
BORROWER'S DOMICILE AT THE TIME OF THIS AGREEMENT'S EXECUTION AND ADMINISTERED
BY J.A.M.S. WHO WILL APPOINT AN ARBITRATOR; IF J.A.M.S. IS UNABLE OR LEGALLY
PRECLUDED FROM ADMINISTERING THE ARBITRATION, THEN THE AMERICAN ARBITRATION
ASSOCIATION WILL SERVE.  ALL ARBITRATION HEARINGS WILL BE COMMENCED WITHIN 90
DAYS OF THE DEMAND FOR ARBITRATION; FURTHER, THE ARBITRATOR SHALL ONLY, UPON A
SHOWING OF CAUSE, BE PERMITTED TO EXTEND THE COMMENCEMENT OF SUCH HEARING FOR UP
TO AN ADDITIONAL 60 DAYS.

B.   RESERVATIONS OF RIGHTS.  NOTHING IN THIS AGREEMENT SHALL BE DEEMED TO (I)
LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE STATUTES OF LIMITATION OR
REPOSE AND ANY WAIVERS CONTAINED IN THIS AGREEMENT; OR (II) BE A WAIVER BY THE
BANK OF THE PROTECTION AFFORDED TO IT BY 12 U.S.C. SEC. 91 OR ANY SUBSTANTIALLY
EQUIVALENT STATE LAW; OR (III) LIMIT THE RIGHT OF THE BANK HERETO (A) TO
EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED TO) SETOFF, OR (B) TO
FORECLOSE AGAINST ANY REAL OR PERSONAL PROPERTY COLLATERAL, OR (C) TO OBTAIN
FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES SUCH AS (BUT NOT LIMITED TO)
INJUNCTIVE RELIEF, WRIT OF POSSESSION OR THE APPOINTMENT OF A RECEIVER.  THE
BANK MAY EXERCISE SUCH SELF HELP RIGHTS, FORECLOSE UPON SUCH PROPERTY, OR OBTAIN
SUCH PROVISIONAL OR ANCILLARY REMEDIES BEFORE, DURING OR AFTER THE PENDENCY OF
ANY ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS AGREEMENT.  AT BANK'S
OPTION, FORECLOSURE UNDER A DEED OF TRUST OR MORTGAGE MAY BE ACCOMPLISHED BY ANY
OF THE FOLLOWING: THE EXERCISE OF A POWER OF SALE UNDER THE DEED OF TRUST OR
MORTGAGE, OR BY JUDICIAL SALE UNDER THE DEED OF TRUST OR MORTGAGE, OR BY
JUDICIAL FORECLOSURE.  NEITHER THIS EXERCISE OR SELF HELP REMEDIES NOR THE
INSTITUTION OR MAINTENANCE OF AN ACTION FOR FORECLOSURE OR PROVISIONAL OR
ANCILLARY REMEDIES SHALL CONSTITUTE A WAIVER OF THE RIGHT OF ANY PARTY,
INCLUDING THE CLAIMANT IN ANY SUCH ACTION, TO ARBITRATE THE MERITS OF THE
CONTROVERSY OR CLAIM OCCASIONING RESORT TO SUCH REMEDIES.

14.  NOTICE OF FINAL AGREEMENT.  THIS WRITTEN AGREEMENT AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES.  THERE ARE NO UNWRITTEN OR ORAL AGREEMENTS BETWEEN THE PARTIES.

                     Remainder of Page Intentionally Blank.
                           Signature Page to Follow.

                                      -5-
<PAGE>
 
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be duly
executed under seal by their duly authorized representatives as of the date
first above written.


Bank/Secured Party

NationsBank of Texas, N.A.


By:  /s/ RUSSELL P. HARTSFIELD                      (Seal)
     ----------------------------------------------

Name:     Russell P. Hartsfield

Title:    Senior Vice President



DEBTOR/PLEDGOR:

----------------------------------------
Print Individual's Name:

                                  (Seal)
----------------------------------


----------------------------------------
Print Individual's Name:

                                  (Seal)
----------------------------------


KTL, INC.
----------------------------------------
(Name of Corporation, Partnership, etc.)


By: /s/ KENNETH H. EVANS, JR.     (Seal)
   -------------------------------
   Kenneth H. Evans, Jr.
   Title: Treasurer
         -------------------------------


                                      -6-
<PAGE>
 
                                   SCHEDULE 1

                                    VEHICLES



                                      -7-