I initially thought that the Hounds worked like this:
Two adjacent hounds use companion.
The first hound begins spending AP while adjacent to another hound. He gets a free walk for beginning his activation. He follows it with some more walking, or charging, or whatever, ending many inches away from the first dog.
Then the second hound begins spending AP, eg, he begins his activation. He is not near any other dogs. So no free walk.
But then I was told that hounds work like this:
Two adjacent hounds use companion. They both "begin their activation" immediately upon declaration of companion, granting them both a free walk, which they take immediately. Then the first dog spends his AP, then the second dog spends his AP.
But if using companion "activates" both models, then terrifying should apply on declaration of companion. See rules manual page 57, terrifying happens when a model begins its activation in range of a terrifying effect.
I don't have the hound's card. If there's something on there that makes my concern a moot point, please let me know.