<PAGE>   1
                        HOUSTON INDUSTRIES INCORPORATED
                                EXHIBIT 10(s)(4)
<PAGE>   2
                        HOUSTON INDUSTRIES INCORPORATED
                                 SAVINGS TRUST

                (As Amended and Restated Effective July 1, 1995)
<PAGE>   3
                        HOUSTON INDUSTRIES INCORPORATED
                                 SAVINGS TRUST

                (As Amended and Restated Effective July 1, 1995)


                                   I N D E X


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ARTICLE I             DEFINITIONS AND CONSTRUCTION  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section:
      1.1             Definitions   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
                               Affiliated Corporation   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
                               Board  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
                               Code   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
                               Committee  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
                               Company  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
                               Company Stock  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
                               ERISA  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
                               ESOP Fund  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
                               Exchange Act   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
                               Investment Fund or Fund  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
                               Investment Manager   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
                               Participant  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
                               Plan   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
                               Prior ESOP Trust Agreement   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
                               Prior Plan   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
                               Prior Trust Agreement  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
                               Prohibited Transaction   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
                               Trust  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
                               Trust Fund   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
                               Trustee  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
                               Valuation Date   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
      1.2             Construction  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

ARTICLE II            TRUST; GENERAL DUTIES OF THE PARTIES  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section:
      2.1             Continuation of Trust   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
      2.2             General Duties of the Company   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
</TABLE>





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      2.3             Investment Guidelines; Contributions; Employee Records. . . . . . . . . . . . . . . . . . . . . . 6
      2.4             General Duties of Trustee   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

ARTICLE III           ACCOUNTS; AUTHORITY OF COMPANY AND COMMITTEE  . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section:
      3.1             Accounts; Valuation   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
      3.2             Exclusive Benefit of Employees Under The Plan   . . . . . . . . . . . . . . . . . . . . . . . . . 8
      3.3             Authority of Company and Committee  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

ARTICLE IV            INVESTMENT, ADMINISTRATION AND DISBURSEMENT OF
                         TRUST FUND   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  10
Section:
      4.1             Division of the Trust Fund  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  10
      4.2             Investment of the Trust Fund  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  11
      4.3             Direction of Investment   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  15
      4.4             Voting of Securities Other than Company Stock in the HI
                         Common Stock Fund or in the ESOP Fund  . . . . . . . . . . . . . . . . . . . . . . . . . . .  16
      4.5             Voting of Company Stock in the HI Common Stock Fund   . . . . . . . . . . . . . . . . . . . . .  17
      4.6             Voting of Company Stock in the ESOP Fund  . . . . . . . . . . . . . . . . . . . . . . . . . . .  17
      4.7             Tendering of Company Stock in the HI Common Stock
                         Fund and Company  Stock in the ESOP Fund   . . . . . . . . . . . . . . . . . . . . . . . . .  18
      4.8             Powers of Trustee   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  19
      4.9             Payments and Distributions from Trust Fund  . . . . . . . . . . . . . . . . . . . . . . . . . .  23
      4.10            Trustee's Dealings with Third Parties   . . . . . . . . . . . . . . . . . . . . . . . . . . . .  24
      4.11            Ancillary Trustee   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  24

ARTICLE V             ADDITIONAL ESOP FUND PROVISIONS   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  25

ARTICLE VI            FOR THE PROTECTION OF THE TRUSTEE   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  26
Section:
      6.1             Composition of Committee  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  26
      6.2             Evidence of Action by Company or Committee  . . . . . . . . . . . . . . . . . . . . . . . . . .  26
      6.3             Communications  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  27
      6.4             Advice of Counsel   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  27
      6.5             Miscellaneous   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  27
      6.6             Fiduciary Responsibilities  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  27
      6.7             Limitations on Powers   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  28

ARTICLE VII           TAXES, EXPENSES AND COMPENSATION OF TRUSTEE   . . . . . . . . . . . . . . . . . . . . . . . . .  29
Section:
      7.1             Taxes and Expenses  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  29
      7.2             Compensation of the Trustee   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  29
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ARTICLE VIII          SETTLEMENT OF ACCOUNTS; DETERMINATION
                         OF INTERESTS UNDER TRUST   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  30
Section:
      8.1             Settlement of Accounts of Trustee   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  30
      8.2             Determination of Rights and Benefits of Persons Claiming
                         an Interest in the Trust Fund; Enforcement of Trust Fund   . . . . . . . . . . . . . . . . .  31

ARTICLE IX            RESIGNATION, REMOVAL AND SUBSTITUTION
                         OF THE TRUSTEE   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  32
Section:
      9.1             Resignation of Trustee  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  32
      9.2             Removal of Trustee  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  32
      9.3             Appointment of Successor Trustee  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  32
      9.4             Transfer of Trust Fund to Successor   . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  32

ARTICLE X             DURATION AND TERMINATION OF TRUST; AMENDMENT  . . . . . . . . . . . . . . . . . . . . . . . . .  33
Section:
      10.1            Duration and Termination  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  33
      10.2            Distribution Upon Termination   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  33
      10.3            Certain Withdrawals   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  33
      10.4            Amendment   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  34

ARTICLE XI            MISCELLANEOUS   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  35
Section:
      11.1            Governing Law; No Bond Required of Trustee  . . . . . . . . . . . . . . . . . . . . . . . . . .  35
      11.2            Interest in Trust Fund; Assignment  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  35
      11.3            Invalid Provisions  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  35
      11.4            Prohibition of Diversion  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  35
      11.5            Headings for Convenience Only   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  35
      11.6            Successors and Assigns  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  35
</TABLE>





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                        HOUSTON INDUSTRIES INCORPORATED
                                 SAVINGS TRUST

                (As Amended and Restated Effective July 1, 1995)


                      THIS TRUST AGREEMENT made and entered into as of the 1st
day of July, 1995, by and between HOUSTON INDUSTRIES INCORPORATED, a Texas
corporation (the "Company"), and THE NORTHERN TRUST COMPANY, an Illinois
corporation (the "Trustee"), as trustee;

                              W I T N E S S E T H:

                      WHEREAS, by Agreement (the "1989 Trust Agreement") dated
June 21, 1989 but effective as of July 1, 1989, between the Company and Texas
Commerce Bank National Association, as trustee (the "Prior Trustee"), the
Company amended, restated and continued a trust established in connection with
the Savings Plan of Houston Industries Incorporated, as amended and restated
effective January 1, 1976, and as thereafter amended (said Plan as it existed
in the form of the Savings Plan of Houston Industries Incorporated, as amended
and restated effective January 1, 1976, and thereafter amended prior to July 1,
1995, being referred to hereinafter in this preamble as the "Prior Plan"); and

                      WHEREAS, the Company amended and restated the Prior Plan,
effective October 5, 1990, to include an "employee stock ownership plan"
("ESOP") within the meaning of Section 4975(e)(7) of the Internal Revenue Code
of 1986, as amended (the "Code"), and designed to meet the requirements of
Section 4975(d)(3) of the Code; and

                      WHEREAS, in order to effectuate the ESOP component of the
Prior Plan, the Company established an additional trust under the Prior Plan,
known as the Savings Plan of Houston Industries Incorporated ESOP Trust (the
"Prior ESOP Trust Agreement"), designed to meet the applicable requirements  of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"); and

                      WHEREAS, the Company amended, restated and continued the
1989 Trust Agreement and the Trust Fund created thereby in the form of the
Houston Industries Incorporated Master Savings Trust, effective January 1, 1994
(the "Prior Trust Agreement"), to accommodate the merger of the KBLCOM
Incorporated Savings Plan into the Prior Plan and to make certain other changes
therein; and

                      WHEREAS, effective as of May 1, 1995, the Company
appointed the Trustee to replace the Prior Trustee as trustee of the Prior
Trust Agreement; and





<PAGE>   7
                      WHEREAS, effective as of May 1, 1995, the Company
appointed the Trustee to replace State Street Bank and Trust Company, a
Massachusetts trust company, as trustee of the Prior ESOP Trust Agreement; and

                      WHEREAS, effective as of July 1, 1995, the Company
amended and restated the Prior Plan to provide for daily valuations, provide
for the addition of new investment funds, and to make certain other changes
therein (the "Plan"); and

                      WHEREAS, the Company has reserved the right at any time
to amend the Prior Trust Agreement and the Prior ESOP Trust Agreement to any
extent that it may deem advisable provided that no amendment shall increase the
duties or responsibilities of the Trustee without the consent of the Trustee
thereto in writing; and

                      WHEREAS, the Company deems it advisable at this time to
amend, restate, merge and continue the Prior Trust Agreement and the Prior ESOP
Trust Agreement in the form of this Trust Agreement to the extent hereinafter
set forth, to provide for daily valuation, to increase the number of Investment
Funds to seven (or such other number as may be prescribed by the Committee from
time to time), to eliminate the master trust concept and to make certain other
changes therein;

                      NOW, THEREFORE, the Company and the Trustee hereby agree
that the Prior Trust Agreement and the Prior ESOP Trust Agreement shall both be
amended and restated in their entirety, merged and continued in the form of
this Trust Agreement, which shall read as follows:





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                                   ARTICLE I

                          DEFINITIONS AND CONSTRUCTION

         1.1     Definitions:  As used in this Savings Trust, the following
words and phrases shall have the following meanings unless the context clearly
requires a different meaning:

                 AFFILIATED CORPORATION:  Houston Industries Incorporated, a
Texas corporation, and any corporation in which the shares owned or controlled
directly or indirectly by Houston Industries Incorporated shall represent 50%
or more of the voting power of the issued and outstanding capital stock of such
corporation.

                 BOARD:  The Board of Directors of the Company.

                 CODE:  The Internal Revenue Code of 1986, as amended from time
to time.

                 COMMITTEE:  The Benefits Committee appointed by the Board of
Directors of the Company, which shall serve as a "named fiduciary" hereunder
and assist in the investment and administration of the Trust Fund and whose
duties also include serving as "plan administrator" of the Plan.  In regard to
any provision of this Trust under which an agent has been appointed by the
Benefits Committee pursuant to Section 6.1 hereof to administer such provision
of this Trust, such agent shall be deemed to be the Committee.

                 COMPANY:  Houston Industries Incorporated, a Texas
corporation, and its successor or successors.

                 COMPANY STOCK:  The common stock of the Company qualifying as
"employer securities" within the meaning of Section 409(1) of the Code and
Section 407(d)(5) of ERISA.

                 ERISA:  Public Law No. 93-406, the Employee Retirement Income
Security Act of 1974, as amended from time to time.

                 ESOP FUND:  All cash, Company Stock, and other properties held
by the Trustee under the Prior ESOP Trust Agreement at the close of business on
June 30, 1995, which have been transferred and allocated to the ESOP Fund under
this Trust as of July 1, 1995, any property into which the same or any part
thereof may from time to time be converted, and any appreciation therein or
income thereon less any depreciation therein, any losses thereon and any
distributions or payments therefrom.

                 EXCHANGE ACT:  The Securities and Exchange Act of 1934, as 
amended.
 
                 INVESTMENT FUND OR FUND:  Any of the investment funds
comprising the Trust Fund (including the HI Common Stock Fund), as described in
Article IV, but excluding the ESOP Fund.





                                    - 3 -
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                 INVESTMENT MANAGER:  The fiduciary or fiduciaries, if any,
appointed hereunder by the Committee and meeting the definition set forth in
Section 3(38) of ERISA.

                 PARTICIPANT:  Each employee, former employee, spouse or
beneficiary of an employee who is or was participating in the Plan in
accordance with the terms thereof.

                 PLAN:  The Houston Industries Incorporated Savings Plan, as
amended and restated effective July 1, 1995, and as the same may hereafter be
amended from time to time.

                 PRIOR ESOP TRUST AGREEMENT:  The Savings Plan of Houston
Industries Incorporated ESOP Trust Agreement, between the Company and State
Street Bank and Trust Company, established effective October 5, 1990, and as
thereafter amended and in effect on June 30, 1995, between the Company and
Trustee.

                 PRIOR PLAN:  The Houston Industries Incorporated Savings Plan,
as amended and restated effective January 1, 1994, and as thereafter amended
and in effect on June 30, 1995.

                 PRIOR TRUST AGREEMENT:  The Houston Industries Incorporated
Master Savings Trust Agreement, between the Company and Texas Commerce Bank
National Association, dated April 7, 1994 but effective as of January 1, 1994,
and as thereafter amended and in effect on June 30, 1995, between the Company
and Trustee.

                 PROHIBITED TRANSACTION:  A transaction prohibited under
Sections 406 through 408 of ERISA.

                 TRUST:  The Houston Industries Incorporated Savings Trust, as
amended and restated effective July 1, 1995 and as the same may hereafter be
amended from time to time.

                 TRUST FUND:  The Investment Funds and ESOP Fund to be
established under the Trust and from which benefits under the Plan are to be
paid.  Such fund shall consist of all assets, money and property, all
investments made therewith and proceeds thereof and all earnings and profits
thereon, less the payments or other distributions which, at the time of
reference, shall have been made by the Trustee, as authorized herein.

                 TRUSTEE:  The Northern Trust Company, an Illinois corporation,
its successor or successors.

                 VALUATION DATE:  Any date on which the New York Stock Exchange
is open for trading and any date on which the value of the assets of the Trust
Fund is determined by the Trustee pursuant to Section 3.1.  The last business
day of each calendar month shall be the "monthly Valuation Date," and the last
business day of December of each Plan Year shall be the "annual Valuation
Date."





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         1.2     Construction:  The masculine gender, where appearing in the
Trust, shall be deemed to include the feminine gender, and the singular may
include the plural, unless the context clearly indicates to the contrary.  The
words "hereof," "herein," "hereunder" and other similar compounds of the words
"here" shall mean and refer to the entire Trust, not to any particular
provision or section.  Article and Section headings are included for
convenience of reference and are not intended to add to or subtract from the
terms of the Trust.





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<PAGE>   11
                                   ARTICLE II

                      TRUST; GENERAL DUTIES OF THE PARTIES

         2.1     Continuation of Trust:  The Company hereby continues with the
Trustee a Trust for the exclusive purposes of providing benefits to employees
of the Company and the Affiliated Corporations, and to the beneficiaries of
such employees, under the Plan and defraying reasonable expenses of
administering the Plan.  The Trust shall consist of (a) such cash and other
property held in trust by the Trustee under the Prior Trust Agreement at the
close of business on June 30, 1995, and which was transferred to the Investment
Funds under this Trust, (b) such cash and other property held in trust by the
Trustee under the Prior ESOP Trust Agreement at the close of business on June
30, 1995, and which was transferred to the ESOP Fund under this Trust, and (c)
such sums of money and such property acceptable to the Trustee as shall from
time to time be paid or delivered to the Trustee as a contribution in respect
of the Plan, together with the income and gains therefrom.  The Trust shall be
maintained at all times as a domestic trust in the United States.

         2.2     General Duties of the Company:

         A.      The Company shall provide the Trustee with a certified copy of
the Plan, and with evidence acceptable to the Trustee that the Plan has been
duly adopted by the Company and has been determined to be qualified under Code
Section 401(a).  True and correct copies of all amendments to the Plan shall be
delivered to the Trustee by the Company promptly following their adoption.

         B.      The Board of Directors of the Company shall appoint a Benefits
Committee, consisting of at least three individuals, which shall be authorized
under the Plan to serve as a "named fiduciary" (within the meaning of Section
402(a)(2) of ERISA) and "plan administrator" (within the meaning of Section
3(16)(A) of ERISA) of the Plan to assist in the investment and administration
of the Trust as hereinafter provided.  Each member of the Committee shall serve
at the pleasure of the Board of Directors of the Company and the Company shall
certify to the Trustee the names and specimen signatures of the members of the
Committee serving from time to time hereunder.  The Company shall indemnify and
hold harmless each member of the Committee from any and all claims, losses,
damages, expenses (including counsel fees approved by the Committee), and
liabilities (including any amounts paid in settlement with the Committee's
approval but excluding any excise tax assessed against any member or members of
the Committee pursuant to the provisions of Code Section 4975) arising from any
act or omission of such member in connection with his duties and
responsibilities under this Trust Agreement, except when the same is judicially
determined to be due to the gross negligence and willful misconduct of such
member.

         2.3     Investment Guidelines; Contributions; Employee Records:  From
time to time the Committee shall communicate in writing to any Investment
Manager who may be acting pursuant to Section 4.3 (and to the Trustee, if it is
managing the investment of any of the assets of the Trust pursuant to such
Section) the investment guidelines governing the portion of the assets of the
Trust managed by such Investment Manager or the Trustee.  The Company shall
make, and shall cause the





                                    - 6 -
<PAGE>   12
Affiliated Corporations to make, contributions to the Plan as the same may be
determined in accordance with the Plan and shall specify in writing to the
Trustee the amount of such contributions.  The Company shall keep and shall
cause the Affiliated Corporations to keep accurate books and records with
respect to their respective employees, including, without limitation, records
as to the periods of employment, compensation and ages of such employees.

         2.4     General Duties of Trustee:  The Trustee shall hold all
property received by it hereunder, which, together with the income and gains
therefrom and additions thereto, and less payments and other distributions
therefrom, shall constitute the Trust Fund.  Except as otherwise hereinafter
provided, the Trustee shall manage, invest and reinvest the Trust Fund, collect
the income thereof, and make payments therefrom, all in accordance with the
terms of this Agreement.  The Trustee shall be responsible only for the
property actually received by it hereunder.  It shall have no duty or authority
to compute any amount to be paid to it by the Company, by any Affiliated
Corporation or by any Participant in the Plan, or to bring any action or
proceeding to enforce the collection from any such person of any contribution
to the Trust in respect of the Plan.





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                                  ARTICLE III

                                   ACCOUNTS;
                       AUTHORITY OF COMPANY AND COMMITTEE

         3.1     Accounts; Valuation: As provided below, the Trustee shall
determine the value of the Trust Fund as of each annual Valuation Date and any
interim Valuation Date as the Committee may prescribe; and the Trustee shall
determine and include in each such report for the assistance of the Committee
in administering the Plan the value as of such valuation dates of each such
asset. In accordance with its normal pricing methods and as provided below, the
Trustee shall value the assets of the Trust Fund on each Valuation Date.  In
the absence of readily attainable fair market values, the fiduciary with
investment responsibility shall determine the fair market value to be used.
Notwithstanding any other provision of this Section, the Trustee, in
determining the value of the assets in the Trust Fund, may rely upon the
determination of any Investment Manager with respect to the value of any
interest of the Trust in any common, collective, commingled or group trust fund
maintained by such Investment Manager in which assets of the Trust are
permitted to be invested by Section 4.2(l) of this Agreement.  As soon as
practicable after each annual Valuation Date (but no later than 90 days after
each such Valuation Date), the Trustee shall furnish the Company and the
Committee a written statement showing the net value of the Trust Fund on such
Valuation Date.  Notwithstanding anything herein to the contrary, to the extent
assets are invested in a mutual fund, the Trustee shall rely upon the value
provided to it by the sponsor of the mutual fund or the pricing service
normally used by the Trustee for this purpose.

                 Any Investment Manager or the Committee who may be acting
pursuant to Section 4.3 (and the Trustee, if it is managing the investment of
any assets of the Trust pursuant to such Section) may in its discretion
transfer or direct the transfer to a liquidating account of any investment of
the portion of the Trust under its management which it determines should be
liquidated for the benefit of the Plan.  Any investment that has been
transferred to a liquidating account shall be segregated and administered or
realized upon solely for the benefit of the Plan and shall be excluded in
determining the value of the Plan in the Trust Fund thereafter.

                 The Committee shall maintain for each of the Participants
under the Plan an accurate account reflecting the interest in the Trust Fund,
in its component Investment Funds and in the ESOP Fund of each such Participant
and shall furnish to each individual Participant, no less than annually, a
report of his account.  The Trustee shall transfer assets to and from each
Investment Fund as directed by the Committee or its representative.

         3.2     Exclusive Benefit of Employees Under The Plan:  At no time
prior to the satisfaction of all liabilities with respect to Participants under
the Plan shall any part of the Trust Fund be used for, or diverted to, any
purposes other than for the exclusive benefit of such Participants or the
payment of Plan or Trust administrative expenses.





                                    - 8 -
<PAGE>   14
         3.3     Authority of Company and Committee:  Any Affiliated
Corporation which participates in the Plan shall be bound by the decisions,
instructions, actions and directions of the Company, Committee (or its
representative), Investment Managers, and named fiduciaries (as such term is
defined in Sections 4.5, 4.6 and 4.7) under this Agreement, and the Trustee
shall be indemnified by the Company and such Affiliated Corporation for
expenses and liabilities incurred by relying upon such decisions, instructions,
actions and directions, or where such expenses or liabilities were incurred by
the Trustee due to the failure of such parties to carry out their
responsibilities under the Plan and Trust.  The Trustee shall not be required
to give notice to or obtain the consent of any such Affiliated Corporation with
respect to any action which is taken by the Trustee pursuant to this Agreement.





                                    - 9 -
<PAGE>   15
                                   ARTICLE IV

                         INVESTMENT, ADMINISTRATION AND
                           DISBURSEMENT OF TRUST FUND

         4.1     Division of the Trust Fund:  Except as provided in Section
3.1, the Trust Fund shall be divided into an ESOP Fund and such Investment
Funds as shall be selected and reviewed from time to time by the Committee.
Initially, such additional Investment Funds shall consist of the HI Common
Stock Fund, Capital Appreciation Fund, Growth & Income Equity Fund,
International Equity Fund, Balanced Fund, Fixed Income Fund and Money Market
Fund, more specifically described in Section 4.2.  Each such Investment Fund
shall be invested by the fiduciary with investment responsibility in accordance
with the provisions of Section 4.2 in the kinds of property specified for such
Investment Fund by the Committee.  The ESOP Fund shall be invested primarily in
Company Stock, in accordance with the provisions of Section 4.2(h).  The
Committee is authorized to terminate the existing Investment Funds and
establish new Investment Funds by giving advance written notice to the Trustee
describing the fund to be terminated or established and the effective date
thereof, provided that in no event shall the Trustee's duties be modified
without its consent.  It is hereby specifically agreed that any termination,
modification, combination or creation of an Investment Fund which consists in
whole or in part of a group or commingled trust sponsored by Trustee hereunder
shall not require the consent of Trustee.

                 The Committee or its representative shall direct the Trustee
in accordance with the terms of the Plan and the Trust Agreement with respect
to the allocation of assets of the Trust Fund, and shall advise the Trustee
with respect to transfers among the Investment Funds and the ESOP Fund, and the
Trustee shall hold the amount so specified as a part of the Investment Fund or
ESOP Fund, as appropriate, to which it shall have been allocated or
transferred.  The Committee's representative ("Recordkeeper") shall, on a daily
basis, calculate the net amount of money to be moved to or from each Investment
Fund based on investment elections made by Participants pursuant to the Plan.
Recordkeeper shall on a daily basis, and based on the information as described
above, notify the sponsor of each Investment Fund of the amount of money that
should be transferred from or transferred to such Investment Fund.
Recordkeeper shall also provide the Trustee with the same information on the
same day it notifies the fund sponsor and the Trustee shall act regarding
contributions and transfers based on such information.  Recordkeeper shall also
calculate the amount of benefit payments and distributions hereunder and
provide the Trustee with information necessary to make such benefit payments
and distributions.

                 To the extent that any Investment Fund is invested in mutual
fund shares or bank commingled funds, the Committee shall initially select
funds to be invested in and shall be responsible for retaining the availability
of or terminating the availability of such funds.  To the extent the Trustee is
required to enter into a custody agreement with the sponsor of a bank
commingled fund or such other type of fund, the Committee shall direct the
Trustee to enter into such agreement.





                                    - 10 -
<PAGE>   16
                 The Trustee, upon receipt of direction from the Committee,
shall transfer to the Investment Funds all such cash and other property as the
Trustee held under the Prior Trust Agreement at the close of business on June
30, 1995.  The Trustee, upon receipt of direction from the Committee, shall
transfer to the ESOP Fund all such cash and other property as the Trustee held
in the ESOP Fund under the Prior ESOP Trust Agreement at the close of business
on June 30, 1995.

                 4.2      Investment of the Trust Fund:  The contributions
hereafter allocated to each of the said Investment Funds and the ESOP Fund, and
all proceeds, interest, income or other payments in respect of each such
Investment Fund and the ESOP Fund shall be invested and reinvested in a manner
described below:

                 (a)      HI Common Stock Fund.  Contributions are to be
          invested and reinvested in Company Stock (which the Trustee shall
          purchase as soon as practicable when and as it holds funds available
          for that purpose, either (i) in the open market, (ii) from the ESOP
          Fund for adequate consideration and in the sole discretion of the
          Trustee, or (iii) privately from the Company at a price per share
          equal to the closing price of said share on the New York Stock
          Exchange on the day of the purchase, it being understood that shares
          purchased from the Company may either be treasury shares or
          authorized but unissued shares, if the Company shall make such shares
          available for the purpose, and that the Trustee in its discretion may
          refrain from making purchases of shares of Company Stock whenever it
          deems such refraining to be necessary to prevent undue trading impact
          on the price of the Company Stock.  At any time that the Trustee
          makes open market purchases of Company Stock, the Trustee will either
          (i) be an "agent independent of the issuer" as that term is defined
          in Rule 10(b)(18) promulgated pursuant to the Exchange Act or (ii)
          make such open market purchases in accordance with the provisions,
          and subject to the restrictions, of Rule 10(b)(18) of the Exchange
          Act.  Except in the case of fractional shares received in any stock
          dividend, stock split or other recapitalization, or as necessary to
          make any distribution or payment from the Trust Fund or transfers
          among Investment Funds, the Trustee shall have no power or duty to
          sell or otherwise dispose of any stock acquired for the HI Common
          Stock Fund.

                 (b)      Capital Appreciation Equity Fund.  Contributions are
          primarily invested and reinvested in a pool of stock funds that have
          a goal of long-term growth with no emphasis on current income.  The
          funds are invested in stocks of rapidly growing companies or
          companies with the potential for exceptional growth.

                 (c)      Growth & Income Equity Fund.  Contributions are
          primarily invested and reinvested in a pool of stock funds with the
          goals of growth and current





                                    - 11 -
<PAGE>   17
          income.  The funds buy stocks of growing companies and companies that
          have a history of paying steady dividends.

                 (d)      International Equity Fund.  Contributions are
          primarily invested and reinvested in a pool of international stock
          funds that have a goal of long-term growth by investing in stocks of
          companies based outside the United States.  These funds buy stocks of
          growing and established companies outside of the United States with
          the potential for growth.

                 (e)      Balanced Fund.  Contributions are primarily invested
          and reinvested in both stock and bond funds.  The funds invested in
          may change from time to time, with the intent being to invest in
          high-quality, limited term bonds and a wide variety of corporate
          stocks.

                 (f)      Fixed Income Fund.  Contributions are primarily
          invested and reinvested in short-term, high-quality government and
          corporate bonds and other fixed income securities.

                 (g)      Money Market Fund.  Contributions are primarily
          invested and reinvested in high-quality government and corporate
          fixed income securities with maturities of less than one year.

                 (h)      ESOP Fund.  All amounts allocated to the ESOP Fund,
          and all proceeds, interest, income or other payments in respect of
          the ESOP Fund shall be invested and reinvested in Company Stock
          except to the extent required to give effect to distributions,
          transfers and other temporary cash needs.  The Committee shall direct
          the Trustee to sell Company Stock, which may include sales to the HI
          Common Stock Fund, in order to make distributions, payments or
          transfers.  To the extent that Company contributions to the ESOP Fund
          are made in Company Stock, the Trustee will be expected to retain
          Company Stock.  To the extent Company contributions to the ESOP Fund
          are made in cash and are not used to pay principal or interest on an
          ESOP Loan pursuant to Article V or to pay expenses of the Trust Fund,
          the Trustee will be expected to acquire Company Stock within a
          reasonable period of time.  If at the time Company Stock is to be
          purchased, the Company has outstanding more than one class of Company
          Stock, the Committee shall direct the Trustee as to which class of
          Company Stock shall be purchased.  However, if the Company Stock to
          be purchased is not readily tradeable on an established market, the
          Trustee shall represent the Trust in the determination of the price
          to be paid for such Company Stock.

                 (i)      The Company has determined that daily movement of
          Participant balances among the Investment Funds is an important
          design feature and objective of the Plan and that timely transfers
          and distributions from the HI Common Stock





                                    - 12 -
<PAGE>   18
          Fund need to be facilitated in order to achieve such objective.  The
          Committee may authorize and direct the Trustee in writing to seek to
          obtain settlement for sales of Company Stock on an expedited basis
          under certain circumstances in which case the Trustee shall carry out
          its responsibilities for execution of Company Stock sale transactions
          in accordance with such direction and subject to any limitations
          expressed therein.

                 (j)      Pending the acquisition of an investment in an
          orderly manner for the purposes of the Investment Funds, the Trustee
          may temporarily hold funds thereof uninvested or in repurchase
          agreements, bankers acceptances, certificates of deposit, commercial
          paper, demand or time deposits, obligations issued or fully
          guaranteed by the United States of America or any agency thereof,
          master notes or like holdings either separately or through the medium
          of a common, collective, group or commingled trust fund that invests
          primarily in such like investments.

                 (k)      To the extent consistent with Section 4.2(h), the
          ESOP Fund may hold temporary investments other than Company Stock,
          may hold such portion of the ESOP Fund uninvested as the Committee
          deems advisable for making distributions under the Plan, may invest
          assets of the ESOP Fund in short term investment grade investments
          bearing a reasonable rate of interest, including without limitation,
          deposits in, or short term investment grade instruments of, the
          Trustee, or in one or more short term collective investment funds
          administered by the Trustee as trustee thereof for the collective
          investment of assets of employee pension or profit-sharing trusts, as
          long as each such collective investment fund constitutes a qualified
          trust under the applicable provisions of the Code (and while any
          portion of the ESOP Fund is so invested, such collective investment
          funds shall constitute part of the Plan to the extent of such
          investment, and the instrument creating such funds shall constitute
          part of this Agreement).

                 (l)      In the discretion of the person who is directing the
          investment of a portion or all of any of the Investment Funds, with
          the exception of the HI Common Stock Fund, under the provisions of
          Section 4.3, all or any part of amounts allocated to such Investment
          Funds, may be invested in such assets as are appropriate to the Fund
          in question collectively with funds of other pension and
          profit-sharing trusts exempt from tax under Code Section 501(a) by
          reason of qualifying under Code Section 401(a) through the medium of
          any common, collective or group trust fund which has been or
          hereafter may be established by the Trustee or by any other bank or
          trust company in the United States, the instrument or instruments
          establishing such trust fund or funds, as amended from time to time,
          being made a part of this Agreement so long as any portion of the
          Trust Fund shall be invested through the medium thereof.





                                    - 13 -
<PAGE>   19
                 The investments of the Trust Fund, with the exception of the 
HI Common Stock Fund and the ESOP Fund, shall be so diversified as to minimize
the risk of large losses unless under the circumstances it is clearly prudent
not to do so, in the sole judgment of the person who is directing the investment
of such Funds under the provisions of Section 4.3.  Any property at any time
received by the Trustee may be retained in the Trust Fund.  To the extent that
the Trustee is managing the Trust Fund under the provisions of Section 4.3, the
Trustee may temporarily invest and reinvest all or any portion of the amounts
allocated to any Investment Fund either in short term investments selected by it
or collectively with funds of other pension and profit-sharing trusts exempt
from tax under Code Section 501(a) by reason of qualifying under Code Section
401(a) through the medium of any common, collective, commingled or group trust
fund which has been or hereafter may be established by the Trustee or by any
other bank or trust company in the United States, the instrument or instruments
establishing such trust fund or funds, as amended from time to time, being made
a part of this Agreement so long as any portion of the Trust Fund shall be
invested through the medium thereof.  With respect to any portion of the Trust
Fund which is under the management of an Investment Manager as provided in
Section 4.3 subject to contrary instructions, the Trustee shall invest cash held
by it in short term obligations, either separately or by investment collectively
with funds of other pension and profit-sharing trusts exempt from tax under Code
Section 501(a) by reason of qualifying under Code Section 401(a) through the
medium of any common, collective, commingled or group trust fund which has been
or hereafter may be established by the Trustee or by any other bank or trust
company in the United States, the instrument or instruments establishing such
trust fund or funds, as amended from time to time, being made a part of this
Agreement so long as any portion of the Trust Fund shall be invested through the
medium thereof.

                 At any time and from time to time, the Committee may direct
the Trustee to transfer a specified portion or all of any of the Investment
Funds of the Trust Fund, with the exception of the HI Common Stock Fund, as it
shall deem advisable to the trustees of any other common, collective, group or
commingled trust (hereinafter collectively, the "Group Trusts"), if and only if
a Group Trust is qualified under Code Section 401(a) and exempt from tax under
Code Section 501(a) and is maintained as a medium for the commingled,
collective and common investment of assets of eligible participating trusts;
and the Committee may direct the Trustee to withdraw all or any part of the
Trust Fund so transferred.  The terms and provisions of the agreements of trust
establishing any Group Trust and the provisions of any amendments thereto are
hereby incorporated herein by reference and shall be deemed a part of this
Trust Agreement so long as any portion of the Trust Fund shall be invested
through the medium thereof.  The Trustee shall make any such transfer or
withdrawal of all or any part of the Trust Fund only upon the expressed
direction of the Committee.  The Trustee shall be under no duty or obligation
to review any investment acquired, held or disposed of by the trustees of the
Group Trusts pursuant to the provisions thereof, and the trustees of the Group
Trusts shall have all fiduciary powers, responsibilities and liabilities
arising under this Trust Agreement with respect to the portion of the Trust
Fund transferred to them pursuant to directions of the Committee to be held
under the terms and provisions of the Group Trusts.  The Company shall
indemnify and hold harmless the Trustee from any and all claims, losses,
damages, expenses (including counsel fees approved by the Trustee), and
liabilities (including any amount paid in settlement with the Trustee's
approval but excluding any excise tax assessed against the Trustee pursuant to
the provisions of Code





                                    - 14 -
<PAGE>   20
Section 4975) arising from any act or omission of the trustees of the Group
Trusts in connection with their duties and responsibilities under this Trust
Agreement with respect to the portion of the Trust Fund transferred to them,
except to any extent prohibited under ERISA.

         4.3     Direction of Investment:  The investment of the HI Common
Stock Fund and the ESOP Fund shall be managed solely by the Trustee in the
manner provided in Section 4.2.  The Committee shall from time to time specify
by written notice to the Trustee whether the investment of the other Investment
Funds under the Plan, in the manner provided in Section 4.2, shall be managed
solely by the Trustee or the Committee (or its agent), or shall be directed by
one or more Investment Managers, or whether the Trustee, the Committee and one
or more Investment Managers are to participate in investment management and, if
so, how the investment responsibility is to be divided with respect to assets,
classes of assets, separate investment funds or sub-funds specified and defined
in such notice.  In the event that the Committee shall fail to specify pursuant
to this Section the person or persons who are to manage the investment of the
other Investment Funds under the Plan, or any portion or portions thereof, the
Trustee shall manage the investment of such Investment Fund or such portion or
portions in the manner described in Section 4.2, until the Committee shall
specify such person or persons as provided herein.  Any Investment Manager
appointed to manage the investment of a part (or all) of the Investment Funds,
other than the HI Common Stock Fund, under the Plan shall either (i) be
registered as an investment adviser under the Investment Managers Act of 1940,
(ii) be a bank, as defined in that Act, or (iii) be an insurance company
qualified to perform investment management services under the laws of more than
one State.  If investment of the Trust Fund is to be directed in whole or in
part by an Investment Manager, such Investment Manager shall acknowledge that
it is acting as a fiduciary with respect to such assets.  The Trustee may
continue to rely upon such instruments and certificate until otherwise notified
in writing by the Committee.

                 The Trustee shall follow the directions of the Investment
Manager regarding the investment and reinvestment of the Trust Fund as to such
portion thereof as shall be under management by the Investment Manager and
shall be under no duty or obligation to review any investment to be acquired,
held or disposed of pursuant to such directions nor to make any recommendations
with respect to the disposition or continued retention of any such investment.
The Trustee shall have no liability or responsibility for acting without
question on the direction of, or failing to act in the absence of any direction
from, the Investment Manager, unless the Trustee knows that by such action or
failure to act it will be participating in a breach of fiduciary duty by the
Investment Manager.  The mere processing of investment instructions,
maintenance of records and providing reports shall not constitute knowledge.

                 The Investment Manager at any time and from time to time may
issue orders for the purchase or sale of securities directly to a broker, and
in order to facilitate such transaction the Trustee upon request shall execute
and deliver appropriate trading authorizations.  Notification of the issuance
of each such order shall be given promptly to the Trustee by the Investment
Manager, and the execution of each such order shall be confirmed according to
industry practice.  Such notification shall be authority for the Trustee to pay
for securities purchased and to deliver securities





                                    - 15 -
<PAGE>   21
sold according to industry practice, as the case may be.  All written
notifications concerning investments made by the Investment Manager shall be
signed by such person or persons, acting on behalf of the Investment Manager as
may be duly authorized in writing; provided, however, that the transmission to
the Trustee of notifications, facsimile transmission or electronic data
transmission shall be considered a delivery in writing of the aforesaid
notifications until the Trustee is notified in writing by the Investment
Manager that the use of such devices is no longer authorized.  The Trustee
shall be entitled to rely upon such directions which it receives by such means
if so authorized by the Investment Manager and shall in no way be responsible
for the consequences of any unauthorized use of such device which was not, in
fact, known by the Trustee at the time to be unauthorized.  The Trustee shall,
as promptly as possible, comply with any written directions given by the
Investment Manager hereunder, and, where such directions are given by facsimile
transmission or electronic data transmission, the Trustee shall be entitled to
presume any directions so given are fully authorized.

                 In the event that an Investment Manager should resign or be
removed by the Committee, the Trustee shall, upon receiving written notice of
such resignation or removal, manage, pursuant to Section 4.2, the investment of
the portion of the Trust Fund under management by such Investment Manager at
the time of its resignation or removal, unless and until it shall be notified
of the appointment of another Investment Manager as provided in this Section
4.3, for such portion of the Trust Fund.

                 The Committee shall have investment responsibility for all or
a portion of the assets held in any Investment Fund other than the HI Common
Stock Fund for which it notifies the Trustee that it is to assume such
responsibility.  With respect to the assets of any Investment Fund other than
the HI Common Stock Fund for which the Committee has investment responsibility,
the Trustee, acting only as directed by the Committee, shall enter into such
agreements as are necessary to facilitate any investment, including agreements
entering into a limited partnership, subtrust or the participation in real
estate funds.  The Trustee shall not make any investment review of, or consider
the propriety of holding or selling, or vote any assets for which the Committee
has retained investment responsibility.

         4.4     Voting of Securities Other than Company Stock in the HI Common
Stock Fund or in the ESOP Fund:  The Trustee shall have power in its discretion
to exercise all voting rights with respect to any investment held in an
Investment Fund under the Plan, with the exception of investments held in the
HI Common Stock Fund and the ESOP Fund, and to grant proxies, discretionary or
otherwise, with respect thereto, except that at any time when an Investment
Manager or the Committee shall be acting with respect to such Investment Fund
as provided in Section 4.3, the Trustee shall not exercise its discretion with
respect to voting any securities under management of such Investment Manager or
the Committee but shall itself vote such securities only upon and in the manner
directed by the Investment Manager or the Committee or shall send such
Investment Manager or the Committee all proxies and proxy materials relating to
such securities, signed by the Trustee without indication of voting preference,
and the Investment Manager or the Committee shall exercise all voting rights
with respect thereto.  All shares of Company Stock held in the HI Common





                                    - 16 -
<PAGE>   22
Stock Fund shall be voted as provided below in Section 4.5.  All shares of
Company Stock held in the ESOP Fund shall be voted as provided below in Section
4.6.

         4.5     Voting of Company Stock in the HI Common Stock Fund:  The
Trustee shall not vote the shares of Company Stock held in the HI Common Stock
Fund at any meeting of stockholders except as it shall receive voting
instructions from Participants in the HI Common Stock Fund as provided below.
Each employee, former employee or beneficiary of a deceased employee
participating in the HI Common Stock Fund (hereinafter in Sections 4.5 and 4.7
referred to as "HI Common Stock Fund Participant") is, for purposes of this
Section 4.5, hereby designated as a "named fiduciary" (within the meaning of
Section 403(a)(1) of ERISA) with respect to the shares of Company Stock
attributable to his account and shall have the right to direct the Trustee with
respect to the vote of the shares of Company Stock attributable to his account,
on each matter brought before any meeting of the stockholders of the Company.
Before each such meeting of stockholders, the Company shall cause to be
furnished to each HI Common Stock Fund Participant a copy of the proxy
solicitation material, together with a form requesting confidential directions
to the Trustee on how such shares of Company Stock attributable to such HI
Common Stock Fund Participant's account shall be voted on each such matter.
Upon timely receipt of such directions, the Trustee shall on each such matter
vote as directed the number of shares (including fractional shares) of Company
Stock attributable to such HI Common Stock Fund Participant's account, giving
effect to all affirmative directions by HI Common Stock Fund Participants,
including directions to vote for or against, to abstain or to withhold the
vote, and the Trustee shall have no discretion in such matter.  The Trustee
shall vote shares of Company Stock for which it has not received direction in
the same proportion as directed shares attributable to HI Common Stock Fund
Participants' accounts in the Plan are voted, and the Trustee shall have no
discretion in such matter.  The instructions received by the Trustee from HI
Common Stock Fund Participants shall be held by the Trustee in confidence and
shall not be divulged or released to any person, including the Committee,
officers or employees of the Company or Affiliated Corporations.  The Trustee
shall be authorized to coordinate the voting of Company Stock pursuant to this
Section 4.5 with the voting provisions of the ESOP Fund so as to fully
effectuate and carry out the purposes and intent thereof.

         4.6     Voting of Company Stock in the ESOP Fund:  Each Participant
(hereinafter in Sections 4.6 and 4.7 referred to as "ESOP Fund Participant" is,
for purposes of this Section 4.6, hereby designated as a "named fiduciary"
(within the meaning of Section 403(a)(1) of ERISA) with respect to the shares
of Company Stock allocated to his account in the ESOP Fund and to a pro rata
portion of the unallocated shares of Company Stock held in the ESOP Fund and
shall have the right to direct the Trustee with respect to the vote of the
shares of Company Stock allocated to his account, on each matter brought before
any meeting of the stockholders of the Company.  Before each such meeting of
stockholders, the Company shall cause to be furnished to each Participant a
copy of the proxy solicitation material, together with a form requesting
confidential directions to the Trustee on how such shares of Company Stock
allocated to such Participant's account in the ESOP Fund shall be voted on each
such matter.  Upon timely receipt of such directions, the Trustee shall on each
such matter vote as directed the number of shares (including fractional shares)
of Company Stock allocated to such Participant's account in the ESOP Fund, and
the Trustee shall have no





                                    - 17 -
<PAGE>   23
discretion in such matter.  The instructions received by the Trustee from
Participants shall be held by the Trustee in confidence and shall not be
divulged or released to any person, including the Committee, officers or
employees of the Company or an Affiliated Corporation.  The Trustee shall vote
both allocated shares of Company Stock for which it has not received direction,
as well as unallocated shares, in the same proportion as directed shares are
voted, and the Trustee shall have no discretion in such matter.  In determining
such proportion, the Trustee shall under all circumstances include in its
calculation the votes of Participants on all shares allocated to Participants'
Plan accounts, giving effect to all affirmative directions by Participants,
including directions to vote for or against, to abstain or to withhold the
vote.

         4.7     Tendering of Company Stock in the HI Common Stock Fund and
Company Stock in the ESOP Fund:  The provisions of this Section 4.7, shall
apply in the event a tender or exchange offer including but not limited to a
tender offer or exchange offer within the meaning of the Exchange Act (a
"tender offer"), for Company Stock is commenced by a person or persons.

                 In the event a tender offer for Company Stock is commenced,
the Committee, promptly after receiving notice of the commencement of any such
tender offer, shall transfer certain of the Committee's record keeping
functions to an independent record keeper (which, if the Trustee consents in
writing, may be the Trustee).  The functions so transferred shall be those
necessary to preserve the confidentiality of any directions given by the HI
Common Stock Fund Participants or the ESOP Fund Participants in connection with
the tender offer.  The Trustee shall have no discretion or authority to sell,
exchange or transfer any of such shares pursuant to such tender offer except to
the extent, and only to the extent, as provided in this Trust Agreement.

                 Each HI Common Stock Fund Participant is, for purposes of this
Section 4.7, hereby designated as a "named fiduciary" (within the meaning of
Section 403(a)(1) of ERISA) with respect to the shares of Company Stock
attributable to his account and shall have the right, to the extent of the
number of whole shares of Company Stock attributable to his account, to direct
the Trustee in writing as to the manner in which to respond to a tender offer
with respect to shares of Company Stock.  Each ESOP Fund Participant is, for
purposes of this Section 4.7, hereby designated as a "named fiduciary" (within
the meaning of Section 403(a)(1) of ERISA) with respect to the shares of
Company Stock allocated to his account and to a pro rata portion of the
unallocated shares of Company Stock held in the ESOP Fund and shall have the
right, to the extent of the number of whole shares of Company Stock allocated
to his account, to direct the Trustee in writing as to the manner in which to
respond to a tender offer with respect to shares of Company Stock.  The Company
shall use its best efforts to timely distribute or cause to be distributed to
each HI Common Stock Fund Participant and ESOP Fund Participant such
information as will be distributed to stockholders of the Company in connection
with any such tender offer.  Upon timely receipt of such instructions, the
Trustee shall respond as instructed with respect to such shares of Company
Stock.  The instructions received by the Trustee from HI Common Stock Fund
Participants and ESOP Fund Participants shall be held by the Trustee in
confidence and shall not be divulged or released to any person, including the
Committee or officers or employees of the Company or Affiliated Corporations.
If the Trustee shall not receive timely instruction from a HI Common Stock Fund
Participant or an ESOP Fund





                                    - 18 -
<PAGE>   24
Participant as to the manner in which to respond to such a tender offer, the
Trustee shall not tender or exchange any shares of Company Stock with respect
to which such HI Common Stock Fund Participant or ESOP Fund Participant has the
right to direction, and the Trustee shall have no discretion in such matter.
Fractional shares of Company Stock attributable to HI Common Stock Fund
Participants' accounts shall be tendered or exchanged by the Trustee in the
same proportion as shares of Company Stock attributable to HI Common Stock Fund
Participants' accounts in the Plan are tendered or exchanged, and the Trustee
shall have no discretion in such matter.  Fractional or unallocated shares of
Company Stock allocated to ESOP Fund Participants' accounts shall be tendered
or exchanged by the Trustee in the same proportion as shares of Company Stock
allocated to ESOP Fund Participants' accounts in the Plan are tendered or
exchanged, and the Trustee shall have no discretion in such matter.  In
determining such proportion, the Trustee shall under all circumstances include
in its calculation the direction of HI Common Stock Fund Participants on all
shares of Company Stock attributable to HI Common Stock Fund Participants' Plan
accounts and the direction of ESOP Fund Participants on all shares of Company
Stock allocated to ESOP Fund Participants' Plan accounts.

                 The independent record keeper shall solicit confidentially
from each HI Common Stock Fund Participant and ESOP Fund Participant the
directions described in this Section 4.7 as to whether shares are to be
tendered.  The independent record keeper, if different from the Trustee, shall
instruct the Trustee as to the amount of shares to be tendered, in accordance
with the above provisions.

         4.8     Powers of Trustee:  When so directed in accordance with the
provisions of Section 4.3, or in the discretion of the Trustee if it is
managing the Trust Fund under such provisions, the Trustee shall have, subject
to the provisions of Sections 4.1 and 4.2, the power:

                 (a)      To manage, sell, contract to sell, grant options to
          purchase, convey, exchange, transfer, abandon, improve, repair,
          insure, lease for any term (even though commencing in the future or
          extending beyond the term of the Trust), and otherwise deal with all
          property, real or personal, in such manner, for such considerations
          and on such terms and conditions as the Trustee decides;

                 (b)      To participate in any plan of reorganization,
          consolidation, merger, combination, liquidation or other similar plan
          relating to any property held in the Trust Fund, and to consent to or
          oppose any such plan or any action thereunder, or any contract,
          lease, mortgage, purchase, sale or other action by any person or
          corporation;

                 (c)      To deposit any property with any protective,
          reorganization or similar committee; and to pay and agree to pay part
          of the expenses and compensation of any such committee and any
          assessments levied with respect to any property so deposited;





                                    - 19 -
<PAGE>   25
                 (d)      To exercise conversion and subscription rights
          pertaining to any property held in the Trust Fund;

                 (e)      To extend the time of payment of any obligation held
          in the Trust Fund;

                 (f)      To enter into stand-by agreements for future
          investment, either with or without a stand-by fee;

                 (g)      To hold in cash or cash balances, without liability
          for interest thereon, any moneys received by the Trustee which are
          awaiting investment and such additional funds as the Trustee may deem
          reasonable or necessary to meet anticipated distributions or other
          payments or disbursements with respect to the Plan;

                 (h)      To invest in any type of deposit of the Trustee (or
          of a bank related to the Trustee within the meaning of Code Section
          414(b)) at a reasonable rate of interest or in a common trust fund,
          as described in Code Section 584, or in a collective investment fund,
          the provisions of which govern the investment of such assets and
          which the Plan incorporates by this reference, which the Trustee (or
          its affiliate as defined in Code Section 1504) maintains exclusively
          for the collective investment of money contributed by the bank (or
          the affiliate) in its capacity as trustee and which conforms to the
          rules of the Comptroller of the Currency;

                 (i)      To provide temporary advances to cover overdrafts
          and, in addition, with the prior approval of the Committee, to borrow
          money from others, to issue its promissory note or notes therefor,
          and to secure the repayment thereof by pledging any property in its
          possession;

                 (j)      If an Investment Manager directing investment under
          Section 4.3 is a bank, as defined in the Investment Managers Act of
          1940, to transfer to such Investment Manager all or any specified
          assets in that part of the Trust Fund which is subject to such
          Investment Manager's direction, for investment by such Investment
          Manager through the medium of any common, collective, commingled or
          group trust fund maintained by it which consists solely of assets of
          trusts qualified under Code Section 401(a) and which is exempt from
          tax under Code Section 501(a), whereupon the instrument establishing
          such common, collective, commingled or group trust fund, as amended
          from time to time, shall constitute a part of the Plan the assets of
          which are included in such part of the trust fund as long as any
          portion of such assets shall be invested through the medium of such
          common, collective, commingled or group trust fund;





                                    - 20 -
<PAGE>   26
                 (k)      Subject to the provisions of Sections 4.2, 4.5, 4.6
          and 4.7, to exercise voting rights either in person or by proxy, with
          respect to any securities or other property, and generally to
          exercise with respect to the ESOP Fund all rights, powers and
          privileges as may be lawfully exercised by any person owning similar
          property in his own right;

                 (l)      Subject to the provisions of Sections 4.5 through
          4.7, to exercise any options, conversion rights, or rights to
          subscribe for additional stocks, bonds or other securities
          appurtenant to any securities or other property held by it, and to
          make any necessary payments in connection with such exercise;

                 (m)      To compromise, compound, contest, abandon and settle
          any debt or obligation owing to or from it as Trustee; to reduce or
          increase the rate of interest on, extend or otherwise modify,
          foreclose upon default, or otherwise enforce any such obligation;

                 (n)      To hold any property at any place, except that it
          shall not maintain the indicia of ownership of any assets of the ESOP
          Fund outside the jurisdiction of the district courts of the United
          States except as permitted by regulations issued by the Secretary of
          Labor of the United States under ERISA Section 404(b);

                 (o)      To determine the market value of any securities or
          other property held by the Trustee in the ESOP Fund, and where any
          securities or other property are determined by the Trustee not to be
          marketable, to determine their value in accordance with sound
          practice and standards for evaluating such property;

                 (p)      In regard to the ESOP Fund, to repay from time to
          time the principal and interest on, and to take any other action with
          respect to, any loan which was previously incurred by the ESOP Fund,
          all as directed by the Committee and in accordance with the
          applicable provisions of the Plan; provided, however, no loans shall
          be made by the Trustee individually to the ESOP Fund other than such
          temporary advancements to the ESOP Fund on a cash or overdraft basis
          as may be agreed to by the Trustee from time to time;

                 (q)      To open and make use of banking accounts including
          checking accounts, which accounts, if bearing a reasonable rate of
          interest or if checking accounts, may be with the Trustee;

                 (r)      To sell at public or private sale, contract to sell,
          convey, exchange, transfer and otherwise deal with the assets in
          accordance with industry practice, and to sell put and covered call
          options from time to time for such price and upon such terms as the
          Trustee sees fit; the Company acknowledges that the Trustee





                                    - 21 -
<PAGE>   27
          may reverse any credits made to the Trust Fund by the Trustee prior
          to receipt of payment in the event that payment is not received;

                 (s)      To employ agents, attorneys and proxies and to
          delegate to any one or more of them any power, discretionary or
          otherwise, granted to the Trustee;

                 (t)      To maintain custody and safekeeping over all
          securities and other property in the Investment Funds and the ESOP
          Fund, and to arrange for the safe transit of any such securities and
          other property; and

                 (u)      To register any security or other property held by it
          hereunder (i) in its own name, (ii) in the name of a title holding
          company exempt from tax under Section 501(c)(2) of the Code (and to
          form title holding corporations or trusts under Section 501(c)(25) of
          the Code), or (iii) in the name of a nominee with or without the
          addition of words indicating that such securities or other property
          are held in a fiduciary capacity, and to hold any securities in
          bearer form and to deposit any securities or other property in a
          depository or a clearing corporation, provided that the requirement
          under Section 403 of ERISA that all assets of the Plan be held in
          trust is not violated (provided, however, that the Trustee's books
          and records shall at all times show that all such investments are a
          part of the Trust Fund).

                 (v)      The Trustee shall have the power in its discretion:

                          (i)     To collect and receive any and all money and
                 other property due to the Trust Fund and to give full
                 discharge therefor;

                          (ii)    To settle, compromise or submit to
                 arbitration any claims, debts or damages due or owing to or
                 from the Trust; to commence or defend suits or legal
                 proceedings to protect any interest of the Trust; and to
                 represent the Trust in all suits or legal proceedings in any
                 court or before any other body or tribunal;

                          (iii)   To organize under the laws of any state a
                 corporation for the purpose of acquiring and holding title to
                 any property which it is authorized to acquire under this
                 Agreement and to exercise with respect thereto any or all of
                 the powers set forth in this Agreement;

                          (iv)    To manage, operate, repair, improve, develop,
                 preserve, mortgage or lease for any period any real property
                 or any oil, mineral or gas properties, royalties, interests or
                 rights held by it directly or through any corporation, either
                 alone or by joining with others, using other Trust assets for
                 any of such purposes; to modify,





                                    - 22 -
<PAGE>   28
                 extend, renew, waive or otherwise adjust any or all of the
                 provisions of any such mortgage or lease; and to make
                 provision for amortization of the investment in or
                 depreciation of the value of such property;

                          (v)     Generally, to do all acts, whether or not
                 expressly authorized, which the Trustee may deem necessary or
                 desirable for the protection of the Trust Fund; and


                          (vi)    To exercise all the rights, powers, options
                 and privileges now or hereafter granted to, provided for, or
                 vested in, trustees under the Texas Trust Code, except such as
                 conflict with the terms of this Agreement or applicable law.
                 As far as possible, no subsequent legislation or regulation
                 shall be in limitation of the rights, powers or privileges
                 granted the Trustee hereunder or in the Texas Trust Code as it
                 exists at the time of the execution hereof.

         4.9     Payments and Distributions from Trust Fund:  The Trustee shall
make such payments and distributions from the Trust Fund at such time or times
and to such person or persons, including a paying agent or agents designated by
the Committee as paying agent (including a commercial banking account in a
federally insured banking institution established by the Committee for such
purpose; provided, however that the Trustee shall have no responsibility to
account for funds held in or disbursed from any such commercial banking
account, or to prepare any information returns for tax purposes as to
distributions made therefrom), as the Committee shall direct in writing,
provided, however, (i) that disbursements for ordinary transaction expenses
incurred in the administration of the Trust Fund need not be authorized by the
Committee and (ii) that no payment or distribution in respect of the Plan shall
exceed the value of the Plan in the Trust Fund on the date such payment or
distribution is made.  Any cash or property so paid or delivered to any such
paying agent shall be held in trust by such payee until disbursed in accordance
with the Plan.  Any written direction of the Committee shall constitute a
certification that the distribution or payment so directed is one which the
Committee is authorized to direct and the Trustee shall not be responsible for
the adequacy of the value of the Plan to meet and discharge such distribution
or payment.

                 The Trustee may make any distribution or payment required to
be made by it hereunder by mailing its check for the specified amount, or
delivering the specified property, including certificates representing shares
of Company Stock in the ESOP Fund, if applicable, to the person to whom such
distribution or payment is to be made, at such address as may have been last
furnished to the Trustee, or, if no such address shall have been so furnished,
to such person in care of the Company or the Committee, or (if so directed by
the Committee by crediting the account of such person or by transferring funds
to such person's account by bank wire or transfer).  If a payment or
distribution from the Trust is not claimed, the Trustee shall promptly notify
the Committee thereof and thereafter handle such payment in accordance with the
subsequent direction of the Committee.





                                    - 23 -
<PAGE>   29
         4.10     Trustee's Dealings with Third Parties:  Any corporation, 
transfer agent or other third party dealing with the Trustee shall not make, nor
be required by any person to make, any inquiry whether the Trustee has authority
to take or omit any action under this Trust Agreement or whether the Committee
has instructed the Trustee to take or omit any such action, but shall be fully
protected in relying upon the certificate of the Trustee that it has authority
to take or omit such proposed action.  The seal of the Trustee affixed to any
instrument executed by it shall constitute the Trustee's certificate that it is
authorized as Trustee hereunder to execute such instrument and proceed as may be
provided for therein. No third party shall be required to follow the application
by the Trustee of any money or property which may be paid or transferred to it.

         4.11    Ancillary Trustee:  If at any time the Trust Fund shall
consist in whole or in part of assets located in a jurisdiction in which the
Trustee is not authorized to act, the Trustee may appoint an individual or
corporation in such jurisdiction as ancillary trustee and may confer upon such
ancillary trustee, power to act solely with reference to such assets, and such
ancillary trustee shall remit all net income or proceeds from the sale of such
assets to the Trustee.  The Trustee may pay such ancillary trustee reasonable
compensation and may absolve it from any requirement that it furnish bond or
other security unless otherwise required by law.





                                    - 24 -
<PAGE>   30
                                   ARTICLE V

                        ADDITIONAL ESOP FUND PROVISIONS

                 It is specifically contemplated that the ESOP Fund will
operate pursuant to a leveraged employee stock ownership plan.  The Company may
from time to time direct the Trustee to take such actions as the Company shall
determine with respect to any loan previously incurred for the purpose of
acquiring Company Stock (a "Loan"), including, without limitation, electing
applicable interest rates and prepaying such Loan.  Any such Loan shall
continue to meet all of the requirements necessary to constitute an "exempt
loan" within the meaning of Treasury Regulation Section 54.4975-7(b)(1)(iii)
and shall continue to be used primarily for the benefit of the ESOP Fund
Participants and their beneficiaries.  The proceeds of any such Loan shall
continue to be used, within a reasonable time after the Loan is obtained, only
to purchase Company Stock or to repay such Loan or a prior Loan.  Any such Loan
shall continue to provide for no more than a reasonable rate of interest and
must continue to be without recourse against the Plan and Trust.  The Loan must
not be payable at the demand of any person, except in the case of a default.
The only assets of the ESOP Fund that may be given as collateral for a Loan are
shares of Company Stock acquired with the proceeds of the Loan and shares of
Company Stock that were used as collateral on prior Loans repaid with the
proceeds of the current Loan.  In the event that Company Stock was used as
collateral for a Loan, such Company Stock shall be released from such
encumbrance at an annual rate which is geared to the rate of total repayment
(principal plus interest) of the Loan or the rate of principal repayment of the
Loan, provided that in either case all applicable requirements of the
applicable regulations shall be satisfied.  No person entitled to payment under
a Loan shall be entitled to payment from the ESOP Fund other than from shares
of Company Stock acquired with the proceeds of the Loan which are collateral
for the Loan, Company contributions made under the Plan for the purpose of
satisfying the Loan obligation, earnings attributable to such Company Stock and
such Company contributions, and such other assets, if any, as to which recourse
may be permitted under Section 4975 of the Code.  Payments of principal and
interest on any such Loan shall be made by the Trustee (as directed by the
Committee) only from (1) Company contributions made under the Plan for the
purpose of satisfying such Loan obligation, earnings on such contributions and
earnings on shares of Company Stock acquired with the proceeds of such Loan,
(2) the proceeds of a subsequent Loan made to repay the prior Loan, and/or (3)
the proceeds of the sale of any collateralized share of Company Stock acquired
with the proceeds of such Loan.  In the event of a default under a Loan, the
value of ESOP Fund assets transferred to the lender shall not exceed the amount
of the default, provided further that if the lender is a "party in interest"
within the meaning of ERISA Section 3(14), a transfer of ESOP Fund assets upon
default shall be made only if, and to the extent of, the ESOP Fund's failure to
meet the Loan's payment schedule.





                                    - 25 -
<PAGE>   31
                                   ARTICLE VI

                       FOR THE PROTECTION OF THE TRUSTEE

         6.1     Composition of Committee:  The Plan shall be administered by
the Committee appointed by the Company pursuant to the provisions of the Plan,
and the Trustee shall not be responsible in any respect for such
administration.  The members of the Committee shall serve pursuant to the
provisions of the Plan, and the Company shall certify to the Trustee the names
of the members of the Committee acting from time to time and furnish to the
Trustee specimens of the signatures of such persons.  The Committee may
delegate any of its rights, powers and duties to any one or more of its members
or to an agent.  The Company shall indemnify and hold harmless each member of
the Committee, from any and all claims, losses, damages, expenses (including
counsel fees approved by the Committee), and liabilities (including any amounts
paid in settlement with the Committee's approval but excluding any excise tax
assessed against any member or members of the Committee pursuant to the
provisions of Code Section 4975) arising from any act or omission of such
member in connection with his duties and responsibilities under this Trust
Agreement, except when the same is judicially determined to be due to the gross
negligence and willful misconduct of such member.  The foregoing right of
indemnification shall be in addition to any rights to which any member of the
Committee, may otherwise be entitled as a matter of law.  When any member of
the Committee, shall cease to act, the Company shall promptly give written
notice to that effect to the Trustee, but until such notice is received by the
Trustee it shall be fully protected in continuing to rely upon the authority of
such persons.  If the full number of members of the Committee, as provided
under the Plan, shall not at any time have been designated, the remaining
member or members acting at such time shall be deemed to have all of the powers
and duties of the Committee; or, if at any time there is no member of the
Committee, the Board of Directors of the Company shall be deemed to be the
Committee.

         6.2     Evidence of Action by Company or Committee:  The Committee
shall certify to the Trustee the name or names of any person or persons
authorized to act for the Committee.  Until the Committee notifies the Trustee
that any such person is no longer authorized to act for the Committee, the
Trustee may continue to rely on the authority of such person.  The Trustee may
rely upon any certificate, notice or direction purporting to have been signed
on behalf of the Committee which the Trustee believes to have been signed by
the Committee or the person or persons authorized to act for the Committee.
Any action required by any provision of this Agreement to be taken by the Board
of Directors of the Company shall be evidenced by a resolution of such Board of
Directors, certified to the Trustee over the signature of its Secretary or
Assistant Secretary, and the Trustee may rely upon, and shall be fully
protected in acting in accordance with, such resolution so certified to it.
Unless other evidence with respect thereto has been expressly prescribed in
this Agreement, any other action of the Company or of an Affiliated Corporation
under any provision of this Agreement, including any approval of, or exceptions
to the Trustee's accounts, shall be evidenced by a certificate signed by an
officer of the Company or of an Affiliated Corporation, as the case may be, and
the Trustee shall be fully protected in relying upon such certificate.





                                    - 26 -
<PAGE>   32
                 Any action by the Trustee pursuant to any of the provisions of
this Agreement shall be sufficiently evidenced by a certification of one of its
Vice Presidents, Second Vice Presidents or other appropriate Trust Officers,
and the Company, each Affiliated Corporation which participates in this Trust,
the Committee and all other persons in interest may rely upon, and shall be
fully protected in acting in accordance with, such certification.

         6.3     Communications:  Communications to the Trustee shall be
addressed to it at 50 South LaSalle Street, Chicago, Illinois 60675.
Communications to the Committee, the Company or any Affiliated Corporation
shall be addressed to it at Five Post Oak Park, 4400 Post Oak Parkway, 27th
Floor, Houston, Texas 77027, with a copy to the Benefits Committee, attention:
Secretary, P.O. Box 61867, Houston, Texas 77208, unless the Trustee, the
Committee, the Company or any Affiliated Corporation, respectively, shall
request that communications be sent to another address.  No communication shall
be binding upon the Trust Fund or the Trustee, or upon the Committee, the
Company or any Affiliated Corporation until it is received by the Trustee, the
Committee or its agent, the Company or the appropriate Affiliated Corporation,
as the case may be.

         6.4     Advice of Counsel:  The Trustee may consult with any legal
counsel, including counsel to the Company or the Committee, with respect to the
construction of this Trust Agreement, its duties hereunder, or any act which it
proposes to take or omit.

         6.5     Miscellaneous:  The Trustee may assume until advised to the
contrary that the Plan and the Trust Fund is qualified under Sections 401(a),
409 and 4975(e)(7) and exempt from taxation under Section 501(a) of the Code.
The Trustee shall be accountable for contributions made to the Plan and
included among the assets of the Trust Fund, but shall have no responsibility
to determine whether the contributions comply with the provisions of the Plan
and ERISA.

                 The Trustee's duties and obligations shall be limited to those
expressly imposed upon it by this Trust, notwithstanding any reference to the
Plan.

                 The Company, any Affiliated Corporation, the Committee or all
of them, at any time may employ as agent (to perform any act, keep any records
or accounts, or make any computations required of the Company, an Affiliated
Corporation or the Committee by this Trust Agreement or the Plan) the
corporation serving as Trustee hereunder.  Nothing done by said corporation as
such agent shall affect its responsibility or liability as Trustee hereunder.

         6.6     Fiduciary Responsibilities:

         A.      The Trustee, the Investment Managers, if any, and the members
of the Committee  shall discharge their duties with respect to the Trust solely
in the interest of the Participants in the Plan and with the care, skill,
prudence, and diligence under the circumstances then prevailing that a prudent
man acting in a like capacity and familiar with such matters would use in the
conduct of an enterprise of a like character and with like aims.  The Trustee,
Investment Managers, and the members of the Committee shall not be liable for
any loss sustained by the Trust Fund by reason of





                                    - 27 -
<PAGE>   33
the purchase, retention, sale or exchange of any investment in good faith and
in accordance with the provisions of this Trust Agreement and of any applicable
Federal law.

         B.      No "fiduciary" (as such term is defined in Section 3(21) of
ERISA, or any successor statutory provision) under this Trust Agreement shall
be liable for an act or omission of another person in carrying out any
fiduciary responsibility where such fiduciary responsibility is allocated to
such other person by this Trust Agreement or pursuant to a procedure
established in this Trust Agreement except to the extent otherwise required by
ERISA.

         6.7     Limitations on Powers:  Except for the short-term investment
of cash, the Company has limited the investment power of the Trustee in the HI
Common Stock Fund and the ESOP Fund to the purchase and holding of Company
Stock.  The Trustee shall not be liable for the purchase, retention, voting,
tender or sale of Company Stock in accordance with the provisions of Sections
4.2, 4.5, 4.6 and 4.7 hereof and the Company (which has the authority to do so
under the laws of the state of its incorporation) agrees to indemnify The
Northern Trust Company from any liability, loss and expense, including
reasonable legal fees and expenses which The Northern Trust Company may sustain
by reason of the purchase, retention, voting, tender or sale of Company Stock
in accordance with the provisions of Sections 4.2 4.5, 4.6 and 4.7 hereof;
provided, however, that the foregoing liability and indemnification provisions
shall not apply to the extent that such liability, loss or expense arises from
the Trustee's willful misconduct, bad faith or negligence in carrying out its
ministerial functions under Sections 4.2, 4.5, 4.6 and 4.7.  This paragraph
shall survive the termination of this Agreement.





                                    - 28 -
<PAGE>   34
                                  ARTICLE VII

                  TAXES, EXPENSES AND COMPENSATION OF TRUSTEE

         7.1     Taxes and Expenses:  Brokerage fees, commissions, stock
transfer taxes and other charges and expenses incurred in connection with the
purchase and sale of securities for the Trust Fund or distribution thereof
shall be paid by the Trustee from the Trust Fund.  All taxes imposed or levied
with respect to the Trust Fund or any part thereof, under existing or future
laws, shall be paid from the Trust Fund.  The Trustee shall pay from the Trust
Fund, to the extent not paid by the Company and/or the Affiliated Corporations
which participate in the Plan, its reasonable expenses of management and
administration of the Trust, including reasonable compensation of counsel and
any agents engaged by the Trustee to assist it in such management and
administration, and when so directed by the Committee shall pay from the Trust
Fund the fees of any Investment Manager and any specified expenses of
administration of the Plan including, but not limited to, audit fees,
investment consulting fees, and recordkeeping expenses.

         7.2     Compensation of the Trustee:  The Trustee shall receive for
its services as Trustee hereunder such reasonable compensation which may be
agreed upon from time to time by the Company and the Trustee.  All amounts due
the Trustee as compensation for its services shall be paid by the Company, or
prorated among the Company and the Affiliated Corporations which participate in
this Trust in such a manner as they deem equitable, or disbursed by the Trustee
out of the Trust Fund, and, until paid, shall constitute a charge upon the
Trust Fund.





                                    - 29 -
<PAGE>   35
                                  ARTICLE VIII

                            SETTLEMENT OF ACCOUNTS;
                     DETERMINATION OF INTERESTS UNDER TRUST

         8.1     Settlement of Accounts of Trustee:  The Trustee shall keep
accurate and detailed accounts of all of its receipts, investments and
disbursements under this Agreement on an accrual basis, accounting separately
for each Investment Fund and the ESOP Fund.  The financial statements, books
and records of the Trustee with respect to the Trust shall be open to
inspection during all business hours of the Trustee by the Company or the
Committee or their representatives, including, without limitation, independent
certified public accountants engaged by the Company or the Committee, on behalf
of all participants in the Plan, to permit compliance with the reporting and
disclosure requirements of ERISA.  However, such financial statements, books
and records may not be audited more frequently than twice in each fiscal year.
If an examination of the financial statements of the Plan requires a review of
the underlying transactions affecting such financial statements, such
independent certified public accountants shall rely on the report of the
independent certified public accountants engaged by the Trustee to review its
procedures and controls, to the extent such reliance is permitted by generally
accepted auditing standards.

                 Within 90 days after the close of each calendar year, or any
termination of the duties of the Trustee, the Trustee shall prepare, sign and
mail in duplicate to the Company and the Committee an account of its acts and
transactions as Trustee hereunder.  Such account shall include a statement of
the value of the Trust Fund and in its component Investment Funds and in the
ESOP Fund as of the last day of such year or other period and a statement of
the portion of the Trust Fund under management by any Investment Manager as of
the same date.

                 If the Company finds the account to be correct, the Company
shall sign the instrument of settlement annexed to one counterpart of the
account and return such counterpart to the Trustee, whereupon the account shall
become an account stated.  If within 90 days after receipt of the account or
any amended account the Company has not signed and returned a counterpart to
the Trustee, nor filed with the Trustee notice of any objection to any act or
transaction of the Trustee, the account or amended account shall become an
account stated.  If any objection has been filed, and if the Company is
satisfied that it should be withdrawn or if the account is adjusted to its
satisfaction, the Company shall in writing filed with the Trustee signify its
approval of the account and it shall become an account stated.  In each case in
which an account becomes an account stated, the account shall be an account
stated between the Trustee and the Company and any Affiliated Corporation which
had adopted the Plan.

                 When an account becomes an account stated, such account shall
be finally settled, and the Trustee shall be completely discharged and
released, as if such account had been settled and allowed by a judgment or
decree of a court of competent jurisdiction in an action or proceeding in which
the Trustee, the Company and any Affiliated Corporation which has adopted the
Plan were parties.





                                    - 30 -
<PAGE>   36
                 The account of the Trustee's acts and transactions delivered
to the Committee shall be settled, and shall become an account stated, in the
same manner as the account delivered to the Company hereunder.  When an account
becomes an account stated as between the Trustee and the Committee, the account
shall be finally settled and the Trustee shall be completely discharged and
released, as if such account had been settled and allowed by a judgment or
decree of a court of competent jurisdiction in an action or proceeding in which
the Trustee and the Committee were parties.

                 The Trustee, the Committee or the Company shall have the right
to apply at any time to a court of competent jurisdiction for judicial
settlement of any account of the Trustee not previously settled as hereinabove
provided.  In any such action or proceeding it shall be necessary to join as
parties only the Trustee, the Committee and the Company (although the Trustee
may also join such other parties as it may deem appropriate), and any judgment
or decree entered therein shall be conclusive.

         8.2     Determination of Rights and Benefits of Persons Claiming an
Interest in the Trust Fund; Enforcement of Trust Fund:  The Committee shall
have authority to determine the existence, non-existence, nature and amount of
the rights and interests of all persons under the Plan and in or to the Trust
Fund, and the Trustee shall have no power, authority, or duty in respect of
such matters, or to question or examine any determination made by the
Committee, or any direction given by the Committee to the Trustee.  The Company
and the Committee shall have authority, either jointly or severally, to enforce
this Trust Agreement on behalf of any and all persons having or claiming any
interest in the Trust Fund or under this Trust Agreement or the Plan.





                                    - 31 -
<PAGE>   37
                                   ARTICLE IX

              RESIGNATION, REMOVAL AND SUBSTITUTION OF THE TRUSTEE

         9.1     Resignation of Trustee:  The Trustee may resign its duties
hereunder by filing with the Committee its written resignation.  No such
resignation shall take effect until 60 days from the date thereof unless
shorter notice is acceptable to the Committee.

         9.2     Removal of Trustee:  The Trustee may be removed by the Board
of Directors of the Company at any time upon not less than 60 days' notice to
the Trustee, but such notice may be waived by the Trustee.  Such removal shall
be effected by delivering to the Trustee a written notice of its removal
executed by the Company, and by giving notice to the Trustee of the appointment
of a successor Trustee in the manner hereinafter set forth.

         9.3     Appointment of Successor Trustee:  The appointment of a
successor Trustee hereunder shall be accomplished by and shall take effect upon
the delivery to the resigning or removed Trustee, as the case may be, of (a) an
instrument in writing appointing such successor Trustee, executed by the
Company, together with a certified copy of the resolution of the Board of
Directors of the Company to such effect and (b) an acceptance in writing of the
office of successor Trustee hereunder executed by the successor so appointed,
both of which documents shall be acknowledged in like manner as this Trust
Agreement.  The Company shall send notice of such appointment to each
Affiliated Corporation which has adopted the Plan, and to each member of the
Committee then in office.  Any successor Trustee hereunder may be either a
corporation authorized and empowered to exercise trust powers or one or more
individuals.  All of the provisions set forth herein with respect to the
Trustee shall relate to each successor Trustee so appointed with the same force
and effect as if such successor Trustee had been originally named herein as the
Trustee hereunder.  If within 60 days after notice of resignation shall have
been given under the provisions of this Article IX a successor Trustee shall
not have been appointed, the resigning Trustee or any member of the Committee
may apply to any court of competent jurisdiction for the appointment of a
successor Trustee.

         9.4     Transfer of Trust Fund to Successor:  Upon the appointment of
a successor Trustee, the resigning or removed Trustee shall transfer and
deliver the Trust Fund and the records relating thereto to such successor
Trustee, after reserving such reasonable amount as it shall deem necessary to
provide for its expenses in the settlement of its accounts, the amount of any
compensation due it and any sums chargeable against the Trust Fund for which it
may be liable, but if the sums so reserved are not sufficient for such
purposes, the resigning or removed Trustee shall be entitled to reimbursement
for any deficiency from the Trust Fund and from the Company and each Affiliated
Corporation which has adopted the Plan, who shall be jointly and severally
liable therefor.





                                    - 32 -
<PAGE>   38
                                   ARTICLE X

                  DURATION AND TERMINATION OF TRUST; AMENDMENT

        10.1     Duration and Termination:  This Trust Agreement shall continue
for such time as may be necessary to accomplish the purpose for which it was
created but may be terminated at any time by the Company by action of its Board
of Directors.  Notice of such termination shall be given to the Trustee by an
instrument in writing executed by the Company and acknowledged in the same form
as this Agreement, together with a certified copy of the resolution of the
Board of Directors of the Company authorizing such termination.  The Company
shall notify the Committee of such termination.

        10.2     Distribution Upon Termination:  If this Trust Agreement is
terminated, the Trustee upon the written direction of the Committee shall
liquidate the Trust Fund to the extent required for distribution and, after its
final account has been settled as provided in Article VIII, shall distribute
the net balance thereof to such person or persons, at such time or times and in
such proportions and manner as may be directed by the Committee or in the
absence of such direction, as may be directed by a judgment or decree of a
court of competent jurisdiction.  Upon making such distributions, the Trustee
shall be relieved from all further responsibility.  The powers of the Trustee
hereunder shall continue so long as any assets of the Trust Fund remain in its
hands.  Notwithstanding the foregoing provisions of this Section 10.2, the
Company may promptly advise the appropriate District Director of Internal
Revenue of the termination of the Trust and the Trustee may delay the final
distribution to Participants in the terminated Plan until said District
Director shall advise in writing that such termination does not adversely
affect the previously qualified status of the terminated Plan or the exemption
from tax of the Trust under Code Section 401(a) or 501(a).

        10.3     Certain Withdrawals:  Each Affiliated Corporation which
participates in the Trust shall have the right to withdraw from this Trust upon
six months' written notice to the Trustee and the Committee, which written
notice may be waived by the Trustee and the Committee.  In the event that any
Affiliated Corporation which participates in the Trust shall cease to be an
Affiliated Corporation of the Company, such corporation shall withdraw from
this Trust as soon as arrangements may be reasonably made therefor, but in any
event such withdrawal shall be made not more than six months after the date
such corporation ceases to be an Affiliated Corporation.  Upon such withdrawal,
the Committee shall certify to the Trustee the interest in the Trust Fund of
the participants of such withdrawing corporation and the Trustee shall
thereupon separate such interest from the Trust Fund as provided below in this
Section.  The Committee may at any time direct the Trustee to segregate and
withdraw any portion as may be certified to the Trustee by the Committee as
allocable to any specified group or groups of employees or beneficiaries in the
Plan.  Whenever segregation is required, the Trustee shall withdraw from the
Trust Fund such assets as it shall in its absolute discretion deem to be equal
in value to the equitable share to be segregated.  Such withdrawal from the
Trust Fund shall be in cash or in any property held in such Fund, or in a
combination of both, in the absolute discretion of the Trustee.  The Trustee
shall thereafter hold the assets so withdrawn as a separate trust fund in
accordance with the provisions either of this Agreement (which shall be





                                    - 33 -
<PAGE>   39
construed in respect of such assets as if the employer maintaining the Plan
(determined without regard to whether any subsidiaries or affiliates of such
employer have joined in the Plan)) had been named as the Company hereunder or
of a separate trust agreement.  Such segregation shall not preclude later
readmission to the Trust.

        10.4     Amendment:  By an instrument in writing delivered to the
Trustee executed pursuant to the order of the Company's Board of Directors and
acknowledged in the same form as this Agreement, the Company shall have the
right to amend or modify this Trust Agreement at any time and from time to time
to the extent that it may deem advisable, except that the duties and
responsibilities of the Trustee shall not be increased without the Trustee's
written consent.  The Committee shall have the right to amend or modify this
Trust Agreement in order to modify the administrative provisions of the Trust,
to change the Investment Funds offered under the Trust and for any changes
required by applicable law or by the Internal Revenue Service to maintain the
qualified status of the Plan and related Trust at any time and from time to
time to the extent that it may deem advisable, except that the duties and
responsibilities of the Trustee shall not be increased without the Trustee's
written consent.  However, no such amendment shall authorize or permit, at any
time prior to the satisfaction of all liabilities with respect to employees and
their beneficiaries under the Plan, any part of the Plan in the Trust Fund to
be used for, or diverted to, any purposes other than for the exclusive benefit
of such employees and their beneficiaries.

                 Any such amendment shall become effective upon (a) delivery to
the Trustee of the written instrument of amendment executed (i) by the
appropriate officers of the Company, together with a certified copy of the
resolution of the Board of Directors of the Company authorizing such amendment,
or (ii) by the appropriate member of the Committee, together with a certified
copy of the resolution of the Committee and (b) endorsement by the Trustee on
such instrument of its receipt thereof, together with its consent thereto if
such consent is required.





                                    - 34 -
<PAGE>   40
                                   ARTICLE XI

                                 MISCELLANEOUS

        11.1     Governing Law; No Bond Required of Trustee:  Subject to the
provisions of ERISA, as they may be amended from time to time, which may be
applicable and provide to the contrary, this Trust Agreement and the Trust
hereby created shall be governed, construed, administered and regulated in all
respects under the laws of the State of Texas.  No bond or other security for
the faithful performance of its duties hereunder shall be required of the
Trustee unless otherwise required by law.

        11.2     Interest in Trust Fund; Assignment:  No document shall be
issued evidencing any interest in the Trust or in the Trust Fund, and no
Affiliated Corporation shall have the power to assign all or any part of its
equitable share of the Trust Fund or of its interest therein.

        11.3     Invalid Provisions:  If any provision or provisions of this
Trust Agreement shall be held illegal or invalid for any reason, said
illegality or invalidity shall not affect the remaining provisions of this
Trust Agreement, but shall be fully severable and the Trust Agreement shall be
construed and enforced as if said illegal or invalid provisions had never been
inserted herein.

        11.4     Prohibition of Diversion:  Except as provided in Article VII
hereof, it shall be impossible under this Trust Agreement for any part of the
corpus or income of the Trust Fund to be used for, or diverted to, purposes
other than for the exclusive benefit of the Participants.  It shall also be
impossible under this Trust Agreement for any part of the Trust Fund to revert
directly or indirectly to the Company or any Affiliated Corporation which
participates in the Plan, except to the extent such reversions are specifically
authorized under Section 403(c)(2) of ERISA.

        11.5     Headings for Convenience Only:  The headings and subheadings
in this Trust Agreement are inserted for convenience of reference only and are
not to be used in construing this instrument or any provision thereof.

        11.6     Successors and Assigns:  This Trust Agreement shall bind and
inure to the benefit of the successors and assigns of the Company and the
Trustee, respectively.





                                    - 35 -
<PAGE>   41
                 IN WITNESS WHEREOF, the Company and Trustee have caused these
presents to be executed by their duly authorized officers, in a number of
copies all of which shall constitute one and the same instrument which may be
sufficiently evidenced by any executed copy hereof, this 19th day of December,
1995, but effective as of July 1, 1995.


                                        HOUSTON INDUSTRIES INCORPORATED
                                        
                                        
                                        By  /s/ D. D. Sykora
                                            -----------------------------------
                                            D. D. Sykora
                                            Chairman of the Benefits Committee
                                        
                                        
ATTEST:                                 
                                        
/s/  R. B. Dauphin                 
-------------------------------
Assistant Corporate Secretary           
                                        
                                        
                                        THE NORTHERN TRUST COMPANY,
                                          TRUSTEE
                                        
                                        
                                        
                                        By  /s/  Bruce G. Heniken
                                            -----------------------------------
                                            Vice President
                                        
ATTEST:                                 

/s/  Stephen M. Kuropas
-------------------------------





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