UIL Exhibit 10.1 - Severance and Release Agreement


    

      EXHIBIT
        10.1

      SEVERANCE
        AND RELEASE AGREEMENT

      This
        Severance and Release Agreement ("Severance Agreement") is made and entered
        into
        as of April
        10, 2006
        by and
        between LOUIS J. PAGLIA ("Mr. Paglia") and UIL Holdings Corporation (the
        “Company”).

      WHEREAS,
        Mr. Paglia was formerly employed as the Executive Vice President and Chief
        Financial Officer of the Company pursuant to an Employment Agreement with
        the
        Company dated November 8, 2004 (the “Employment Agreement”); and

      WHEREAS,
        pursuant to the Company’s plans for a finance reorganization, Mr. Paglia’s
        employment with the Company is being terminated without cause; and

      WHEREAS,
        for purposes of this Separation Agreement, Mr. Paglia’s termination date is
        considered to be March 31, 2006 (the “Termination Date”); and

      WHEREAS,
        the Employment Agreement provides for certain severance payments and benefits
        to
        Mr. Paglia in the event of a termination without Cause, the payment of which
        are
        conditioned upon Mr. Paglia executing a release of all claims arising out
        of the
        termination of his employment; and

      WHEREAS,
        after discussions between the parties, the parties now desire to define with
        greater specificity the severance payments and benefits to be provided to
        Mr.
        Paglia, to substitute the provisions of this Severance Agreement for those
        related provisions in the Employment Agreement as of the Termination Date,
        and
        to compromise and settle any and all issues, obligations and liabilities
        that
        may exist among Mr. Paglia and the Company (together with all Affiliates
        of the
        Company as defined herein) in connection with any employment relationship,
        fiduciary relationship, contractual relationship, or any other relationship
        or
        interest of whatsoever nature.


      
        
           

          
          

        

        
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      NOW
        THEREFORE, in consideration of the mutual promises of the parties and other
        valuable and sufficient consideration, including but not limited to the
        obligations of the Company set forth below, and intending to compromise and
        settle any and all disputes between Mr. Paglia and the Company (and their
        Affiliates), the parties hereto agree as follows:

      1. Payments
        and Benefits.
        The
        following payments and benefits are in full and final satisfaction of all
        amounts due and owing to Mr. Paglia under the Employment Agreement, including
        without limitation Section 4(g) and Section 6 of the Employment
        Agreement.

      (a)
        Base
        Salary; Business Expense Reimbursement.
        The
        parties acknowledge that the Company have paid to Mr. Paglia (i) all of his
        Base
        Salary (as defined in Section 4(a) of the Employment Agreement and as approved
        by the Board of Directors of the Company at the time of the most recent review
        of the salary rates of all of the Company’ officers earned prior to the
        Termination Date; and (ii) all reasonable business expenses incurred by Mr.
        Paglia prior to the Termination Date. 

      (b)
        Accumulated
        Unused Vacation.
        Subject
        to applicable withholding requirements, the Company shall pay Mr. Paglia
        for all
        accumulated but unused vacation due to Mr. Paglia in accordance with the
        Company’s existing vacation pay policies and practices, which amount the parties
        agree to be $12,920.78, representing 11 days of accrued but unused
        vacation.

      (c)
        Supplemental
        Retirement Lump Sum Benefit.
        Notwithstanding anything in his Employment Agreement to the contrary, on
        or
        before December 31, 2005, the Company paid to Mr. Paglia a lump sum payment
        in
        the amount of $62,890, which amount the parties agreed, and still agree,
        to be
        equal to the present lump sum value of the supplemental retirement benefit
        (“SERP”) payable to Mr. Paglia as of December 31, 2004 under Section 4(g) of the
        Employment Agreement and upon termination of his SERP arrangement in accordance
        with Q&A 20(b) of 


      
        
           

          
          

        

        
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      IRS
        Notice 2005-1. The parties agree that Mr. Paglia is entitled to no further
        accrual of SERP benefits through his Termination Date.

      (d)
        Severance
        Benefit.
        Effective as of the first day of the 7th
        month
        following Mr. Paglia’s Termination Date, and subject to all applicable
        withholding requirements and Section 6(c)(iv) of the Employment Agreement,
        the
        Company will commence to pay to Mr. Paglia the sum of Nine Hundred Sixteen
        Thousand Two Hundred Dollars ($916,200.00), with one half of that sum being
        paid
        in a lump sum, and the other half being paid ratably over the twelve month
        period commencing with such month as consideration for the covenant not to
        compete that restricts Mr. Paglia for such twelve month period under Section
        11
        of the Employment Agreement. 

      (e)
        Cash
        Recognition Bonus.
        No later
        than 2 1⁄2 months following Mr. Paglia’s Termination Date (the ‘vesting date’),
        and subject to all applicable withholding requirements, the Company shall
        pay to
        Mr. Paglia a cash bonus in a gross amount equal to $328,351.10.

      (f)
        Options.
        Mr.
        Paglia shall be entitled to exercise his non-qualified stock options that
        are
        vested and exercisable as of his termination of employment, for a five (5)
        month
        period following his termination of employment from the Company. Mr. Paglia
        understands and agrees that he shall forfeit any options or other equity
        awards
        not yet vested as of his termination of employment, and shall receive no
        value
        for his underwater options whether or not vested. 

      (g)
        Performance
        Shares.
        Mr.
        Paglia shall not be considered to be vested in, and consequently shall forfeit,
        any entitlement to payment under the terms of the UIL Holdings Corporation
        Performance Share Agreement for Annual Performance Shares and TSR Performance
        Shares.

      (h)
        Incentive
        Compensation.
        No
        later than 2 1⁄2 months following the financial closing (the ‘vesting date’) of
        the transaction(s) forming the basis for the 2005 and 2006 performance based
        short-term incentive programs approved by the Compensation and Executive
        


      
        
           

          
          

        

        
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      Development
        Committee at its March 28, 2005 and January 18, 2006 meetings, respectively,
        the
        Company shall pay to Mr. Paglia the Incentive Compensation, if any, to which
        he
        would be entitled, calculated in accordance with the terms of such program
        subject to all applicable withholding requirements. The parties hereby agree
        that the gross Incentive Compensation amount with respect to both transactions
        is $975,000. Mr. Paglia and the Company agree that this incentive shall be
        in
        lieu of any other short-term incentive and further agree that said incentive
        program is hereby amended to specify the payment date provided in the first
        sentence of this subsection (h).

      (i)
        Discharge
        of All Obligations.
        Except
        as specifically provided in this Severance Agreement and except for such
        retirement benefits to which Mr. Paglia is eligible under The United
        Illuminating Company 401(k)/ Employee Stock Ownership Plan, Mr. Paglia
        acknowledges and agrees that the Company does not owe him any wages, salary,
        commissions, bonuses, vacation or severance payments, buyouts, fringe benefits
        or any other payments of any kind, including any payments under any current
        or
        former executive incentive compensation plan applicable to Mr. Paglia. Mr.
        Paglia acknowledges and agrees that the payments set forth in Paragraphs
        1 and 2
        of this Agreement are in full satisfaction of any and all wages, salary,
        benefits and compensation of any nature owed to him by the Company under
        the
        Employment Agreement or otherwise. 

      (j)
        Tax
        withholding Requirements.
        All
        payments under Paragraph 1 of this Severance Agreement shall be subject to
        withholding for all state or federal taxes. 

      2. Post-Termination
        Group Health Insurance. 

      From
        and
        after the Termination Date, and for a two year period thereafter, Mr. Paglia
        shall be entitled to continued participation for himself and any eligible
        dependents in the medical and dental plan(s) in which he was a participant
        as of
        his Termination Date on the same basis as if he remained an active employee,
        provided that such participation is possible under the terms 


      
        
           

          
          

        

        
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      and
        conditions of such plans and applicable law. Such period of continued
        participation shall run concurrently with, and reduce day-for-day, any
        obligation that the Company or any Affiliate would have to provide “COBRA”
continuation coverage with respect to Mr. Paglia’s termination of employment. In
        the event that Mr. Paglia becomes covered by the group health plan of another
        employer, he shall promptly notify the Company of such coverage, such group
        health coverage shall become primary to the coverage offered pursuant to
        this
        Paragraph, and the coverage offered hereunder shall pay on a secondary basis
        so
        long as Mr. Paglia timely pays the applicable premiums. If Mr. Paglia’s
        continued participation is barred due to his termination of employment, the
        Company shall instead provide Mr. Paglia with the discounted present value
        of
        the expected cost of family premium coverage for such two year period, which
        amount shall ‘grossed up’ to take into account the impact of federal and state
        income taxes on such amount, and shall be payable in a single sum. The
        determination of such grossed up amount shall be made by the Company’s
        independent accountants in good faith, and shall be binding on the parties
        to
        this Agreement. Nothing in the foregoing shall be construed to prevent the
        Company or its Affiliates from modifying or terminating any of their employee
        benefit plans at any time. 

      3. Communications.

      (a) Disclosure
        of Severance Agreement.
        From
        the date this Severance Agreement has been signed by all parties, the Company
        and Mr. Paglia mutually agree that neither party shall disclose the financial
        or
        other terms of this Severance Agreement except for disclosure to Mr. Paglia’s
        immediate family members and financial and legal advisors, and except as
        necessary to comply and obtain compliance with this Severance Agreement and
        except as otherwise provided in this Severance Agreement.

      (b) Compulsory
        Disclosure.
        The
        proscriptions contained in (a) above Severance Agreement shall not be construed
        to limit any person's duty to testify under oath as directed by a valid subpoena
        or similar compulsory process or to provide information in filings with



      
        
           

          
          

        

        
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      governmental
        agencies or officials or to make public filings as may by legislative enactment
        or administrative regulation, rule or order be required to be so disclosed,
        provided that the person required to testify or who is otherwise legally
        compelled to provide information shall have made every reasonable effort
        to
        notify the person whose information may be disclosed in time to afford him
        or it
        an opportunity to contest the subpoena, other process or other governmental
        requirements giving rise to the duty to testify or to otherwise provide such
        information. The aforementioned notice requirement shall not apply to SEC
        and
        other regulatory filings. 

      4. Release
        and Covenant Not to Sue.
        

      (a)
        In
        exchange
for
        the
        severance payment and benefits described above,
        and
        consistent with Section 6 of the Employment Agreement, Mr.
        Paglia waives any claim for a specific period of termination notice, and
        waives,
        and releases the Company from, any and all claims or charges or suits
of
        whatever nature which Mr.
        Paglia has
        or
        may have against the Company, whether or
        not
        now
        known, including
        any
        claims arising out of or in connection
        with Mr. Paglia's employment
        with the Company or the termination of Mr. Paglia's employment; provided,
        however,
        that by
        this Paragraph 4(a) Mr. Paglia does not waive any claim he may have for
        indemnification from the Company for acts performed within the scope of his
        employment by the Company.

      (b)
        To
        the
fullest extent
        permitted by law, Mr. Paglia further agrees not to commence
        any action or proceeding against the Company in any state or federal court,
        or
with
        any
        administrative agency, for the purpose of recovering individual damages or
        other
monetary
        or personal relief
        for
        any
        claim based on any act or event
        that occurred prior to the date of this Severance Agreement. Mr.
        Paglia further
        waives and relinquishes any right to benefit financially from any charge
        of
        discrimination, or from any other claim of any nature, filed by him or on
        his
        behalf. If
        Mr.
        Paglia violates this Paragraph, all consideration described
        in 


      
        
           

          
          

        

        
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      Paragraphs
        1 and 2 of this Severance Agreement shall be immediately recoverable by
the
        Company.

       

      (c) The
        release and covenant not to sue contained in subparagraph (a) and
        (b)
        above includes, but is not limited to, any claim of discrimination on the
        basis
        of race, color, sex,
        religion, marital status, sexual preference, national origin, ancestry, handicap
        or disability, age, or veteran status; any other claim based on a statutory
        prohibition; any claim for breach of an
        express or implied contract, or of any covenant of good faith and fair
dealing;
        any tort claims; any claim for
        wrongful
        discharge or retaliation; or any other claim growing out of any legal
        restriction on Company’s right to terminate the employment of an employee, and
        further including, without limitation, any claim for back pay, front pay,
        incentive pay, bonuses, commissions, expenses, vacation, severance pay,
        liquidated damages, punitive damages, compensatory damages, court costs or
        attorneys’ fees.

       

      (d) Mr.
        Paglia further agrees not to seek redress under any internal
        complaint procedure available to him under any policies of the
        Company.

      (e) Mr.
        Paglia represents that he understands the foregoing release,
        that rights and claims under the Age
        Discrimination
        in Employment Act of 1967,
        Title
        VII of the Civil Rights Act, Executive Order 11246, ERISA, the Americans
        with
        Disabilities
        Act , the Connecticut Fair Employment Practice Act, Title VII of the Civil
        Rights Act of 1964, as amended, the Civil Rights Act of 1866, the Equal Pay
        Act
        of 1963, the Connecticut Family and Medical Leave Act, the federal Family
        and
        Medical Leave Act, and the Workers’ Compensation Act as it relates to
        discrimination (i.e., C.G.S. Sec. 31-290a) are among the rights and claims
        which
Mr.
        Paglia is releasing, and that Mr.
        Paglia is not releasing any rights or claims arising after the effective
        date of
        the Severance
        Agreement.


      
        
           

          
          

        

        
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      (f) This
        release and covenant not to sue shall apply to the Company and its
        Affiliates, and to
        all of
        their current and former officers, directors, employees, agents, fiduciaries,
        representatives, successors and assigns,
        or any
        person acting on behalf of
        the
        Company and its Affiliates and shall be
        binding upon Mr. Paglia, and Mr. Paglia's executors, administrators, and
        heirs.
        For purposes of this Severance Agreement, the term Affiliate includes
The
        United Illuminating Company, United Resources, Inc., and all other direct
        and
        indirect subsidiaries of UIL. 

      (h) This
        release and covenant not to sue is not intended to waive any workers'
        compensation claims Mr. Paglia may have
        or
        any payment or benefits to which Mr.
        Paglia may
        be
entitled
        under The United Illuminating Company Pension Plan and The
        United Illuminating Company 401(k)/ Employee Stock Ownership Plan.

      5. Property
        of the Company.
        By his
        signature on this Severance Agreement, Mr. Paglia confirms that he has delivered
        to the Company any and all property and equipment of the Company previously
        in
        his possession, including without limitation his beeper, mobile phone, credit
        card, keys, laptop or other computers, together with all memoranda, notes,
        records, drawings documents and other writings referenced in Section 10 of
        the
        Employment Agreement. The Company agree to keep Mr. Paglia’s Company voice mail
        account active until Mr. Paglia secures permanent employment. In addition,
        the
        Company will arrange for email addressed to Mr. Paglia’s Company email address
        (Louis.Paglia@uinet.com) to be forwarded automatically to Mr. Paglia’s home
        email address, until Mr. Paglia secures permanent employment.

      6. Miscellaneous
        Provisions.
        

      (a) Non
        Admission.
        This
        Severance Agreement does not and shall not be construed to constitute an
        admission of liability or wrongdoing on any matter by Mr. Paglia, the Company
        or
        any Affiliate, or any present or former director, officer, employee, agent,
        or
        representative thereof.


      
        
           

          
          

        

        
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      (b) Voluntariness.
        Mr.
        Paglia represents and acknowledges that he has completely read and completely
        understands this Severance Agreement and that he has entered into this Severance
        Agreement voluntarily. Mr. Paglia also acknowledges and agrees that by receipt
        of a draft of this Severance Agreement he has been advised in writing to,
        and
        has been given the opportunity to, consult with an attorney of his choice
        prior
        to executing this Severance Agreement. The parties mutually acknowledge the
        adequacy of consideration for this Severance Agreement.

      (c) Entire
        Agreement.
        The
        parties agree that this Severance Agreement contains the entire agreement
        and
        understanding of the parties with respect to employment, cessation of
        employment, and any other rights of Mr. Paglia in and to the assets of the
        Company and its Affiliates, that this Severance Agreement supercedes and
        replaces all provisions of the Employment Agreement except for Sections 10,
        11
        and 12 which shall survive the termination of the Mr. Paglia’s employment, and
        that all other provisions of the Employment Agreement shall be of no further
        force and effect. The parties acknowledge that the only consideration for
        their
        signing this Severance Agreement is as stated in this Severance Agreement,
        and
        that no promise, commitment or addition has been made to either of them that
        is
        not set forth in this Severance Agreement. No amendment or supplementation
        of
        this Severance Agreement shall be effective unless it is reduced to writing
        and
        signed by Mr. Paglia and the Company by their authorized representative.
        

      (d) Persons
        Bound.
        This
        Severance Agreement shall be binding upon and inure to the benefit of Mr.
        Paglia's personal representatives, heirs, executors, administrators and
        dependents. This Severance Agreement shall also bind and be enforceable against
        the Company and any successor to or assignee of the Company. Neither this
        Severance Agreement nor any rights, benefits, duties or obligations hereunder
        shall be assignable by either party hereto without the written consent of
        the
        other party. Any consent may be withheld for any reason or for no
        reason.


      
        
           

          
          

        

        
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      (e) Governing
        Law.
        The
        performance of this Severance Agreement is intended to occur primarily within
        the State of Connecticut. The laws of Connecticut exclusively shall govern
        the
        interpretation and enforcement of this Severance Agreement, but without regard
        to any Connecticut law that may rely upon or refer to the laws of any other
        jurisdiction foreign to that state. 

      (f) Validity.
        The
        validity or unenforceability of any provision or provisions of this Severance
        Agreement shall not affect the validity or enforceability of any other provision
        of this Severance Agreement, which shall remain in full force and
        effect.

      (f) Further
        Acts.
        All
        parties hereto shall perform any and all acts and shall execute any and all
        documents which may be reasonably necessary and desirable to carry out the
        terms
        and intent of this Severance Agreement. The parties recognize that certain
        provisions of this Agreement may be affected by Section 409A of the Internal
        Revenue Code and guidance issued thereunder, and it is understood and agreed
        that Mr. Paglia is responsible for consulting with his tax advisor regarding
        the
        potential impact of Section 409A on his benefits hereunder. The parties agree
        to
        negotiate in good faith to amend this Agreement or to take such other actions
        as
        may be necessary or advisable in the future to comply with Section 409A with
        respect to this Agreement.

      (g) Duplicate
        Copies.
        Multiple copies of this Severance Agreement shall be executed, each of which
        shall be used as an original. 

      (h)
          Acknowledgement.
        Mr.
        Paglia acknowledges that he has a period of more than 21 days from the receipt
        of this Severance Agreement in which to consider the terms of this Severance
        Agreement. If Mr. Paglia elects to sign this Severance Agreement, he shall
        have
        a period of seven days following the execution of this Severance Agreement
        to
        revoke the Severance Agreement and this Severance Agreement shall not become
        effective and enforceable until this seven day period expires.


      
        
           

          
          

        

        
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      IN
        WITNESS WHEREOF, the parties hereto have executed this Severance Agreement
        in a
        number of counterparts on the dates set forth below.

      

        
          	 	 	 	
                  /s/
                    Louis J. Paglia

                
	 	 	 	
                  LOUIS
                    J. PAGLIA

                
	
                  Date:

                	
                  April
                    10, 2006

                	 	 


        

        


        
          	 	 	
                  UIL
                    HOLDINGS CORPORATION.

                
	 	 	 
	 	 	
                  /s/
                    Nathaniel D. Woodson

                
	
                  /s/
                    Angel A. Bruno

                	 	
                  By
                    Nathaniel D. Woodson

                
	
                  Witness

                	 	
                  Its
                    Chairman and Chief Executive Officer

                
	 	 	
                  Date:
                    4/10/06

                


        

      

       

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