uil_exh4-3.htm


    
      EXHIBIT
4.3

    

    
      


       

    

    
      	 Execution
      Version


    

     

     

     

     

    The
United Illuminating Company

     

     

     

    $50,000,000
5.61% Senior Notes, due March 10, 2025

     

     

     

     

    Note
Purchase Agreement

     

     

     

     

    Dated as
of December 10, 2009

     

    
      


    

    


    


    
      
        


         

      

      
        	 


      

       




    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Table
of Contents

    


    
      	
              Section

            	
              Heading

            	
              Page

            
	 
      	 
      	 
      
	
              Section 1.

            	
              Authorization
      of Notes

            	
              1

            
	 
      	 
      	 
      
	
              Section 2.

            	
              Sale
      and Purchase of Notes

            	
              1

            
	 
      	 
      	 
      
	
              Section 3.

            	
              Closing

            	
              1

            
	 
      	 
      	 
      
	
              Section 4.

            	
              Conditions
      and Closing

            	
              2

            
	 
      	
              Section 4.1.

            	
              Representations
      and Warranties

            	
              2

            
	 
      	
              Section 4.2.

            	
              Performance;
      No Default

            	
              2

            
	 
      	
              Section 4.3.

            	
              Compliance
      Certificates

            	
              2

            
	 
      	
              Section 4.4.

            	
              Opinions
      of Counsel

            	
              2

            
	 
      	
              Section 4.5.

            	
              Purchase
      Permitted by Applicable Law, Etc

            	
              3

            
	 
      	
              Section 4.6.

            	
              Payment
      of Special Counsel Fees

            	
              3

            
	 
      	
              Section 4.7.

            	
              Private
      Placement Number

            	
              3

            
	 
      	
              Section 4.8.

            	
              Changes
      in Corporate Structure

            	
              3

            
	 
      	
              Section 4.9.

            	
              Proceedings
      and Documents

            	
              3

            
	 
      	
              Section 4.10.

            	
              Sale
      of Notes to Purchasers

            	
              3

            
	 
      	
              Section 4.11.

            	
              Funding
      Instructions

            	
              3

            
	 
      	
              Section 4.12.

            	
              Governmental
      Authorizations, Etc

            	
              4

            
	 
      	 
      	 
      
	
              Section 5.

            	
              Representations
      and Warranties of The Company

            	
              4

            
	 
      	
              Section 5.1.

            	
              Organization;
      Power and Authority

            	
              4

            
	 
      	
              Section 5.2.

            	
              Authorization,
      Etc

            	
              4

            
	 
      	
              Section 5.3.

            	
              Disclosure

            	
              4

            
	 
      	
              Section 5.4.

            	
              Organization
      and Ownership of Shares of
      Subsidiaries;    Affiliates

            	
              5

            
	 
      	
              Section 5.5.

            	
              Financial
      Statements

            	
              5

            
	 
      	
              Section 5.6.

            	
              Compliance
      with Laws, Other Instruments, Etc

            	
              5

            
	 
      	
              Section 5.7.

            	
              Governmental
      Authorizations, Etc

            	
              6

            
	 
      	
              Section 5.8.

            	
              Litigation;
      Observance of Agreements, Statutes and Orders

            	
              6

            
	 
      	
              Section 5.9.

            	
              Taxes

            	
              6

            
	 
      	
              Section 5.10.

            	
              Title
      to Property; Leases

            	
              7

            
	 
      	
              Section 5.11.

            	
              Licenses,
      Permits, Etc

            	
              7

            
	 
      	
              Section 5.12.

            	
              Compliance
      with ERISA

            	
              7

            
	 
      	
              Section 5.13.

            	
              Private
      Offering by the Company

            	
              8

            
	 
      	
              Section 5.14.

            	
              Use
      of Proceeds; Margin Regulations

            	
              8

            
	 
      	
              Section 5.15.

            	
              Existing
      Indebtedness

            	
              9

            
	 
      	
              Section 5.16.

            	
              Foreign
      Assets Control Regulations, Etc

            	
              9

            
	 
      	
              Section 5.17.

            	
              Status
      Under Certain Statutes

            	
              9

            
	 
      	
              Section 5.18.

            	
              Environmental
      Matters

            	
              10

            


    

    



    
      
        
           

        

         


      

      
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              Section 6.

            	
              Representations
      of The Purchaser

            	
              10

            
	 
      	
              Section 6.1.

            	
              Purchase
      of Notes

            	
              10

            
	 
      	
              Section 6.2.

            	
              Source
      of Funds

            	
              10

            
	 
      	
              Section 6.3.

            	
              Accredited
      Investor

            	
              12

            


      	 
      	 
      	 
      
	
              Section 7.

            	
              Information
      of The Company

            	
              12

            


      	 
      	
              Section 7.1.

            	
              Financial
      and Business Information

            	
              12

            
	 
      	
              Section 7.2.

            	
              Officer’s
      Certificate

            	
              14

            
	 
      	
              Section 7.3.

            	
              Inspection

            	
              15

            
	 
      	 
      	 
      
	
              Section 8.

            	
              Prepayment
      of The Notes

            	
              15

            
	 
      	
              Section 8.1.

            	
              Optional
      Prepayments with Make-Whole Amount

            	
              15

            
	 
      	
              Section 8.2.

            	
              Notice
      of Prepayment

            	
              16

            
	 
      	
              Section 8.3.

            	
              Allocation
      of Partial Prepayments

            	
              16

            
	 
      	
              Section 8.4.

            	
              Maturity;
      Surrender, Etc

            	
              16

            
	 
      	
              Section 8.5.

            	
              Purchase
      of Notes

            	
              16

            
	 
      	
              Section 8.6.

            	
              Make-Whole
      Amount

            	
              17

            
	 
      	 
      	 
      
	
              Section 9.

            	
              Affirmative
      Covenants

            	
              18

            
	 
      	
              Section 9.1.

            	
              Compliance
      with Law

            	
              18

            
	 
      	
              Section 9.2.

            	
              Insurance

            	
              18

            
	 
      	
              Section 9.3.

            	
              Maintenance
      of Properties

            	
              18

            
	 
      	
              Section 9.4.

            	
              Payment
      of Taxes and Claims

            	
              19

            
	 
      	
              Section 9.5.

            	
              Corporate
      Existence, Etc

            	
              19

            
	 
      	 
      	 
      
	
              Section 10.

            	
              Negative
      Covenants

            	
              19

            
	 
      	
              Section 10.1.

            	
              Maintenance
      of Consolidated Indebtedness

            	
              19

            
	 
      	
              Section 10.2.

            	
              Subsidiary
      Indebtedness

            	
              19

            
	 
      	
              Section 10.3.

            	
              Liens

            	
              20

            
	 
      	
              Section 10.4.

            	
              Limitation
      on Sale and Leaseback Transactions

            	
              22

            
	 
      	
              Section 10.5.

            	
              Disposition
      of Assets

            	
              22

            
	 
      	
              Section 10.6.

            	
              Merger,
      Consolidation, Etc

            	
              23

            
	 
      	
              Section 10.7.

            	
              Transactions
      with Affiliates

            	
              24

            
	 
      	
              Section 10.8.

            	
              Terrorism
      Sanctions Regulations

            	
              24

            
	 
      	 
      	 
      
	
              Section 11.

            	
              Event
      of Default

            	
              24

            
	 
      	 
      	 
      
	
              Section 12.

            	
              Remedies
      on Default, Etc.

            	
              26

            
	 
      	
              Section 12.1.

            	
              Acceleration

            	
              26

            
	 
      	
              Section 12.2.

            	
              Other
      Remedies

            	
              27

            
	 
      	
              Section 12.3.

            	
              Rescission

            	
              27

            
	 
      	
              Section 12.4.

            	
              No
      Waivers or Election of Remedies, Expenses, Etc

            	
              27

            


    

    


    



    
      
        
           

        

         


      

      
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              Section 13.

            	
              Registation;
      Exchange; Substitutions of Notes

            	
              27

            


      	 
      	
              Section 13.1.

            	
              Registration
      of Notes

            	
              27

            
	 
      	
              Section 13.2.

            	
              Transfer
      and Exchange of Notes

            	
              28

            
	 
      	
              Section 13.3.

            	
              Replacement
      of Notes

            	
              28

            


      	 
      	 
      	 
      
	
              Section 14.

            	
              Payments
      on Notes

            	
              28

            


      	 
      	
              Section 14.1.

            	
              Place
      of Payment

            	
              28

            
	 
      	
              Section 14.2.

            	
              Home
      Office Payment

            	
              29

            
	 
      	 
      	 
      
	
              Section 15.

            	
              Expenses,
      Etc.

            	
              29

            
	 
      	
              Section 15.1.

            	
              Transaction
      Expenses

            	
              29

            
	 
      	
              Section 15.2.

            	
              Survival

            	
              30

            
	 
      	 
      	 
      
	
              Section 16.

            	
              Survival
      of Representations and Warranties; Entire Agreement

            	
              30

            
	 
      	 
      	 
      
	
              Section 17.

            	
              Amendment
      and Waiver

            	
              30

            
	 
      	
              Section 17.1.

            	
              Requirements

            	
              30

            
	 
      	
              Section 17.2.

            	
              Solicitation
      of Holders of Notes

            	
              31

            
	 
      	
              Section 17.3.

            	
              Binding
      Effect, Etc

            	
              31

            
	 
      	
              Section 17.4.

            	
              Notes
      Held by Company, Etc

            	 
      
	 
      	 
      	 
      
	
              Section 18.

            	
              Notices

            	
              32

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	
              Section 19.

            	
              Reproduction
      of Documents

            	
              32

            
	 
      	 
      	 
      
	
              Section 20.

            	
              Confidential
      Information

            	
              33

            
	 
      	 
      	 
      
	
              Section 21.

            	
              Substitution
      of Purchaser

            	
              34

            
	 
      	 
      	 
      
	
              Section 22.

            	
              Miscellaneous

            	
              34

            
	 
      	
              Section 22.1.

            	
              Successors
      and Assigns

            	
              34

            
	 
      	
              Section 22.2.

            	
              Construction

            	
              34

            
	 
      	
              Section 22.3.

            	
              Consent
      to Jurisdiction; Service of Process; Waiver of Jury Trial

            	
              34

            
	 
      	
              Section 22.4.

            	
              Payments
      Due on Non-Business Days

            	
              35

            
	 
      	
              Section 22.5.

            	
              Severability

            	
              35

            
	 
      	
              Section 22.6.

            	
              Accounting
      Terms

            	
              35

            
	 
      	
              Section 22.7.

            	
              Counterparts

            	
              36

            
	 
      	
              Section 22.8.

            	
              Governing
      Law

            	
              36

            


    

    



    
      
        
           

        

         


      

      
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        	 Exhibit
      1	 —	 Form of 5.61%
      Senior Note, due March 10, 2025
	 Exhibit
      2	 —	 Form of Funds
      Delivery Instruction Letter
	 Exhibit
      4.4(a)	 —	 Form of
      Opinion of Counsel for the Company
	 Exhibit
      4.4(b)	 —	 Form of
      Opinion of Special Counsel for the Purchasers
	 Schedule
      A	 —	 Names and
      Addresses of Purchasers
	 Schedule
      B	 —	 Defined
      Terms
	 Schedule
      5.3	 —	 Disclosure
      Documents
	 Schedule
      5.4	 —	 Subsidiaries
	 Schedule
      5.5	 —	 Financial Statements
	 Schedule
      5.14	 —	 Use of
      Proceeds
	 Schedule
      5.15	 —	 Existing
      Indebtedness


      

    

    



    
      
        
           

        

         


      

      
        - iv
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    The
United Illuminating Company

    157
Church Street

    PO Box
1564

    New
Haven, CT 06506-0901

     

    
      $50,000,000
5.61% Senior Notes, due March 10, 2025

    

     

     

    


    As of
December 10, 2009

    


    To the
Several Purchasers Listed 

      in
the Attached Schedule A:

    


    Ladies
and Gentlemen:

     

    The United Illuminating
Company, a Connecticut corporation (the “Company”), agrees with each
of you (sometimes individually a “Purchaser” and collectively
the “Purchasers”) as
follows:

     

    
      	
              Section 1. 
      Authorization of Notes.

            


    

     

    The
Company has duly authorized the issue and sale of $50,000,000 aggregate
principal amount of its 5.61% Senior Notes, due March 10, 2025 (the “Notes”), to be substantially
in the form set out in Exhibit 1.  As
used herein, the term “Notes” shall mean all notes
originally delivered pursuant to this Agreement and all notes delivered in
substitution or exchange for any such note and, where applicable, shall include
the singular number as well as the plural.  Certain capitalized and
other terms used in this Agreement are defined in Schedule B; references to a
“Schedule” or an “Exhibit” are, unless otherwise specified, to a Schedule or an
Exhibit attached to this Agreement.

     

    
      	
              Section 2. 
      Sale and Purchase of Notes.

            


    

     

    Subject
to the terms and conditions of this Agreement, the Company will issue and sell
to you and you will severally purchase from the Company, at the Closing provided
for in Section 3, Notes in the principal amount or amounts specified
opposite your name in Schedule A at the purchase price of 100% of the
principal amount thereof.  Your obligations hereunder are several and
not joint obligations and no Purchaser shall have any liability to any Person
for the performance or non-performance by any other Purchaser
hereunder.

     

    
      	
              Section 3. 
      Closing.

            


    

     

    The sale
and purchase of the Notes to be purchased by each Purchaser shall occur at
the  offices of Chapman and Cutler LLP, 111 West Monroe Street,
Chicago, Illinois 60603, at 10:00 A.M. Chicago time, at a closing (the
“Closing”) on
December 10, 2009.  At the Closing the Company will deliver
to you the Notes to be purchased by you at the Closing, as set forth



    
      
         


      

      
        
        

        
          

        

      

      
         


      

    


     

    opposite
your name on Schedule A, in the form of a single Note to be purchased by
you (or such greater number of Notes in denominations of at least $100,000 as
you may request prior to the Closing), dated the date of the Closing and
registered in your name (or in the name of your nominee), against delivery by
you to the Company or its order of immediately available funds in the amount of
the purchase price therefor by wire transfer of immediately available funds to
the Company’s account in accordance with Exhibit 2.

     

    If at the
Closing the Company shall fail to tender such Notes to you as provided above in
this Section 3, or any of the conditions specified in Section 4 shall not
have been fulfilled to your satisfaction, you shall, at your election, be
relieved of all further obligations under this Agreement, without thereby
waiving any rights you may have by reason of such failure or such
nonfulfillment.

     

    
      	
              Section 4. 
      Conditions to Closing.

            


    

     

    Your
obligation to execute and deliver this Agreement at the Closing and your several
obligations to purchase and pay for the Notes to be sold to you at the Closing
are subject to the fulfillment to your satisfaction, prior to the Closing, of
the following conditions:

     

    Section 4.1. Representations and
Warranties.  The representations and warranties of the Company
in this Agreement shall be correct when made and at the time of the
Closing.

     

    Section 4.2. Performance; No
Default.  The Company shall have performed and complied in all
material respects with all agreements and conditions contained in this Agreement
required to be performed or complied with by it prior to or at the Closing and
after giving effect to the issue and sale of the Notes (and the concurrent
application of the proceeds thereof as contemplated by Section 5.14) no Default
or Event of Default shall have occurred and be continuing.  Neither
the Company nor any Subsidiary shall have entered into any transaction since the
date of the Memorandum that would have been prohibited by Sections 10.1 to 10.7,
inclusive, had such Sections applied since such date.

     

    Section 4.3. Compliance
Certificates.

     

    (a)Officer’s
Certificate.  The Company shall have delivered to you an
Officer’s Certificate, dated the date of the Closing certifying that the
conditions specified in Sections 4.1, 4.2 and 4.8 have been
fulfilled.

     

    (b)Secretary’s
Certificate.  The Company shall have delivered to you a
certificate of the Secretary or an Assistant Secretary of the Company, dated the
date of the Closing, certifying as to the resolutions attached thereto and other
corporate proceedings relating to the authorization, execution and delivery of
the Notes and this Agreement.

     

    Section 4.4. Opinions of
Counsel.  You shall have received opinions in form and
substance satisfactory to you, dated the date of the Closing (a) from Wiggin and
Dana LLP, independent counsel to the Company, substantially in the form set
forth in Exhibit 4.4(a) and covering such other matters incident to the
transactions contemplated hereby as you or your 


    
      
        
           

        

         


      

      
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    counsel
may reasonably request (and the Company hereby instructs its counsel to deliver
such opinion to you) and (b) from Chapman and Cutler LLP, your special
counsel in connection with such transactions, substantially in the form set
forth in Exhibit 4.4(b) and covering such other matters incident to such
transactions as you may reasonably request.

     

    Section 4.5. Purchase Permitted by Applicable
Law, Etc.  On the date of the Closing your purchase of Notes
shall (a) be permitted by the laws and regulations of each jurisdiction to
which you are subject, without recourse to provisions (such as
section 1405(a)(8) of the New York Insurance Law) permitting limited
investments by insurance companies without restriction as to the character of
the particular investment, (b) not violate any applicable law or regulation
(including without limitation Regulation T, U or X of the Board of Governors of
the Federal Reserve System) and (c) not subject you to any tax, penalty or
liability under or pursuant to any applicable law or regulation, which law or
regulation was not in effect on the date hereof.  If requested by you,
you shall have received an Officer’s Certificate certifying as to such matters
of fact as you may reasonably specify to enable you to determine whether such
purchase is so permitted.

     

    Section 4.6. Payment of Special Counsel
Fees.  Without limiting the provisions of Section 15.1,
the Company shall have paid on or before the date of the Closing the fees,
charges and disbursements of your special counsel referred to in
Section 4.4 to the extent reflected in a statement of such counsel rendered
to the Company at least one Business Day prior to the Closing.

     

    Section 4.7. Private Placement
Number.  A Private Placement Number issued by Standard &
Poor’s CUSIP Service Bureau (in cooperation with the Securities Valuation Office
of the National Association of Insurance Commissioners) shall have been obtained
for the Notes prior to the date of the Closing.

     

    Section 4.8. Changes in Corporate
Structure.  The Company shall not have changed its jurisdiction
of incorporation or been a party to any merger or consolidation or succeeded to
all or any substantial part of the liabilities of any other entity at any time
following the date of the most recent financial statements referred to in
Schedule 5.5, except as permitted pursuant to Section 10.6.

     

    Section 4.9. Proceedings and
Documents.  All corporate and other proceedings in connection
with the transactions contemplated by this Agreement and all documents and
instruments incident to such transactions shall be satisfactory to you and your
special counsel, and you and your special counsel shall have received all such
counterpart originals or certified or other copies of such documents as you or
they may reasonably request.

     

    Section 4.10. Sale of Notes to
Purchasers.  Contemporaneously with the Closing, the Company
shall sell to each of the Purchasers and each of the Purchasers shall purchase
the Notes to be purchased by them at the Closing as specified in Schedule
A.

     

    Section 4.11. Funding
Instructions.  At least three Business Days prior to the date
of the Closing, each Purchaser shall have received written instructions signed
by a Responsible Officer 


    
      
        
           

        

         


      

      
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    on
letterhead of the Company confirming the information specified in Section 3 in the form of
Exhibit 2.

     

    Section 4.12. Governmental Authorizations,
Etc.  All consents, approvals and authorizations of, notices
to, and registrations, filings and declarations with, or other actions by, any
Governmental Authority required for the valid execution, delivery or performance
by the Company of this Agreement or the Notes, including the final approval of
the Connecticut Department of Public Utility Control (the “Final Approval”), shall have
been obtained and the Final Approval shall be in full force and effect on or
before the date of the Closing and all periods of appeal and rehearing by third
parties which have not stipulated to such approval as issued shall have expired
and all conditions contained in any such authorization or waiver which are to be
fulfilled on or prior to the date of the Closing shall have been
fulfilled.

     

    
      	
              Section 5. 
      Representations and Warranties of the
Company.

            


    

     

    The
Company represents and warrants to you on the date of the Closing
that:

     

    Section 5.1. Organization; Power and
Authority.  The Company is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation, and is duly qualified as a foreign corporation and is in good
standing in each jurisdiction in which such qualification is required by law,
other than those jurisdictions as to which the failure to be so qualified or in
good standing could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.  The Company has the
corporate power and authority to own or hold under lease the properties it
purports to own or hold under lease, to transact the business it transacts and
proposes to transact, to execute and deliver this Agreement and the Notes and to
perform the provisions hereof and thereof.

     

    Section 5.2. Authorization,
Etc.  This Agreement and the Notes have been duly authorized by
all necessary corporate action on the part of the Company, and this Agreement
constitutes, and upon execution and delivery thereof each Note will constitute,
a legal, valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except as such enforceability may be
limited by (a) applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors’ rights generally and
(b) general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).

     

    Section 5.3. Disclosure.  The
Company, through its agent, J.P. Morgan Securities Inc., has delivered to you a
copy of a Private Placement Memorandum dated October 26, 2009 (together
with the documents incorporated therein by reference, the “Memorandum”), relating to
the transactions contemplated hereby.  This Agreement, the Memorandum,
the documents, certificates or other writings delivered to you by or on behalf
of the Company in connection with the transactions contemplated hereby and
described in Schedule 5.3 (together with the Memorandum, the “Disclosure Documents”), and
the financial statements listed in Schedule 5.5, taken as a whole, do not
contain any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein not misleading in light of the
circumstances under which they were made.  Except as disclosed in the
Memorandum, since 


    
      
        
           

        

         


      

      
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    December 31,
2008, there has been no change in the financial condition, operations, business,
properties or prospects of the Company or any Subsidiary other than changes that
individually or in the aggregate could not reasonably be expected to have a
Material Adverse Effect.  There is no fact known to the Company that
could reasonably be expected to have a Material Adverse Effect.

     

    Section 5.4. Organization and Ownership of Shares
of Subsidiaries; Affiliates.  (a) Schedule 5.4 contains
(except as noted therein) complete and correct lists (i) of the Company’s
Subsidiaries, showing, as to each Subsidiary, the correct name thereof, the
jurisdiction of its organization, and the percentage of shares of each class of
its capital stock or similar equity interests outstanding owned by the Company
and each other Subsidiary, (ii) of the Company’s Affiliates, other than
Subsidiaries, and (iii) of the Company’s directors and senior
officers.

     

    (b)All of the outstanding shares of capital stock
or similar equity interests of each Subsidiary shown in Schedule 5.4 as being
owned by the Company and its Subsidiaries have been validly issued, are fully
paid and nonassessable and are owned by the Company or another Subsidiary free
and clear of any Lien (except as otherwise disclosed in
Schedule 5.4).

     

    (c)Each Subsidiary identified in Schedule 5.4 is a
corporation or other legal entity duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization, and is duly
qualified as a foreign corporation or other legal entity and is in good standing
in each jurisdiction in which such qualification is required by law, other than
those jurisdictions as to which the failure to be so qualified or in good
standing could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.  Each such Subsidiary has the
corporate or other power and authority to own or hold under lease the properties
it purports to own or hold under lease and to transact the business it transacts
and proposes to transact.

     

    (d)No Subsidiary is a party to, or otherwise
subject to any legal restriction or any agreement (other than this Agreement,
the agreements listed in Schedule 5.4 and customary limitations imposed by
corporate law statutes) restricting the ability of such Subsidiary to pay
dividends out of profits or make any other similar distributions of profits to
the Company or any of its Subsidiaries that owns outstanding shares of capital
stock or similar equity interests of such Subsidiary.

     

    Section 5.5. Financial
Statements.  The Company has delivered to you copies of the
consolidated financial statements of the Company and its Subsidiaries listed in
Schedule 5.5.  All of said financial statements (including in each
case the related schedules and notes) fairly present in all material respects
the consolidated financial position of the Company and its Subsidiaries as of
the respective dates specified in such Schedule and the consolidated results of
their operations and cash flows for the respective periods so specified and have
been prepared in accordance with GAAP consistently applied throughout the
periods involved except as set forth in the notes thereto (subject, in the case
of any interim financial statements, to normal year-end
adjustments).

     

    Section 5.6. Compliance with Laws, Other
Instruments, Etc.  The execution, delivery and performance by
the Company of this Agreement and the Notes will not (a) contravene, result
in any breach of, or constitute a default under, or result in the creation of
any Lien in respect of 


    
      
        
           

        

         


      

      
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    any
property of the Company or any Subsidiary under, any indenture, mortgage, deed
of trust, loan, purchase or credit agreement, lease, corporate charter or
by-laws, or any other agreement or instrument to which the Company or any
Subsidiary is bound or by which the Company or any Subsidiary or any of their
respective properties may be bound or affected, (b) conflict with or result in a
breach of any of the terms, conditions or provisions of any order, judgment,
decree, or ruling of any court, arbitrator or Governmental Authority applicable
to the Company or any Subsidiary or (c) violate any provision of any statute or
other rule or regulation of any Governmental Authority applicable to the Company
or any Subsidiary.

     

    Section 5.7. Governmental Authorizations,
Etc.  No consent, approval or authorization of, notice to, or
registration, filing or declaration with, or other action by, any Governmental
Authority is required for the valid execution, delivery or performance by the
Company of this Agreement or the Notes, except for the Connecticut Department of
Public Utility Control, whose final approval shall have been obtained on or
before the date of the Closing.

     

    Section 5.8. Litigation; Observance of
Agreements, Statutes and Orders.  (a) There are no
actions, suits or proceedings pending or, to the knowledge of the Company,
threatened against or affecting the Company or any Subsidiary or any property of
the Company or any Subsidiary in any court or before any arbitrator of any kind
or before or by any Governmental Authority that, individually or in the
aggregate, could reasonably be expected to have a Material Adverse
Effect.

     

    (b)Neither the Company nor any Subsidiary is in
default under any term of any agreement or instrument to which it is a party or
by which it is bound, or any order, judgment, decree or ruling of any court,
arbitrator or Governmental Authority or is in violation of any applicable law,
ordinance, rule or regulation (including without limitation Environmental Laws)
of any Governmental Authority, which default or violation, individually or in
the aggregate, could reasonably be expected to have a Material Adverse
Effect.

     

    Section 5.9. Taxes.  The Company
and its Subsidiaries have filed all tax returns that are required to have been
filed in any jurisdiction, and have paid all taxes shown to be due and payable
on such returns and all other taxes and assessments levied upon them or their
properties, assets, income or franchises, to the extent such taxes and
assessments have become due and payable and before they have become delinquent,
except for any taxes and assessments (a)  the amount of which is not
individually or in the aggregate Material or (b) the amount, applicability
or validity of which is currently being contested in good faith by appropriate
proceedings and with respect to which the Company or a Subsidiary, as the case
may be, has established adequate reserves in accordance with
GAAP.  The Company knows of no basis for any other tax or assessment
that could reasonably be expected to have a Material Adverse
Effect.  The charges, accruals and reserves on the books of the
Company and its Subsidiaries in respect of United States federal, state or other
taxes for all fiscal periods are adequate.  The United States federal
income tax liabilities of the Company and its Subsidiaries have been determined
by the Internal Revenue Service and paid for all fiscal years up to and
including the fiscal year ended December 31, 2007.  The United
States federal income tax liabilities of the Company and its Subsidiaries have
been included in the consolidated tax return of UIL Holdings beginning with the
fiscal year ended December 31, 2000.


    
      
        
           

        

         


      

      
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    Section 5.10. Title to Property;
Leases.  The Company and its Subsidiaries have good and
sufficient title to their respective properties that individually or in the
aggregate are Material, including all such properties reflected in the most
recent audited balance sheet referred to in Section 5.5 or purported to
have been acquired by the Company or any Subsidiary after said date (except as
sold or otherwise disposed of in the ordinary course of business and except as
described in Section 10.5(b)), in each case free and clear of Liens
prohibited by this Agreement.  All leases that individually or in the
aggregate are Material are valid and subsisting and are in full force and effect
in all material respects. 

     

    Section 5.11. Licenses, Permits,
Etc.  (a) The Company and its Subsidiaries own or possess
all licenses, permits, franchises, authorizations, patents, copyrights,
proprietary software, service marks, trademarks and trade names, or rights
thereto, that individually or in the aggregate are Material, without known
conflict with the rights of others.

     

    (b)To the best knowledge of the Company, no
product of the Company infringes in any material respect on any license, permit,
franchise, authorization, patent, copyright, proprietary software, service mark,
trademark, trade name or other right owned by any other Person.

     

    (c)To the best knowledge of the Company, there is
no Material violation by any Person of any right of the Company or any of its
Subsidiaries with respect to any patent, copyright, proprietary software,
service mark, trademark, trade name or other right owned or used by the Company
or any of its Subsidiaries.

     

    Section 5.12. Compliance with
ERISA.  (a) The Company and each ERISA Affiliate have
operated and administered each Plan in compliance with all applicable laws
except for such instances of noncompliance as have not resulted in and could not
reasonably be expected to result in a Material Adverse
Effect.  Neither the Company nor any ERISA Affiliate has incurred any
liability pursuant to Title I or IV of ERISA or the penalty or excise tax
provisions of the Code relating to employee benefit plans (as defined in
section 3 of ERISA), and no event, transaction or condition has occurred or
exists that could reasonably be expected to result in the incurrence of any such
liability by the Company or any ERISA Affiliate, or in the imposition of any
Lien on any of the rights, properties or assets of the Company or any ERISA
Affiliate, in either case pursuant to Title I or IV of ERISA or to such
penalty or excise tax provisions or to section 401(a)(29) or 412 of the
Code, other than such liabilities or Liens as would not be individually or in
the aggregate Material.

     

    (b)   The aggregate
current value of the assets under the Plan subject to Title IV of ERISA, as
disclosed in the valuation report for the 2009 plan year, is less than the
present value of the accumulated plan benefits under such Plan, as calculated
under Financial Accounting Standards No. 35 for such year, by
$55,635,005.  The terms “current value” and “present value” have the
meanings specified in section 3 of ERISA.

     

    (c)The Company and its ERISA Affiliates have not
incurred withdrawal liabilities (and are not subject to contingent withdrawal
liabilities) under section 4201 or 4204 of ERISA in respect of
Multiemployer Plans that individually or in the aggregate are
Material.


    
      
        
           

        

         


      

      
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    (d)The expected post retirement benefit obligation
(determined as of the last day of the Company’s most recently ended fiscal year
in accordance with Financial Accounting Standards Board Statement No. 106,
without regard to liabilities attributable to continuation coverage mandated by
section 4980B of the Code) of the Company and its Subsidiaries is not expected
to have a Material Adverse Effect.

     

    (e)With respect to each employee benefit plan, if
any, disclosed by you in writing to the Company in accordance with
Section 6.2(d), neither the Company nor any “affiliate” of the Company (as
defined in section V(c) of the QPAM Exemption) has at this time, nor has
exercised at any time during the immediately preceding year, the authority to
appoint or terminate the “QPAM” (as defined in Part V of the QPAM Exemption)
disclosed by you to the Company pursuant to Section 6.2(d) as manager of
any of the assets of any such plan or to negotiate the terms of any management
agreement with such QPAM on behalf of any such plan, and the Company is not an
“affiliate” (as so defined) of such QPAM.  The Company is not a party
in interest with respect to any employee benefit plan disclosed by you in
accordance with Section 6.2(c) or 6.2(e).  The execution and
delivery of this Agreement and the issuance and sale of the Notes at the Closing
hereunder will not involve any prohibited transaction (as such term is defined
in section 406(a) of ERISA and section 4975(c)(1)(A)-(D) of the Code),
that could subject the Company or any holder of a Note to any tax or penalty on
prohibited transactions imposed under said section 4975 of the Code or by
section 502(i) of ERISA.  The representation by the Company in
the preceding sentence of this Section 5.12(e) is made in reliance upon and
subject to the accuracy of your representation in Section 6.2 as to the
source of the funds used to pay the purchase price of the Notes to be purchased
by you.

     

    Section 5.13. Private Offering by the
Company.  Neither the Company nor anyone acting on its behalf
has offered the Notes or any similar securities for sale to, or solicited any
offer to buy any of the same from, or otherwise approached or negotiated in
respect thereof with, any Person other than the Purchasers and not more than 20
other Institutional Investors, each of which has been offered the Notes at a
private sale for investment.  Neither the Company nor anyone acting on
its behalf has taken, or will take, any action that would subject the issuance
or sale of the Notes to the registration requirements of section 5 of the
Securities Act.

     

    Section 5.14. Use of Proceeds; Margin
Regulations.  The Company will apply the net proceeds of the
sale of the Notes as set forth in Schedule 5.14.  No part of the
proceeds from the sale of the Notes hereunder will be used, and no part of the
proceeds of such Indebtedness being repaid was used, directly or indirectly, for
the purpose of buying or carrying any margin stock within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System (12 CFR
221), or for the purpose of buying or carrying or trading in any securities
under such circumstances as to involve the Company in a violation of Regulation
X of said Board (12 CFR 224) or to involve any broker or dealer in a violation
of Regulation T of said Board (12 CFR 220).  Margin stock does not
constitute more than 1% of the value of the consolidated assets of the Company
and its Subsidiaries and the Company does not have any present intention that
margin stock will constitute more than 25% of the value of such
assets.  As used in this Section, the terms “margin stock” and “purpose of buying or
carrying” shall have the meanings assigned to them in said Regulation
U.


    
      
        
           

        

         


      

      
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    Section 5.15. Existing
Indebtedness.  Schedule 5.15 sets forth a complete and
correct list of all outstanding Indebtedness of the Company and its Subsidiaries
as of December 10, 2009, except for those items identified with an asterisk on
Schedule 5.15, the Indebtedness for which such items was calculated as of
December 7, 2009.  Neither the Company nor any Subsidiary is in
default, and no waiver of default is currently in effect, in the payment of any
principal or interest on any Indebtedness of the Company or such Subsidiary, and
no event or condition exists with respect to any Indebtedness of the Company or
any Subsidiary that would permit (or that with the giving of notice or the lapse
of time, or both, would permit) one or more Persons to cause such Indebtedness
to become due and payable before its stated maturity or before its regularly
scheduled dates of payment.  

     

    Except as
disclosed in Schedule 5.15, neither the Company nor any Subsidiary has agreed or
consented to cause or permit in the future (upon the happening of a contingency
or otherwise) any of its property, whether now owned or hereafter acquired, to
be subject to a Lien that would not be permitted by
Section 10.3.

     

    Section 5.16. Foreign Assets Control Regulations,
Etc.  (a) Neither the sale of the Notes by the Company
hereunder nor its use of the proceeds thereof will violate the Trading with the
Enemy Act, as amended, or any of the foreign assets control regulations of the
United States Treasury Department (31 CFR, Subtitle B, Chapter V, as
amended) or any enabling legislation or executive order relating
thereto.  

     

    (b)Neither the Company nor any Subsidiary (i) is,
or will become, a Person described or designated in the Specially Designated
Nationals and Blocked Persons List of the Office of Foreign Assets Control or in
section 1 of the Anti-Terrorism Order or (ii) knowingly engages or
will engage in any dealings or transactions, or knowingly is or will be
otherwise associated, with any such Person.  The Company and its
Subsidiaries are, to their knowledge, in compliance, in all material respects,
with the USA Patriot Act.  Neither the Company nor any Subsidiary (i)
is or will become a blocked person described in section 1 of Executive
Order 13224 of September 23, 2001 Blocking Property and Prohibiting
Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism
(66 Fed. Reg. 49079 (2001)) or (ii) knowingly engages or will engage in any
dealings or transactions, or be otherwise associated, with any such blocked
person.

     

      (c)   No part
of the proceeds from the sale of the Notes hereunder will be used, directly or
indirectly, for any payments to any governmental official or employee, political
party, official of a political party, candidate for political office, or anyone
else acting in an official capacity, in order to obtain, retain or direct
business or obtain any improper advantage, in violation of the Foreign Corrupt
Practices Act of 1977, as amended.

     

    Section 5.17. Status Under Certain
Statutes.  Neither the Company nor any Subsidiary is subject to
regulation under the Investment Company Act of 1940, as amended, or the ICC
Termination Act of 1995, as amended, nor is the Company subject to regulation
under the Federal Power Act, as amended, with respect to the execution, delivery
or performance of this Agreement or the Notes or the issuance of other
securities.


    
      
        
           

        

         


      

      
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    Section 5.18. Environmental
Matters.  Neither the Company nor any Subsidiary has knowledge
of any claim or has received any notice of any claim, and no proceeding has been
instituted raising any claim against the Company or any of its Subsidiaries or
any of their respective real properties now or formerly owned, leased or
operated by any of them or other assets, alleging any damage to the environment
or violation of any Environmental Laws, except, in each case, such as could not
reasonably be expected to result in a Material Adverse
Effect.  Without limiting the foregoing,

     

    (a)neither the Company nor any Subsidiary has
knowledge of any facts which would give rise to any claim, public or private, of
violation of Environmental Laws or damage to the environment emanating from,
occurring on or in any way related to real properties now or formerly owned,
leased or operated by any of them or to other assets or their use, except, in
each case, such as could not reasonably be expected to result in a Material
Adverse Effect;

     

    (b)neither the Company nor any of its Subsidiaries
has stored any Hazardous Materials on real properties now or formerly owned,
leased or operated by any of them and has not disposed of any Hazardous
Materials in a manner contrary to any Environmental Laws in each case in any
manner that could reasonably be expected to result in a Material Adverse Effect;
and

     

    (c)all buildings on all real properties now owned,
leased or operated by the Company or any of its Subsidiaries are in compliance
with applicable Environmental Laws, except where failure to comply could not
reasonably be expected to result in a Material Adverse Effect.

     

    
      	
              Section 6. 
      Representations of the Purchaser.

            


    

     

    Each of
you severally represents and warrants to the Company as follows:

     

    Section 6.1. Purchase of
Notes.

     

    You
represent that you are purchasing the Notes for your own account or for one or
more separate accounts maintained by you or for the account of one or more
pension or trust funds and not with a view to the distribution thereof, provided that the disposition
of your or their property shall at all times be within your or their
control.  You understand that the Notes have not been registered under
the Securities Act and may be resold only if registered pursuant to the
provisions of the Securities Act or if an exemption from registration is
available, except under circumstances where neither such registration nor such
an exemption is required by law, and that the Company is not required to
register the Notes.

     

    Section 6.2. Source of
Funds.  You represent that at least one of the following
statements is an accurate representation as to each source of funds (a “Source”) to be used by you
to pay the purchase price of the Notes to be purchased by you
hereunder:

     

    (a)the Source is an “insurance company general
account” (as the term is defined in the United States Department of Labor’s
Prohibited Transaction Exemption (“PTE”) 95-60) in respect of
which the reserves and liabilities (as defined by the annual 


    
      
        
           

        

         


      

      
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    statement
for life insurance companies approved by the National Association of Insurance
Commissioners (the “NAIC
Annual Statement”)) for the general account contract(s) held by or on
behalf of any employee benefit plan together with the amount of the reserves and
liabilities for the general account contract(s) held by or on behalf of any
other employee benefit plans maintained by the same employer (or affiliate
thereof as defined in PTE 95-60) or by the same employee organization in the
general account do not exceed ten percent (10%) of the total reserves and
liabilities of the general account (exclusive of separate account liabilities)
plus surplus as set forth in the NAIC Annual Statement filed with such
Purchaser’s state of domicile; or

     

    (b)the Source is a separate account that is
maintained solely in connection with such Purchaser’s fixed contractual
obligations under which the amounts payable, or credited, to any employee
benefit plan (or its related trust) that has any interest in such separate
account (or to any participant or beneficiary of such plan (including any
annuitant)) are not affected in any manner by the investment performance of the
separate account; or 

     

    (c)the Source is either (i) an insurance
company pooled separate account, within the meaning of PTE 90-1, or (ii) a
bank collective investment fund, within the meaning of the PTE 91-38 and, except
as have been disclosed by such Purchaser to the Company in writing pursuant to
this clause (c), no employee benefit plan or group of plans maintained by
the same employer or employee organization beneficially owns more than 10% of
all assets allocated to such pooled separate account or collective investment
fund; or

     

    (d)the Source constitutes assets of an “investment
fund” (within the meaning of Part V of the QPAM Exemption) managed by a
“qualified professional asset manager” or “QPAM” (within the meaning of
Part V of the QPAM Exemption), no employee benefit plan’s assets that are
included in such investment fund, when combined with the assets of all other
employee benefit plans established or maintained by the same employer or by an
affiliate (within the meaning of section V(c)(1) of the QPAM Exemption) of
such employer or by the same employee organization and managed by such QPAM,
exceed 20% of the total client assets managed by such QPAM, the conditions of
Part I(c) and (g) of the QPAM Exemption are satisfied, as of the last day of its
most recent calendar quarter, the QPAM does not own a 10% or more interest in
the Company and no Person controlling or controlled by the QPAM (applying the
definition of “control” in section V(e) of the QPAM Exemption) owns a 20%
or more interest in the Company (or less than 20% but greater than 10%, if such
Person exercises control over the management or policies of the Company by
reason of its ownership interest) and (i) the identity of such QPAM and
(ii) the names of all employee benefit plans whose assets are included in
such investment fund have been disclosed to the Company in writing pursuant to
this clause (d); or

     

    (e)the Source constitutes assets of a “plan(s)”
(within the meaning of section IV of PTE 96-23 (the “INHAM Exemption”)) managed
by an “in-house asset manager” or “INHAM” (within the meaning of Part IV of
the INHAM Exemption), the 


    
      
        
           

        

         


      

      
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    conditions
of Part I(a), (g) and (h) of the INHAM Exemption are satisfied, neither the
INHAM nor a Person controlling or controlled by the INHAM (applying the
definition of “control” in section IV(d) of the INHAM Exemption) owns a 5%
or more interest in the Company and (i) the identity of such INHAM and (ii) the
name(s) of the employee benefit plan(s) whose assets constitute the Source have
been disclosed to the Company in writing pursuant to this clause (e);
or

     

    (f)the Source is a governmental plan;
or

     

    (g)the Source is one or more employee benefit
plans, or a separate account or trust fund comprised of one or more employee
benefit plans, each of which has been identified to the Company in writing
pursuant to this paragraph (f); or

     

    (h)the Source does not include assets of any
employee benefit plan, other than a plan exempt from the coverage of
ERISA.

     

    As used
in this Section 6.2, the terms “employee benefit plan”,
“governmental plan” and
“separate account”
shall have the respective meanings assigned to such terms in section 3 of
ERISA.

     

    Section 6.3. Accredited
Investor.  You are an “accredited investor” as such term is
defined in Regulation D promulgated pursuant to the Securities
Act.

     

    
      	
              Section 7. 
      Information as to Company.

            


    

     

    Section 7.1. Financial and Business
Information.

  The Company shall deliver to each holder of Notes that is an
Institutional Investor:

     

    (a)Quarterly Statements --
within 60 days after the end of each quarterly fiscal period in each fiscal year
of the Company (other than the last quarterly fiscal period of each such fiscal
year), copies of

     

    (i)a consolidated balance sheet of the Company and
its Subsidiaries as at the end of such quarter, and

     

    (ii)consolidated statements of income, changes in
shareholders’ equity and cash flows of the Company and its Subsidiaries, for
such quarter and (in the case of the second and third quarters) for the portion
of the fiscal year ending with such quarter,

     

    setting
forth in each case in comparative form the figures for the corresponding periods
in the previous fiscal year, all in reasonable detail, prepared in accordance
with GAAP applicable to quarterly financial statements generally, and certified
by a Senior Financial Officer as fairly presenting, in all material respects,
the financial position of the companies being reported on and their results of
operations and cash flows, subject to changes resulting from year-end
adjustments, provided
that delivery within the time 


    
      
        
           

        

         


      

      
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    period
specified above of copies of the Company’s Quarterly Report on Form 10-Q
prepared in compliance with the requirements therefor and filed with the
Securities and Exchange Commission shall be deemed to satisfy the requirements
of this Section 7.1(a);

     

    (b)Annual Statements -- within
105 days after the end of each fiscal year of the Company, copies
of,

     

    (i)a consolidated balance sheet of the Company and
its Subsidiaries as at the end of such year, and

     

    (ii)consolidated statements of income, changes in
shareholders’ equity and cash flows of the Company and its Subsidiaries for such
year,

     

    setting
forth in each case in comparative form the figures for the previous fiscal year,
all in reasonable detail, prepared in accordance with GAAP, and accompanied by
an opinion thereon of independent public accountants of recognized national
standing, which opinion shall state that such financial statements present
fairly, in all material respects, the financial position of the companies being
reported upon and their results of operations and cash flows and have been
prepared in conformity with GAAP, and that the examination of such accountants
in connection with such financial statements has been made in accordance with
generally accepted auditing standards, and that such audit provides a reasonable
basis for such opinion in the circumstances, provided that the delivery
within the time period specified above of the Company’s Annual Report on Form
10-K for such fiscal year (together with the Company’s annual report to
shareholders, if any, prepared pursuant to Rule 14a-3 under the Exchange Act)
prepared in accordance with the requirements therefor and filed with the
Securities and Exchange Commission shall be deemed to satisfy the requirements
of this Section 7.1(b);

     

    (c)SEC and Other Reports --
promptly upon their becoming available, one copy of (i) each financial
statement, report, notice or proxy statement sent by UIL Holdings, the Company
or any Subsidiary to public securities holders generally or its lending banks,
(ii) each regular or periodic report, each registration statement (without
exhibits except as expressly requested by such holder), and each prospectus and
all amendments thereto filed by UIL Holdings, the Company or any Subsidiary with
the Securities and Exchange Commission and (iii) all press releases and
other statements made available generally by UIL Holdings, the Company or any
Subsidiary to the public concerning developments that are Material;

     

    (d)Notice of Default or Event of
Default -- promptly, and in any event within five days after a
Responsible Officer becoming aware of the existence of any Default or Event of
Default or that any Person has given any notice or taken any action with respect
to a claimed default hereunder or that any Person has given any notice or taken
any action with respect to a claimed default of the type referred to in
Section 11(f), a written notice specifying the nature and period of
existence thereof and what action the Company is taking or proposes to take with
respect thereto;


    
      
        
           

        

         


      

      
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    (e)ERISA Matters -- promptly,
and in any event within five days after a Responsible Officer becoming aware of
any of the following, a written notice setting forth the nature thereof and the
action, if any, that the Company or an ERISA Affiliate proposes to take with
respect thereto:

     

    (i)with respect to any Plan, any reportable event,
as defined in section 4043(b) of ERISA and the regulations thereunder, for
which notice thereof has not been waived pursuant to such regulations as in
effect on the date hereof; 

     

    (ii)the taking by the PBGC of steps to institute,
or the threatening by the PBGC of the institution of, proceedings under
section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan, or the receipt by the Company or any ERISA
Affiliate of a notice from a Multiemployer Plan that such action has been taken
by the PBGC with respect to such Multiemployer Plan; or

     

    (iii)any event, transaction or condition that could
result in the incurrence of any liability by the Company or any ERISA Affiliate
pursuant to Title I or IV of ERISA or the penalty or excise tax provisions
of the Code relating to employee benefit plans, or in the imposition of any Lien
on any of the rights, properties or assets of the Company or any ERISA Affiliate
pursuant to Title I or IV of ERISA or such penalty or excise tax
provisions, if such liability or Lien, taken together with any other such
liabilities or Liens then existing, could reasonably be expected to have a
Material Adverse Effect;

     

    (f)Notices from Governmental
Authority -- promptly, and in any event within 30 days of receipt
thereof, copies of any notice to the Company or any Subsidiary from any United
States federal or state Governmental Authority relating to any order, ruling,
statute or other law or regulation that could reasonably be expected to have a
Material Adverse Effect; and

     

    (g)Requested Information -- with
reasonable promptness, such other data and information relating to the business,
operations, affairs, financial condition, assets or properties of the Company or
any of its Subsidiaries or relating to the ability of the Company to perform its
obligations hereunder and under the Notes as from time to time may be reasonably
requested by any such holder of Notes.

     

    Section 7.2. Officer’s Certificate.
   Each set of
financial statements delivered to a holder of Notes pursuant to
Section 7.1(a) or Section 7.1(b) shall be accompanied by a certificate
of a Senior Financial Officer setting forth:

     

    (a)Covenant Compliance -- the
information (including detailed calculations) required in order to establish
whether the Company was in compliance with the requirements of Sections 10.1
through 10.6, inclusive, during the quarterly or annual period covered by the
statements then being furnished (including with respect to each



    
      
        
           

        

         


      

      
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    such
Section, where applicable, the calculations of the maximum or minimum amount,
ratio or percentage, as the case may be, permissible under the terms of such
Sections, and the calculation of the amount, ratio or percentage then in
existence); and

     

    (b)Default -- a statement that
such Senior Financial Officer has reviewed the relevant terms hereof and has
made, or caused to be made, under his or her supervision, a review of the
transactions and conditions of the Company and its Subsidiaries from the
beginning of the quarterly or annual period covered by the statements then being
furnished to the date of the certificate and that such review shall not have
disclosed the existence during such period of any condition or event that
constitutes a Default or an Event of Default or, if any such condition or event
existed or exists (including without limitation any such event or condition
resulting from the failure of the Company or any Subsidiary to comply with any
Environmental Law), specifying the nature and period of existence thereof and
what action the Company shall have taken or proposes to take with respect
thereto.

     

    Section 7.3. Inspection.
   The Company shall permit
the representatives of each holder of Notes that is an Institutional
Investor:

     

    (a)No Default -- if no Default
or Event of Default then exists, at the expense of such holder and upon
reasonable prior notice to the Company, to visit the principal executive office
of the Company, to discuss the affairs, finances and accounts of the Company and
its Subsidiaries with the Company’s officers, and (with the consent of the
Company, which consent will not be unreasonably withheld) its independent public
accountants, and (with the consent of the Company, which consent will not be
unreasonably withheld) to visit the other offices and properties of the Company
and each Subsidiary, all at such reasonable times and as often as may be
reasonably requested in writing; and

     

    (b)Default -- if a Default or
Event of Default then exists, at the expense of the Company, to visit and
inspect any of the offices or properties of the Company or any Subsidiary, to
examine all their respective books of account, records, reports and other
papers, to make copies and extracts therefrom, and to discuss their respective
affairs, finances and accounts with their respective officers, employees and
independent public accountants (and by this provision the Company authorizes
said accountants to discuss the affairs, finances and accounts of the Company
and its Subsidiaries), all at such times and as often as may be
requested.

     

    
      	
              Section 8. 
      Prepayment of the Notes.

            


    

     

    In
addition to the payment of the entire unpaid principal amount of the Notes at
the final maturity thereof, the Company may make optional prepayments in respect
of the Notes as hereinafter provided.

     

    Section 8.1. Optional Prepayments with Make-Whole
Amount.  The Company may, at its option and upon notice as
provided in Section 8.2, prepay at any time all, or from time to time



    
      
        
           

        

         


      

      
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    any part
of, the Notes in proportion to the aggregate principal amount outstanding of the
Notes (in a minimum amount of $5,000,000 and otherwise in multiples of $100,000)
at the principal amount so prepaid, together with interest accrued thereon to
the date of such prepayment, plus the Make-Whole Amount determined for the
prepayment date with respect to the respective principal
amounts.  

     

    Section 8.2. Notice of
Prepayment.  The Company will give each holder of Notes written
notice of each optional prepayment under Section 8.1 not less than 30 days
and not more than 60 days prior to the date fixed for such
prepayment.  Each such notice shall specify the date fixed for such
prepayment (which shall be a Business Day), the aggregate principal amount of
the Notes to be prepaid on such date, the principal amount of Notes held by such
holder to be prepaid (determined in accordance with Section 8.3) and the
interest to be paid on the prepayment date with respect to such principal amount
being prepaid.

     

    Each such
notice of prepayment shall be accompanied by a certificate of a Senior Financial
Officer as to the estimated Make-Whole Amount due in connection with such
prepayment (calculated as if the date of such notice were the date of the
prepayment), setting forth the details of such computation.  Two
Business Days prior to such prepayment, the Company shall deliver to each holder
of Notes a certificate of a Senior Financial Officer specifying the calculation
of such Make-Whole Amount as of the specified prepayment date.

     

    Section 8.3. Allocation of Partial
Prepayments.  In the case of each partial prepayment of the
Notes pursuant to Section 8.1, the principal amount of the Notes to be
prepaid shall be (a) allocated among the Notes in proportion to the
aggregate unpaid principal amount of the Notes and (b) allocated pro rata
among all of the Notes at the time outstanding in proportion, as nearly as
practicable, to the respective unpaid principal amounts thereof.

     

    Section 8.4. Maturity; Surrender,
Etc.  In the case of each prepayment of Notes pursuant to this
Section 8, the principal amount of each Note to be prepaid shall mature and
become due and payable on the date fixed for such prepayment, together with
interest on such principal amount accrued to such date and the applicable
Make-Whole Amount, if any.  From and after such date, unless the
Company shall fail to pay such principal amount when so due and payable,
together with the interest and Make-Whole Amount, if any, as aforesaid, interest
on such principal amount shall cease to accrue.  Any Note paid or
prepaid in full shall be surrendered to the Company and cancelled and shall not
be reissued, and no Note shall be issued in lieu of any prepaid principal amount
of any Note.

     

    Section 8.5. Purchase of Notes.  The Company will
not and will not permit any Affiliate to purchase, redeem, prepay or otherwise
acquire, directly or indirectly, any of the outstanding Notes except
(a) upon the payment or prepayment of the Notes in accordance with the
terms of this Agreement and the Notes or (b) pursuant to an offer to
purchase made by the Company or an Affiliate pro rata to the holders of all
Notes at the time outstanding upon the same terms and conditions.  Any
such offer shall provide each holder with sufficient information to enable it to
make an informed decision with respect to such offer, and shall remain open for
at least 15 Business Days.  If the holders of more than 10% of the
principal amount of the Notes then outstanding accept such offer, the Company
shall promptly notify the remaining holders of such 


    
      
        
           

        

         


      

      
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    fact and
the expiration date for the acceptance by holders of Notes of such offer shall
be extended by the number of days necessary to give each such remaining holder
at least 5 Business Days from its receipt of such notice to accept such
offer.  The Company will promptly cancel all Notes acquired by it or
any Affiliate pursuant to any payment, prepayment or purchase of Notes pursuant
to any provision of this Agreement and no Notes may be issued in substitution or
exchange for any such Notes.

     

    Section 8.6. Make-Whole
Amount.  The term “Make-Whole Amount” means, with respect to
any Note, an amount equal to the excess, if any, of the Discounted Value of the
Remaining Scheduled Payments with respect to the Called Principal of such Note
over the amount of such Called Principal, provided that the Make-Whole
Amount may in no event be less than zero.  For the purposes of
determining the Make-Whole Amount, the following terms have the following
meanings:

     

    “Called Principal” means,
with respect to any Note, the principal of such Note that is to be prepaid
pursuant to Section 8.1 or has become or is declared to be immediately due
and payable pursuant to Section 12.1, as the context requires.

     

    “Discounted Value” means,
with respect to the Called Principal of any Note, the amount obtained by
discounting all Remaining Scheduled Payments with respect to such Called
Principal from their respective scheduled due dates to the Settlement Date with
respect to such Called Principal, in accordance with accepted financial practice
and at a discount factor (applied on the same periodic basis as that on which
interest on the Notes is payable) equal to the Reinvestment Yield with respect
to such Called Principal.

     

    “Reinvestment Yield” means,
with respect to the Called Principal of any Note, .50% (50 basis points) over
the yield to maturity implied by (i) the yields reported as of 10:00 a.m. (New
York City time) on the second Business Day preceding the Settlement Date with
respect to such Called Principal, on the display designated as “Page PX1” (or
such other display as may replace Page PX1) on Bloomberg Financial Markets for
the most recently issued actively traded on the run U.S. Treasury securities
having a maturity equal to the remaining life of such Called Principal as of
such Settlement Date, or (ii) if such yields are not reported as of such
time or the yields reported as of such time are not ascertainable (including by
way of interpolation), the Treasury Constant Maturity Series Yields reported,
for the latest day for which such yields have been so reported as of the second
Business Day preceding the Settlement Date with respect to such Called
Principal, in Federal Reserve Statistical Release H.15 (519) (or any comparable
successor publication) for actively traded U.S. Treasury securities having a
constant maturity equal to the remaining life of such Called Principal as of
such Settlement Date.  Such implied yield will be determined, if
necessary, by (a) converting U.S. Treasury bill quotations to
bond-equivalent yields in accordance with accepted financial practice and
(b) interpolating linearly between (1) the actively traded U.S. Treasury
security with a maturity closest to and greater than the remaining life and (2)
the actively traded U.S. Treasury security with a maturity closest to and less
than the remaining life.  The Reinvestment Yield will be rounded to
two decimal places.


    
      
        
           

        

         


      

      
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    “Remaining Scheduled
Payments” means, with respect to the Called Principal of any Note, all
payments of such Called Principal and interest thereon that would be due after
the Settlement Date with respect to such Called Principal if no payment of such
Called Principal were made prior to its scheduled due date, provided that if such
Settlement Date is not a date on which interest payments are due to be made
under the terms of the Notes, then the amount of the next succeeding scheduled
interest payment will be reduced by the amount of interest accrued to such
Settlement Date and required to be paid on such Settlement Date pursuant to
Section 8.1 or 12.1.

     

    “Settlement Date” means, with
respect to the Called Principal of any Note, the date on which such Called
Principal is to be prepaid pursuant to Section 8.1 or has become or is
declared to be immediately due and payable pursuant to Section 12.1, as the
context requires.

     

    
      	
              Section 9. 
      Affirmative Covenants.

            


    

     

    The
Company covenants that so long as any of the Notes are outstanding:

     

    Section 9.1. Compliance with
Law.  The Company will and will cause each of its Subsidiaries
to comply with all laws, ordinances or governmental rules or regulations to
which each of them is subject, including without limitation the USA Patriot Act
and Environmental
Laws, and will obtain and maintain in effect all licenses, certificates,
permits, franchises and other governmental authorizations necessary to the
ownership of their respective properties or to the conduct of their respective
businesses, in each case to the extent necessary to ensure that non-compliance
with such laws, ordinances or governmental rules or regulations or failures to
obtain or maintain in effect such licenses, certificates, permits, franchises
and other governmental authorizations could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect.

     

    Section 9.2. Insurance.  The
Company will and will cause each of its Subsidiaries to maintain, with
financially sound and reputable insurers, insurance with respect to their
respective properties and businesses against such casualties and contingencies,
of such types, on such terms and in such amounts (including deductibles,
co-insurance and self-insurance, if adequate reserves are maintained with
respect thereto) as is customary in the case of entities of established
reputations engaged in the same or a similar business and similarly
situated.

     

    Section 9.3. Maintenance of
Properties.  The Company will and will cause each of its
Subsidiaries to maintain and keep, or cause to be maintained and kept, their
respective properties in good repair, working order and condition (other than
ordinary wear and tear), so that the business carried on in connection therewith
may be properly conducted at all times, provided that this Section
shall not prevent the Company or any Subsidiary from discontinuing the operation
and the maintenance of any of its properties if such discontinuance is desirable
in the conduct of its business and the Company has concluded that such
discontinuance could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.


    
      
        
           

        

         


      

      
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    Section 9.4. Payment of Taxes and
Claims.  The Company will and will cause each of its
Subsidiaries to file all tax returns (whether filed directly by the Company or
its Subsidiaries or as part of the consolidated tax return of UIL Holdings)
required to be filed in any jurisdiction and to pay and discharge all taxes
shown to be due and payable on such returns and all other taxes, assessments,
governmental charges, or levies imposed on them or any of their properties,
assets, income or franchises, to the extent such taxes and assessments have
become due and payable and before they have become delinquent and all claims for
which sums have become due and payable that have or might become a Lien on
properties or assets of the Company or any Subsidiary, provided that neither the
Company nor any Subsidiary need pay any such tax or assessment or claims if
(i) the amount, applicability or validity thereof is contested by the
Company or such Subsidiary on a timely basis in good faith and in appropriate
proceedings, and the Company or a Subsidiary has established adequate reserves
therefor in accordance with GAAP on the books of the Company or such Subsidiary
or (ii) the nonpayment of all such taxes and assessments in the aggregate
could not reasonably be expected to have a Material Adverse Effect.

     

    Section 9.5. Corporate Existence,
Etc.  The Company will at all times preserve and keep in full
force and effect its corporate existence.  Subject to
Section 10.6, the Company will at all times preserve and keep in full force
and effect the corporate existence of each of its Subsidiaries (unless merged
into the Company or a Subsidiary) and all rights and franchises of the Company
and its Subsidiaries unless, in the good faith judgment of the Company, the
termination of or failure to preserve and keep in full force and effect such
corporate existence, right or franchise could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect.

     

    
      	
              Section 10. 
      Negative Covenants.

            


    

     

    The
Company covenants that so long as any of the Notes are outstanding:

     

    Section 10.1. Maintenance of Consolidated
Indebtedness.   The Company will not at any time permit
Consolidated Indebtedness to be greater than 65% of Consolidated Capitalization.


     

    Section 10.2. Subsidiary
Indebtedness.  The Company will not permit any Subsidiary to
create, assume, incur, guarantee or otherwise become liable in respect of any
Indebtedness other than:

     

    (a)Indebtedness outstanding on the date hereof as
specified on Schedule 5.15 and any extension, renewal, refunding or refinancing
of any such Indebtedness, provided that the principal
amount thereof outstanding immediately before giving effect to such extension,
renewal, refunding or refinancing is not increased;

     

    (b)Indebtedness of any Person existing at the time
such Person becomes a Subsidiary (and not incurred in anticipation thereof) and
any extension, renewal, refunding or refinancing of any such Indebtedness, provided that the principal
amount thereof outstanding immediately before giving effect to such extension,
renewal, refunding or refinancing is not increased and neither the Company nor
any other 


    
      
        
           

        

         


      

      
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    Subsidiary
shall assume or otherwise be directly or indirectly liable for such
Indebtedness;

     

    (c)Indebtedness owing to the Company or a
Wholly-Owned Subsidiary; and

     

    (d)Indebtedness not otherwise permitted by clauses
(a) through (c) above, provided that Priority Debt
(as defined below) does not exceed 10% of Consolidated
Capitalization.

     

    For
purposes of this Section 10.2, a Subsidiary shall be deemed to have
incurred Indebtedness previously owed to the Company or another Subsidiary at
the time the obligee ceases for any reason to be the Company or a Wholly-Owned
Subsidiary.

     

    Section 10.3. Liens.  The Company
will not and will not permit any Subsidiary to create, assume, incur or suffer
to exist any Lien upon or with respect to any property or assets, whether now
owned or hereafter acquired, without making effective provision (pursuant to
documentation in form and substance reasonably satisfactory to the Required
Holders) whereby the Notes shall be secured by such Lien equally and ratably
with or prior to any and all Indebtedness and other obligations to be secured
thereby, provided that
nothing in this Section 10.3 shall prohibit:

     

    (a)Liens in respect of property of the Company or
a Subsidiary existing on the date of Closing and described in Schedule
5.15;

     

    (b)Liens in respect of property acquired or
constructed by the Company or a Subsidiary after the date of Closing, which are
created at the time of or within 120 days after acquisition or completion of
construction of such property to secure Indebtedness assumed or incurred to
finance all or any part of the purchase price or cost of construction of such
property, provided that
in any such case

     

    (i)no such Lien shall extend to or cover any other
property of the Company or such Subsidiary, as the case may be, and

     

    (ii)the aggregate principal amount of Indebtedness
secured by all such Liens in respect of any such property shall not exceed the
cost of such property and any improvements then being financed;

     

    (c)Liens in respect of property acquired by the
Company or a Subsidiary after the date of Closing, existing on such property at
the time of acquisition thereof (and not created in anticipation thereof), or in
the case of any Person that after the date of Closing becomes a Subsidiary or is
consolidated with or merged with or into the Company or a Subsidiary or sells,
leases or otherwise disposes of all or substantially all of its property to the
Company or a Subsidiary, Liens existing at the time such Person becomes a
Subsidiary or is so consolidated or merged or effects such sale, lease or other
disposition of property (and not created in anticipation thereof), provided that in any such
case no 


    
      
        
           

        

         


      

      
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    such Lien
shall extend to or cover any other property of the Company or such Subsidiary,
as the case may be;

     

    (d)Liens securing Indebtedness owed by a
Subsidiary to the Company or to a Subsidiary; 

     

    (e)extensions, renewals or replacements of any
Liens permitted by clause (a), (b) or (c) above (including successive
extensions, renewals and replacements), provided in each case that
the principal amount of Indebtedness (or the maximum commitment therefor)
secured by any such Lien is not increased and such Lien does not extend to or
cover any property other than the property covered by such Lien on the date of
such extension, renewal or replacement;

     

    (f)Liens (i) for taxes or assessments or
other governmental charges or levies, either not yet delinquent, or which are
being contested in good faith by appropriate proceedings provided that the Company has
established adequate reserves therefor in accordance with GAAP,
(ii) created by or resulting from litigation or legal proceedings which are
currently being contested in good faith by appropriate proceedings and do not
involve amounts that in the aggregate would exceed $10,000,000 and
(iii) incidental to the normal conduct of the business of the Company or
any Subsidiary or the ownership of its property which are not incurred in
connection with the incurrence of Indebtedness and which do not in the aggregate
materially impair the use of such property in the operation of the business of
the Company and its Subsidiaries taken as a whole or the value of such property
for the purposes of such business; or

     

    (g)Liens which would otherwise not be permitted by
clauses (a) through (f) above, securing additional Indebtedness of the Company
or a Subsidiary, provided that Priority Debt
does not exceed 10% of Consolidated Capitalization provided, further that,
notwithstanding the foregoing, in the event that at any time the Company or any
Subsidiary provides a Lien to or for the benefit of the lenders under the Bank
Credit Agreement or the administrative agent on their behalf, then the Company
will (if it has provided such Lien), and will cause each of its Subsidiaries
that has provided such Lien to concurrently grant to or for the benefit of the
holders of Notes a similar first priority Lien (subject only to Liens permitted
by the Bank Credit Agreement and this Section 10.3, and ranking pari passu with the Lien
provided to or for the benefit of the lenders under such Bank Credit Agreement),
over the same assets, property and undertaking of the Company and such
Subsidiary as those encumbered in respect of the Bank Credit Agreement, in form
and substance satisfactory to the Required Holders with such security to be the
subject of an intercreditor agreement among the lenders under the Bank Credit
Agreement or the administrative agent on their behalf and the holders of Notes,
which shall be satisfactory in form and substance to the Required
Holders.

     

    As used
in this Agreement the term “Priority Debt” means, at any
date, the sum (without duplication) of (A) the aggregate unpaid principal amount
of Indebtedness (including Capitalized Lease Obligations) of the Company and its
Subsidiaries secured by Liens (other than Liens permitted by clauses (a) through
(f) of this Section 10.3) plus (B) the aggregate Attributable Debt



    
      
        
           

        

         


      

      
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    in
connection with all Sale and Leaseback Transactions of the Company and its
Subsidiaries entered into after the date of the day of Closing, in accordance
with the provisions of Section 10.4(c) plus (C) the aggregate unpaid
principal amount of Indebtedness of all Subsidiaries (other than Indebtedness
permitted by Section 10.2(b) and (c)).

     

    Section 10.4. Limitation on Sale and Leaseback
Transactions.  The Company will not and will not permit any
Subsidiary to enter into any arrangement, directly or indirectly, with any
Person whereby the Company or such Subsidiary shall sell, lease or transfer any
asset, whether now owned or hereafter acquired, and then or thereafter rent or
lease as lessee such asset or any part thereof or any other asset that the
Company or such Subsidiary, as the case may be, intends to use for substantially
the same purposes as the asset being sold, leased or transferred (any such sale,
lease or transfer and rent or lease, a “Sale and Leaseback
Transaction”), unless:

     

    (a)such Sale and Leaseback Transaction involves an
asset upon which a Lien would at the time be permitted by Section 10.3(b)
without equally and ratably securing the Notes or such Sale and Leaseback
Transaction is between the Company and a Subsidiary as lessee and involves an
asset subject to a Lien permitted by Section 10.3(d);

     

    (b)such lease is for a period not exceeding one
year, at the expiration of which it is intended that the use of such asset by
the lessee will be discontinued; or

     

    (c)Priority Debt (which includes the Attributable
Debt resulting from such Sale and Leaseback Transaction) does not exceed 10% of
Consolidated Capitalization.

     

    Section 10.5. Disposition of
Assets.  The Company will not and will not permit any
Subsidiary to, directly or indirectly, sell, lease, transfer or otherwise
dispose of (collectively a “Disposition”) any of its
assets, whether now owned or hereafter acquired, unless after giving effect to
any proposed Disposition, the aggregate net book value of all assets of the
Company and its Subsidiaries that were the subject of a Disposition during the
period (x) commencing on January 1, 2009 and ending on the date of such
proposed Disposition does not exceed 10% of Consolidated Total Assets and
(y) commencing on the first day of the then current fiscal year of the
Company and ending on the date of such proposed Disposition does not exceed 5%
of Consolidated Total Assets (Consolidated Total Assets in each case to be
determined as at the end of the immediately preceding fiscal year), provided that the following
Dispositions shall not be taken into account for purposes of this
Section 10.5:  

     

    (a)any Disposition in the ordinary course of
business; 

     

    (b)the Disposition of the Company’s Electric
Systems Work Center Facility located in Shelton, Connecticut;

     

    (c)Sale and Leaseback Transactions permitted by
Section 10.4; and

     

    (d)any other Disposition for fair value to the
extent that the Net Proceeds Amount of such Disposition is applied within 360
days after the date thereof to the acquisition of other assets for use in the
business of the Company or any Subsidiary (such 


    
      
        
           

        

         


      

      
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    assets
not to include cash or marketable securities) or to reduce outstanding
unsubordinated Indebtedness of the Company or any Subsidiary (any such reduction
to include either (i) prepayment of Notes pursuant to Section 8.1 in an
aggregate unpaid principal amount that bears the same relation to the amount
then being applied to reduce such Indebtedness as the aggregate unpaid principal
amount of the Notes bears to the aggregate unpaid principal amount of
outstanding unsubordinated Indebtedness of the Company and its Subsidiaries, or
(ii) an offer by the Company to all holders of Notes to purchase, at not less
than par on the same terms and conditions and which offer shall remain
outstanding for at least 30 days, Notes in an aggregate unpaid principal amount
at least equal to such pro rata portion of such unsubordinated Indebtedness
being so reduced, allocated pro rata among all Notes tendered, and the
requirements of this subclause (d) with respect to prepayment of Notes shall be
deemed to be satisfied with respect to such Disposition if such offer is made
and, if accepted, consummated).

     

    For
purposes of this Section 10.5 any shares of Voting Stock of a Subsidiary
that are the subject of a Disposition (including without limitation pursuant to
an issuance of shares by such Subsidiary) shall be valued at the aggregate net
book value of the assets of such Subsidiary multiplied by a fraction of which
the numerator is the aggregate number of shares of Voting Stock of such
Subsidiary issued or disposed of in such Disposition and the denominator is the
aggregate number of shares of Voting Stock of such Subsidiary outstanding
immediately prior to such Disposition.  

     

    Section 10.6. Merger, Consolidation,
Etc.  The Company will not consolidate with or merge with any
other corporation or convey, transfer or lease all or substantially all of its
assets in a single transaction or series of transactions to any Person
unless:

     

    (a)the successor formed by such consolidation or
the survivor of such merger or the Person that acquires by conveyance, transfer
or lease substantially all of the assets of the Company as an entirety, as the
case may be, shall be a solvent corporation organized and existing under the
laws of the United States or any State thereof (including the District of
Columbia), and, if the Company is not such successor corporation, (i) such
corporation shall have executed and delivered to each holder of any Notes its
assumption of the due and punctual performance and observance of each covenant
and condition of this Agreement and the Notes in form and substance reasonably
satisfactory to the Required Holders and (ii) shall have caused to be delivered
to each holder of any Notes an opinion of nationally recognized independent
counsel, or other independent counsel reasonably satisfactory to the Required
Holders, to the effect that all agreements or instruments effecting such
assumption are enforceable in accordance with their terms and comply with the
terms hereof; and

     

    (b)immediately after giving effect to such
transaction, no Default or Event of Default shall have occurred and be
continuing.

     

    No such
conveyance, transfer or lease of all or substantially all of the assets of the
Company shall have the effect of releasing the Company or any successor
corporation that shall theretofore 


    
      
        
           

        

         


      

      
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    have
become such in the manner prescribed in this Section 10.6 from its
liability under this Agreement or the Notes.

     

    Section 10.7. Transactions with
Affiliates.  The Company will not and will not permit any
Subsidiary to enter into directly or indirectly any transaction or group of
related transactions (including without limitation the purchase, lease, sale or
exchange of properties of any kind or the rendering of any service) with any
Affiliate (other than the Company or another Subsidiary), except in the ordinary
course and pursuant to the reasonable requirements of the Company’s or such
Subsidiary’s business and upon fair and reasonable terms no less favorable to
the Company or such Subsidiary than would be obtainable in a comparable
arm’s-length transaction with a Person not an Affiliate.

     

    Section 10.8. Terrorism Sanctions
Regulations.  The Company will not and will not permit any
Subsidiary to (a) become a Person described or designated in the Specially
Designated Nationals and Blocked Persons List of the Office of Foreign Assets
Control or in Section 1 of the Anti-Terrorism Order or (b) knowingly
engage in any dealings or transactions with any such Person.

     

    
      	
              Section 11. 
      Events of Default.

            


    

     

    An “Event
of Default” shall exist if any of the following conditions or events shall occur
and be continuing:

     

    (a)the Company defaults in the payment of any
principal or Make-Whole Amount, if any, on any Note when the same becomes due
and payable, whether at maturity or at a date fixed for prepayment or by
declaration or otherwise; or

     

    (b)the Company defaults in the payment of any
interest on any Note for more than five days after the same becomes due and
payable; or

     

    (c)the Company defaults in the performance of or
compliance with any term contained in Section 7.1(d) (provided that if the
Default, Event of Default or claimed default giving rise to the requirement for
a notice in respect thereof, the non-delivery of which has caused the occurrence
of an Event of Default hereunder, has been cured or otherwise remedied, such
that it is not a Default or Event of Default under Section 11(d), then no
Event of Default hereunder by virtue of such breach of Section 7.1(d) shall
constitute an Event of Default hereunder) or Sections 10.1 to 10.6, inclusive;
or

     

    (d)the Company defaults in the performance of or
compliance with any term contained herein (other than those referred to in
paragraphs (a), (b) and (c) of this Section 11) and such default is
not remedied within 30 days after a Responsible Officer obtains knowledge of
such default; or

     

    (e)any representation or warranty made in writing
by or on behalf of the Company or any officer of the Company in this Agreement
or in any writing furnished in connection with the transactions contemplated
hereby proves to have been false or incorrect in any material respect on the
date as of which made; or


    
      
        
           

        

         


      

      
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    (f)(i) the Company or any Significant Subsidiary
is in default (as principal or as guarantor or other surety) in the payment of
any principal of or premium or make-whole amount or interest on any Indebtedness
(other than the Notes) that is outstanding in an aggregate principal amount of
at least $10,000,000 beyond any period of grace provided with respect thereto,
or (ii) the Company or any Significant Subsidiary is in default in the
performance of or compliance with any term of any evidence of any Indebtedness
outstanding in an aggregate principal amount of at least $10,000,000 or of any
mortgage, indenture or other agreement relating thereto or any other condition
exists, and as a consequence of such default or condition such Indebtedness has
become, or has been declared (or one or more Persons are entitled to declare
such Indebtedness to be), due and payable before its stated maturity or before
its regularly scheduled dates of payment, or (iii) as a consequence of the
occurrence or continuation of any event or condition (other than the passage of
time or the right of the holder of Indebtedness to convert such Indebtedness
into equity interests), (x) the Company or any Subsidiary has become obligated
to purchase or repay Indebtedness before its regular maturity or before its
regularly scheduled dates of payment in an aggregate outstanding principal
amount of at least $10,000,000, or (y) one or more Persons have the right to
require the Company or any Subsidiary so to purchase or repay such Indebtedness;
or

     

    (g)the Company or any Significant Subsidiary (i)
is generally not paying, or admits in writing its inability to pay, its debts as
they become due, (ii) files, or consents by answer or otherwise to the
filing against it of, a petition for relief or reorganization or arrangement or
any other petition in bankruptcy, for liquidation or to take advantage of any
bankruptcy, insolvency, reorganization, moratorium or other similar law of any
jurisdiction, (iii) makes an assignment for the benefit of its creditors,
(iv) consents to the appointment of a custodian, receiver, trustee or other
officer with similar powers with respect to it or with respect to any
substantial part of its property, (v) is adjudicated as insolvent or to be
liquidated, or (vi) takes corporate action for the purpose of any of the
foregoing; or

     

    (h)a court or other Governmental Authority of
competent jurisdiction enters an order appointing, without consent by the
Company or any Significant Subsidiary, a custodian, receiver, trustee or other
officer with similar powers with respect to it or with respect to any
substantial part of its property, or constituting an order for relief or
approving a petition for relief or reorganization or any other petition in
bankruptcy or for liquidation or to take advantage of any bankruptcy or
insolvency law of any jurisdiction, or ordering the dissolution, winding-up or
liquidation of the Company or any such Significant Subsidiary, or any such
petition shall be filed against the Company or any such Significant Subsidiary
and such petition shall not be dismissed within 60 days; or

     

    (i)a final judgment or judgments for the payment
of money aggregating in excess of $10,000,000 are rendered against one or more
of the Company and its Significant Subsidiaries which judgments are not, within
60 days after entry thereof, bonded, discharged or stayed pending appeal, or are
not discharged within 60 days after the expiration of such stay;
or


    
      
        
           

        

         


      

      
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    (j)if (i) any Plan shall fail to satisfy the
minimum funding standards of ERISA or the Code for any plan year or part thereof
or a waiver of such standards or extension of any amortization period is sought
or granted under section 412 of the Code, (ii) a notice of intent to
terminate any Plan shall have been or is reasonably expected to be filed
with the PBGC or the PBGC shall have instituted proceedings under ERISA
section 4042 to terminate or appoint a trustee to administer any Plan or
the PBGC shall have notified the Company or any ERISA Affiliate that a Plan may
become a subject of any such proceedings, (iii)  the Company or any ERISA
Affiliate shall have incurred or is reasonably expected to incur any liability
pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of
the Code relating to employee benefit plans, (iv) the Company or any ERISA
Affiliate withdraws from any Multiemployer Plan and withdrawal liability exceeds
$5,000,000, or (v) the Company or any Subsidiary establishes or amends any
employee welfare benefit plan that provides post-employment welfare benefits in
any manner that would increase the liability of the Company or any Subsidiary
thereunder by more than $5,000,000; and any such event or events described in
clauses (i) through (v) above, either individually or together with any other
such event or events, could reasonably be expected to have a Material Adverse
Effect.

     

    As used
in Section 11(j), the terms “employee benefit plan” and
“employee welfare benefit
plan” shall have the respective meanings assigned to such terms in
section 3 of ERISA.

     

    
      	
              Section 12. 
      Remedies on Default, Etc.

            


    

     

    Section 12.1. Acceleration.  (a)  If
an Event of Default with respect to the Company described in paragraph (g)
or (h) of Section 11 (other than an Event of Default described in clause
(i) of paragraph (g) or described in clause (vi) of paragraph (g) by
virtue of the fact that such clause encompasses clause (i) of
paragraph (g)) has occurred, all the Notes then outstanding shall
automatically become immediately due and payable.

     

    (b)If any other Event of Default has occurred and
is continuing, the Required Holders may at any time at its or their option, by
notice or notices to the Company, declare all the Notes at the time outstanding
to be immediately due and payable.

     

    (c)If any Event of Default described in
paragraph (a) or (b) of Section 11 has occurred and is continuing, any
holder or holders of Notes at the time outstanding affected by such Event of
Default may at any time, at its or their option, by notice or notices to the
Company, declare all the Notes held by it or them to be immediately due and
payable.

     

    Upon any
Note becoming due and payable under this Section 12.1, whether
automatically or by declaration, such Note will forthwith mature and the entire
unpaid principal amount of such Note, plus (x) all accrued and unpaid interest
thereon and (y) the Make-Whole Amount determined in respect of such principal
amount, shall all be immediately due and payable, in each and every case without
presentment, demand, protest or further notice, all of which are hereby
waived.  The Company acknowledges, and the parties hereto agree, that
each holder of a Note has the right to maintain its investment in the Notes free
from repayment by the Company 


    
      
        
           

        

         


      

      
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    (except
as herein specifically provided) and that the provision for payment of a
Make-Whole Amount by the Company in the event that the Notes are prepaid or are
accelerated as a result of an Event of Default, is intended to provide
compensation for the deprivation of such right under such
circumstances.

     

    Section 12.2. Other Remedies.  If
any Default or Event of Default has occurred and is continuing, and irrespective
of whether any Notes have become or have been declared immediately due and
payable under Section 12.1, the holder of any Note at the time outstanding
may proceed to protect and enforce the rights of such holder by an action at
law, suit in equity or other appropriate proceeding, whether for the specific
performance of any agreement contained herein or in any Note, or for an
injunction against a violation of any of the terms hereof or thereof, or in aid
of the exercise of any power granted hereby or thereby or by law or
otherwise.

     

    Section 12.3. Rescission.  At any
time after any Notes have been declared due and payable pursuant to paragraph
(b) or (c) of Section 12.1, the Required Holders, by written notice to the
Company, may rescind and annul any such declaration and its consequences if
(a) the Company has paid all overdue interest on the Notes, all principal
of and Make-Whole Amount, if any, on any Notes that are due and payable and are
unpaid other than by reason of such declaration, and all interest on such
overdue principal and Make-Whole Amount, if any, and any overdue interest in
respect of the Notes, at the Default Rate, (b) all Events of Default and
Defaults, other than the non-payment of amounts that have become due solely by
reason of such declaration, have been cured or have been waived pursuant to
Section 17, and (c) no judgment or decree has been entered for the
payment of any monies due pursuant hereto or to the Notes.  No
rescission and annulment under this Section 12.3 will extend to or affect
any subsequent Event of Default or Default or impair any right consequent
thereon.

     

    Section 12.4. No Waivers or Election of Remedies,
Expenses, Etc.  No course of dealing and no delay on the part
of any holder of any Note in exercising any right, power or remedy shall operate
as a waiver thereof or otherwise prejudice such holder’s rights, powers or
remedies.  No right, power or remedy conferred by this Agreement or by
any Note upon any holder thereof shall be exclusive of any other right, power or
remedy referred to herein or therein or now or hereafter available at law, in
equity, by statute or otherwise.  Without limiting the obligations of
the Company under Section 15, the Company will pay to the holder of each
Note on demand such further amount as shall be sufficient to cover all costs and
expenses of such holder incurred in any enforcement or collection under this
Section 12, including without limitation reasonable attorneys’ fees,
expenses and disbursements.

     

    
      	
              Section 13. 
      Registration; Exchange; Substitution of
Notes.

            


    

     

    Section 13.1. Registration of Notes.
   The Company shall
keep at its principal executive office a register for the registration and
registration of transfers of Notes.  The name and address of each
holder of one or more Notes, each transfer thereof and the name and address of
each transferee of one or more Notes shall be registered in such
register.  Prior to due presentment for registration of transfer, the
Person in whose name any Note shall be registered shall be deemed and treated as
the owner and holder thereof for all purposes hereof, and the Company shall not
be affected by any notice or knowledge to the contrary.  The Company
shall give to any holder of a 


    
      
        
           

        

         


      

      
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    Note that
is an Institutional Investor promptly upon request therefor, a complete and
correct copy of the names and addresses of all registered holders of
Notes.

     

    Section 13.2 Transfer and Exchange of
Notes.

  Upon surrender of any Note at the principal executive office of
the Company for registration of transfer or exchange (and in the case of a
surrender for registration of transfer, duly endorsed or accompanied by a
written instrument of transfer duly executed by the registered holder of such
Note or his attorney duly authorized in writing and accompanied by the address
for notices of each transferee of such Note or part thereof), within five
Business Days thereafter the Company shall execute and deliver, at the Company’s
expense (except as provided below), one or more new Notes (as requested by the
holder thereof) in exchange therefor, in an aggregate principal amount equal to
the unpaid principal amount of the surrendered Note.  Each such new
Note shall be payable to such Person as such holder may request and shall be
substantially in the form set out in Exhibit 1.  Each
such new Note shall be dated and bear interest from the date to which interest
shall have been paid on the surrendered Note or dated the date of the
surrendered Note if no interest shall have been paid thereon.  The
Company may require payment of a sum sufficient to cover any stamp tax or
governmental charge imposed in respect of any such transfer of
Notes.  Notes shall not be transferred in denominations of less than
$100,000, provided that
if necessary to enable the registration of transfer by a holder of its entire
holding of Notes, one Note may be in a denomination of less than
$100,000.  Any transferee, by its acceptance of a Note registered in
its name (or the name of its nominee), shall be deemed to have made the
representations set forth in Section 6.

     

    Section 13.3. Replacement of Notes.
   Upon receipt by
the Company of evidence reasonably satisfactory to it of the ownership of and
the loss, theft, destruction or mutilation of any Note (which evidence shall be,
in the case of an Institutional Investor, notice from such Institutional
Investor of such ownership and such loss, theft, destruction or mutilation),
and

     

    (a)in the case of loss, theft or destruction, of
indemnity reasonably satisfactory to it (provided that if the holder
of such Note is, or is a nominee for, an original Purchaser or any other
Institutional Investor, such Person’s own unsecured agreement of indemnity shall
be deemed to be satisfactory), or

     

    (b)in the case of mutilation, upon surrender and
cancellation thereof,

     

    within
five Business Days thereafter the Company at its own expense shall execute and
deliver, in lieu thereof, a new Note, dated and bearing interest from the date
to which interest shall have been paid on such lost, stolen, destroyed or
mutilated Note or dated the date of such lost, stolen, destroyed or mutilated
Note if no interest shall have been paid thereon.

     

    
      	
              Section 14. 
      Payments on Notes.

            


    

     

    Section 14.1. Place of
Payment.  Subject to Section 14.2, payments of principal,
Make-Whole Amount, if any, and interest becoming due and payable on the Notes
shall be made at the principal office of Citibank, N.A. in New York
City.  The Company may at any time, by notice 


    
      
        
           

        

         


      

      
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    to each
holder of a Note, change the place of payment of the Notes so long as such place
of payment shall be the principal office of a bank or trust company in New York
City.

     

    Section 14.2. Home Office
Payment.  So long as you or your nominee shall be the holder of
any Note, and notwithstanding anything contained in Section 14.1 or in such
Note to the contrary, the Company will pay all sums becoming due on such Note
for principal, Make-Whole Amount, if any, and interest by the method and at the
address specified for such purpose below your name in Schedule A, or by such
other method or at such other address as you shall have from time to time
specified to the Company in writing for such purpose, without the presentation
or surrender of such Note or the making of any notation thereon, except that
upon written request of the Company made concurrently with or reasonably
promptly after payment or prepayment in full of any Note, you shall surrender
such Note for cancellation, reasonably promptly after any such request, to the
Company at its principal executive office or at the place of payment most
recently designated by the Company pursuant to
Section 14.1.  Prior to any sale or other disposition of any Note
held by you or your nominee you will, at your election, either endorse thereon
the amount of principal paid thereon and the last date to which interest has
been paid thereon or surrender such Note to the Company in exchange for a new
Note or Notes pursuant to Section 13.2.  The Company will afford
the benefits of this Section 14.2 to any Institutional Investor that is the
direct or indirect transferee of any Note purchased by you under this Agreement
and that has made the same agreement relating to such Note as you have made in
this Section 14.2.

     

    
      	
              Section 15. 
      Expenses, Etc.

            


    

     

    Section 15.1. Transaction
Expenses.  Whether or not the transactions contemplated hereby
are consummated, the Company will pay all costs and expenses (including
reasonable attorneys’ fees of your special counsel and, if reasonably required,
local or other counsel) incurred by you and each other Purchaser or holder of a
Note in connection with such transactions and in connection with any amendments,
waivers or consents under or in respect of this Agreement or the Notes (whether
or not such amendment, waiver or consent becomes effective), including without
limitation:  (a) the costs and expenses incurred in enforcing or
defending (or determining whether or how to enforce or defend) any rights under
this Agreement or the Notes or in responding to any subpoena or other legal
process or informal investigative demand issued in connection with this
Agreement or the Notes, or by reason of being a holder of any Note; (b) the
costs and expenses incurred in connection with the initial filing of this
Agreement and all related documents and financial information and all subsequent
annual and interim filings of documents and financial information related to
this Agreement, with the Securities Valuation Office of the National Association
of Insurance Commissioners or any successor organization succeeding to the
authority thereof; and (c) the costs and expenses, including financial
advisors’ fees, incurred in connection with the insolvency or bankruptcy of the
Company or any Subsidiary or in connection with any work-out or restructuring of
the transactions contemplated hereby and by the Notes.  The Company
will pay, and will save you and each other holder of a Note harmless from, all
claims in respect of any fees, costs or expenses if any, of brokers and finders
(other than those retained by you).


    
      
        
           

        

         


      

      
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    In
furtherance of the foregoing, on the date of the Closing the Company will pay or
cause to be paid the fees and disbursements and other charges (including
estimated unposted disbursements and other charges as of the date of the
Closing) of your special counsel which are reflected in the statement of such
special counsel submitted to the Company at least one Business Day prior to the
date of the Closing.  The Company will also pay, promptly upon receipt
of supplemental statements therefor, reasonable additional fees, if any, and
disbursements and charges of such special counsel in connection with the
transactions hereby contemplated (including disbursements and other charges
unposted as of the date of either Closing to the extent such disbursements and
other charges exceed estimated amounts paid as aforesaid).

     

    Section 15.2. Survival.  The
obligations of the Company under this Section 15 will survive the payment
or transfer of any Note, the enforcement, amendment or waiver of any provision
of this Agreement or the Notes, and the termination of this
Agreement.

     

    
      	
              Section 16. 
      Survival of Representations and Warranties; Entire
    Agreement

            


    

     

    All
representations and warranties contained herein shall survive the execution and
delivery of this Agreement and the Notes, the purchase or transfer by you of any
Note or portion thereof or interest therein and the payment of any Note, and may
be relied upon by any subsequent holder of a Note, regardless of any
investigation made at any time by or on behalf of you or any other holder of a
Note.  All statements contained in any certificate or other instrument
delivered by or on behalf of the Company pursuant to this Agreement shall be
deemed representations and warranties of the Company under this
Agreement.  Subject to the preceding sentence, this Agreement and the
Notes embody the entire agreement and understanding between you and the Company
and supersede all prior agreements and understandings relating to the subject
matter hereof.

     

    
      	
              Section 17. 
      Amendment and Waiver.

            


    

     

    Section 17.1. Requirements.  This
Agreement and the Notes may be amended, and the observance of any term hereof or
of the Notes may be waived (either retroactively or prospectively), with (and
only with) the written consent of the Company and the Required Holders, except
that (a) no amendment or waiver of any of the provisions of Section 1, 2,
3, 4, 5, 6 or 21, or any defined term (as it is used therein), will be effective
as to you unless consented to by you in writing, and (b) no such amendment or
waiver may, without the written consent of the holder of each Note at the time
outstanding, (i) subject to the provisions of Section 12 relating to
acceleration or rescission, change the amount or time of any prepayment or
payment of principal of, or reduce the rate or change the time of payment or
method of computation of interest or of the Make-Whole Amount on, the Notes,
(ii) change the percentage of the principal amount of the Notes the holders
of which are required to consent to any such amendment or waiver, or
(iii) amend any of Sections 8.1, 8.2, 8.3, 8.4, 8.6, 11(a), 11(b), 12,
17 or 20.


    
      
        
           

        

         


      

      
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    Section 17.2. Solicitation of Holders of
Notes.

     

    (a)Solicitation.  The
Company will provide each holder of the Notes (irrespective of the amount of
Notes then owned by it) with sufficient information, sufficiently far in advance
of the date a decision is required, to enable such holder to make an informed
and considered decision with respect to any proposed amendment, waiver or
consent in respect of any of the provisions hereof or of the
Notes.  The Company will deliver executed or true and correct copies
of each amendment, waiver or consent effected pursuant to the provisions of this
Section 17 to each holder of outstanding Notes promptly following the date
on which it is executed and delivered by, or receives the consent or approval
of, the requisite holders of Notes.

     

    (b)Payment.  The
Company will not directly or indirectly pay or cause to be paid any
remuneration, whether by way of supplemental or additional interest, fee or
otherwise, or grant any security, to any holder of the Notes as consideration
for or as an inducement to such holder’s consideration of or entering into of
any waiver or amendment of any of the terms and provisions hereof unless such
remuneration is concurrently paid, or security is concurrently granted, on the
same terms, ratably to each holder of the Notes then outstanding even if such
holder did not consent to such waiver or amendment.

     

    (c)Consent in Contemplation of
Transfer.  Any consent made pursuant to this Section 17.2
by the holder of any Note that has transferred or has agreed to transfer such
Note to the Company, any Subsidiary or any Affiliate of the Company and has
provided or has agreed to provide such written consent as a condition to such
transfer shall be void and of no force or effect except solely as to such
holder, and any amendments effected or waivers granted or to be effected or
granted that would not have been or would not be so effected or granted but for
such consent (and the consents of all other holders of Notes that were acquired
under the same or similar conditions) shall be void and of no force or effect
except solely as to such transferring holder.

     

    Section 17.3. Binding Effect,
Etc.  Any amendment or waiver consented to as provided in this
Section 17 applies equally to all holders of the Notes and is binding upon
them and upon each future holder of any Note and upon the Company without regard
to whether such Note has been marked to indicate such amendment or
waiver.  No such amendment or waiver will extend to or affect any
obligation, covenant, agreement, Default or Event of Default not expressly
amended or waived or impair any right consequent thereon.  No course
of dealing between the Company and the holder of any Note nor any delay in
exercising any rights hereunder or under any Note shall operate as a waiver of
any rights of any holder of such Note.  As used herein, the term “this Agreement” and
references thereto shall mean this Agreement as it may from time to time be
amended or supplemented.

     

    Section 17.4. Notes Held by Company,
Etc.  Solely for the purpose of determining whether the holders
of the requisite percentage of the aggregate principal amount of Notes then
outstanding approved or consented to any amendment, waiver or consent to be
given under this Agreement or the Notes, or have directed the taking of any
action provided herein or in the Notes to be taken upon the direction of the
holders of a specified percentage of the aggregate principal 


    
      
        
           

        

         


      

      
        - 31
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    amount of
Notes then outstanding, Notes directly or indirectly owned by the Company or any
of its Affiliates shall be deemed not to be outstanding.

     

    
      	
              Section 18. 
      Notices.

            


    

     

    All
notices and communications provided for hereunder shall be in writing and sent
(a) by telecopy if the sender on the same day sends a confirming copy of
such notice by a recognized overnight delivery service (charges prepaid), or
(b) by United States mail, postage prepaid, or (c) by a recognized
United States based overnight delivery service (with charges
prepaid).  Any such notice must be sent:

     

    (a)if to you or your nominee, to you or it at the
address specified for such communications in Schedule A, or at such other
address as you or it shall have specified to the Company in
writing,

     

    (b)if to any other holder of any Note, to such
holder at such address as such other holder shall have specified to the Company
in writing, or

     

    (c) if to the Company, to the Company at its
address set forth at the beginning hereof to the attention of the Treasurer, or
at such other address as the Company shall have specified to the holder of each
Note in writing.

     

    Notices
under this Section 18 will be deemed given only when actually
received.  The information required to be sent to holders of notes
pursuant to Sections 7.1(a), (b) or (c) or Section 7.2 may be sent by any of the
methods listed above or by electronic mail at such address as such holder shall
have specified to the Company in writing.

     

    
      	
              Section 19. 
      Reproduction of Documents.

            


    

     

    This
Agreement and all documents relating thereto, except the Notes themselves, but
including, without limitation, (a) consents, waivers and modifications that
may hereafter be executed, (b) documents received by you at either Closing,
and (c) financial statements, certificates and other information previously
or hereafter furnished to you, may be reproduced by you by any photographic,
photostatic, electronic, digital, microfilm, microcard, miniature photographic
or other similar process and you may destroy any original document so
reproduced.  The Company agrees and stipulates that, to the extent
permitted by applicable law, any such reproduction shall be admissible in
evidence as the original itself in any judicial or administrative proceeding
(whether or not the original is in existence and whether or not such
reproduction was made by you in the regular course of business) and any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.  This Section 19 shall not
prohibit the Company or any other holder of Notes from contesting any such
reproduction to the same extent that it could contest the original, or from
introducing evidence to demonstrate the inaccuracy of any such
reproduction.


    
      
        
           

        

         


      

      
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              Section 20. 
      Confidential Information.

            


    

     

    For the
purposes of this Section 20, “Confidential Information”
means information delivered to you by or on behalf of the Company, any
Subsidiary or UIL Holdings in connection with the transactions contemplated by
or otherwise pursuant to this Agreement that is proprietary in nature and that
was clearly marked or labeled or otherwise adequately identified when received
by you as being confidential information of the Company, such Subsidiary or UIL
Holdings, provided that
such term does not include information that (a) was publicly known or
otherwise known to you prior to the time of such disclosure,
(b) subsequently becomes publicly known through no act or omission by you
or any Person acting on your behalf, (c) otherwise becomes known to you
other than through disclosure by the Company, any Subsidiary or UIL Holdings,
(d) constitutes financial statements delivered to you under Section 7.1 that are
otherwise publicly available or (e) involves the tax treatment and tax structure
of the transactions as defined in United States Treasury Regulation section
1.6011-4(c) and all materials of any kind (including opinions or other tax
analyses) that are provided relating to such tax treatment and tax
structure.  You will maintain the confidentiality of such Confidential
Information in accordance with procedures adopted by you in good faith to
protect confidential information of third parties delivered to you, provided that you may deliver
or disclose Confidential Information to (i) your directors, officers,
trustees, employees, agents, attorneys and Affiliates (to the extent such
disclosure reasonably relates to the administration of the investment
represented by your Notes), (ii) your financial advisors and other professional
advisors who agree, or whose duties require them, to hold confidential the
Confidential Information substantially in accordance with the terms of this
Section 20, (iii) any other holder of any Note, (iv) any Institutional
Investor to which you sell or offer to sell such Note or any part thereof or any
participation therein (if such Person has agreed in writing prior to its receipt
of such Confidential Information to be bound by the provisions of this
Section 20), (v) any Person from which you offer to purchase any
security of the Company (if such Person has agreed in writing prior to its
receipt of such Confidential Information to be bound by the provisions of this
Section 20), (vi) any federal or state regulatory authority having
jurisdiction over you, (vii) the National Association of Insurance
Commissioners or any similar organization, or any nationally recognized rating
agency that requires access to information about your investment portfolio or
(viii) any other Person to which such delivery or disclosure may be
necessary or appropriate (w) to effect compliance with any law, rule,
regulation or order applicable to you, (x) in response to any subpoena or
other legal process, (y) in connection with any litigation to which you are
a party or (z) if an Event of Default has occurred and is continuing, to
the extent you may reasonably determine such delivery and disclosure to be
necessary or appropriate in the enforcement or for the protection of the rights
and remedies under your Notes and this Agreement.  Each holder of a
Note, by its acceptance of a Note, will be deemed to have agreed to be bound by
and to be entitled to the benefits of this Section 20 as though it were a
party to this Agreement.  On reasonable request by the Company in
connection with the delivery to any holder of a Note of information required to
be delivered to such holder under this Agreement or requested by such holder
(other than a holder that is a party to this Agreement or its nominee), such
holder will enter into an agreement with the Company embodying the provisions of
this Section 20.


    
      
        
           

        

         


      

      
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              Section 21. 
      Substitution of Purchaser.

            


    

     

    You shall
have the right to substitute any one of your Affiliates as the purchaser of the
Notes that you have agreed to purchase hereunder, by written notice to the
Company, which notice shall be signed by both you and such Affiliate, shall
contain such Affiliate’s agreement to be bound by this Agreement and shall
contain a confirmation by such Affiliate of the accuracy with respect to it of
the representations set forth in Section 6.  Upon receipt of such
notice, wherever the word “you” is used in this Agreement (other than in this
Section 21), such word shall be deemed to refer to such Affiliate in lieu
of you.  In the event that such Affiliate is so substituted as a
purchaser hereunder and such Affiliate thereafter transfers to you all of the
Notes then held by such Affiliate, upon receipt by the Company of notice of such
transfer, wherever the word “you” is used in this Agreement (other than in this
Section 21), such word shall no longer be deemed to refer to such
Affiliate, but shall refer to you, and you shall have all the rights of an
original holder of the Notes under this Agreement.

     

    
      	
              Section 22. 
      Miscellaneous.

            


    

     

    Section 22.1. Successors and
Assigns.  All covenants and other agreements contained in this
Agreement by or on behalf of any of the parties hereto bind and inure to the
benefit of their respective successors and assigns (including without limitation
any subsequent holder of a Note) whether so expressed or not.

     

    Section 22.2. Construction.  Each
covenant contained herein shall be construed (absent express provision to the
contrary) as being independent of each other covenant contained herein, so that
compliance with any one covenant shall not (absent such an express contrary
provision) be deemed to excuse compliance with any other
covenant.  Where any provision herein refers to action to be taken by
any Person, or which such Person is prohibited from taking, such provision shall
be applicable whether such action is taken directly or indirectly by such
Person.

     

    For the
avoidance of doubt, all Schedules and Exhibits attached to this Agreement shall
be deemed to be a part hereof. 

     

    Section 22.3. Consent to Jurisdiction; Service of
Process; Waiver of Jury Trial.  (a)  The Company
irrevocably submits to the non-exclusive in personam jurisdiction of
any New York State or federal court sitting in the Borough of Manhattan,
The City of New York, over any suit, action or proceeding arising out of or
relating to this Agreement or the Notes.  To the fullest extent it may
effectively do so under applicable law, the Company irrevocably waives and
agrees not to assert, by way of motion, as a defense or otherwise, any claim
that it is not subject to the in personam jurisdiction of
any such court, any objection that it may now or hereafter have to the laying of
the venue of any such suit, action or proceeding brought in any such court and
any claim that any such suit, action or proceeding brought in any such court has
been brought in an inconvenient forum.

     

    (b)The Company consents to process being served in
any suit, action or proceeding of the nature referred to in paragraph (a) of
this Section 22.3 by mailing a copy thereof by registered or certified
mail, postage prepaid, return receipt requested, to the address of the



    
      
        
           

        

         


      

      
        - 34
-

        
          

        

      

      
         


      

    


     

    Company
specified in Section 18 or at such other address of which you shall then
have been notified pursuant to said Section.  The Company agrees that
such service upon receipt (i) shall be deemed in every respect effective
service of process upon it in any such suit, action or proceeding and (ii)
shall, to the full extent permitted by law, be taken and held to be valid
personal service upon and personal delivery to the Company.  Notices
hereunder shall be conclusively presumed received as evidenced by a delivery
receipt furnished by the United States Postal Service or any reputable
commercial delivery service.

     

    (c)Nothing in this Section 22.3 shall affect
the right of any holder of Notes to serve process in any manner permitted by
law, or limit any right that the holders of any of the Notes may have to bring
proceedings against the Company in the courts of any appropriate jurisdiction or
to enforce in any lawful manner a judgment obtained in one jurisdiction in any
other jurisdiction.

     

    (d)Each of the parties hereto
waives trial by jury in any action brought on or with respect to this Agreement,
the Notes or any other document executed in connection herewith or
therewith.

     

    Section 22.4. Payments Due on Non-Business
Days.  Anything in this Agreement or the Notes to the contrary
notwithstanding (but without limiting the requirement in Section 8.2 that notice
of any optional prepayment specify a Business Day as the date fixed for such
prepayment), any payment of principal of or Make-Whole Amount or interest on any
Note that is due on a date other than a Business Day shall be made on the next
succeeding Business Day without including the additional days elapsed in the
computation of the interest payable on such next succeeding Business Day; provided that if the maturity
date of any Note is a date other than a Business Day, the payment otherwise due
on such maturity date shall be made on the next succeeding Business Day and
shall include the additional days elapsed in the computation of interest payable
on such next succeeding Business Day.

     

    Section 22.5. Severability.  Any
provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the fullest extent permitted by applicable law) not
invalidate or render unenforceable such provision in any other
jurisdiction.

     

    Section 22.6. Accounting
Terms.  All accounting terms used herein which are not
expressly defined in this Agreement have the meanings respectively given to them
in accordance with GAAP.  Except as otherwise specifically provided
herein, all computations made pursuant to this Agreement shall be made in
accordance with GAAP and all balance sheets and other financial statements with
respect thereto shall be prepared in accordance with GAAP.  For
purposes of determining compliance with the financial covenants contained in
this Agreement, any election by the Company to measure an item of Indebtedness
using an amount other than par (as permitted by FASB 159 or any similar
accounting standard) shall be disregarded and such determination shall be made
as if such election has not been made.


    
      
        
           

        

         


      

      
        - 35
-

        
          

        

      

      
         


      

    


     

    Each of
the holders of the Notes by its acceptance thereof understands and agrees with
the Company that in the event that a change in GAAP is the sole cause of the
Company violating any of the covenants contained in Sections 10.1 through
10.5 hereof, or causes a Default or Event of Default to occur, at a time when no
other Default or Event of Default exists, then and in such event, anything
contained in this Agreement to the contrary notwithstanding, no Default or Event
of Default will be caused by such change in GAAP for a period of 90 days
following the event which would otherwise be treated as a Default or Event of
Default and the Company shall have 90 days from and after the date of the
occurrence of such event within which to enter into an amendment with the
Required Holders and the holders and the Company shall undertake in good faith
to amend any affected provisions of this Agreement so as to preserve the intent
and purpose thereof and to accommodate such change in GAAP and to enter into an
amendment hereof to reflect the same, such amendment to be in form and substance
satisfactory to the Company and the Required Holders.

     

    Section 22.7. Counterparts.  This
Agreement may be executed in any number of counterparts, each of which shall be
an original but all of which together shall constitute one
instrument.  Each counterpart may consist of a number of copies
hereof, each signed by less than all, but together signed by all, of the parties
hereto.

     

    Section 22.8. Governing
Law.  This Agreement and the Notes shall be construed and
enforced in accordance with, and the rights of the parties shall be governed by,
the law of the State of New York excluding choice-of-law principles of the law
of such State that would require the application of the laws of a jurisdiction
other than such State.

    *    *    *    *    *

     


    
      
        
           

        

         


      

      
        - 36
-

        
          

        

      

      
         


      

    


     

    If you
are in agreement with the foregoing, please sign the form of agreement in the
space below provided on a counterpart of this Agreement and return it to the
Company, whereupon the foregoing shall become a binding agreement between you
and the Company.

     

    Very
truly yours,

     

     

    
      	
               
      

            	
              The
      United Illuminating Company

            


    

     

    


    
      	 
      	
              By:

            	
               
      /s/ Susan E.
      Allen         

            
	 
      	
                  Title:

            	
               
      Vice President Investor Relations

            
	 
      	 
      	
               
      and Treasurer

            


    

    


    



    
      
        
           

        

         


      

      
        - 37
-

        
          

        

      

      
         


      

    


    


     

    The
foregoing is hereby agreed to as of the date thereof.

    


    


    
      	 
      	
              Bankers
      Life and Casualty Company

            
	 
      	 
      	 
      
	 
      	
              Conseco
      Life Insurance Company

            
	 
      	
              By:

            	
               
      40/86 Advisors, Inc. acting as Investment

            
	 
      	 
      	
               
      Advisor

            


    

    


    


    
      	 
      	
              By:

            	
              /s/ Timothy L. Powell      

            
	 
      	 
      	
              Title:  Vice
      President 

            


    

    


    


    
      	 
      	
              Great-West
      Life & Annuity Insurance
Company

            


    

    


    


    
      	 
      	
              By:

            	
              /s/ James Lowery        

            
	 
      	 
      	
              Title:  AVP,
      Investments

            


    

    


    


    
      	 
      	
              By:

            	
              /s/ Tad Anderson        

            
	 
      	 
      	
              Title:  AVP,
      Investments

            


    

    


    


    


    
      	 
      	
              Metropolitan
      Life Insurance Company

            
	 	 
	 	      
              MetLife
      Investors USA Insurance Company

            
	 
      	
              By:

            	
               
      Metropolitan Life Insurance Company, Its

            
	 
      	  
      	
               
      Investment Manager

            


    

    


    


    
      	 
      	
              By:

            	
              /s/ John A. Tanyeri        

            
	
               

            	 
      	
              Title:  Director

            


    

    



    
      
        
           

        

         


      

      
        - 38
-

        
          

        

      

      
         


      

    


    


    


    
      	 
      	
              Companion
      Life Insurance Company

            


    

    


    


    
      	 
      	
              By:

            	
              /s/ Justin P. Kavan        

            
	 
      	 
      	
              Title:  Authorized
      Signer

            


    

    


    


    


    
      	 
      	
              Mutual
      of Omaha Insurance Company

            


    

    


    


    
      	 
      	
              By:

            	
              /s/ Justin P. Kavan        

            
	 
      	 
      	
              Title:  Vice
      President

            


    

    


    


    


    
      	 
      	
              United
      of Omaha Life Insurance Company

            


    

    


    


    
      	 
      	
              By:

            	
              /s/ Justin P. Kavan        

            
	 
      	 
      	
              Title:  Vice
      President

            


    

    


    


    


    
      	 
      	
              Thrivent
      Financial For Lutherans

            


    

    


    


    
      	 
      	
              By:

            	
              /s/ Alan D. Onstad        

            
	 
      	 
      	
              Title:  Senior
      Director

            


    

    


     

    



    
      
        
        

         


      

      
        
          -
39 -

        

        
          

        

      

      
         


      

    


    Defined
Terms

     

    As used
herein, the following terms have the respective meanings set forth below or set
forth in the Section hereof following such term:

     

    “Affiliate” means, at any
time, and with respect to any Person, (a) any other Person that at such time
directly or indirectly through one or more intermediaries Controls, or is
Controlled by, or is under common Control with, such first Person, and (b) any
Person beneficially owning or holding, directly or indirectly, 10% or more of
any class of voting or equity interests of the Company or any Subsidiary or any
corporation of which the Company and its Subsidiaries beneficially own or hold,
in the aggregate, directly or indirectly, 10% or more of any class of voting or
equity interests.  As used in this definition, “Control” means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise. Unless the context
otherwise clearly requires, any reference to an “Affiliate” is a reference to an
Affiliate of the Company.

     

    “Anti-Terrorism Order” means Executive Order
No. 13,224 of September 24, 2001, Blocking Property and Prohibiting
Transactions with Persons Who Commit, Threaten to Commit or Support Terrorism,
66 U.S. Fed. Reg. 49,079 (2001), as amended.

     

    “Attributable Debt” means, as
to any particular lease relating to a Sale and Leaseback Transaction, the total
amount of rent (discounted semiannually from the respective due dates thereof at
the interest rate implicit in such lease) required to be paid by the lessee
under such lease during the remaining term thereof.  The amount of
rent required to be paid under any such lease for any such period shall be (a)
the total amount of the rent payable by the lessee with respect to such period
after excluding amounts required to be paid on account of maintenance and
repairs, insurance, taxes, assessments, utilities, operating and labor costs and
similar charges plus (b) without duplication, any guaranteed residual value in
respect of such lease to the extent such guarantee would be included in
indebtedness in accordance with GAAP.

     

    “Bank Credit Agreement” means
(a) that certain Credit Agreement dated December 22, 2006 among the
Company, Citibank, N.A., as administrative agent, and the other commercial banks
from time to time parties thereto, as the same may from time to time be amended,
extended, renewed or replaced or (b) if for any reason whatsoever, the Bank
Credit Agreement is not extended, renewed or replaced or otherwise ceases to be
in full force and effect or otherwise falls-away, then and in such event Bank
Credit Agreement means the credit, term loan or like commercial bank agreement
between the Company and one or more commercial banks with the largest commitment
from such bank or banks to extend credit thereunder to the Company as compared
to any other credit, term loan or like commercial bank agreement then
outstanding between any bank or banks and the Company.

     

    “Business Day” means any day
other than a Saturday, a Sunday or a day on which commercial banks in New York
City are required or authorized to be closed.


    
      
        
          Schedule
B

        

         


      

      
         


        
          

        

      

      
         


      

    


     

    “Capital Lease” means, at any
time, a lease with respect to which the lessee is required concurrently to
recognize the acquisition of an asset and the incurrence of a liability in
accordance with GAAP.

     

    “Capitalized Lease
Obligations” means with respect to any Person, all outstanding
obligations of such Person in respect of Capital Leases, taken at the
capitalized amount thereof accounted for as indebtedness in accordance with
GAAP.

     

    “Closing” is defined in
Section 3.

     

    “Code” means the Internal
Revenue Code of 1986, as amended from time to time, and the rules and
regulations promulgated thereunder from time to time.

     

    “Company” means The United
Illuminating Company, a Connecticut corporation.

     

    “Confidential Information” is
defined in Section 20.

     

    “Consolidated Capitalization”
means, at any date, the sum of (a) Consolidated Indebtedness plus (b)
shareholders’ equity of all classes of stock (except mandatorily redeemable
Preferred Stock) of the Company and its Subsidiaries, all as determined on a
consolidated basis in accordance with GAAP.

     

    “Consolidated Indebtedness”
means, at any date, all Indebtedness of the Company and its Subsidiaries
determined on a consolidated basis in accordance with GAAP.

     

    “Consolidated Total Assets”
means, as of any date, the total assets of the Company and its Subsidiaries
determined on a consolidated basis in accordance with GAAP.

     

    “Default” means an event or
condition the occurrence or existence of which would, with the giving of notice
or the lapse of time, or both, become an Event of Default.

     

    “Default Rate” means, with
respect to the Notes, that rate of interest that is the greater of (i) 2% per
annum above the stated interest rate for the Notes and (ii) 2% above the
rate of interest publicly announced by Citibank, N.A. from time to time at its
principal office in New York City as its prime or base rate. 

     

    “Disposition” is defined in
Section 10.5.

     

    “Environmental Laws” means,
with respect to the Notes, any and all United States federal, state, local, and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including but
not limited to those related to hazardous substances or wastes, air emissions
and discharges to waste or public systems.


    
      
        
          B-2

        

         


      

      
         


        
          

        

      

      
         


      

    


     

    “ERISA” means the Employee
Retirement Income Security Act of 1974, as amended from time to time, and the
rules and regulations promulgated thereunder from time to time in
effect.

     

    “ERISA Affiliate” means any
trade or business (whether or not incorporated) that is treated as a single
employer together with the Company under section 414 of the
Code.

     

    “Event of Default” is defined
in Section 11.

     

    “Exchange Act” means the
Securities Exchange Act of 1934, as amended from time to time.

     

    “GAAP” means generally
accepted accounting principles as in effect from time to time in the United
States of America.

     

    “Governmental Authority”
means

     

    (a)the government of

     

    (i)the United States of America or any State or
other political subdivision thereof, or

     

    (ii)any jurisdiction in which the Company or any
Subsidiary conducts all or any part of its business, or which asserts
jurisdiction over any properties of the Company or any Subsidiary,
or

     

    (b)any entity exercising executive, legislative,
judicial, regulatory or administrative functions of, or pertaining to, any such
government.

     

    “Guaranty” means, with
respect to any Person, any obligation (except the endorsement in the ordinary
course of business of negotiable instruments for deposit or collection) of such
Person guaranteeing or in effect guaranteeing any indebtedness, dividend or
other obligation of any other Person in any manner, whether directly or
indirectly, including without limitation obligations incurred through an
agreement, contingent or otherwise, by such Person:

     

    (a)to purchase such indebtedness or obligation or
any property constituting security therefor;

     

    (b)to advance or supply funds (i) for the purchase
or payment of such indebtedness or obligation, or (ii) to maintain any working
capital or other balance sheet condition or any income statement condition of
any other Person or otherwise to advance or make available funds for the
purchase or payment of such indebtedness or obligation;


    
      
        
          B-3

        

         


      

      
         


        
          

        

      

      
         


      

    


    (c)to lease properties or to purchase properties
or services primarily for the purpose of assuring the owner of such indebtedness
or obligation of the ability of any other Person to make payment of the
indebtedness or obligation; or

     

    (d)otherwise to assure the owner of such
indebtedness or obligation against loss in respect thereof.

     

    In any
computation of the indebtedness or other liabilities of the obligor under any
Guaranty, the indebtedness or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor.

     

    “Hazardous Materials” means
any and all pollutants, toxic or hazardous wastes or any other substances that
might pose a hazard to health or safety, the removal of which may be required or
the generation, manufacture, refining, production, processing, treatment,
storage, handling, transportation, transfer, use, disposal, release, discharge,
spillage, seepage, or filtration of which is or shall be restricted, prohibited
or penalized by any applicable law (including without limitation asbestos, urea
formaldehyde foam insulation and polychlorinated biphenyls).

     

    “holder” means, with respect
to any Note, the Person in whose name such Note is registered in the register
maintained by the Company pursuant to Section 13.1.

     

    “Indebtedness” with respect
to any Person means, at any time, without duplication,

     

    (a)its liabilities for borrowed money and its
redemption obligations in respect of mandatorily redeemable Preferred
Stock,

     

    (b)its liabilities for the deferred purchase price
of property acquired by such Person (excluding accounts payable arising in the
ordinary course of business and not overdue but including all liabilities
created or arising under any conditional sale or other title retention agreement
with respect to any such property),

     

    (c)its Capitalized Lease Obligations,

     

    (d)all liabilities for borrowed money secured by
any Lien with respect to any property owned by such Person (whether or not it
has assumed or otherwise become liable for such liabilities),

     

    (e)all its liabilities in respect of letters of
credit or instruments serving a similar function issued or accepted for its
account by banks and other financial institutions (whether or not representing
obligations for borrowed money),

     

    (f)Swaps of such Person not entered into for the
purpose of hedging in the ordinary course of business, and

     

    (g)any Guaranty of such Person with respect to
liabilities of a type described in any of clauses (a) through (f)
above.


    
      
        
          B-4

        

         


      

      
         


        
          

        

      

      
         


      

    


     

    Indebtedness
of any Person shall include all obligations of such Person of the character
described in clauses (a) through (g) above to the extent such Person remains
legally liable in respect thereof notwithstanding that any such obligation is
deemed to be extinguished under GAAP.

     

    “Institutional Investor”
means (a) any original purchaser of a Note, (b) any holder of a Note
holding (together with one or more of its Affiliates) more than 2% of the
aggregate principal amount of the Notes then outstanding, and (c) any bank,
trust company, savings and loan association or other financial institution, any
pension plan, any investment company, any insurance company, any broker or
dealer, or any other similar financial institution or entity, regardless of
legal form.

     

    “Lien” means, with respect to
any Person, any mortgage, lien, pledge, charge, security interest or other
encumbrance, or any interest or title of any vendor, lessor, lender or other
secured party to or of such Person under any conditional sale or other title
retention agreement or Capital Lease, upon or with respect to any property or
asset of such Person (including in the case of stock, stockholder agreements,
voting trust agreements and all similar arrangements).

     

    “Make-Whole Amount” is
defined in Section 8.6.

     

    “Material” means material in
relation to the business, operations, affairs, financial condition, assets,
properties or prospects of the Company and its Subsidiaries taken as a
whole.

     

    “Material Adverse Effect”
means a material adverse effect on (a) the business, operations, affairs,
financial condition, assets or properties of the Company and its Subsidiaries
taken as a whole, (b) the ability of the Company to perform its obligations
under this Agreement and the Notes or (c) the validity or enforceability of this
Agreement or the Notes.

     

    “Memorandum” is defined in
Section 5.3.

     

    “Multiemployer Plan” means
any Plan that is a “multiemployer plan” (as such term is defined in
section 4001(a)(3) of ERISA).

     

    “Net Proceeds Amount” means,
with respect to any Disposition by any Person, an amount equal to the difference
of

     

    (a)the aggregate amount of cash received by such
Person in respect of such Disposition at any time (including without limitation
the payment of principal and interest on any promissory note issued to such
Person as consideration for such Disposition or the cash proceeds received upon
the disposition of non-cash consideration received for such Disposition),
minus

     

    (b)the sum of

     

    (i)all ordinary and reasonable out-of-pocket costs
and expenses actually paid in cash by such Person in connection with such
Disposition;


    
      
        
          B-5

        

         


      

      
         


        
          

        

      

      
         


      

    


     

    (ii)all sales, transfer and income taxes
attributable to such Disposition, it being understood that income taxes in
respect of such Disposition (A) shall be determined on a consolidated basis for
the Company and its Subsidiaries, (B) shall be calculated without regard to
any credits, deductions, carryforwards or carrybacks (except to the extent that
any such credits or deductions are attributable to such Disposition), and (C)
shall be computed on the assumption that such Disposition was the only
transaction in which the Company and its Subsidiaries engaged during the period
in respect of which such income taxes are payable; and

     

    (iii)the principal amount of Indebtedness (and
premium thereon, if any) secured by such asset that is required to be paid, and
is paid, by such Person, as a condition to the consummation of such
Disposition.

     

    “Notes” is defined in
Section 1.

     

    “Officer’s Certificate” means
a certificate of a Senior Financial Officer or of any other officer of the
Company whose responsibilities extend to the subject matter of such
certificate.

     

    “PBGC” means the Pension
Benefit Guaranty Corporation referred to and defined in ERISA or any successor
thereto.

     

    “Person” means an individual,
partnership, corporation, limited liability company, association, trust,
unincorporated organization, or a government or agency or political subdivision
thereof.

     

    “Plan” means an “employee
benefit plan” (as defined in section 3(3) of ERISA) that is or, within the
preceding five years, has been established or maintained, or to which
contributions are or, within the preceding five years, have been made or
required to be made, by the Company or any ERISA Affiliate or with respect to
which the Company or any ERISA Affiliate may have any liability.

     

    “Preferred Stock” means any
class of capital stock of a corporation that is preferred over any other class
of capital stock of such corporation as to the payment of dividends or the
payment of any amount upon liquidation or dissolution of such
corporation.

     

    “Priority Debt” is defined in
Section 10.3.

     

    “property” or “properties” means, unless
otherwise specifically limited, real or personal property of any kind, tangible
or intangible, inchoate or otherwise.

     

    “PTE” is defined in
Section 6.2.

     

    “Purchaser” is defined in the
first paragraph of this Agreement.


    
      
        
          B-6

        

         


      

      
         


        
          

        

      

      
         


      

    


     

    “QPAM Exemption” means
Prohibited Transaction Class Exemption 84-14 issued on March 13, 1984
by the United States Department of Labor.

     

    “Required Holders” means, at
any time, the holder or holders of at least 51% in unpaid principal amount of
the Notes at the time outstanding (exclusive of Notes then owned by the Company
or any of its Affiliates).

     

    “Responsible Officer” means
any Senior Financial Officer and any other officer of the Company with
responsibility for the administration of the relevant portion of this
Agreement.

     

    “Sale and Leaseback Transaction”
is defined in Section 10.4.

     

    “Securities Act” means the
Securities Act of 1933, as amended from time to time.

     

    “Senior Financial Officer”
means the chief financial officer, principal accounting officer, treasurer or
comptroller of the Company.

     

    “Significant Subsidiary”
means, at any date, any Subsidiary that accounts for more than 5% of the
consolidated assets of the Company and its Subsidiaries on such date or
accounted for more than 5% of the consolidated revenue of the Company and its
Subsidiaries for the fiscal year ending on or immediately prior to such
date.

     

    “Subsidiary” means, as to any
Person, any corporation, association or other business entity in which such
Person or one or more of its Subsidiaries or such Person and one or more of its
Subsidiaries owns sufficient equity or voting interests to enable it or them (as
a group) ordinarily, in the absence of contingencies, to elect a majority of the
directors (or Persons performing similar functions) of such entity, and any
partnership or joint venture if more than a 50% interest in the profits or
capital thereof is owned by such Person or one or more of its Subsidiaries or
such Person and one or more of its Subsidiaries (unless such partnership can and
does ordinarily take major business actions without the prior approval of such
Person or one or more of its Subsidiaries).  Unless the context
otherwise clearly requires, any reference to a “Subsidiary” is a reference to a
Subsidiary of the Company.

     

    “Swaps” means, with respect
to any Person, payment obligations with respect to interest rate swaps, currency
swaps and similar obligations obligating such Person to make payments, whether
periodically or upon the happening of a contingency.  For the purposes
of this Agreement, the amount of the obligation under any Swap shall be the
amount determined in respect thereof as of the end of the then most recently
ended fiscal quarter of such Person, based on the assumption that such Swap had
terminated at the end of such fiscal quarter, and in making such determination,
if any agreement relating to such Swap provides for the netting of amounts
payable by and to such Person thereunder or if any such agreement provides for
the simultaneous payment of amounts by and to such Person, then in each such
case, the amount of such obligation shall be the net amount so
determined.

     

    “UIL Holdings” means UIL
Holdings Corporation, a Connecticut corporation.


    
      
        
          B-7

        

         


      

      
         


        
          

        

      

      
         


      

    


     

    “USA Patriot Act” means
United States Public Law 107-56, Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism (USA Patriot Act) Act of
2001, as amended from time to time, and the rules and regulations promulgated
thereunder from time to time in effect.

     

    “Voting Stock” means, with
respect to any Person, any shares of stock or other equity interests of any
class or classes of such Person whose holders are entitled under ordinary
circumstances (irrespective of whether at the time stock or other equity
interests of any other class or classes shall have or might have voting power by
reason of the happening of any contingency) to vote for the election of a
majority of the directors, managers, trustees or other governing body of such
Person.

     

    “Wholly-Owned Subsidiary”
means, at any time, any Subsidiary all of the equity interests (except
directors’ qualifying shares) and voting interests of which are owned by any one
or more of the Company and the Company’s other Wholly-Owned Subsidiaries at such
time.

     

    



    
      
        
          B-8

        

         


      

      
         


        
          

        

      

      
         


      

    

    


    [Form
of Note]

    


    The
United Illuminating Company

     

    5.61%
Senior Note, due March 10, 2025

     

    
      	
               
      

            	
              No.
      R-[_____]New York, New York

            


    

     

    
      	
               
      

            	
              $[_______][Date]

            


    

     

    
      	
               
      

            	
              PPN:  910637
      R*0

            


    

     

     

    For Value Received, the
undersigned, The United
Illuminating Company (the “Company”), a Connecticut
corporation, hereby promises to pay to _____________________, or registered
assigns, the principal sum of ___________________ Dollars ($_________) on
March 10, 2025, with interest (computed on the basis of a 360-day year of
twelve 30-day months) (a) from the date hereof on the unpaid balance
thereof at the rate of 5.61% per annum, payable semiannually on March 10
and September 10 in each year, commencing with March 10, 2010, and
(b) on any overdue payment of principal, any overdue payment of interest
and any overdue payment of any premium or Make-Whole Amount (as defined in the
Note Purchase Agreement referred to below), payable semiannually as aforesaid
(or, at the option of the registered holder hereof, on demand) at a rate per
annum from time to time equal to the greater of (i) 7.61% and (ii) 2% above
the rate of interest publicly announced by Citibank, N.A. from time to time at
its principal office in New York, New York as its prime or base
rate.

     

    Payments
of principal of, interest on and any Make-Whole Amount with respect to this Note
are to be made in lawful money of the United States of America at said principal
office of Citibank, N.A. in New York, New York or at such other place as the
Company shall have designated by written notice to the holder of this Note as
provided in the Note Purchase Agreement referred to below.

     

    This Note
is one of the 5.61% Senior Notes due March 10, 2025 issued pursuant to a
Note Purchase Agreement dated as of December 10, 2009 (as from time to time
amended, the “Note Purchase
Agreement”) between the Company and the several Purchasers named therein
and is entitled to the benefits thereof.  Each holder of this Note
will be deemed, by its acceptance hereof, (i) to have agreed to the
confidentiality provisions set forth in Section 20 of the Note Purchase
Agreement and (ii) to have made the representations set forth in Section 6
of the Note Purchase Agreement.

     

    This Note
is a registered Note and, as provided in the Note Purchase Agreement, upon
surrender of this Note for registration of transfer accompanied by a written
instrument of transfer duly executed by the registered holder hereof or such
holder’s attorney duly authorized in writing, a new Note for a like principal
amount will be issued to, and registered in the name of, the
transferee.  Prior to due presentment for registration of transfer,
the Company may treat the person in whose name this Note is registered as the
owner hereof for the purpose of receiving payment and for all other purposes,
and the Company will not be affected by any notice to the contrary.

    


    
      
        
          
            Exhibit
1

            


          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


     

    


     

    This Note
is subject to optional prepayments of principal in whole or from time to time in
part, at the times and on the terms specified in the Note Purchase Agreement,
but not otherwise.

     

    If an
Event of Default, as defined in the Note Purchase Agreement, occurs and is
continuing, the principal of this Note may be declared or otherwise become due
and payable in the manner, at the price (including any applicable premium or
Make-Whole Amount) and with the effect provided in the Note Purchase
Agreement.

     

    This Note
shall be construed and enforced in accordance with, and the rights of the holder
hereof shall be governed by, the laws of the State of New York, excluding
choice-of-law principles of the law of such State that would require the
application of the laws of a jurisdiction other than such State.

     

    
      	
               
      

            	
              The
      United Illuminating Company

            


    

     

    
      	
               
      

            	
              By                    

            


    

    
      	
               
      

            	
              Title:

            


    

    


    
      
        
          
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