UIL Exhibit 10.35 - Severance and Release Agreement


    EXHIBIT
      10.35

     

    SEVERANCE
      AND RELEASE AGREEMENT

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

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

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

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

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

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


    
      
         

         

      

      
         

        
          

        

      

      
         

      

    


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

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

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

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

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


    
      
         

         

      

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

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

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

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

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

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



    
      
         

         

      

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

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

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

    2. Post-Termination
      Group Health Insurance. 

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


    
      
         

         

      

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

    3. Communications.

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

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



    
      
         

         

      

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

    4. Release
      and Covenant Not to Sue.
      

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

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


    
      
         

         

      

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

     

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

     

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

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


    
      
         

         

      

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

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

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

    6. Miscellaneous
      Provisions.
      

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


    
      
         

         

      

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

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


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


    
      
         

         

      

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

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

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

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

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


    
      
         

         

      

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

     

    
      
        


        
          	 	 	 	
                  /s/
                    Louis J. Paglia    

                
	 	 	 	
                  LOUIS
                    J. PAGLIA

                
	
                  Date:

                	
                  April
                    10, 2006

                	 	 


        

        


        
          	 	 	
                  UIL
                    HOLDINGS CORPORATION.

                
	 	 	 
	 	 	
                  /s/
                    Nathaniel D. Woodson            

                
	
                  /s/
                    Angel A. Bruno

                	 	
                  By
                    Nathaniel D. Woodson

                
	
                  Witness

                	 	
                  Its
                    Chairman and Chief Executive Officer

                
	 	 	
                  Date:
                    4/10/06