uil_exh10-40.htm


    EXHIBIT
10.40

    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    UIL
HOLDINGS CORPORATION

    


    2008
STOCK AND INCENTIVE COMPENSATION PLAN

    


    


    


    


    


    


    


    


    


    


    


    


    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


     UIL
HOLDINGS CORPORATION

    


    2008
STOCK AND INCENTIVE COMPENSATION PLAN

    


    


    


    
      	 
      	 
      	
              Page

            
	
              1.

            	
              Purpose

            	
                     1

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	
              2.

            	
              Definitions

            	
                     1

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	
              3.

            	
              Administration

            	
                     3

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	
              4.

            	
              Stock
      Subject to Plan

            	
                     4

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	
              5.

            	
              Eligibility;
      Per-Person Award Limitations

            	
                     5

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	
              6.

            	
              Specific
      Terms of Awards

            	
                     5

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	
              7.

            	
              Performance
      Awards

            	
                     8

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	
              8.

            	
              Certain
      Provisions Applicable to Awards

            	
                    12

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	
              9.

            	
              Additional
      Award Forfeiture Provisions

            	
                    12

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	
              10.

            	
              General
      Provisions

            	
                    13

            


    


    
      
         


      

      
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    UIL
HOLDINGS CORPORATION

    


    2008
STOCK AND INCENTIVE COMPENSATION PLAN

    


    1.        Purpose.  The
purpose of this 2008 Stock and Incentive Compensation Plan (the "Plan") is to
enable UIL Holdings Corporation, a Connecticut corporation (together with its
successors and assigns, the "Corporation") and its Subsidiaries (individually
and collectively, with the Corporation, the “Company”) to attract, retain and
reward outstanding directors and managerial employees, provide them with
equitable and competitive compensation opportunities, recognize individual
contributions and reward achievement of Company goals, and promote the creation
of long-term value for shareowners by closely aligning the interests of
Participants with those of the Corporation’s shareowners.  The Plan
authorizes stock-based and cash-based incentives for Participants.

     

    2.           Definitions.  In
addition to the terms defined in Section 1 above and elsewhere in the Plan, the
following capitalized terms used in the Plan have the respective meanings set
forth in this Section:

     

    (a)           "Annual
Incentive Award" means a type of Performance Award granted to a Participant
under Section 7(c) representing a conditional right to receive cash, Stock or
other Awards or payments, as determined by the Committee, based on performance
in a performance period of one fiscal year or a portion thereof.

     

    (b)           "Annual
Limit" shall have the meaning specified in Section 5(b).

     

    (c)           "Award"
means any Option, SAR, Stock, Restricted Stock, Stock granted as a bonus or in
lieu of another award, Dividend Equivalent, Other Stock-Based Award, or
Performance Award or Annual Incentive Award, together with any related right or
interest, granted to a Participant under the Plan.

     

    (d)           "Beneficiary"
means the legal representatives of the Participant's estate entitled by will or
the laws of descent and distribution to receive the benefits under a
Participant's Award upon a Participant's death, provided that, if and to the
extent authorized by the Committee, a Participant may be permitted to designate
a Beneficiary, in which case the "Beneficiary" instead will be the person or
persons (including individuals who survive the Participant, and trusts) which
have been designated by the Participant in his or her most recent written and
duly filed beneficiary designation to receive the benefits specified under the
Participant's Award upon such Participant's death.

     

    (e)           "Board"
means, except as otherwise expressly provided, the Corporation’s Board of
Directors.

     

    (f)           “Change
in Control” means, unless otherwise expressly provided in a given Award, a
Change in Control as defined for purposes of the UIL Holdings Corporation Change
in Control Severance Plan II.

    


    (g)           "Code"
means the Internal Revenue Code of 1986, as amended.  References to
any provision of the Code or regulation thereunder shall include any successor
provisions and regulations, and reference to regulations includes any applicable
guidance or pronouncement of the Department of the Treasury and Internal Revenue
Service.

     

    (h)           "Committee"
means, except as otherwise expressly provided, the Compensation and Executive
Development Committee of the Board (or a designated successor to such
committee), the composition and governance of which is established in the
Committee's Charter as approved from time to time by the Board and subject to
other corporate governance documents of the
Company.   Notwithstanding the foregoing, no action of the
Committee shall be void or deemed to be without authority due to the failure of
any member, at the time the action was taken, to meet any qualification standard
set forth in the Committee’s charter or this Plan.  The full Board may
perform any function of the Committee hereunder (except to the extent limited
under applicable New York Stock Exchange rules), in which case the term
"Committee" shall refer to the Board.

     

    
      
         


      

      
        
        

        
          

        

      

      
         


      

    

     

    (i)           "Covered
Employee" means an Eligible Person who is a Covered Employee as specified in
Section 10(j).

     

    (j)           "Dividend
Equivalent" means a right, granted under this Plan, to receive cash, Stock,
other Awards or other property equal in value to all or a specified portion of
the dividends paid with respect to a specified number of shares of
Stock.

     

    (k)           "Effective
Date" means the effective date specified in Section 10(p).

     

    (l)           "Eligible
Person" has the meaning specified in Section 5.

     

    (m)           "Exchange
Act" means the Securities Exchange Act of 1934, as
amended.  References to any provision of the Exchange Act or rule
(including a proposed rule) thereunder shall include any successor provisions
and rules.

     

    (n)           "Fair
Market Value" means the fair market value of Stock, Awards or other property as
determined in good faith by the Committee or under procedures established by the
Committee.  Unless otherwise determined by the Committee, the Fair
Market Value of Stock on a given day shall be the average of the high and low
sales prices of the Stock on the date on which it is to be valued hereunder as
reported for New York Stock Exchange -- Composite Transactions.  Fair
Market Value relating to the exercise price or base price of any Non-409A Option
or SAR and relating to the market value of Stock measured at the time of
exercise shall conform to requirements under Code Section 409A.

     

    (o)           "409A
Awards" means Awards that constitute a deferral of compensation under Code
Section 409A and regulations thereunder.  "Non-409A Awards" means
Awards other than 409A Awards.  Although the Committee retains
authority under the Plan to grant Options, SARs and Restricted Stock on terms
that will qualify those Awards as 409A Awards, Options, SARs, and Restricted
Stock are intended to be Non-409A Awards unless otherwise expressly specified by
the Committee.

     

    (p)           “Governance
Committee” means the Governance Committee of the Board (or a designated
successor to such committee).

     

    (q)           "Incentive
Stock Option" or "ISO" means any Option designated as an incentive stock option
within the meaning of Code Section 422 and qualifying thereunder.

     

    (r)           "Option"
means a right to purchase Stock granted under Section 6(b).

     

    (s)           "Other
Stock-Based Awards" means Awards granted to a Participant under Section
6(h).

     

    (t)           "Participant"
means a person who has been granted an Award under the Plan which remains
outstanding, including a person who is no longer an Eligible
Person.

     

    (u)           "Performance
Award" means a conditional right, granted to a Participant under Sections 6(i)
or 7, to receive cash, Stock or other Awards or payments.

     

    (v)           “Preeexisting
Plan” means the UIL Holdings Corporation 1999 Amended and Restated Stock
Plan.

     

    (w)           "Restricted
Stock" means Stock granted under this Plan which is subject to certain
restrictions and to a risk of forfeiture.

     

    (x)           "Stock"
means the Corporation's Common Stock, without par value , and any other equity
securities of the Corporation that may be substituted or resubstituted for Stock
pursuant to Section 10(c).

     

    (y)           "Stock
Appreciation Rights" or "SAR" means a right granted to a Participant under
Section 6(c).

     

    (z)           “Subsidiary”
or “Subsidiaries” means The United Illuminating Company and/or any other entity
that is owned directly or indirectly by the Corporation such that it would
constitute a member of a controlled group of corporations with the Corporation
or a trade or business under common control with the Corporation within the
meaning of Code Section 414(b) or Section 414(c).

     

    
      
         


      

      
        
        

        
          

        

      

      
         


      

    

     

    3.           Administration.

     

    (a)           Authority of the
Committee.  The Plan shall be administered by the Committee,
which shall have full and final authority, in each case subject to and
consistent with the provisions of the Plan, to select Eligible Persons to become
Participants; to grant Awards; to determine the type and number of Awards, the
dates on which Awards may be exercised, whether such Awards may be deferred, the
dates on which the risk of forfeiture or deferral period relating to Awards
shall lapse or terminate, the acceleration of any such dates (including upon a
Change in Control), the expiration date of any Award, whether, to what extent,
and under what circumstances an Award may be settled, or the exercise price of
an Award may be paid, in cash, Stock, other Awards, or other property, and other
terms and conditions of, and all other matters relating to, Awards; to prescribe
documents evidencing or setting terms of Awards (such Award documents need not
be identical for each Participant or each Award), amendments thereto, and rules
and regulations for the administration of the Plan and amendments thereto; to
construe and interpret the Plan and Award documents and correct defects, supply
omissions or reconcile inconsistencies therein; and to make all other decisions
and determinations as the Committee may deem necessary or advisable for the
administration of the Plan.  Decisions of the Committee with respect
to the administration and interpretation of the Plan shall be final, conclusive,
and binding upon all persons interested in the Plan, including Participants,
Beneficiaries, transferees under Section 10(b) and other persons claiming rights
from or through a Participant, and shareowners.  The foregoing
notwithstanding, in accordance with the recommendations of the Governance
Committee, the Board shall perform the functions of the Committee for purposes
of granting Awards under the Plan to non-employee directors (the administrative
functions of the Committee with respect to other aspects of non-employee
director awards is not exclusive to the Board, however).

     

    (b)           Manner of
Exercise of Committee Authority.  The express grant of any
specific power to the Committee, and the taking of any action by the Committee,
shall not be construed as limiting any power or authority of the
Committee.  The Committee may act through subcommittees, including for
purposes of perfecting exemptions under Rule 16b-3 or qualifying Awards under
Code Section 162(m) as performance-based compensation, in which case the
subcommittee shall be subject to and have authority under the charter applicable
to the Committee, and the acts of the subcommittee shall be deemed to be acts of
the Committee hereunder.  The Committee may delegate to officers or
managers of the Corporation or any Subsidiary, or committees thereof, the
authority, subject to such terms as the Committee shall determine, to perform
such functions, including administrative functions, as the Committee may
determine, to the extent that such delegation (i) will not result in the loss of
an exemption under Rule 16b-3(d) for Awards granted to Participants subject to
Section 16 of the Exchange Act in respect of the Corporation, (ii) will not
cause Awards intended to qualify as "performance-based compensation" under Code
Section 162(m) to fail to so qualify, (iii) will not result in a related-person
transaction with an executive officer required to be disclosed under Item 404(a)
of Regulation S-K (in accordance with Instruction 5.a.ii thereunder) under the
Exchange Act, and (iv) is permitted under applicable provisions of the
Connecticut Business Corporation Act.

     

    (c)           Limitation of
Liability.  The Committee and each member thereof, and any
person acting pursuant to authority delegated by the Committee, shall be
entitled, in good faith, to rely or act upon any report or other information
furnished by any executive officer, other officer or employee of the Corporation
or a Subsidiary, the Corporation's independent auditors, consultants or any
other agents assisting in the administration of the Plan.  Members of
the Committee, any person acting pursuant to authority delegated by the
Committee, and any officer or employee of the Corporation or a Subsidiary acting
at the direction or on behalf of the Committee or a delegee shall not be
personally liable for any action or determination taken or made in good faith
with respect to the Plan, and shall, to the extent permitted by law, be fully
indemnified and protected by the Corporation with respect to any such action or
determination.

     

    4.           Stock Subject To
Plan.

     

    (a)           Overall Number of
Shares Available for Delivery.  The total number of shares of
Stock reserved and available for delivery in connection with Awards under the
Plan shall be (i) 550,000 shares, plus (ii) the
number of shares that, immediately prior to the Effective Date, remain available
for new awards under the Preexisting Plan; provided, however, that the total
number of shares with respect to which ISOs may be granted shall not exceed the
number specified under clause (i) above.  Any shares of Stock
delivered under the Plan shall consist of authorized and unissued
shares.  


    
      
         


      

      
        
        

        
          

        

      

      
         


      

    


    (b)           Share Counting
Rules.  The Committee may adopt reasonable counting procedures
to ensure appropriate counting, avoid double counting (as, for example, in the
case of tandem or substitute awards) and make adjustments in accordance with
this Section 4(b).  Shares shall be counted against those reserved to
the extent such shares have been delivered and are no longer subject to a risk
of forfeiture.  Accordingly, (i) to the extent that an Award under the
Plan, in whole or in part, is canceled, expired, forfeited, settled in cash,
settled by delivery of fewer shares than the number underlying the Award, or
otherwise terminated without delivery of shares to the Participant, the shares
retained by or returned to the Corporation will not be deemed to have been
delivered under the Plan; and (ii) shares that are withheld from such an Award
or separately surrendered by the Participant in payment of the exercise price or
taxes relating to such an Award shall be deemed to constitute shares not
delivered and will be available under the Plan.  The Committee may
determine that Awards may be outstanding that relate to more shares than the
aggregate remaining available under the Plan so long as Awards will not in fact
result in delivery and vesting of shares in excess of the number then available
under the Plan.  In addition, in the case of any Award granted in
assumption of or in substitution for an award of a company or business acquired
by the Corporation or a Subsidiary or with which the Corporation or a Subsidiary
combines, shares delivered or deliverable in connection with such assumed or
substitute Award shall not be counted against the number of shares reserved
under the Plan.

     

    5.           Eligibility; Per-Person Award
Limitations.

     

    (a)           Eligibility.  Awards
may be granted under the Plan only to Eligible Persons.  For purposes
of the Plan, an "Eligible Person" means (i) an employee of the Corporation or
any Sub­sid­iary, including any executive officer or employee director
of the Corporation or a Sub­sidiar­y, (ii) any person who has been
offered employment by the Corporation or a Subsidiary, provided that such
prospective employee may not receive any payment or exercise any right relating
to an Award until such person has commenced employment with the Corporation or a
Subsidiary, and (iii) any non-employee director of the Corporation or a
Subsidiary.  An employee on leave of absence may be considered as
still in the employ of the Corporation or a Subsidiary for purposes of
eligibility for participation in the Plan.

     

    (b)           Per-Person Award
Limitations.  In each calendar year during any part of which
the Plan is in effect, an Eligible Person may be granted Awards intended to
qualify as "performance-based compensation" under Code Section 162(m) under the
Plan relating to up to his or her Annual Limit.  A Participant's
Annual Limit, in any year during any part of which the Participant is then
eligible under the Plan, shall equal 250,000 shares plus the amount
of the Participant's unused Annual Limit relating to the same type of Award as
of the close of the previous year, subject to adjustment as provided in Section
10(c).  In the case of an Award which is not valued in a way in which
the limitation set forth in the preceding sentence would operate as an effective
limitation satisfying applicable law (including Treasury Regulation
1.162-27(e)(4)), an Eligible Person may not be granted Awards authorizing the
earning during any calendar year of an amount that exceeds the Eligible Person's
Annual Limit, which for this purpose shall equal $5 million plus the amount of
the Eligible Person's unused cash Annual Limit as of the close of the previous
year (this limitation is separate and not affected by the number of Awards
granted during such calendar year subject to the limitation in the preceding
sentence).  For this purpose, (i) "earning" means satisfying
performance conditions so that an amount becomes payable, without regard to
whether it is to be paid currently or on a deferred basis or continues to be
subject to any service requirement or other non-performance condition, (ii) a
Participant's Annual Limit is used to the extent an amount or number of shares
may be potentially earned or paid under an Award (at the maximum designated
amount for such Awards), regardless of whether such amount or shares are in fact
earned or paid, and (iii) the Annual Limit applies to Dividend Equivalents under
Section 6(g) only if such Dividend Equivalents are granted separately from and
not as a feature of another Award.

     

    6.           Specific Terms Of
Awards.

     

    (a)           General.  Awards
may be granted on the terms and conditions set forth in this Section
6.  In addition, the Committee may impose on any Award or the exercise
thereof, at the date of grant or thereafter (subject to Sections 10(e) and
10(k)), such additional terms and conditions, not inconsistent with the
provisions of the Plan, as the Committee shall determine, including terms
requiring forfeiture of Awards in the event of termination of employment or
service by the Participant and terms permitting a Participant to make elections
relating to his or her Award.  The Committee shall retain full power
and discretion with respect to any term or condition of an Award that is not
mandatory under the Plan, subject to Section 10(k) and the terms of
the  Award agreement.  The Committee may require payment of
consideration for an Award except as limited by the Plan.

     

    
      
         


      

      
        
        

        
          

        

      

      
         


      

    

     

    (b)           Options.  The
Committee is authorized to grant Options to Participants on the following terms
and conditions:

     

    
      	
               
      

            	
              (i)

            	
              Exercise
      Price.  The exercise price per share of Stock purchasable under
      an Option (including both ISOs and non-qualified Options) shall be
      determined by the Committee, provided that such exercise price shall be
      not less than the Fair Market Value of a share of Stock on the date of
      grant of such Option, subject to Section 8(a).  Notwithstanding
      the foregoing, any substitute award granted in assumption of or in
      substitution for an outstanding award granted by a company or business
      acquired by the Corporation or a Subsidiary or with which the Corporation
      or a Subsidiary combines may be granted with an exercise price per share
      of Stock other than as required above.  No adjustment will be
      made for a dividend or other right for which the record date is prior to
      the date on which the stock is issued, except as provided in Section 10(c)
      of the Plan.

            


    

     

    
      	
               
      

            	
              (ii)

            	
              Option
      Term; Time and Method of Exercise.  The Committee shall
      determine the term of each Option, provided that in no event shall the
      term of any Option exceed a period of ten years from the date of
      grant.  The Committee shall determine the time or times at which
      or the circumstances under which an Option may be exercised in whole or in
      part (including based on achievement of performance goals and/or future
      service requirements), the methods by which such exercise price may be
      paid or deemed to be paid and the form of such payment (subject to
      Sections 10(k) and 10(l)), including, without limitation, cash, Stock
      (including by withholding Stock deliverable upon exercise), other Awards
      or awards granted under other plans of the Corporation or any Subsidiary
      or other property (including through broker-assisted "cashless exercise"
      arrangements, to the extent permitted by applicable law), and the methods
      by or forms in which Stock will be delivered or deemed to be delivered in
      satisfaction of Options to Participants (including, in the case of 409A
      Awards, deferred delivery of shares subject to the Option, as mandated by
      the Committee, with such deferred shares subject to any vesting,
      forfeiture or other terms as the Committee may
  specify).

            


    

     

    
      	
               
      

            	
              (iii)

            	
              ISOs.  The
      terms of any ISO granted under the Plan shall comply in all respects with
      the provisions of Code Section 422.

            


    

     

    (c)           Stock
Appreciation Rights.  The Committee is authorized to grant SARs
to Participants on the following terms and conditions:

     

    
      	
               
      

            	
              (i)

            	
              Right
      to Payment.  A SAR shall confer on the Participant to whom it is
      granted a right to receive, upon exercise thereof, the excess of (A) the
      Fair Market Value of one share of Stock on the date of exercise over (B)
      the grant price of the SAR as determined by the Committee but which in any
      event shall be not less than the Fair Market Value of a share of Stock on
      the date of grant of the SAR, subject to Section
  8(a).

            


    

     

    
      	
               
      

            	
              (ii)

            	
              Other
      Terms.  The Committee shall determine the term of each SAR,
      provided that in no event shall the term of a SAR exceed a period of ten
      years from the date of grant.  The Committee shall determine at
      the date of grant or thereafter, the time or times at which and the
      circumstances under which a SAR may be exercised in whole or in part
      (including based on achievement of performance goals and/or future service
      requirements), the method of exercise, method of settlement, form of
      consideration payable in settlement, method by or forms in which Stock
      will be delivered or deemed to be delivered to Participants, whether or
      not a SAR shall be free-standing or in tandem or combination with any
      other Award, and whether or not the SAR will be a 409A Award or Non-409A
      Award.  Limited SARs that may only be exercised in connection
      with a Change in Control or termination of service following a Change in
      Control as specified by the Committee may be granted on such terms, not
      inconsistent with this Section 6(c), as the Committee may
      determine.  The Committee may require that an outstanding Option
      be exchanged for a SAR exercisable for Stock having vesting, expiration,
      and other terms substantially the same as the Option, so long as such
      exchange will not result in additional accounting expense to the
      Corporation.

            


    

     

    
      
         


      

      
        
        

        
          

        

      

      
         


      

    


    (d)           Stock.  The
Committee is authorized to grant Awards of Stock, including Awards which provide
that Stock will be issued and delivered at a future date (including, but not
limited to, Awards of Performance Shares and Awards of Stock, Performance Shares
and Restricted Stock which may be deferred in the form of stock units pursuant
to the terms of the UIL Holdings Deferred Compensation Plan or other deferred
compensation plan or arrangement of the Corporation).  Such Awards may
be subject to restrictions on transferability, dividend equivalents and
deferral, a risk of forfeiture, and other conditions and restrictions, if any,
as the Committee may impose.

     

    (e)           Restricted
Stock.  The Committee is authorized to grant Restricted Stock
to Participants on the following terms and conditions:

     

    
      	
               
      

            	
              (i)

            	
              Grant
      and Restrictions.  Restricted Stock shall be subject to such
      restrictions on transferability, risk of forfeiture and other
      restrictions, if any, as the Committee may impose, which restrictions may
      lapse separately or in combination at such times, under such circumstances
      (including based on achievement of performance goals and/or future service
      requirements), in such installments or otherwise and under such other
      circumstances as the Committee may determine at the date of grant or
      thereafter.  Except to the extent restricted under the terms of
      the Plan and any Award document relating to the Restricted Stock, a
      Participant granted Restricted Stock shall have all of the rights of a
      shareowner, including the right to vote the Restricted Stock and the right
      to receive dividends thereon (subject to any mandatory reinvestment or
      other requirement imposed by the
Committee).

            


    

     

    
      	
               
      

            	
              (ii)

            	
              Forfeiture.  Except
      as otherwise determined by the Committee, upon termination of employment
      or service during the applicable restriction period, Restricted Stock that
      is at that time subject to restrictions shall be forfeited and reacquired
      by the Corporation; provided that the Committee may provide, by rule or
      regulation or in any Award document, or may determine in any individual
      case, that restrictions or forfeiture conditions relating to Restricted
      Stock will lapse in whole or in part, including in the event of
      terminations resulting from specified
causes.

            


    

     

    
      	
               
      

            	
              (iii)

            	
              Certificates
      for Stock.  Restricted Stock granted under the Plan may be
      evidenced in such manner as the Committee shall determine.  If
      certificates representing Restricted Stock are registered in the name of
      the Participant, the Committee may require that such certificates bear an
      appropriate legend referring to the terms, conditions and restrictions
      applicable to such Restricted Stock, that the Corporation retain physical
      possession of the certificates, and that the Participant deliver a stock
      power to the Corporation, endorsed in blank, relating to the Restricted
      Stock.

            


    

     

    
      	
               
      

            	
              (iv)

            	
              Dividends
      and Splits.  As a condition to the grant of an Award of
      Restricted Stock, the Committee may require that any dividends paid on a
      share of Restricted Stock shall be either (A) paid with respect to such
      Restricted Stock at the dividend payment date in cash, in kind, or in a
      number of shares of unrestricted Stock having a Fair Market Value equal to
      the amount of such dividends, or (B) automatically reinvested in
      additional Restricted Stock or held in kind, which shall be subject to the
      same terms as applied to the original Restricted Stock to which it
      relates, or (C) deferred as to payment, either as a cash deferral or with
      the amount or value thereof automatically deemed reinvested in deferred
      stock units, other Awards or other investment vehicles, subject to such
      terms as the Committee shall determine or permit a Participant to
      elect.  Unless otherwise determined by the Committee, Stock
      distributed in connection with a Stock split or Stock dividend, and other
      property distributed as a dividend, shall be subject to restrictions and a
      risk of forfeiture to the same extent as the Restricted Stock with respect
      to which such Stock or other property has been
  distributed.

            


    

     

    (f)           Bonus Stock and
Awards in Lieu of Obligations.  The Committee is authorized to
grant to Participants Stock as a bonus, or to grant Stock or other Awards in
lieu of obligations of the Corporation or a Subsidiary to pay cash or deliver
other property under the Plan or under other plans or compensatory arrangements,
subject to such terms as shall be determined by the Committee.

     

    (g)           Dividend
Equivalents.  The Committee is authorized to grant Dividend
Equivalents to a Participant, which may be awarded on a free-standing basis or
in connection with another Award.  The Committee may provide that
Dividend Equivalents shall be paid or distributed when accrued or shall be
deemed to have been

     


    
      
         


      

      
        
        

        
          

        

      

      
         


      

    

     

    reinvested
in additional Stock, Awards, or other investment vehicles, and subject to
restrictions on transferability, risks of forfeiture and such other terms as the
Committee may specify.

     

    (h)           Other Stock-Based
Awards.  The Committee is authorized, subject to limitations
under applicable law, to grant to Participants such other Awards that may be
denominated or payable in, valued in whole or in part by reference to, or
otherwise based on, or related to, Stock or factors that may influence the value
of Stock, including, without limitation, convertible or exchangeable debt
securities, other rights convertible or exchangeable into Stock, purchase rights
for Stock, Awards with value and payment contingent upon performance of the
Corporation, a Subsidiary or business units thereof or any other factors
designated by the Committee, and Awards valued by reference to the book value of
Stock or the value of securities of or the performance of specified subsidiaries
or other business units.  The Committee shall determine the terms and
conditions of such Awards.  Stock delivered pursuant to an Award in
the nature of a purchase right granted under this Section 6(h) shall be
purchased for such consideration, paid for at such times, by such methods, and
in such forms, including, without limitation, cash, Stock, other Awards, notes,
or other property, as the Committee shall determine.  Cash awards, as
an element of or supplement to any other Award under the Plan, may also be
granted pursuant to this Section 6(h).

     

    (i)           Performance
Awards.  Performance Awards, denominated in cash or in Stock or
other Awards, may be granted by the Committee in accordance with Section
7.  A Performance Award denominated in shares shall constitute an
Award authorized under Sections 6(b) - 6(h) to which performance conditions have
been attached under Section 7.

     

    7.           Performance
Awards.

     

    (a)           Performance
Awards Generally.  Performance Awards may be denominated as a
cash amount, number of shares of Stock, or specified number of other Awards (or
a combination) which may be earned upon achievement or satisfaction of
performance conditions specified by the Committee.  In addition, the
Committee may specify that any other Award shall constitute a Performance Award
by conditioning the right of a Participant to exercise the Award or have it
settled, and the timing thereof, upon achievement or satisfaction of such
performance conditions as may be specified by the Committee.  The
Committee may use such business criteria and other measures of performance as it
may deem appropriate in establishing any performance conditions, and may
exercise its discretion to reduce or increase the amounts payable under any
Award subject to performance conditions, except as limited under Sections 7(b)
in the case of a Performance Award intended to qualify as "performance-based
compensation" under Code Section 162(m).

     

    (b)           Performance
Awards Granted to Covered Employees.  If the Committee
determines that a Performance Award to be granted to an Eligible Person who is
designated by the Committee as likely to be a Covered Employee should qualify as
"performance-based compensation" for purposes of Code Section 162(m), the grant,
exercise and/or settlement of such Performance Award shall be contingent upon
achievement of a preestablished performance goal and other terms set forth in
this Section 7(b).

     

    
      	
               
      

            	
              (i)

            	
              Performance
      Goal Generally.  The performance goal for such Performance
      Awards shall consist of one or more business criteria and a targeted level
      or levels of performance with respect to each of such criteria, as
      specified by the Committee consistent with this Section
      7(b).  The performance goal shall be objective and shall
      otherwise meet the requirements of Code Section 162(m) and regulations
      thereunder, including the requirement that the level or levels of
      performance targeted by the Committee result in the achievement of
      performance goals being "substantially uncertain." The Committee may
      determine that such Performance Awards shall be granted, exercised and/or
      settled upon achievement of any one performance goal or that two or more
      of the performance goals must be achieved as a condition to grant,
      exercise and/or settlement of such Performance
      Awards.  Performance goals may differ for Performance Awards
      granted to any one Participant or to different
    Participants.

            


    

     

    
      	
               
      

            	
              (ii)

            	
              Business
      Criteria.  One or more of the following business criteria for
      the Corporation, the Company, on a consolidated basis, and/or for any
      specified Subsidiary or other business unit of the Company (alone or in
      combination), shall be used by the Committee in establishing performance
      goals for such Performance
Awards:

            


    


    
      
         


      

      
        
        

        
          

        

      

      
         


      

    


    (i) net
income;

    (ii)
earnings, before or after income taxes;

    (iii)
earnings per share;

    (iv)
pre-tax operating income;

    (v)
expense management;

    (vi)
profitability, including profitability of an identifiable business unit or
product;

    (vii)
revenue;

    (viii)
shareowner value creation measures, including but not limited to stock price or
total shareowner return;

    (ix)
return measures, including return on assets (gross or net), return on
investment, return on capital, or return on equity;

    (x) cash
flow, free cash flow, cash flow return on investment (discounted or otherwise),
net cash provided by operations, or cash flow in excess of cost of
capital;

    (xi) net
economic profit (operating earnings minus a charge for capital) or economic
value created;

    (xii)
strategic innovation;

    (xiii)
dividend levels;

    (xiv)
strategic business criteria, consisting of one or more objectives based on
meeting specified market penetration, geographic business expansion goals, cost
targets, completion of capital and debt transactions, customer satisfaction,
employee satisfaction, management of employment practices and employee benefits,
supervision of litigation and information technology, and goals relating to
acquisitions or divestitures of subsidiaries, affiliates or joint ventures and
the management of capital projects;

    (xv)
operating performance metrics, including, but not limited to, safety and
electric system reliability; or

    (xvi) any
combination of the foregoing. 

    


    The
targeted level or levels of performance with respect to such business criteria
may be established at such levels and in such terms as the Committee may
determine, in its discretion, including in absolute terms, as a goal relative to
performance in prior periods, or as a goal compared to the performance of one or
more comparable companies or an index covering multiple
companies.  Performance goals based upon these business criteria may
be based upon generally accepted accounting principles (“GAAP”) or may be
non-GAAP measures, and in either case may be adjusted for purchase accounting
impacts related to acquisitions and other extraordinary, non-recurring or
unusual events or accounting treatments.  Performance Goals may be
particular to a Participant, the Corporation, the Company or a division,
Subsidiary or other business segment of the Company, or may be based on the
performance of the Company as a whole.

     

    
      	
               
      

            	
              (iii)

            	
              Performance
      Period; Timing for Establishing Performance Goals.  Achievement
      of performance goals in respect of such Performance Awards shall be
      measured over a performance period of up to one year or more than one
      year, as specified by the Committee.  A performance goal shall
      be established not later than the earlier of (A) 90 days after the
      beginning of any performance period applicable to such Performance Award
      or (B) the time 25% of such performance period has
  elapsed.

            


    

     

    
      	
               
      

            	
              (iv)

            	
              Performance
      Award Pool.  The Committee may establish a Performance Award
      pool, which shall be an unfunded pool, for purposes of measuring
      performance of the Company in connection with Performance
      Awards.  The amount of such Performance Award pool shall be
      based upon the achievement of a performance goal or goals based on one or
      more of the business criteria set forth in Section  7(b)(ii)
      during the given performance period, as specified by the Committee in
      accordance with Section 7(b)(iv).  The Committee may specify the
      amount of the Performance Award pool as a percentage of any of such
      business criteria, a percentage thereof in excess of a threshold amount,
      or as another amount which need not bear a strictly mathematical
      relationship to such business criteria.  The Committee may
      specify Performance Awards for any one
  Participant

            


    

     

    
      
         


      

      
        
        

        
          

        

      

      
         


      

    

     

    as a
percentage of the Performance Award pool, subject to such terms and conditions
as the Committee may specify, provided that the aggregate percentage of the
Performance Award pool allocated to Participants may not exceed 100% of the
Performance Award pool.

     

    
      	
               
      

            	
              (v)

            	
              Settlement
      of Performance Awards; Other Terms.  Settlement of Performance
      Awards shall be in cash, Stock, other Awards or other property, in the
      discretion of the Committee.  The Committee may, in its
      discretion, increase or reduce the amount of a settlement otherwise to be
      made in connection with such Performance Awards, but may not exercise
      discretion to increase any such amount payable to a Covered Employee in
      respect of a Performance Award subject to this Section 7(b) beyond the
      level of payment authorized for achievement of the performance goal
      specified under this Section 7(b) based on the actual level of achievement
      of such goal in excess of the amount earned through performance with
      respect to the performance goal established under Section
      7(b).  Any settlement which changes the form of payment from
      that originally specified shall be implemented in a manner such that the
      Performance Award and other related Awards do not, solely for that reason,
      fail to qualify as "performance-based compensation" for purposes of Code
      Section 162(m).  The Committee shall specify the circumstances
      in which such Performance Awards shall be paid or forfeited in the event
      of termination of employment by the Participant or other event (including
      a Change in Control) prior to the end of a performance period or
      settlement of such Performance
Awards.

            


    

     

    (c)           Annual Incentive
Awards Granted to Covered Employees.  The Committee may grant
an Annual Incentive Award to an Eligible Person who is designated by the
Committee as likely to be a Covered Employee.  Such Annual Incentive
Award will be intended to qualify as "performance-based compensation" for
purposes of Code Section 162(m), and its grant, exercise and/or settlement shall
be contingent upon achievement of preestablished performance goals and other
terms set forth in this Section 7(c).

     

    
      	
               
      

            	
              (i)

            	
              Grant
      of Annual Incentive Awards.  Not later than the earlier of 90
      days after the beginning of any performance period applicable to such
      Annual Incentive Award or the time 25% of such performance period has
      elapsed, the Committee shall determine the Covered Employees who will
      potentially receive Annual Incentive Awards, and the amount(s) potentially
      payable thereunder, for that performance period.  The amount(s)
      potentially payable shall be based upon the achievement of a performance
      goal or goals based on one or more of the business criteria set forth in
      Section 7(b)(ii) in the given performance period, as specified by the
      Committee.  The Committee may designate an annual incentive
      award pool as the means by which Annual Incentive Awards will be measured,
      which pool shall conform to the provisions of Section
      7(b)(iv).  In such case, the portion of the Annual Incentive
      Award pool potentially payable to each Covered Employee shall be
      preestablished by the Committee.  In all cases, the maximum
      Annual Incentive Award of any Participant shall be subject to the
      limitation set forth in Section 5.

            


    

     

    
      	
               
      

            	
              (ii)

            	
              Payout
      of Annual Incentive Awards.  After the end of each performance
      period, the Committee shall determine the amount, if any, of the Annual
      Incentive Award for that performance period payable to each
      Participant.  The Committee may, in its discretion, determine
      that the amount payable to any Participant as a final Annual Incentive
      Award shall be reduced from the amount of his or her potential Annual
      Incentive Award, including a determination to make no final Award
      whatsoever, but may not exercise discretion to increase any such
      amount.  The Committee shall specify the circumstances in which
      an Annual Incentive Award shall be paid or forfeited in the event of
      termination of employment by the Participant or other event prior to the
      end of a performance period or settlement of such Annual Incentive
      Award.

            


    

     

    (d)           Written
Determinations.  Determinations by the Committee as to the
establishment of performance goals, the amount potentially payable in respect of
Performance Awards and Annual Incentive Awards, the level of actual achievement
of the specified performance goals relating to Performance Awards and Annual
Incentive Awards, and the amount of any final Performance Award and Annual
Incentive Awards shall be recorded in writing in the case of Awards intended to
qualify under Section 162(m).  Specifically, the Committee shall
certify

     

    
      
         


      

      
        
        

        
          

        

      

      
         


      

    

     

    in
writing, in a manner conforming to applicable regulations under Section 162(m),
prior to settlement of each such Award granted to a Covered Employee, that the
performance objective relating to the Performance Award or Annual Incentive
Award and other material terms of the Award upon which settlement of the Award
was conditioned have been satisfied.

     

    8.           Certain Provisions Applicable To
Awards.

     

    (a)           Stand-Alone,
Additional, Tandem, and Substitute Awards.  Awards granted
under the Plan may, in the discretion of the Committee, be granted either alone
or in addition to, in tandem with, or in substitution or exchange for, any other
Award or any award granted under another plan of the Corporation or any
Subsidiary or any business entity to be acquired by the Corporation or a
Subsidiary or any other right of a Participant to receive payment from the
Corporation or any Subsidiary; provided, however, that a 409A Award may not be
granted in tandem with a Non-409A Award.  Awards granted in addition
to or in tandem with other Awards or awards may be granted either as of the same
time as or a different time from the grant of such other Awards or
awards.  The Committee may determine that, in granting a new Award,
the in-the-money value or fair value of any surrendered Award or award or the
value of any other right to payment surrendered by the Participant may be
applied to the purchase of any other Award.  This Section 8(a) shall
be subject to Section 10(e) (including the limitation on repricing) and subject
to Section 10(k) (and (l).

     

    (b)           Term of
Awards.  The term of each Award shall be for such period as may
be determined by the Committee, subject to the express limitations set forth in
Sections 6(b)(ii), 6(c)(ii) and 8 or elsewhere in the Plan.

     

    (c)           Form and Timing
of Payment under Awards; Deferrals.  Subject to the terms of
the Plan (including Sections 10(k) and (l)) and any applicable Award document,
payments to be made by the Corporation or a Subsidiary upon the exercise of an
Option or other Award or settlement of an Award may be made in such forms as the
Committee shall determine, including, without limitation, cash, Stock, other
Awards or other property, and may be made in a single payment or transfer, in
installments, or on a deferred basis.  The settlement of any Award may
be accelerated, and cash paid in lieu of Stock in connection with such
settlement, in the discretion of the Committee or upon occurrence of one or more
specified events, subject to Sections 10(k) and (l).  Subject to
Section 10(k), installment or deferred payments may be required by the Committee
(subject to Section 10(e)) or permitted at the election of the Participant on
terms and conditions established by the Committee.  Payments may
include, without limitation, provisions for the payment or crediting of
reasonable interest on installment or deferred payments or the grant or
crediting of Dividend Equivalents or other amounts in respect of installment or
deferred payments denominated in Stock.

    


    9.           Additional Award Forfeiture
Provisions.  The Committee may condition a Participant’s right
to receive a grant of an Award, to exercise the Award, to retain cash, Stock,
other Awards or other property acquired in connection with an Award, or to
retain the profit or gain realized by a Participant in connection with an Award,
including cash or other proceeds received upon sale of Stock acquired in
connection with an Award, upon compliance by the Participant with specified
conditions relating to non-competition, confidentiality of information relating
to or possessed by the Company, non-solicitation of customers, suppliers, and
employees of the Company, cooperation in litigation, non-disparagement of the
Company and its subsidiaries and affiliates and the officers, directors and
affiliates of the Company and its subsidiaries and affiliates, and other
restrictions upon or covenants of the Participant, including during specified
periods following termination of employment or service to the
Company.   Pursuant to this authorization, unless otherwise
determined by the Committee, the following policy will apply to each
Award:

     

    In the
event that the Corporation or any Subsidiary is required to restate its
financial statements due to material noncompliance of the Corporation or any
Subsidiary with any applicable financial reporting requirement, if such
restatement results directly or indirectly from willful misconduct or gross
negligence of the Participant the Participant shall reimburse the Corporation
for the difference between (i) the amount of any bonus, incentive or equity
compensation paid as a result of the erroneous financial statement and
(ii) the amount that would have been paid, if any, under the restated
financial statements. The Committee may specify additional forfeitures
applicable in the event of such a restatement or similar circumstances, subject
to Section 10(e).


    
      
         


      

      
        
        

        
          

        

      

      
         


      

    

     

    10.           General
Provisions.

     

    (a)           Compliance with
Legal and Other Requirements.  The Corporation may, to the
extent deemed necessary or advisable by the Committee and subject to Section
10(k), postpone the issuance or delivery of Stock or payment of other benefits
under any Award until completion of such registration or qualification of such
Stock or other required action under any federal or state law, rule or
regulation, listing or other required action with respect to any stock exchange
or automated quotation system upon which the Stock or other securities of the
Corporation are listed or quoted, or compliance with any other obligation of the
Corporation, as the Committee may consider appropriate, and may require any
Participant to make such representations, furnish such information and comply
with or be subject to such other conditions as it may consider appropriate in
connection with the issuance or delivery of Stock or payment of other benefits
in compliance with applicable laws, rules, and regulations, listing
requirements, or other obligations.  The foregoing notwithstanding, in
connection with a Change in Control, the Corporation shall take or cause to be
taken no action, and shall undertake or permit to arise no legal or contractual
obligation, that results or would result in any postponement of the issuance or
delivery of Stock or payment of benefits under any Award or the imposition of
any other conditions on such issuance, delivery or payment, to the extent that
such postponement or other condition would represent a greater burden on a
Participant than existed on the 90th day preceding the Change in
Control.

     

    (b)           Limits on
Transferability; Beneficiaries.  No Award or other right or
interest of a Participant under the Plan shall be pledged, hypothecated or
otherwise encumbered or subject to any lien, obligation or liability of such
Participant to any party (other than the Corporation or a Subsidiary thereof),
or assigned or transferred by such Participant otherwise than by will or the
laws of descent and distribution or to a Beneficiary upon the death of a
Participant, and such Awards or rights that may be exercisable shall be
exercised during the lifetime of the Participant only by the Participant or his
or her guardian or legal representative, except that Awards and other rights
(other than ISOs and SARs in tandem therewith) may be transferred to one or more
transferees during the lifetime of the Participant but not otherwise to a third
party for value, and may be exercised by such transferees in accordance with the
terms of such Award, but only if and to the extent such transfers are permitted
by the Committee and the Committee has determined that there will be no transfer
of the Award to a third party for value, and subject to any terms and conditions
which the Committee may impose thereon (which may include limitations the
Committee may deem appropriate in order that offers and sales under the Plan
will meet applicable requirements of registration forms under the Securities Act
of 1933 specified by the Securities and Exchange Commission).  A
Beneficiary, transferee, or other person claiming any rights under the Plan from
or through any Participant shall be subject to all terms and conditions of the
Plan and any Award document applicable to such Participant, except as otherwise
determined by the Committee, and to any additional terms and conditions deemed
necessary or appropriate by the Committee.

     

    (c)           Adjustments.  In
the event that an extraordinary dividend or other distribution (whether in the
form of cash or property other than Stock), recapitalization, forward or reverse
split, Stock dividend, reorganization, merger, consolidation, spinoff,
combination, repurchase, share exchange, liquidation, dissolution, equity
restructuring as defined under FAS 123R, or other similar corporate transaction
or event affects the Stock such that an adjustment is determined by the
Committee to be appropriate or, in the case of any outstanding Award, which is
necessary in order to prevent dilution or enlargement of the rights of the
Participant, then the Committee shall, in an equitable manner as determined by
the Committee, adjust any or all of (i) the number and kind of shares of Stock
which may be delivered in connection with Awards granted thereafter, including
the number of shares available under Section 4, (ii) the number and kind of
shares of Stock by which annual per-person Award limitations are measured under
Section 5, (iii) the number and kind of shares of Stock subject to or
deliverable in respect of outstanding Awards, (iv) the exercise price, grant
price or purchase price relating to any Award or, if deemed appropriate, the
Committee may make provision for a payment of cash or property to the holder of
an outstanding Option (subject to Section 10(l)), and (v) the performance goals
or conditions of outstanding Awards that are based on share
prices.  In addition, the Committee is authorized to make adjustments
in the terms and conditions of, and the criteria included in, Awards (including
Performance Awards and perfor­mance goals and any hypothetical funding pool
relating thereto) in recognition of unusual or nonrecurring events (including,
without limitation, events described in the preceding sentence, as well as
acquisitions and dispositions of businesses and assets) affecting the
Corporation, any Subsidiary or other business unit, or the financial statements
of the Corporation or any Subsidiary or in response to changes in applicable
laws, regulations, accounting principles, tax rates and regulations or
business

     

    
      
         


      

      
        
        

        
          

        

      

      
         


      

    

     

    conditions
or in view of the Committee's assessment of the business strategy of the
Corporation, any Subsidiary or business unit thereof, performance of comparable
organizations, economic and business conditions, personal performance of a
Participant, and any other circumstances deemed relevant; provided that no such
adjustment shall be authorized or made if and to the extent that the existence
of such authority (i) would cause Options, SARs, or Performance Awards granted
under the Plan to Participants designated by the Committee as Covered Employees
and intended to qualify as "performance-based compensation" under Code Section
162(m) and regulations thereunder to otherwise fail to qualify as
"performance-based compensation" under Code Section 162(m) and regulations
thereunder, or (ii) would cause the Committee to be deemed to have authority to
change the targets, within the meaning of Treasury Regulation
1.162-27(e)(4)(vi), under the performance goals relating to Options or SARs
granted to Covered Employees and intended to qualify as "performance-based
compensation" under Code Section 162(m) and regulations thereunder.

     

    (d)           Tax
Provisions.

     

    
      	
               
      

            	
              (i)

            	
              Withholding.  The
      Corporation and any Subsidiary is authorized to withhold from any Award
      granted, any payment relating to an Award under the Plan, including from a
      distribution of Stock, or any payroll or other payment to a Participant,
      amounts of withholding and other taxes due or potentially payable in
      connection with any transaction involving an Award, and to take such other
      action as the Committee may deem advisable to enable the Company and
      Participants to satisfy obligations for the payment of withholding taxes
      and other tax obligations relating to any Award.  This authority
      shall include authority to withhold or receive Stock or other property and
      to make cash payments in respect thereof in satisfaction of a
      Participant's withholding obligations, either on a mandatory or elective
      basis in the discretion of the Committee, or in satisfaction of other tax
      obligations.  Other provisions of the Plan notwithstanding, only
      the minimum amount of Stock deliverable in connection with an Award
      necessary to satisfy statutory withholding requirements will be withheld,
      unless withholding of any additional amount of Stock will not result in
      additional accounting expense to the
  Corporation.

            


    

     

    
      	
               
      

            	
              (ii)

            	
              Required
      Consent to and Notification of Code Section 83(b) Election.  No
      election under Section 83(b) of the Code (to include in gross income in
      the year of transfer the amounts specified in Code Section 83(b)) or under
      a similar provision of the laws of a jurisdiction outside the United
      States may be made unless expressly permitted by the terms of the Award
      document or by action of the Committee in writing prior to the making of
      such election.  In any case in which a Participant is permitted
      to make such an election in connection with an Award, the Participant
      shall notify the Corporation of such election within ten days of filing
      notice of the election with the Internal Revenue Service or other
      governmental authority, in addition to any filing and notification
      required pursuant to regulations issued under Code Section 83(b) or other
      applicable provision.

            


    

     

    
      	
               
      

            	
              (iii)

            	
              Requirement
      of Notification Upon Disqualifying Disposition Under Code Section
      421(b).  If any Participant shall make any disposition of shares
      of Stock delivered pursuant to the exercise of an ISO under the
      circumstances described in Code Section 421(b) (i.e., a disqualifying
      disposition), such Participant shall notify the Corporation of such
      disposition within ten days
thereof.

            


    

     

    (e)           Changes to the
Plan.  The Committee may amend, suspend or terminate the Plan
or the Committee's authority to grant Awards under the Plan without the consent
of shareowners or Participants; provided, however, that any amendment to the
Plan shall be submitted to the Corporation's shareowners for approval not later
than the earliest annual meeting for which the record date is at or after the
date of such Board action if such shareowner approval is required by any federal
or state law or regulation or the rules of the New York Stock Exchange, or if
such amendment would materially increase the number of shares reserved for
issuance and delivery under the Plan, and the Committee or the Board may
otherwise, in its discretion, determine to submit other amendments to the Plan
to shareowners for approval.  The Committee is authorized to amend
outstanding awards, except as limited by the Plan.  The Board and
Committee may not amend outstanding Awards (including by means of an amendment
to the Plan) without the consent of an affected Participant if such an amendment
would materially and adversely affect the rights of such Participant with
respect to the outstanding Award (for this purpose, actions that alter the
timing of federal income taxation of a Participant will not be deemed material
unless such action results

     

    
      
         


      

      
        
        

        
          

        

      

      
         


      

    

     

    in an
income tax penalty on the Participant, and any discretion that is reserved by
the Board or Committee with respect to an Award is unaffected by this
provision).  Without the approval of shareowners, the Committee will
not amend or replace previously granted Options or SARs in a transaction that
constitutes a "repricing," which for this purpose means any of the following or
any other action that has the same effect:

     

    
      	
              ·  

            	
              Lowering
      the exercise price of an option or SAR after it is
  granted;

            


    

     

    
      	
              ·  

            	
              Any
      other action that is treated as a repricing under generally accepted
      accounting principles;

            


    

     

    
      	
              ·  

            	
              Canceling
      an option or SAR at a time when its exercise price exceeds the fair market
      value of the underlying Stock, in exchange for another option or SAR,
      restricted stock, other equity or
cash;

            


    

     

    provided,
however, that the foregoing transactions shall not be deemed a repricing if
pursuant to an adjustment authorized under Section 10(c).   A
cancellation and exchange described in the preceding sentence will be considered
a repricing regardless of whether the Option, Restricted Stock or other equity
is delivered simultaneously with the cancellation, regardless of whether it is
treated as a repricing under generally accepted accounting principles, and
regardless of whether it is voluntary on the part of the
Participant.  With regard to other terms of Awards, the Committee
shall have no authority to waive or modify any such Award term after the Award
has been granted to the extent the waived or modified term would be mandatory
under the Plan for any Award newly granted at the date of the waiver or
modification.

     

    (f)           Right of
Setoff.  The Corporation or any Subsidiary may, to the extent
permitted by applicable law, deduct from and set off against any amounts the
Corporation or a Subsidiary may owe to the Participant from time to time,
including amounts payable in connection with any Award, owed as wages, fringe
benefits, or other compensation owed to the Participant, such amounts as may be
owed by the Participant to the Company, including but not limited to amounts
owed under Section 9(a), although the Participant shall remain liable for any
part of the Participant's payment obligation not satisfied through such
deduction and setoff.  By accepting any Award granted hereunder, the
Participant agrees to any deduction or setoff under this Section
10(f).  With respect to any amount that constitutes a deferral of
compensation, the Corporation may implement a setoff under this provision only
at such time as the deferred compensation otherwise would be distributable to
the Participant (i.e., the settlement date for such deferred
compensation).

     

    (g)           Unfunded Status
of Awards; Creation of Trusts.  The Plan is intended to
constitute an "unfunded" plan for incentive and deferred
compensation.  With respect to any payments not yet made to a
Participant or obligation to deliver Stock pursuant to an Award, nothing
contained in the Plan or any Award shall give any such Participant any rights
that are greater than those of a general creditor of the Company; provided that
the Committee may authorize the creation of trusts and deposit therein cash,
Stock, other Awards or other property, or make other arrangements to meet the
Company's obligations under the Plan.  Such trusts or other
arrangements shall be consistent with the "unfunded" status of the Plan unless
the Committee otherwise determines with the consent of each affected
Participant.

     

    (h)           Nonexclusivity of
the Plan.  Neither the adoption of the Plan by the Board nor
its submission to the shareowners of the Corporation for approval shall be
construed as creating any limitations on the power of the Board or a committee
thereof to adopt such other incentive arrangements, apart from the Plan, as it
may deem desirable, including incentive arrangements and awards which do not
qualify under Code Section 162(m), and such other arrangements may be either
applicable generally or only in specific cases.

     

    (i)           Payments in the
Event of Forfeitures; Fractional Shares.  Unless otherwise
determined by the Committee, in the event of a forfeiture of an Award with
respect to which a Participant paid cash consideration, the Participant shall be
repaid the amount of such cash consideration.  No fractional shares of
Stock shall be issued or delivered pursuant to the Plan or any
Award.  The Committee shall determine whether cash, other Awards or
other property shall be issued or paid in lieu of such fractional shares or
whether such fractional shares or any rights thereto shall be forfeited or
otherwise eliminated.

     


    
      
         


      

      
        
        

        
          

        

      

      
         


      

    

     

    (j)           Compliance with
Code Section 162(m).  It is the intent of the Company that
Options and SARs granted to Covered Employees and other Awards designated as
Awards to Covered Employees subject to Section 7 shall constitute qualified
"performance-based compensation" within the meaning of Code Section 162(m) and
regulations thereunder, unless otherwise determined by the Committee at the time
of allocation of an Award.  Accordingly, the terms of Sections 7(b)
and (c), including the definitions of Covered Employee and other terms used
therein, shall be interpreted in a manner consistent with Code Section 162(m)
and regulations thereunder.  The foregoing notwithstanding, because
the Committee cannot determine with certainty whether a given Participant will
be a Covered Employee with respect to a fiscal year that has not yet been
completed, the term Covered Employee as used herein shall mean only a person
designated by the Committee as likely to be a Covered Employee with respect to a
specified fiscal year.  If any provision of the Plan or any Award
document relating to a Performance Award that is designated as intended to
comply with Code Section 162(m) does not comply or is inconsistent with the
requirements of Code Section 162(m) or regulations thereunder, such provision
shall be construed or deemed amended to the extent necessary to conform to such
requirements, and no provision shall be deemed to confer upon the Committee or
any other person discretion to increase the amount of compensation otherwise
payable in connection with any such Award upon attainment of the applicable
performance objectives.

     

    (k)           Compliance with
Section 409A. To
the extent any Award hereunder is a 409A Award and provides for the deferral of
compensation (within the meaning of Code Section 409A and related regulations)
other than in accordance with the terms of the UIL Holdings Deferred
Compensation Plan, the material terms of the deferral, to the extent required
under Treasury Regulation §1.409A-1(c)(3) to establish a deferred compensation
plan, shall be set forth in the written award or grant (including by
incorporation by reference, if applicable).  To the extent any Award
hereunder does not provide for a deferral of compensation, but may be deferred
under the Company’s Deferred Compensation Plan (or other nonqualified deferred
compensation plan), the terms of the Deferred Compensation Plan (or such other
nonqualified deferred compensation plan) shall govern the deferral and, to the
extent necessary, are incorporated herein by reference.

    


    (l)           Governing
Law.  The validity, construction, and effect of the Plan, any
rules and regulations relating to the Plan and any Award document shall be
determined in accordance with the laws of the State of Connecticut, without
giving effect to principles of conflicts of laws, and applicable provisions of
federal law.

     

    (m)           Awards to
Participants Outside the United States.  The Committee may
modify the terms of any Award under the Plan made to or held by a Participant
who is then resident or primarily employed outside of the United States, or
establish one or more sub-plans for such participants, in any manner deemed by
the Committee to be necessary or appropriate in order that such Award shall
conform to laws, regulations, and customs of the country in which the
Participant is then resident or primarily employed, or so that the value and
other benefits of the Award to the Participant, as affected by foreign tax laws
and other restrictions applicable as a result of the Participant's residence or
employment abroad shall be comparable to the value of such an Award to a
Participant who is resident or primarily employed in the United
States.  An Award may be modified under this Section 10(m) in a manner
that is inconsistent with the express terms of the Plan, so long as such
modifications will not contravene any applicable law or regulation or result in
actual liability under Section 16(b) for the Participant whose Award is
modified.

     

    (n)           Limitation on
Rights Conferred under Plan.  Neither the Plan nor any action
taken hereunder shall be construed as (i) giving any Eligible Person or
Participant the right to continue as an Eligible Person or Participant or in the
employ or service of the Corporation or a Subsidiary, (ii) interfering in any
way with the right of the Corporation or a Subsidiary to terminate any Eligible
Person's or Participant's employment or service at any time (subject to the
terms and provisions of any separate written agreements), (iii) giving an
Eligible Person or Participant any claim to be granted any Award under the Plan
or to be treated uniformly with other Participants and employees, or (iv)
conferring on a Participant any of the rights of a shareowner of the Corporation
unless and until the Participant is duly issued or transferred shares of Stock
in accordance with the terms of an Award or an Option is duly
exercised.  Except as expressly provided in the Plan and an Award
document, neither the Plan nor any Award document shall confer on any person
other than the Company and the Participant any rights or remedies
thereunder.  Any Award shall not be deemed compensation for purposes
of computing benefits under any retirement plan of the Corporation or any
Subsidiary and shall not affect any benefits under any other benefit plan at any
time in effect and which the availability or amount of benefits is related to
the level of compensation (unless required by any such other plan or arrangement
with specific reference to Awards under this Plan).

     


    
      
         


      

      
        
        

        
          

        

      

      
         


      

    

     

    (o)           Severability.  If
any of the provisions of this Plan or any Award document is finally held to be
invalid, illegal or unenforceable (whether in whole or in part), such provision
shall be deemed modified to the extent, but only to the extent, of such
invalidity, illegality or unenforceability, and the remaining provisions shall
not be affected thereby; provided, that, if any of such provisions is finally
held to be invalid, illegal, or unenforceable because it exceeds the maximum
scope determined to be acceptable to permit such provision to be enforceable,
such provision shall be deemed to be modified to the minimum extent necessary to
modify such scope in order to make such provision enforceable
hereunder.  The Plan and any Award documents contain the entire
agreement of the parties with respect to the subject matter thereof and
supersede all prior agreements, promises, covenants, arrangements,
communications, representations and warranties between them, whether written or
oral with respect to the subject matter thereof.  No rule of strict
construction shall be applied against the Company, the Committee, or any other
person in the interpretation of any terms of the Plan, Award, or agreement or
other document relating thereto.

     

     

    (p)           Plan
Effective Date and Termination.  The Plan shall become effective if,
and at such time as, the shareowners of the Corporation have approved it by a
vote sufficient to approve it in accordance with applicable law and the
Corporation's charter documents.  The date of such shareowner approval
shall be the Effective Date.  Upon such approval of the Plan by the
shareowners of the Corporation, no further awards shall be granted under the
Preexisting Plan, but any outstanding awards under the Preexisting Plan shall
continue in accordance with their terms.  Unless earlier terminated by
action of the Board of Directors, the authority to make new grants under the
Plan shall terminate on the date that is ten years after the latest date upon
which shareowners of the Corporation, have approved the Plan, and the Plan will
remain in effect until such time as no Stock remains available for delivery
under the Plan and the Corporation, has no further rights or obligations under
the Plan with respect to outstanding Awards under the Plan.