Document:

EXHIBIT 10.28

                              EMPLOYMENT AGREEMENT

         THIS  AGREEMENT,  made as of the 12th day of June,  2000,  between  THE
UNITED ILLUMINATING COMPANY, a Connecticut Corporation (the Company) and GREGORY
E. SAGES, an individual (the Officer),

                                 WITNESSETH THAT

         WHEREAS,  the Company  desires to employ the Officer as Vice  President
Finance of the Company, and the Officer desires to be employed by the Company as
Vice President Finance.

         NOW  THEREFORE,  in  consideration  of the foregoing and the respective
covenants and agreements of the parties herein contained, and the services to be
rendered to the Company pursuant hereto, and in order to provide an incentive to
the Officer to remain in the employ of the Company hereafter and, in particular,
in the event of any  Change in  Control  (as  herein  defined)  of the  Company,
thereby establishing and preserving continuity of management, the Parties hereby
agree as follows:

         (1) EMPLOYMENT

                  The Company  hereby  agrees to employ  Gregory E.  Sages,  and
Gregory E. Sages  hereby  agrees to serve the  Company,  at the  pleasure of the
Board of Directors of the Company,  all upon the terms and  conditions set forth
herein.

         (2) POSITION AND DUTIES

         The Officer shall be employed by the Company as Vice President Finance,
or in such other  equivalent  or higher  officership  position as the  Company's
Board of Directors may determine.  The Officer shall accept such  employment and
shall  perform  and  discharge,  faithfully,  diligently  and to the best of the
Officer's abilities, the duties and obligations of the Officer's office and such
other  duties as may from time to time be  assigned to the Officer by, or at the
direction  of,  the  Board  of  Directors  of  the  Company,  and  shall  devote
substantially  all of the Officer's working time and efforts to the business and
affairs of the  Company.  Although a Change in Control of the Company  shall not
affect the  obligations  of the  Company and the Officer as set forth in the two
preceding  sentences,  at and  after  the  date of any  Change  in  Control  the
Company's  employment of the Officer shall also be without  diminishment  in the
Officer's management responsibilities, duties or powers.

         (3) PLACE OF PERFORMANCE

         In his  employment  by the Company,  the Officer  shall be based at the
executive offices of the Company situated within the Company's statutory service
area.

<PAGE>

         (4) COMPENSATION

                  (a) Base Salary.  During the term of the Officer's  employment
hereunder,  the Officer  shall  receive a base salary (Base Salary) at an annual
rate of One Hundred Sixty-Five Thousand Dollars  ($165,000).  The Officer's Base
Salary  rate  shall  be  reviewed  by the  Board  of  Directors  of the  Company
contemporaneously  with each review of the salary rates of the  Company's  other
officers by said Board of Directors,  and may be revised  upwards as a result of
any such  review.  The  Officer's  Base Salary may be revised  downwards by said
Board of Directors  contemporaneously  with any general  reduction of the salary
rates of the Company's other officers.

                  (b) Incentive  Compensation.  During the term of the Officer's
employment  hereunder,  the Officer  shall be eligible to be  designated  by the
Board  of  Directors  of  the  Company  as  a  participant   in  each  incentive
compensation program established for all officers of the Company.

                  For purposes of this Agreement, Total Compensation is defined,
as the sum of the Officer's Base Salary and any amount paid or payable  pursuant
to this Section (4)(b).

                  (c)  Business  Expenses.  During  the  term  of the  Officer's
employment   hereunder,   the  Officer  shall  be  entitled  to  receive  prompt
reimbursement for all reasonable expenses incurred by the Officer (in accordance
with the policies and  procedures  established  by the Board of Directors of the
Company  from  time to time for all of the  Company's  officers)  in  performing
services hereunder, provided that the Officer properly accounts therefor.

                  (d)  Benefit  Programs.  During  the  term  of  the  Officer's
employment  hereunder,  the  Officer  shall be entitled  to  participate  in and
receive  full  benefits  under  all of the  Company's  employee  benefit  plans,
programs and arrangements for its officers,  including,  without limitation, its
retirement and pension plan programs. Nothing paid to the Officer under any such
plan,  program  or  arrangement  presently  in effect or made  available  by the
Company  in the  future  shall be  deemed to be in lieu of  compensation  to the
Officer under any other Section of this Agreement.

                  (e) Vacations  and Holidays.  During the term of the Officer's
employment  hereunder,  the  Officer  shall be  entitled  to the  number of paid
vacation days in each calendar year  determined by the Board of Directors of the
Company from time to time for all of the Company's  officers,  and shall also be
entitled to all paid holidays afforded by the Company to its employees.

         (5) TERMINATION

                  (a) The Officer's  employment  hereunder  shall terminate upon
the Officer's death.

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                  (b) The Board of  Directors of the Company may  terminate  the
Officer's  employment hereunder at any time, with or without Cause. Prior to the
date of a Change in  Control,  the  Company  shall be  deemed  to have  Cause to
terminate  the  Officer's  employment  hereunder  only  upon the  Officer's  (A)
continued  failure to perform and  discharge  the duties or  obligations  of the
Officer's  office,  or such other duties as may from time to time be assigned to
the  Officer by, or at the  direction  of, the Board of  Directors,  faithfully,
diligently,  to the best of the  Officer's  abilities,  and in  accordance  with
standards  accepted  in the  electric  utility  industry,  in the  opinion  of a
majority  of the  members  of the  Board of  Directors  of the  Company,  or (B)
misconduct  that is  injurious  to the Company,  or (C)  conviction  of a felony
involving  the personal  dishonesty  or moral  turpitude of the Officer,  or (D)
total and permanent physical or mental disability, or (E) absence from work on a
full-time basis, due to physical or mental illness, for an uninterrupted 365-day
period.  On and after  the date of a Change in  Control,  the  Company  shall be
deemed to have Cause to terminate the Officer's  employment  hereunder only upon
the Officer's (F)  conviction of a felony  involving the personal  dishonesty or
moral  turpitude of the Officer,  or (G) total and permanent  physical or mental
disability,  or (H) absence from work on a full-time  basis,  due to physical or
mental illness, for an uninterrupted 365-day period.

                  (c)  The  Officer  may  terminate  the  Officer's   employment
hereunder, upon at least thirty (30) days' prior Notice of Termination delivered
to the Company, for failure of the Company to observe and perform one or more of
its  obligations  under Sections (1), (2), (3) and/or (4) hereof,  which failure
the Company  fails to remedy within such notice period (a Breach by the Company)
at a time when the Officer is not in default of any of the Officer's obligations
under  Sections (1) and/or (2) hereof.  The Officer may terminate his employment
hereunder in the absence of a Breach by the Company, effective upon at least six
(6) months' prior Notice of Termination delivered to the Company.

                  (d) Notice of Termination.  Any termination of employment,  by
the Company or by the Officer,  shall be  communicated  by delivery of a written
Notice of Termination to the other party.

                  (e) Date of Termination.  For purposes of this Agreement,  the
Date of Termination is defined as: if the Officer's employment is terminated (A)
by his  death,  the date of his death,  or (B)  pursuant  to  Section  (5)(b) or
Section (5)(c) hereof, the date specified in the Notice of Termination.

         (6) CONSEQUENCES OF TERMINATION

                  (a) If the  Officer's  employment  terminates by reason of the
Officer's  death,  the Company shall pay to the persona

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representative  and/or  spouse of the Officer the Officer's  Total  Compensation
earned  prior  to the Date of  Termination,  any  amounts  payable  pursuant  to
Sections  (4)(c) and (4)(d) hereof and any benefits or amounts payable under any
deferred compensation plan in which the Officer had been a participant,  and the
Company shall have no further obligation under this Agreement.

                  (b)  If  the  Officer  terminates  the  Officer's   employment
hereunder  in the  absence of a Breach by the  Company and upon at least six (6)
months' prior Notice of Termination, the Company shall pay to the Officer and/or
the  Officer's  personal   representative  and/or  spouse  the  Officer's  Total
Compensation  earned  prior  to the Date of  Termination,  any  amounts  payable
pursuant  to  Sections  (4)(c) and (4)(d)  hereof  and any  benefits  or amounts
payable  under any  deferred  compensation  plan in which the Officer had been a
participant,  and the Company  shall have no further  obligation  to the Officer
and/or the Officer's personal  representative and/or spouse under this Agreement
or on  account  of,  or  arising  out  of,  the  termination  of  the  Officer's
employment.

                  (c)  If  the  Company  terminates  the  Officer's   employment
hereunder  for Cause,  or if the Officer  terminates  the  Officer's  employment
hereunder  in the  absence of a Breach by the Company and upon less than six (6)
months'  prior Notice of  Termination,  the Company shall pay to the Officer the
Officer's full Base Salary earned prior to the Date of Termination,  any amounts
payable  pursuant  to  Sections  (4)(c) and (4)(d)  hereof and any  benefits  or
amounts  payable under any deferred  compensation  plan in which the Officer had
been a participant,  and,  provided that the Company is not in default of any of
its obligations  hereunder,  the Company shall have no further obligation to the
Officer  under  this  Agreement  or on  account  of,  or  arising  out  of,  the
termination of the Officer's employment.

                  (d)  If  the  Company  terminates  the  Officer's   employment
hereunder without Cause, or if the Officer  terminates the Officer's  employment
hereunder on account of a Breach by the Company:

                           (i)  The  Company  shall  pay  to  the  Officer  the
Officer's  Total  Compensation  earned  prior  to the Date of  Termination,  any
amounts  payable  pursuant to Sections  4(c) and 4(d) hereof and any benefits or
amounts  payable under any deferred  compensation  plan in which the Officer had
been a participant.

                           (ii)  The  Company  shall  afford  the  Officer  the
severance benefits set forth on Schedule A attached hereto.

                           (iii)  The payment to, and acceptance by, the Officer
of any sum of money or benefit  prescribed  in this Section  (6)(d) shall effect
and evidence a release by the Officer of any

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<PAGE>

and all  claims  against  the  Company on  account  of, or  arising  out of, the
termination of the Officer's employment.

         (7) CHANGE IN CONTROL

         For purposes of this Agreement, Change in Control shall mean any of the
following events:

                  (a) any  merger  or  consolidation  of the  Company  with  any
corporate  shareholder or group of corporate  shareholders  holding  twenty-five
percent  (.25) or more of the  Common  Stock of the  Company  or with any  other
corporation  or  group  of  corporations  which  is,  or after  such  merger  or
consolidation  would be, or be affiliated  with, a  shareholder  owning at least
twenty-five percent (.25) of the Common Stock of the Company; or

                  (b) any sale, lease, exchange,  mortgage,  pledge, transfer or
other  disposition to or with any shareholder or group of  shareholders  holding
twenty-five  percent  (.25) or more of the Common Stock of the  Company,  or any
affiliate of such  shareholder  or group of  shareholders,  of any assets of the
Company having an aggregate fair market value of $50 million or more; or

                  (c) the issuance or sale by the Company of any  securities  of
the Company to any  shareholder  or group of  shareholders  holding  twenty-five
percent (.25) or more of the Common Stock of the Company, or to any affiliate of
such shareholder or group of shareholders,  in exchange for cash,  securities or
other  consideration  having an  aggregate  fair market  value of $50 million or
more; or

                  (d)  the  implementation  of any  plan  or  proposal  for  the
liquidation  or  dissolution  of the  Company  proposed  by or on  behalf of any
shareholder or group of shareholders  owning at least twenty-five  percent (.25)
of the Common Stock of the Company,  or any  affiliate  of such  shareholder  or
group of shareholders; or

                  (e) any  reclassification  of securities  (including a reverse
stock split), or  recapitalization of the Company or any other transaction which
has the effect, directly or indirectly, of increasing the proportionate share of
outstanding shares of any class of equity securities,  or securities convertible
into any equity  securities,  of the  Company,  which is directly or  indirectly
owned by a  shareholder  or group of  shareholders  owning at least  twenty-five
percent  (.25) of the Common  Stock of the  Company,  or any  affiliate  of such
shareholder or group of shareholders.

         The Board of Directors of the Company  may,  from time to time,  by the
affirmative  vote of not less than a majority of the entire  membership  of said
Board of Directors,  at a meeting of said Board of Directors called and held for
the purpose, modify the phrase "twenty-five percent (.25)" in one or more of the

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foregoing  Sections  (7)(a),  (7)(b),  (7)(c),  (7)(d) and/or (7)(e) to a lesser
percentage, but not less than twenty percent (.20).

         (8) ADDITIONAL CONSEQUENCES OF A CHANGE IN CONTROL

                  (a) In the event that a Change in Control has been approved by
all necessary  shareholder,  creditor and regulatory actions,  the Company will,
not later  than the day prior to the date of the Change in  Control,  pay to the
Trustee of The United Illuminating Company Supplemental Retirement Benefit Trust
established  pursuant  to the  Agreement,  made as of the 1st day of June,  1995
between the Company and State Street Bank and Trust Company, as Trustee, for the
benefit of the  Officer,  cash in an amount  equal to: (A) In the event that the
Officer's employment has been terminated or will be terminated prior to the date
of the  Change  in  Control,  a sum,  calculated  by the  Company's  independent
certified  public  accountants,  reasonably  sufficient to pay and discharge the
largest of the Company's future  obligations,  if any, to the Officer and/or his
personal  representative and/or spouse, under Section (6)(a),  Section (6)(b) or
Section (6)(d) hereof; or (B) in the event that the Officer's employment has not
been  terminated  and will not be terminated  prior to the date of the Change in
Control,  a  sum,  calculated  by the  Company's  independent  certified  public
accountants,   reasonably   sufficient   to  pay  and  discharge  the  Company's
obligations to the Officer under Section (6)(d) hereof assuming, for purposes of
such calculation, that the Officer's employment is terminated under said Section
(6)(d) by a Notice of Termination delivered on the date of the Change in Control
and specifying an immediate Date of Termination.

                  (b) On and  after  the  date of the  Change  in  Control,  the
Officer's  Base Salary may not be reduced by the Board of Directors to an annual
rate less than the rate  fixed by the Board of  Directors  of the  Company  as a
result of its most recent  review of salary  rates,  pursuant to Section  (4)(a)
hereof, prior to the date of the Change in Control.

         (9) TAX SAVINGS PROVISION

         If any  portion  of the  payments  which the  Officer  has the right to
receive from the Company,  or any affiliated entity,  hereunder would constitute
"excess parachute  payments" (as defined in Section 280G of the Internal Revenue
Code,  and not governed by the terms defined in this  Agreement)  subject to the
excise tax imposed by Section 4999 of the  Internal  Revenue  Code,  such excess
parachute payments shall be reduced to the largest amount that will result in no
portion  of such  excess  parachute  payments  being  subject  to the excise tax
imposed by Section 4999 of the Internal Revenue Code.

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         (10) SUCCESSORS; BINDING AGREEMENT

                  (a) The Company shall pay to the Officer  and/or the Officer's
personal  representative  and/or  spouse all legal fees and  expenses  and court
costs,  if any,  incurred by the  Officer  and/or the  Officer's  representative
and/or  spouse in successful  litigation  to enforce the Officer's  rights under
this Agreement.

                  (b) The Company will require any successor  (whether direct or
indirect,   by  purchase,   merger,   consolidation  or  otherwise)  to  all  or
substantially all of the business or assets of the Company, by agreement in form
and substance  reasonably  satisfactory to the Officer,  to expressly assume and
agree to perform  this  Agreement in the same manner and to the same extent that
the  Company  would be required  to perform it if no such  succession  had taken
place.  Failure of the Company to obtain such agreement by the  effectiveness of
any such  succession  shall be a breach of this  Agreement and shall entitle the
Officer to  compensation  from the  Company in the same amount and upon the same
terms as the Officer  would be entitled to hereunder  if the Officer  terminated
the Officer's  employment upon Breach by the Company,  except that, for purposes
of implementing  the foregoing,  the date on which any such  succession  becomes
effective  shall be deemed the Date of  Termination.  As used in this Agreement,
the term "the Company" shall include The United Illuminating Company, any parent
and any  successor  to the  business  or assets of  either  as  aforesaid  which
executes and delivers the  agreement  provided for in this Section (10) or which
otherwise  becomes bound by all the terms and  provisions  of this  Agreement by
operation of law.

                  (c) This  Agreement  and all rights of the  Officer  hereunder
shall inure to the benefit of and be  enforceable  by the Officer's  personal or
legal   representatives,    executors,   administrators,    successors,   heirs,
distributees, devisees and legatees. If the Officer should die while any amounts
would still be payable to the Officer  hereunder if the Officer had continued to
live,  all such amounts,  unless  otherwise  provided  herein,  shall be paid in
accordance with the terms of this Agreement to the Officer's devisee, legatee or
other designee or, if there be no such designee, to the Officer's estate.

         (11) NOTICE

         For the purpose of this Agreement, notices and all other communications
to either party hereunder  provided for in the Agreement shall be in writing and
shall be  deemed  to have been duly  given  when  delivered  or mailed by United
States certified or registered mail, return receipt requested,  postage prepaid,
addressed,  in the case of the Company, to The United Illuminating  Company, 157
Church Street, New Haven, Connecticut,  Attention: Secretary, or, in the case of
the Officer,  to the Officer at 157 Church Street, New Haven Connecticut,  or to
such other address as either party shall  designate by giving  written notice of
such change to the other party.

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<PAGE>

         (12) MISCELLANEOUS

         No provision of this  Agreement  may be modified,  waived or discharged
unless  such  waiver,  modification  or  discharge  is  approved by the Board of
Directors  of the Company  and agreed to in a writing  signed by the Officer and
such officer of the Company as may be  specifically  authorized  by the Board of
Directors  of the  Company.  No waiver by either party hereto at any time of any
breach by the other  party  hereto of, or  compliance  with,  any  condition  or
provision of this  Agreement to be performed by such other party shall be deemed
a waiver of any similar or dissimilar provisions or conditions at the same or at
any  prior  or  subsequent  time.  No  agreements  or  representations,  oral or
otherwise,  express or implied,  with respect to the subject  matter hereof have
been made by either party that are not set forth  expressly  in this  Agreement.
The validity,  interpretation,  construction  and  performance of this Agreement
shall be governed by the laws of the State of Connecticut.

         (13) VALIDITY

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

         (14) SURVIVAL

         The provisions of this Agreement  shall not survive the  termination of
this  Agreement  or of the  Officer's  employment  hereunder,  except  that  the
provisions of Sections (4), (6), (8), (9),  (10),  and (11) hereof shall survive
such termination and shall be binding upon the Company's successors and assigns.

         (15) COUNTERPARTS

         This  Agreement  may be executed in one or more  counterparts,  each of
which  shall  be  deemed  to be an  original  but  all of  which  together  will
constitute one and the same instrument.

         IN WITNESS WHEREOF,  the parties hereto have executed this Agreement on
the date and year first above written.

Attest:  THE UNITED ILLUMINATING COMPANY

  /s/ Susan E. Allen                By:     /s/ Nathaniel D. Woodson
---------------------------                 ---------------------------
Secretary                                   Chairman, President and
                                            Chief Executive Officer

                                            /s/ Gregory E. Sages
                                            ---------------------------
                                                Gregory E. Sages

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                                   SCHEDULE A

                               Severance Benefits
                               ------------------

The Company shall:

     (i) pay to the  Officer,  within 30 days,  a lump sum  payment in an amount
     equal to two (2) times the Officer's Total  Compensation  immediately prior
     to the date of his termination; and
     (ii) maintain in full force and effect,  for the  continued  benefit of the
     Officer for the period ending on the second  anniversary of the date of his
     termination,  all employee  benefit plans and programs in which the Officer
     was  entitled  to  participate   immediately  prior  to  the  date  of  his
     termination,   provided  that  the  Officer's  continued  participation  is
     possible  under the general terms and provisions of such plans and programs
     and applicable law and, if the Officer's  participation in any such plan or
     program is barred as a result of his termination, the Company shall arrange
     to provide the Officer with benefits  substantially similar on an after-tax
     basis to those that he would have been  entitled to receive under such plan
     or program; and
     (iii) afford to the Officer the addition of two (2) years of service deemed
     as an employee of the Company in the calculation of the benefits payable to
     the Officer under the retiree medical benefit plan(s) of the Company and in
     the  calculation  of the benefits  payable to the Officer as a supplemental
     retirement benefit under his Employment Agreement.EXHIBIT 10.29

                              EMPLOYMENT AGREEMENT

         THIS  AGREEMENT,  made as of the 26th day of June,  2000,  between  THE
UNITED ILLUMINATING  COMPANY, a Connecticut  corporation (the Company) and SUSAN
E. ALLEN, an individual (the Officer),

                                 WITNESSETH THAT

         WHEREAS,  the Company  desires to employ the Officer as Vice  President
Investor  Relations  and  Corporate  Secretary of the  Company,  and the Officer
desires to be employed by the Company as Vice President  Investor  Relations and
Corporate Secretary.

         NOW  THEREFORE,  in  consideration  of the foregoing and the respective
covenants and agreements of the parties herein contained, and the services to be
rendered to the Company pursuant hereto, and in order to provide an incentive to
the Officer to remain in the employ of the Company hereafter and, in particular,
in the event of any  Change in  Control  (as  herein  defined)  of the  Company,
thereby establishing and preserving continuity of management, the Parties hereby
agree as follows:

         (1) EMPLOYMENT

                  The  Company  hereby  agrees to employ  the  Officer,  and the
Officer  hereby  agrees to serve the  Company,  at the  pleasure of the Board of
Directors of the Company, all upon the terms and conditions set forth herein.

         (2) POSITION AND DUTIES

         The Officer shall be employed by the Company as Vice President Investor
Relations  and  Corporate  Secretary,  or in such  other  equivalent  or  higher
officership  position as the  Company's  Board of Directors may  determine.  The
Officer  shall  accept  such   employment   and  shall  perform  and  discharge,
faithfully,  diligently and to the best of the Officer's  abilities,  the duties
and  obligations of the Officer's  office and such other duties as may from time
to time be  assigned to the  Officer  by, or at the  direction  of, the Board of
Directors of the Company,  and shall devote  substantially  all of the Officer's
working time and efforts to the business and affairs of the Company.  Although a
Change in Control of the Company shall not affect the obligations of the Company
and the Officer as set forth in the two  preceding  sentences,  at and after the
date of any Change in Control the Company's employment of the Officer shall also
be without diminishment in the Officer's management responsibilities,  duties or
powers.

         (3) PLACE OF PERFORMANCE

         In the Officer's  employment by the Company, the Officer shall be based
at the executive offices of the Company situated within the Company's  statutory
service area.

<PAGE>

         (4) COMPENSATION

                  (a) Base Salary.  During the term of the Officer's  employment
hereunder,  the Officer  shall  receive a base salary (Base Salary) at an annual
rate of One Hundred Thousand Dollars ($100,000).  The Officer's Base Salary rate
shall be reviewed  by the Board of  Directors  of the Company  contemporaneously
with each review of the salary  rates of the  Company's  other  officers by said
Board of Directors,  and may be revised  upwards as a result of any such review.
The  Officer's  Base Salary may be revised  downwards by said Board of Directors
contemporaneously  with  any  general  reduction  of  the  salary  rates  of the
Company's other officers.

                  (b) Incentive  Compensation.  During the term of the Officer's
employment  hereunder,  the Officer  shall be eligible to be  designated  by the
Board  of  Directors  of  the  Company  as  a  participant   in  each  incentive
compensation program established for all officers of the Company.

                  For purposes of this Agreement, Total Compensation is defined,
as the sum of the Officer's Base Salary and any amount paid or payable  pursuant
to this Section (4)(b).

                  (c)  Business  Expenses.  During  the  term  of the  Officer's
employment   hereunder,   the  Officer  shall  be  entitled  to  receive  prompt
reimbursement for all reasonable expenses incurred by the Officer (in accordance
with the policies and  procedures  established  by the Board of Directors of the
Company  from  time to time for all of the  Company's  officers)  in  performing
services hereunder, provided that the Officer properly accounts therefor.

                  (d)  Benefit  Programs.  During  the  term  of  the  Officer's
employment  hereunder,  the  Officer  shall be entitled  to  participate  in and
receive  full  benefits  under  all of the  Company's  employee  benefit  plans,
programs and arrangements for its officers,  including,  without limitation, its
retirement and pension plan programs. Nothing paid to the Officer under any such
plan,  program  or  arrangement  presently  in effect or made  available  by the
Company  in the  future  shall be  deemed to be in lieu of  compensation  to the
Officer under any other Section of this Agreement.

                  (e) Vacations  and Holidays.  During the term of the Officer's
employment  hereunder,  the  Officer  shall be  entitled  to the  number of paid
vacation days in each calendar year  determined by the Board of Directors of the
Company from time to time for all of the Company's  officers,  and shall also be
entitled to all paid holidays afforded by the Company to its employees.

                                     - 2 -
<PAGE>

         (5) TERMINATION

                  (a) The  Officer's  employment  hereunder shall terminate upon
the Officer's death.

                  (b) The Board of  Directors of the Company may  terminate  the
Officer's  employment hereunder at any time, with or without Cause. Prior to the
date of a Change in  Control,  the  Company  shall be  deemed  to have  Cause to
terminate  the  Officer's  employment  hereunder  only  upon the  Officer's  (A)
continued  failure to perform and  discharge  the duties or  obligations  of the
Officer's  office,  or such other duties as may from time to time be assigned to
the  Officer by, or at the  direction  of, the Board of  Directors,  faithfully,
diligently,  to the best of the  Officer's  abilities,  and in  accordance  with
standards  accepted  in the  electric  utility  industry,  in the  opinion  of a
majority  of the  members  of the  Board of  Directors  of the  Company,  or (B)
misconduct  that is  injurious  to the Company,  or (C)  conviction  of a felony
involving  the personal  dishonesty  or moral  turpitude of the Officer,  or (D)
total and permanent physical or mental disability, or (E) absence from work on a
full-time basis, due to physical or mental illness, for an uninterrupted 365-day
period.  On and after  the date of a Change in  Control,  the  Company  shall be
deemed to have Cause to terminate the Officer's  employment  hereunder only upon
the Officer's (F)  conviction of a felony  involving the personal  dishonesty or
moral  turpitude of the Officer,  or (G) total and permanent  physical or mental
disability,  or (H) absence from work on a full-time  basis,  due to physical or
mental illness, for an uninterrupted 365-day period.

                  (c)  The  Officer  may  terminate  the  Officer's   employment
hereunder, upon at least thirty (30) days' prior Notice of Termination delivered
to the Company, for failure of the Company to observe and perform one or more of
its  obligations  under Sections (1), (2), (3) and/or (4) hereof,  which failure
the Company  fails to remedy within such notice period (a Breach by the Company)
at a time when the Officer is not in default of any of the Officer's obligations
under  Sections (1) and/or (2) hereof.  The Officer may  terminate the Officer's
employment  hereunder in the absence of a Breach by the Company,  effective upon
at least six (6) months' prior Notice of Termination delivered to the Company.

                  (d) Notice of Termination.  Any termination of employment,  by
the Company or by the Officer,  shall be  communicated  by delivery of a written
Notice of Termination to the other party.

                  (e) Date of Termination.  For purposes of this Agreement,  the
Date of Termination is defined as: if the Officer's employment is terminated (A)
by the  Officer's  death,  the date of the Officer's  death,  or (B) pursuant to
Section  (5)(b) or Section  (5)(c)  hereof,  the date specified in the Notice of
Termination.

                                     - 3 -
<PAGE>

         (6) CONSEQUENCES OF TERMINATION

                  (a) If the  Officer's  employment  terminates by reason of the
Officer's  death,  the Company shall pay to the personal  representative  and/or
spouse of the Officer the Officer's Total Compensation  earned prior to the Date
of  Termination,  any amounts  payable  pursuant  to Sections  (4)(c) and (4)(d)
hereof and any benefits or amounts payable under any deferred  compensation plan
in which the  Officer  had been a  participant,  and the  Company  shall have no
further obligation under this Agreement.

                  (b)  If  the  Officer  terminates  the  Officer's   employment
hereunder  in the  absence of a Breach by the  Company and upon at least six (6)
months' prior Notice of Termination, the Company shall pay to the Officer and/or
the  Officer's  personal   representative  and/or  spouse  the  Officer's  Total
Compensation  earned  prior  to the Date of  Termination,  any  amounts  payable
pursuant  to  Sections  (4)(c) and (4)(d)  hereof  and any  benefits  or amounts
payable  under any  deferred  compensation  plan in which the Officer had been a
participant,  and the Company  shall have no further  obligation  to the Officer
and/or the Officer's personal  representative and/or spouse under this Agreement
or on  account  of,  or  arising  out  of,  the  termination  of  the  Officer's
employment.

                  (c)  If  the  Company  terminates  the  Officer's   employment
hereunder  for Cause,  or if the Officer  terminates  the  Officer's  employment
hereunder  in the  absence of a Breach by the Company and upon less than six (6)
months'  prior Notice of  Termination,  the Company shall pay to the Officer the
Officer's full Base Salary earned prior to the Date of Termination,  any amounts
payable  pursuant  to  Sections  (4)(c) and (4)(d)  hereof and any  benefits  or
amounts  payable under any deferred  compensation  plan in which the Officer had
been a participant,  and,  provided that the Company is not in default of any of
its obligations  hereunder,  the Company shall have no further obligation to the
Officer  under  this  Agreement  or on  account  of,  or  arising  out  of,  the
termination of the Officer's employment.

                  (d)  If  the  Company  terminates  the  Officer's   employment
hereunder without Cause, or if the Officer  terminates the Officer's  employment
hereunder on account of a Breach by the Company:

                           (i)  The  Company   shall   pay   to  the Officer the
Officer's  Total  Compensation  earned  prior  to the Date of  Termination,  any
amounts  payable  pursuant to Sections  4(c) and 4(d) hereof and any benefits or
amounts  payable under any deferred  compensation  plan in which the Officer had
been a participant.

                           (ii)  The   Company   shall   afford  the Officer the
severance benefits set forth on Schedule A attached hereto.

                                     - 4 -
<PAGE>

                           (iii) The payment to, and acceptance by, the Officer
of any sum of money or benefit  prescribed  in this Section  (6)(d) shall effect
and evidence a release by the Officer of any and all claims  against the Company
on account of, or arising out of, the termination of the Officer's employment.

         (7) CHANGE IN CONTROL

         For purposes of this Agreement,  Change in Control of the Company shall
mean any of the following events:

                  (a) any  merger  or  consolidation  of the  Company  with  any
corporate  shareowner  or group of  corporate  shareowners  holding  twenty-five
percent  (.25) or more of the Common  Stock of UIL  Holdings  Corporation  (or a
successor to UIL Holdings Corporation,  whether direct or indirect, by purchase,
merger,  consolidation  or  otherwise  -  a  "Successor"),  or  with  any  other
corporation  or  group  of  corporations  that  is,  or  after  such  merger  or
consolidation  would  be,  or be  affiliated  with,  a  shareowner  or  group of
shareowners owning at least twenty-five percent (.25) of the Common Stock of UIL
Holdings Corporation or a Successor, or

                  (b) any sale, lease, exchange,  mortgage,  pledge, transfer or
other  disposition  of any assets of the Company having an aggregate fair market
value of $50 million or more to or with any  shareowner or group of  shareowners
holding  twenty-five  percent  (.25) or more of the Common Stock of UIL Holdings
Corporation or a Successor,  or to or with any affiliate of any such  shareowner
or group of shareowners; or

                  (c) the  issuance or sale by the  Company,  or the sale by UIL
Holdings Corporation or a Successor,  in exchange for cash,  securities or other
consideration  having an aggregate  fair market value of $50 million or more, of
any securities of the Company to any shareowner or group of shareowners  holding
twenty-five  percent  (.25)  or  more  of  the  Common  Stock  of  UIL  Holdings
Corporation or a Successor,  or to any affiliate of any such shareowner or group
of shareowners; or

                  (d)  the  implementation  of any  plan  or  proposal  for  the
liquidation or dissolution of the Company,  or of UIL Holdings  Corporation or a
Successor,  proposed by or on behalf of any  shareowner or group of  shareowners
owning at least  twenty-five  percent  (.25) of the Common Stock of UIL Holdings
Corporation  or a  Successor,  or by or on behalf of any  affiliate  of any such
shareowner or group of shareowners; or

                  (e) any  reclassification  of securities  (including a reverse
stock split), or  recapitalization,  of UIL Holdings

                                     - 5 -
<PAGE>

Corporation  or a  Successor,  or any other  transaction,  which has the effect,
directly or  indirectly,  of increasing the  proportionate  share of outstanding
shares of any class of equity  securities,  or securities  convertible  into any
equity securities,  of UIL Holdings  Corporation or a Successor,  which class of
securities  is  directly  or  indirectly  owned  by a  shareowner  or  group  of
shareowners owning at least twenty-five percent (.25) of the Common Stock of UIL
Holdings Corporation or a Successor,  or by any affiliate of any such shareowner
or group of shareowners.

         The Board of Directors of the Company  may,  from time to time,  by the
affirmative  vote of not less than a majority of the entire  membership  of said
Board of Directors,  at a meeting of said Board of Directors called and held for
the purpose, modify the phrase "twenty-five percent (.25)" in one or more of the
foregoing  Sections  (7)(a),  (7)(b),  (7)(c),  (7)(d) and/or (7)(e) to a lesser
percentage, but not less than twenty percent (.20).

         (8) ADDITIONAL CONSEQUENCES OF A CHANGE IN CONTROL

                  (a) In the event that a Change in Control has been approved by
all necessary  shareholder,  creditor and regulatory actions,  the Company will,
not later  than the day prior to the date of the Change in  Control,  pay to the
Trustee of The United Illuminating Company Supplemental Retirement Benefit Trust
established  pursuant  to the  Agreement,  made as of the 1st day of June,  1995
between the Company and State Street Bank and Trust Company, as Trustee, for the
benefit of the  Officer,  cash in an amount  equal to: (A) In the event that the
Officer's employment has been terminated or will be terminated prior to the date
of the  Change  in  Control,  a sum,  calculated  by the  Company's  independent
certified  public  accountants,  reasonably  sufficient to pay and discharge the
largest of the Company's future  obligations,  if any, to the Officer and/or his
personal  representative and/or spouse, under Section (6)(a),  Section (6)(b) or
Section (6)(d) hereof; or (B) in the event that the Officer's employment has not
been  terminated  and will not be terminated  prior to the date of the Change in
Control,  a  sum,  calculated  by the  Company's  independent  certified  public
accountants,   reasonably   sufficient   to  pay  and  discharge  the  Company's
obligations to the Officer under Section (6)(d) hereof assuming, for purposes of
such calculation, that the Officer's employment is terminated under said Section
(6)(d) by a Notice of Termination delivered on the date of the Change in Control
and specifying an immediate Date of Termination.

                  (b) On and  after  the  date of the  Change  in  Control,  the
Officer's  Base Salary may not be reduced by the Board of Directors to an annual
rate less than the rate  fixed by the Board of  Directors  of the  Company  as a
result of its most recent  review of salary  rates,  pursuant to Section  (4)(a)
hereof, prior to the date of the Change in Control.

                                     - 6 -
<PAGE>

         (9) TAX SAVINGS PROVISION

         If any  portion  of the  payments  which the  Officer  has the right to
receive from the Company,  or any affiliated entity,  hereunder would constitute
"excess parachute  payments" (as defined in Section 280G of the Internal Revenue
Code,  and not governed by the terms defined in this  Agreement)  subject to the
excise tax imposed by Section 4999 of the  Internal  Revenue  Code,  such excess
parachute payments shall be reduced to the largest amount that will result in no
portion  of such  excess  parachute  payments  being  subject  to the excise tax
imposed by Section 4999 of the Internal Revenue Code.

         (10) SUCCESSORS; BINDING AGREEMENT

                  (a) The Company shall pay to the Officer  and/or the Officer's
personal  representative  and/or  spouse all legal fees and  expenses  and court
costs,  if any,  incurred by the  Officer  and/or the  Officer's  representative
and/or  spouse in successful  litigation  to enforce the Officer's  rights under
this Agreement.

                  (b) The Company will require any successor  (whether direct or
indirect,   by  purchase,   merger,   consolidation  or  otherwise)  to  all  or
substantially all of the business or assets of the Company, by agreement in form
and substance  reasonably  satisfactory to the Officer,  to expressly assume and
agree to perform  this  Agreement in the same manner and to the same extent that
the  Company  would be required  to perform it if no such  succession  had taken
place.  Failure of the Company to obtain such agreement by the  effectiveness of
any such  succession  shall be a breach of this  Agreement and shall entitle the
Officer to  compensation  from the  Company in the same amount and upon the same
terms as the Officer  would be entitled to hereunder  if the Officer  terminated
the Officer's  employment upon Breach by the Company,  except that, for purposes
of implementing  the foregoing,  the date on which any such  succession  becomes
effective  shall be deemed the Date of  Termination.  As used in this Agreement,
the term "the Company" shall include The United Illuminating Company, any parent
and any  successor  to the  business  or assets of  either  as  aforesaid  which
executes and delivers the  agreement  provided for in this Section (10) or which
otherwise  becomes bound by all the terms and  provisions  of this  Agreement by
operation of law.

                  (c) This  Agreement  and all rights of the  Officer  hereunder
shall inure to the benefit of and be  enforceable  by the Officer's  personal or
legal   representatives,    executors,   administrators,    successors,   heirs,
distributees, devisees and legatees. If the Officer should die while any amounts
would still be payable to the Officer  hereunder if the Officer had continued to
live,  all such amounts,  unless  otherwise  provided  herein,  shall be paid in
accordance with the terms of this Agreement to the Officer's devisee, legatee or
other designee or, if there be no such designee, to the Officer's estate.

                                     - 7 -
<PAGE>

         (11) NOTICE

         For the purpose of this Agreement, notices and all other communications
to either party hereunder  provided for in the Agreement shall be in writing and
shall be  deemed  to have been duly  given  when  delivered  or mailed by United
States certified or registered mail, return receipt requested,  postage prepaid,
addressed,  in the case of the Company, to The United Illuminating  Company, 157
Church Street, New Haven, Connecticut,  Attention: Secretary, or, in the case of
the Officer,  to the Officer at 157 Church Street, New Haven Connecticut,  or to
such other address as either party shall  designate by giving  written notice of
such change to the other party.

         (12) MISCELLANEOUS

                   No provision  of this  Agreement  may be modified,  waived or
discharged  unless such  waiver,  modification  or  discharge is approved by the
Board of  Directors  of the  Company  and  agreed to in a writing  signed by the
Officer and such officer of the Company as may be specifically authorized by the
Board of Directors of the Company.  No waiver by either party hereto at any time
of any breach by the other party hereto of, or compliance with, any condition or
provision of this  Agreement to be performed by such other party shall be deemed
a waiver of any similar or dissimilar provisions or conditions at the same or at
any  prior  or  subsequent  time.  No  agreements  or  representations,  oral or
otherwise,  express or implied,  with respect to the subject  matter hereof have
been made by either party that are not set forth  expressly  in this  Agreement.
The validity,  interpretation,  construction  and  performance of this Agreement
shall be governed by the laws of the State of Connecticut.

         (13) VALIDITY

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

         (14) SURVIVAL

         The provisions of this Agreement  shall not survive the  termination of
this  Agreement  or of the  Officer's  employment  hereunder,  except  that  the
provisions of Sections (4), (6), (8), (9),  (10),  and (11) hereof shall survive
such termination and shall be binding upon the Company's successors and assigns.

         (15) COUNTERPARTS

         This  Agreement  may be executed in one or more  counterparts,  each of
which  shall  be  deemed  to be an  original  but  all of  which  together  will
constitute one and the same instrument.

                                     - 8 -
<PAGE>

         IN WITNESS WHEREOF,  the parties hereto have executed this Agreement on
the date and year first above written.

Attest:  THE UNITED ILLUMINATING COMPANY

  /s/ Charles J. Pepe                  By:     /s/ Nathaniel D. Woodson
--------------------------                   -----------------------------
Assistant Secretary                            Chairman, President and
                                               Chief Executive Officer

                                               /s/ Susan E. Allen
                                             -----------------------------
                                                   Susan E. Allen

                                     - 9 -
<PAGE>

                                   SCHEDULE A

                               Severance Benefits
                               ------------------

The Company shall:

     (i) pay to the  Officer,  within 30 days,  a lump sum  payment in an amount
     equal  to two  (2)  times  the  sum  of  the  Officer's  Base  Salary  rate
     immediately  prior to the date of the Officer's  termination and the target
     amount  payable  to  the  Officer  under  any  annual  Executive  Incentive
     Compensation Program of the Company; and
     (ii) maintain in full force and effect,  for the  continued  benefit of the
     Officer for the period ending on the second  anniversary of the date of his
     termination,  all employee  benefit plans and programs in which the Officer
     was entitled to participate  immediately prior to the date of the Officer's
     termination,   provided  that  the  Officer's  continued  participation  is
     possible  under the general terms and provisions of such plans and programs
     and applicable law and, if the Officer's  participation in any such plan or
     program is barred as a result of the  Officer's  termination,  the  Company
     shall arrange to provide the Officer with benefits substantially similar on
     an after-tax  basis to those that the Officer  would have been  entitled to
     receive under such plan or program; and
     (iii) afford to the Officer the addition of two (2) years of service deemed
     as an employee of the Company in the calculation of the benefits payable to
     the Officer under the retiree medical benefit plan(s) of the Company and in
     the  calculation  of the benefits  payable to the Officer as a supplemental
     retirement benefit under the Officer's Employment Agreement.

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