Document:

UIL Holdings Exhibit 10.1

    Exhibit
      10.1

    

    

    FIRST
      AMENDMENT TO

    EMPLOYMENT
      AGREEMENT

    BETWEEN
      UIL HOLDINGS CORPORATION

    AND

    CHARLES
      J. PEPE

    

    

    WHEREAS,
      the Department of the Treasury has issued interim guidance contained in Notice
      2005-1 concerning the implementation of the new non-qualified deferred
      compensation rules contained in Section 409A of the Internal Revenue Code;
      and

    

    WHEREAS,
      the interim guidance has made it clear that amounts accrued under a supplemental
      executive retirement arrangement through December 31, 2004 may be
‘grandfathered’ and not subject to the new, more restrictive rules, provided
      that there is no material amendment made to such arrangement after October
      3,
      2004; and

    

    WHEREAS,
      in light of the IRS guidance, UIL Holdings Corporation (the “Company”) and
      Charles J. Pepe (the “Executive”) wish to clarify the supplemental executive
      retirement plan (“SERP”) provisions contained in the employment agreement
      between UIL Holdings Corporation and Charles J. Pepe dated November 8, 2004
      (the
“Employment Agreement”), to clearly bifurcate SERP accruals before and after
      January 1, 2005, and to restrict applicability of the new, more restrictive
      rules to post-2004 accruals; and

    

    WHEREAS,
      the Company and Executive further wish to take advantage of certain transition
      rules that allow elections as to time and form of payment to be made up through
      December 31, 2005 without running afoul of Section 409A of the
      Code;

    

    WHEREAS,
      it is anticipated that this will be the first in a series of such amendments
      required to comply with the new non-qualified deferred compensation rules;
      

    

    

    NOW
      THEREFORE, Section 4(g) of the Employment Agreement is revised in its entirety
      to read as follows:

    

    (g)
      Supplemental
      Executive Retirement Benefit. 

    

    (i)
      Benefit
      Formula.  Upon
      termination of the Executive's employment with the Company and all affiliates
      other than for Cause (as defined in Section 5(b) of this Agreement), a SERP
      benefit shall be payable in accordance with the provisions of this Section
      (4)(g). The annual supplemental retirement benefit, expressed in the form of
      a
      single life annuity beginning at the Executive's Normal Retirement

     

    
      
        
        

      

      
        -
          1
          -

        
          

        

      

      
        
        

      

    

     

    Date
      as
      defined in The United Illuminating Company Pension Plan (the “UI Pension Plan”),
      shall be the excess, if any, of (A) less (B), where (A) is 1.9% (.019) of the
      Executive's highest three-year average Total Compensation times his number
      of
      years of service as an employee of the Company (including any deemed service
      and/or deemed age credited under this Agreement or the CIC Plan II) at
      termination (not to exceed twenty-five years), plus 0.1% (.001) of the
      Executive’s highest three-year average Total Compensation times the number of
      years at termination in excess of twenty-five (not to exceed five) of the
      Executive’s service as an employee of the Company and all affiliates (including
      deemed service), and (B) is the benefit payable under the UI Pension Plan,
      where
      (A) and (B) are both expressed as a single life annuity commencing as of the
      Executive’s Normal Retirement Date. For purposes of this Section, Total
      Compensation shall mean the Executive’s Base Salary, and any amount paid to the
      Executive as short-term incentive compensation pursuant to the Company’s annual
      executive incentive compensation plan. The benefits payable under this Section
      4(g) shall be calculated using the same definitions of actuarial equivalence,
      and the same early retirement reduction factors that are specified in the
      Pension Plan in the event that the Executive becomes entitled to payment of
      the
      supplemental retirement benefit prior to what would have been his Normal
      Retirement Date, except that, in the event that the Executive is credited with
      deemed years of service and/or age, the reductions shall be based on the
      Executive's deemed age and years of service. If the form of payment provides
      for
      a death benefit, such benefit shall be payable to the Executive's estate, unless
      another beneficiary has been designated by the Executive. If the Executive
      dies
      prior to the commencement of benefit payments, then the pre-retirement death
      benefit provisions of the Pension Plan shall apply to the supplemental
      retirement benefit payable pursuant to this Section (4)(g).

    

    (ii)
      Grandfathering
      Pre-2005 Accruals; Time and Form of Payment.
      SERP
      accruals through December 31, 2004 (the ‘grandfathered amount’) shall be subject
      to the tax law in effect prior to the enactment of Section 409A of the Internal
      Revenue Code, including without limitation requirements as to election of the
      timing and form of payment. For purposes of calculating the grandfathered
      amount, the grandfathered amount shall be determined to be the actuarially
      equivalent present value as of December 31, 2004 of the SERP benefit to which
      the Executive would be entitled under this Section 4(g) if the Executive had
      voluntarily terminated service as of that date and received, upon his
      termination of service, a full payment of benefits from the SERP, including
      in
      such calculation the addition of up to six years of age or service (or any
      combination) to which the Executive became entitled under Section 6(c)(B) of
      this Employment Agreement by virtue of having been notified in 2004 that he
      was
      being terminated without cause. Early retirement subsidies to which the
      Executive would not in fact be entitled as of December 31, 2004 because the
      Executive had not attained sufficient service shall not be included in
      determining the grandfathered amount. The normal form of benefit 

     

    
      
        
        

      

      
        -
          2
          -

        
          

        

      

      
        
        

      

    

     

    payment
      for the grandfathered amount shall be an actuarially equivalent lump sum equal
      to the present value of the deferred life annuity payable as of the Executive’s
      Normal Retirement Date to which the Executive would have been entitled under
      this Section 4(g) had he terminated service as of December 31, 2004. The
      Executive may instead elect to receive the grandfathered amount in any other
      one
      of the actuarially equivalent forms provided for under the Pension Plan;
      provided that such election is made in accordance with the law in effect prior
      to January 1, 2005 and any transition rules provided in IRS Notice
      2005-1.

    

    (iii)
      Time
      and Form of Payment for Non-Grandfathered Amounts.
      Distribution of the SERP benefit accruals occurring on or after January 1,
      2005
      (the “non-grandfathered amount”) shall be shall be paid, or commence, in the
      month of January following the Executive’s termination of service with the
      Company and its affiliates, but in no event earlier than six months following
      the Executive’s termination of service in the event that the Executive is a ‘key
      employee’ as defined in Section 416 of the Internal Revenue Code. The
      non-grandfathered amount, determined as of the Executive’s termination date,
      shall be paid in an actuarially equivalent lump sum equal to the present value
      of the deferred life annuity commencing at Normal Retirement Date, unless the
      Executive shall have elected at least 12 months in advance of such distribution
      date to commence distributions in one of the other actuarially equivalent forms
      of benefits permitted under the Company’s Pension Plan, in which case the
      commencement of the non-grandfathered amount shall be deferred for a period
      of
      at least five years from the date on which such distribution otherwise would
      have been made, unless termination of service is due to death or disability.
      Notwithstanding the foregoing to the contrary, on or before December 31, 2005,
      the Executive shall be permitted to make an election, pursuant to IRS Notice
      2005-1, Question and Answer 19(c) to alter the form of distribution that would
      otherwise apply under this Subsection (iii) to the non-grandfathered amount,
      and
      to take the non-grandfathered amount in any actuarially equivalent form of
      distribution available under the Pension Plan, without the necessity of making
      such election 12 months in advance of such distribution commencement date,
      and
      without being deemed to have violated either the 5 year deferral rule contained
      in Sections 409A(4) or the ‘anti-acceleration’ rule of Section 409A(3) of the
      Code.

    

    (iv)
      Payments
      Conditioned upon Release.
      All
      payments under this Section 4(g) are conditioned upon the Executive executing
      the release provided for in Section 6(f).

    

    (v)
      Compliance
      with Applicable Tax Law.
      The
      provisions of this section are intended to comply in good faith with all laws
      applicable to the taxation of non-qualified deferred compensation, and the
      Company and Executive agree to revise this subsection as necessary or advisable
      on or before December 31, 2005 in order to comply with such laws and to
      incorporate the applicable provisions of Section 409A

     

    
      
        
        

      

      
        -
          3
          -

        
          

        

      

      
        
        

      

    

     

    of
      the
      Internal Revenue Code (and guidance issued thereon) with respect to
      non-grandfathered amounts.

    

    The
      provisions of the foregoing amendment shall be effective as of January 1,
      2005.

     

     

    IN
      WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
      day
      and year first above written.

    

    

    UIL
      HOLDINGS CORPORATION

    

    Attest: 
      June 30, 2005

    

    

    

    

    
      	
                   /s/
                Susan E. Allen             

            	 	
                   
                By: /s/ Nathaniel D. Woodson            

            
	
              Susan
                E. Allen, Vice President

              Investor
                Relations, Corporate

              Secretary
                & Assistant Treasurer

            	 	
                 
                Nathaniel D. Woodson

                  
                Chairman and Chief

                    Executive
                Officer

            

    

    

    

                                 /s/
      Charles J. Pepe          

                                         Charles
      J. Pepe

     

    
      
        -
          4
          -UIL Holdings Exhibit 10-1

    Exhibit
      10.1

    

    

    FIRST
      AMENDMENT TO

    EMPLOYMENT
      AGREEMENT

    BETWEEN
      UIL HOLDINGS CORPORATION

    AND

    CHARLES
      J. PEPE

    

    

    WHEREAS,
      the Department of the Treasury has issued interim guidance contained in Notice
      2005-1 concerning the implementation of the new non-qualified deferred
      compensation rules contained in Section 409A of the Internal Revenue Code;
      and

    

    WHEREAS,
      the interim guidance has made it clear that amounts accrued under a supplemental
      executive retirement arrangement through December 31, 2004 may be
‘grandfathered’ and not subject to the new, more restrictive rules, provided
      that there is no material amendment made to such arrangement after October
      3,
      2004; and

    

    WHEREAS,
      in light of the IRS guidance, UIL Holdings Corporation (the “Company”) and
      Charles J. Pepe (the “Executive”) wish to clarify the supplemental executive
      retirement plan (“SERP”) provisions contained in the employment agreement
      between UIL Holdings Corporation and Charles J. Pepe dated November 8, 2004
      (the
“Employment Agreement”), to clearly bifurcate SERP accruals before and after
      January 1, 2005, and to restrict applicability of the new, more restrictive
      rules to post-2004 accruals; and

    

    WHEREAS,
      the Company and Executive further wish to take advantage of certain transition
      rules that allow elections as to time and form of payment to be made up through
      December 31, 2005 without running afoul of Section 409A of the
      Code;

    

    WHEREAS,
      it is anticipated that this will be the first in a series of such amendments
      required to comply with the new non-qualified deferred compensation rules;
      

    

    

    NOW
      THEREFORE, Section 4(g) of the Employment Agreement is revised in its entirety
      to read as follows:

    

    (g)
      Supplemental
      Executive Retirement Benefit. 

    

    (i)
      Benefit
      Formula.  Upon
      termination of the Executive's employment with the Company and all affiliates
      other than for Cause (as defined in Section 5(b) of this Agreement), a SERP
      benefit shall be payable in accordance with the provisions of this Section
      (4)(g). The annual supplemental retirement benefit, expressed in the form of
      a
      single life annuity beginning at the Executive's Normal Retirement

     

    
      
        
        

      

      
        -
          1
          -

        
          

        

      

      
        
        

      

    

     

    Date
      as
      defined in The United Illuminating Company Pension Plan (the “UI Pension Plan”),
      shall be the excess, if any, of (A) less (B), where (A) is 1.9% (.019) of the
      Executive's highest three-year average Total Compensation times his number
      of
      years of service as an employee of the Company (including any deemed service
      and/or deemed age credited under this Agreement or the CIC Plan II) at
      termination (not to exceed twenty-five years), plus 0.1% (.001) of the
      Executive’s highest three-year average Total Compensation times the number of
      years at termination in excess of twenty-five (not to exceed five) of the
      Executive’s service as an employee of the Company and all affiliates (including
      deemed service), and (B) is the benefit payable under the UI Pension Plan,
      where
      (A) and (B) are both expressed as a single life annuity commencing as of the
      Executive’s Normal Retirement Date. For purposes of this Section, Total
      Compensation shall mean the Executive’s Base Salary, and any amount paid to the
      Executive as short-term incentive compensation pursuant to the Company’s annual
      executive incentive compensation plan. The benefits payable under this Section
      4(g) shall be calculated using the same definitions of actuarial equivalence,
      and the same early retirement reduction factors that are specified in the
      Pension Plan in the event that the Executive becomes entitled to payment of
      the
      supplemental retirement benefit prior to what would have been his Normal
      Retirement Date, except that, in the event that the Executive is credited with
      deemed years of service and/or age, the reductions shall be based on the
      Executive's deemed age and years of service. If the form of payment provides
      for
      a death benefit, such benefit shall be payable to the Executive's estate, unless
      another beneficiary has been designated by the Executive. If the Executive
      dies
      prior to the commencement of benefit payments, then the pre-retirement death
      benefit provisions of the Pension Plan shall apply to the supplemental
      retirement benefit payable pursuant to this Section (4)(g).

    

    (ii)
      Grandfathering
      Pre-2005 Accruals; Time and Form of Payment.
      SERP
      accruals through December 31, 2004 (the ‘grandfathered amount’) shall be subject
      to the tax law in effect prior to the enactment of Section 409A of the Internal
      Revenue Code, including without limitation requirements as to election of the
      timing and form of payment. For purposes of calculating the grandfathered
      amount, the grandfathered amount shall be determined to be the actuarially
      equivalent present value as of December 31, 2004 of the SERP benefit to which
      the Executive would be entitled under this Section 4(g) if the Executive had
      voluntarily terminated service as of that date and received, upon his
      termination of service, a full payment of benefits from the SERP, including
      in
      such calculation the addition of up to six years of age or service (or any
      combination) to which the Executive became entitled under Section 6(c)(B) of
      this Employment Agreement by virtue of having been notified in 2004 that he
      was
      being terminated without cause. Early retirement subsidies to which the
      Executive would not in fact be entitled as of December 31, 2004 because the
      Executive had not attained sufficient service shall not be included in
      determining the grandfathered amount. The normal form of benefit 

     

    
      
        
        

      

      
        -
          2
          -

        
          

        

      

      
        
        

      

    

     

    payment
      for the grandfathered amount shall be an actuarially equivalent lump sum equal
      to the present value of the deferred life annuity payable as of the Executive’s
      Normal Retirement Date to which the Executive would have been entitled under
      this Section 4(g) had he terminated service as of December 31, 2004. The
      Executive may instead elect to receive the grandfathered amount in any other
      one
      of the actuarially equivalent forms provided for under the Pension Plan;
      provided that such election is made in accordance with the law in effect prior
      to January 1, 2005 and any transition rules provided in IRS Notice
      2005-1.

    

    (iii)
      Time
      and Form of Payment for Non-Grandfathered Amounts.
      Distribution of the SERP benefit accruals occurring on or after January 1,
      2005
      (the “non-grandfathered amount”) shall be shall be paid, or commence, in the
      month of January following the Executive’s termination of service with the
      Company and its affiliates, but in no event earlier than six months following
      the Executive’s termination of service in the event that the Executive is a ‘key
      employee’ as defined in Section 416 of the Internal Revenue Code. The
      non-grandfathered amount, determined as of the Executive’s termination date,
      shall be paid in an actuarially equivalent lump sum equal to the present value
      of the deferred life annuity commencing at Normal Retirement Date, unless the
      Executive shall have elected at least 12 months in advance of such distribution
      date to commence distributions in one of the other actuarially equivalent forms
      of benefits permitted under the Company’s Pension Plan, in which case the
      commencement of the non-grandfathered amount shall be deferred for a period
      of
      at least five years from the date on which such distribution otherwise would
      have been made, unless termination of service is due to death or disability.
      Notwithstanding the foregoing to the contrary, on or before December 31, 2005,
      the Executive shall be permitted to make an election, pursuant to IRS Notice
      2005-1, Question and Answer 19(c) to alter the form of distribution that would
      otherwise apply under this Subsection (iii) to the non-grandfathered amount,
      and
      to take the non-grandfathered amount in any actuarially equivalent form of
      distribution available under the Pension Plan, without the necessity of making
      such election 12 months in advance of such distribution commencement date,
      and
      without being deemed to have violated either the 5 year deferral rule contained
      in Sections 409A(4) or the ‘anti-acceleration’ rule of Section 409A(3) of the
      Code.

    

    (iv)
      Payments
      Conditioned upon Release.
      All
      payments under this Section 4(g) are conditioned upon the Executive executing
      the release provided for in Section 6(f).

    

    (v)
      Compliance
      with Applicable Tax Law.
      The
      provisions of this section are intended to comply in good faith with all laws
      applicable to the taxation of non-qualified deferred compensation, and the
      Company and Executive agree to revise this subsection as necessary or advisable
      on or before December 31, 2005 in order to comply with such laws and to
      incorporate the applicable provisions of Section 409A

     

    
      
        
        

      

      
        -
          3
          -

        
          

        

      

      
        
        

      

    

     

    of
      the
      Internal Revenue Code (and guidance issued thereon) with respect to
      non-grandfathered amounts.

    

    The
      provisions of the foregoing amendment shall be effective as of January 1,
      2005.

     

     

    IN
      WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
      day
      and year first above written.

    

    

    UIL
      HOLDINGS CORPORATION

    

    Attest: 
      June 30, 2005

    

    

    

    

    
      	
                   /s/
                Susan E. Allen             

            	 	
                   
                By: /s/ Nathaniel D. Woodson            

            
	
              Susan
                E. Allen, Vice President

              Investor
                Relations, Corporate

              Secretary
                & Assistant Treasurer

            	 	
                 
                Nathaniel D. Woodson

                  
                Chairman and Chief

                    Executive
                Officer

            

    

    

    

                                 /s/
      Charles J. Pepe          

                                         Charles
      J. Pepe

     

    
      
        -
          4
          -

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