WEBSTER FINANCIAL CORPORATION

                               AMENDMENT NUMBER 2
                           TO 1992 STOCK OPTION PLAN

     The Webster  Financial  Corporation 1992 Stock Option Plan, as amended (the
"Plan") is hereby  amended as set forth  below,  effective  March 18, 1996 ( the
"Adoption  Date"),  subject  to  approval  of  this  Amendment  Number  2 by the
shareholders of Webster Financial  Corporation (the "Corporation"),  as provided
below:

     1. The  second  sentence  of  Section 3 of the Plan is  further  amended to
increase  the  number  of  shares  covered  by the  Plan by  375,000  shares  by
substituting the figure "780,500" for the figure "405,500."

     2. Section 4(b) is amended to read in its entirety as follows:

        "(b)   Non-Employee   Directors.    Each   Non-Employee
        Director  who is elected  by  the  shareholders of  the
        Corporation  to serve on the Board for a term beginning
        after  March 18, 1996 shall be granted an Option on the
        date of such  election to purchase  2,000 shares of the
        Stock at the  price on the  date of such  election  and
        upon the other terms and  conditions  specified  in the
        Plan, except that if a Non-Employee Director is elected
        to serve on the  Board  for a term of less  than  three
        years,  the  Option  shall  cover a number of shares of
        Stock equal to 2,000,  multiplied  by a  fraction,  the
        numerator  is the number of whole months of the term to
        which such  Non-Employee  Director  was elected and the
        denominator  of which  is 36,  rounded  to the  nearest
        whole share,  The foregoing  numbers of shares of Stock
        shall be subject to  adjustment  pursuant to Section 17
        hereof.  Except as provided in this  Section  4(b),  no
        Non-Employee  Director  shall be eligible to be granted
        Options under this Plan."

     3. The Plan shall otherwise be unchanged by this Amendment Number 2.

     4. This Amendment  Number 2 is adopted  subject to approval within one year
of the Adoption Date by a majority of the votes present,  in person or by proxy,
and  entitled  to  vote  at a  duly  held  meeting  of the  shareholders  of the
Corporation at which a quorum  representing a majority of all outstanding voting
stock is present, in person or by proxy;  provided,  however, that upon approval
of Amendment Number 2 by the shareholders of the Corporation as set forth above,
any options  granted  under the Plan on or after the Adoption  Date  pursuant to
Amendment  Number 2 shall  be  fully  effective  as if the  shareholders  of the
Corporation had approved Amendment






Number 2 on the Adoption  Date. If the  shareholders  fail to approve  Amendment
Number 2 within one year of the  Adoption  Date,  any options  granted  covering
shares of stock in excess of the number  permitted  under the Plan (as in effect
before the Adoption Date) shall be null and void and of no effect.

                           *           *            *

     Amendment  Number 2 to the Plan was duly  adopted and approved by the Board
of Directors of the  Corporation  by  resolution  at a meeting held on March 18,
1996, subject to approval of Amendment Number 2 shareholders of the Corporation.

                                                      /s/ Lee A. Gagnon
                                                       -------------------------
                                                        Lee A. Gagnon, Secretary