EXHIBIT 10.1

                          WEBSTER FINANCIAL CORPORATION

                               AMENDMENT NUMBER 3
                                       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  February 23, 1998 (the
"Adoption  Date"),  subject  to  approval  of  this  Amendment  Number  3 by the
shareholders of Webster Financial  Corporation (the "Corporation"),  as provided
below:

     1.   The  second  sentence  of  Section 3 of the Plan is amended to read as
          follows:

          "The number of shares of Stock that may be issued  pursuant to Options
          granted  under the Plan shall not exceed in the  aggregate  2,961,000*
          shares, which number of shares is subject to adjustment as hereinafter
          provided in Section 17 below."

     2.   The last  sentence  of Section  4(a) of the Plan is amended to read as
          follows:

          "The maximum  number of shares of Stock subject to Options that may be
          granted  under  the  Plan to any  officer  or  other  employee  of the
          Corporation or any Subsidiary in any calendar year is 500,000*  shares
          (subject to adjustment as provided in Section 17 hereof)."

     3.   Section 5(b) of the Plan is amended to read as follows:

               "(b) Term. The Plan shall terminate on February 23, 2008."

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



     *    Restated to reflect the two-for-one  stock split of the  Corporation's
          common stock in April 1998.








     5. This Amendment  Number 3 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 3 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 3 shall  be  fully  effective  as if the  shareholders  of the
Corporation  had  approved  Amendment  Number  3 on the  Adoption  Date.  If the
shareholders  fail to approve Amendment Number 3 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 3 to the Plan was duly  adopted and approved by the Board
of Directors of the  Corporation by resolution at a meeting held on February 23,
1998,  subject  to  approval  of  Amendment  Number  3 by  shareholders  of  the
Corporation.

                                                /s/ Harriet Munrett Wolfe
                                                --------------------------------
                                                Harriet Munrett Wolfe, Secretary

     Amendment  Number 3 to the Plan was duly adopted by the shareholders of the
Corporation at a meeting held on April 23, 1998.



                                                /s/ Harriet Munrett Wolfe
                                                --------------------------------
                                                Harriet Munrett Wolfe, Secretary


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