EXHIBIT 10.7



                         WEBSTER FINANCIAL CORPORATION
                               AMENDMENT NUMBER 4
                                       TO
                             1992 STOCK OPTION PLAN



     The Webster  Financial  Corporation  1992 Stock Option Plan,  as heretofore
amended (the "Plan"), is hereby amended, effective as of the date of adoption of
this  Amendment  Number  4 by  the  Board  of  Directors  of  Webster  Financial
Corporation (the "Corporation"), as provided below:

     1.   Section 11 of the Plan is amended to read in its entirety as follows:

          "11. TRANSFERABILITY OF OPTIONS.

               During the  lifetime of an Optionee  to whom an  Incentive  Stock
          Option is  granted,  only  such  Optionee  (or,  in the event of legal
          incapacity  or   incompetence,   the  Optionee's   guardian  or  legal
          representative)  may exercise such Incentive  Stock Option.  No Option
          shall be  assignable  or  transferable  by the  Optionee to whom it is
          granted,  other than by will or the laws of descent and  distribution,
          except that,  unless  otherwise  provided in an Option  Agreement,  an
          Option that is not intended to  constitute  an Incentive  Stock Option
          may be transferred by gift: to a member of the Optionee's "Family" (as
          defined below);  to a trust for the exclusive  benefit of the Optionee
          or one or more members of the Optionee's Family; or to any combination
          of the foregoing, provided that any such transferee shall enter into a
          written  agreement  to be bound by the  terms  of the  Plan.  For this
          purpose, "Family" shall mean the spouse, siblings and lineal ancestors
          and descendants of the Optionee."

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

                                     * * *

     Amendment  Number 4 to the Plan was duly  adopted and approved by the Board
of Directors of the  Corporation  by resolution at a meeting held on January 25,
1999.

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