Exhibit 10.1

                          WEBSTER FINANCIAL CORPORATION
                                  Webster Plaza
                             Waterbury, Connecticut

                                January 10, 2000

Brian Orenstein
MECH Financial, Inc.
100 Peal Street
Hartford, Connecticut 06103

Dear Mr. Orenstein:

                  1. In consideration  for the payments set forth in paragraph 2
hereof,  you hereby agree that for a period of nine months  commencing  upon the
day  following  the  consummation  (the  "Effective  Time") of the  transactions
contemplated  by the  Agreement  and  Plan  of  Merger  by and  between  Webster
Financial Corporation (the "Company") and MECH Financial,  Inc. ("MECH"),  dated
as of  December  1,  1999  (the  "Merger  Agreement"),  you will  adhere  to the
restrictions and limitations set forth herein.

                  (a)  Confidential  Information.  You will hold in a  fiduciary
capacity for the benefit of the Company and its affiliated  companies all secret
or confidential  information,  knowledge or data relating to MECH or the Company
or any of its affiliated companies and their respective  businesses  (including,
without  limitation,  any  proprietary  and not publicly  available  information
concerning any processes,  methods, trade secrets,  research, secret data, costs
or names of users or  purchasers  of  their  respective  products  or  services,
business methods,  operating  procedures or programs or methods of promotion and
sale) that you obtain or obtained  during your employment by MECH or the Company
or any of the affiliated  companies and that is not public knowledge (other than
as  a  result  of  your  violation  of  this  paragraph   1(a))   ("Confidential
Information"). For the purposes of this paragraph 1(a), information shall not be
deemed to be  publicly  available  merely  because  it is  embraced  by  general
disclosures or because individual features or combinations  thereof are publicly
available.  You  will  not  communicate,  divulge  or  disseminate  Confidential
Information at any time during or after your  employment with the Company or any
of the  affiliated  companies,  except  with the prior  written  consent  of the
Company, or as otherwise required by law or legal process.  All records,  files,
memoranda, reports, customer lists, drawings, plans, documents and the like that
you use,  prepare or come into contact with during the course of your employment
shall remain the sole  property of the Company or one or more of the  affiliated
companies,  as  applicable,  and shall be  turned  over to the  Company  or such
affiliated company, as applicable, upon termination of your employment.

                  (b) Nonsolicitation.  You agree that you will not, at any time
during the Restricted  Period (as defined in paragraph 1(c) below),  without the
prior written consent of the Company,  directly or indirectly employ, or solicit
the employment of (whether as an employee,  officer, director, agent, consultant
or  independent  contractor),  any person  who was or is at any time  during the
previous  12 months an  employee,  representative,  officer or  director  of the
Company or any of its affiliated  companies  (except for such  employment by the
Company or any of its affiliated companies). You agree that you will not, at any
time during the Restricted Period, directly or indirectly, attempt in any manner
to persuade any client or customer of the Company or its affiliated companies to
cease to do business  or to reduce the amount of business  which any such client
or customer has customarily  done or contemplates  doing with the Company or its
affiliated  companies,  whether or not the  relationship  between the Company or
such affiliated company and such client or customer was originally  established,
in whole or in part,  through your efforts,  or to solicit  business of


<PAGE>
Brian Orenstein
January 10, 2000
Page 2

any such client or customer of the Company or its affiliated  companies,  unless
such  solicitation  is  rendered  on the behalf of,  and in  furtherance  of the
business of, the Company.

                  (c)  Noncompetition.  During the Restricted Period (as defined
below),  you shall not, without the prior written consent of the Chief Executive
Officer  of the  Company,  engage in or  become  associated  with a  Competitive
Activity.  For purposes of this paragraph 1: (i) the  "Restricted  Period" means
the  period  commencing  on the  Effective  Time and  ending  on the  nine-month
anniversary  of the Effective  Time;  (ii) a  "Competitive  Activity"  means any
business or other endeavor, in any county in Connecticut, that is engaged in the
banking  business,  whether as a bank,  a savings and loan,  a savings  bank,  a
credit union, mortgage company,  bank holding company,  savings and loan holding
company or other depositary  institution holding company in such jurisdiction as
of the Effective Time or any time  thereafter;  and (iii) you will be considered
to have become  "associated with a Competitive  Activity" if you become directly
or indirectly  involved as an owner,  principal,  employee,  officer,  director,
independent contractor,  representative,  stockholder,  financial backer, agent,
partner,  advisor, lender, or in any other individual or representative capacity
with any  individual,  partnership,  corporation or other  organization  that is
engaged in a Competitive Activity.  Notwithstanding the foregoing,  you may make
and retain  investments during the Restricted Period in less than one percent of
the equity of any entity  engaged in a Competitive  Activity,  if such equity is
listed  on  a  national   securities   exchange  or   regularly   traded  in  an
over-the-counter market.

                  2. In  consideration  for your  agreement not to engage in the
activities  set forth in  paragraph 1, the Company  hereby  agrees to pay you an
amount (the "Non-Compete Amount"),  currently valued by the parties at $102,916,
to be paid in equal  monthly  installments  over the duration of the  Restricted
Period,  provided that such payments  shall not commence  until such time as you
are no longer providing services to the Company or its affiliated companies. The
parties hereby agree to reconfirm and, to the extent  necessary or  permissible,
modify in writing the  Non-Compete  Amount and the  duration  of the  Restricted
Period on or before the date on which the Effective Time is expected to occur.

                  3. In the event  payments to you under this Agreement and with
or pertaining to any other plan, agreement or arrangement of the Company or MECH
(the "Total Payments"),  are determined by a final and nonappealable  order of a
court of competent jurisdiction or a final settlement approved by the Company to
be subject  to the  excise tax (the  "Excise  Tax")  under  Section  4999 of the
Internal Revenue Code (the "Code"),  the Company shall pay to you within 30 days
of such  determination an additional amount such that the net amount retained by
you,  after  deduction  of the Excise Tax on Total  Payments and any federal and
state income tax and Excise Tax upon the payment  provided for by this paragraph
3, shall be equal to the Total Payments. The parties agree that any calculations
required  pursuant to this  paragraph 3 shall be made by the Company;  provided,
however, that if you object in writing to the Company's  determination within 60
days, the  determination  shall be made by a "Big Five" accounting firm selected
by the Company and subject to your reasonable consent. The determination made by
such  accounting  firm  shall be  binding on you and the  Company.  The  parties
further agree that they shall reasonably cooperate with each other in connection
with any  administrative  or judicial  proceedings  concerning  the existence or
liability  for Excise Tax with  respect to the amounts  payable  hereunder.  The
Company  agrees  to  indemnify  you and hold  you  harmless  for any  penalties,
interest or expenses you  reasonably  incur in the event it is  determined  that
Excise Tax is owed. You hereby agree that you will not take any position on your
income tax return or otherwise  that is  inconsistent  with the positions of the
Company with respect to the treatment of any payment,  including the Non-Compete
Amount,  which may be contended is a "parachute  payment"  under Section 280G of
the Code.


<PAGE>

Brian Orenstein
January 10, 2000
Page 3

                  4. In  accordance  with  Section 1(a) of the Change in Control
Agreement  between  MECH and you dated as of June 28,  1996,  as  amended  as of
January  1, 1998 (the  "Prior  Agreement"),  as soon as  reasonably  practicable
following  the  Effective  Time and within 30 days of the  Effective  Time,  the
Company  shall  make a lump sum  payment  to you equal to  $381,833,  subject to
reduction as provided for in Sections 1(e) and 1(f) of the Prior Agreement. Upon
the  Company's  request  given in  writing  not less  than 45 days  prior to the
Effective  Time, you hereby agree that you will provide  services to the Company
on the same basis as you  provided  services  to MECH  immediately  prior to the
Effective  Time, for a period of up to six months  following the Effective Time,
at your current base pay; provided,  however,  that in the event you receive and
accept  a bona  fide  employment  opportunity  that is not in  violation  of the
covenants  set forth in paragraph 1 hereof,  you may terminate  your  employment
before the end of the period  requested by the Company,  but in no event earlier
than the 90th day following the Effective Time.

                  5. In the event of a breach or threatened  breach of paragraph
1, you agree that the Company shall be entitled to injunctive  relief in a court
of appropriate  jurisdiction to remedy any such breach or threatened breach, and
you acknowledge that damages would be inadequate and insufficient.  With respect
to any  provision  of  paragraph 1 finally  determined  by a court of  competent
jurisdiction  to be  unenforceable,  you and the Company  hereby agree that such
court shall have  jurisdiction to reform this Agreement or any provision  hereof
so that it is  enforceable  to the  maximum  extent  permitted  by law,  and the
parties agree to abide by such court's determination. If any of the covenants of
paragraph  1 are  determined  to be wholly  or  partially  unenforceable  in any
jurisdiction,  such  determination  shall not be a bar to or in any way diminish
the  rights  of  the  Company  to  enforce  any  such   covenant  in  any  other
jurisdiction.

                  6.  The   existence   of  Excise  Tax  shall  not  affect  the
obligations  of  the  parties  to  perform  their  respective   covenants  under
paragraphs 1 and 2.

                  7. This  Agreement  shall be  governed  by and  subject to the
jurisdiction  of the laws of the State of  Connecticut  applicable  to contracts
made and to be performed within such State.

                  8.  This  Agreement  shall be  binding  upon and  inure to the
benefit of the parties hereto and their respective  successors and assigns. This
Agreement may not be amended or terminated  without the prior written consent of
the parties  hereto,  provided  that the parties agree to the  modifications  or
amendments as are  contemplated by paragraph 2. In the event of your death after
the  Effective   Time,  the   Non-Compete   Amount  shall  be  payable  to  your
beneficiaries or your estate. In the event of non-payment hereof by the Company,
you shall be  entitled  to payment of counsel  fees and  expenses to enforce the
Company's obligations as provided in Section 1(d) of the Prior Agreement.

                  9. This  Agreement  shall  terminate and have no further force
and effect  without  liability  of any kind to any of the parties  hereto,  upon
termination  of  the  Merger  Agreement  without   consummation  of  the  merger
contemplated  thereby.  Immediately following the Effective Time, this Agreement
shall supersede any other  employment,  severance or change of control agreement
between you and MECH,  including,  without limitation,  the Prior Agreement.  As
used in this  Agreement,  the term  "affiliated  companies"  shall  include  any
company controlled by, controlling or under common control with the Company.

<PAGE>

Brian Orenstein
January 10, 2000
Page 4

                  10. The Company may withhold  from any amounts  payable  under
this Agreement such Federal,  state, local or foreign taxes as shall be required
to be withheld pursuant to any applicable law or regulation.

                                  Very truly yours,


                                  WEBSTER FINANCIAL CORPORATION


                                  By: /s/ James C. Smith
                                  -----------------------------
                                      James C. Smith

Accepted and Agreed to:


 /s/ Brian A. Orenstein
-----------------------------
Brian Orenstein


Accepted and Agreed to:

MECH FINANCIAL, INC.


By:      /s/ Edgar C. Gerwig
   -----------------------------
         President



<PAGE>

                          WEBSTER FINANCIAL CORPORATION
                                  Webster Plaza
                             Waterbury, Connecticut

                                January 10, 2000

Richard Stout
MECH Financial, Inc.
100 Peal Street
Hartford, Connecticut 06103

Dear Mr. Stout:

                  1. In consideration  for the payments set forth in paragraph 2
hereof,  you hereby agree that for a period of nine months  commencing  upon the
day  following  the  consummation  (the  "Effective  Time") of the  transactions
contemplated  by the  Agreement  and  Plan  of  Merger  by and  between  Webster
Financial Corporation (the "Company") and MECH Financial,  Inc. ("MECH"),  dated
as of  December  1,  1999  (the  "Merger  Agreement"),  you will  adhere  to the
restrictions and limitations set forth herein.

                  (a)  Confidential  Information.  You will hold in a  fiduciary
capacity for the benefit of the Company and its affiliated  companies all secret
or confidential  information,  knowledge or data relating to MECH or the Company
or any of its affiliated companies and their respective  businesses  (including,
without  limitation,  any  proprietary  and not publicly  available  information
concerning any processes,  methods, trade secrets,  research, secret data, costs
or names of users or  purchasers  of  their  respective  products  or  services,
business methods,  operating  procedures or programs or methods of promotion and
sale) that you obtain or obtained  during your employment by MECH or the Company
or any of the affiliated  companies and that is not public knowledge (other than
as  a  result  of  your  violation  of  this  paragraph   1(a))   ("Confidential
Information"). For the purposes of this paragraph 1(a), information shall not be
deemed to be  publicly  available  merely  because  it is  embraced  by  general
disclosures or because individual features or combinations  thereof are publicly
available.  You  will  not  communicate,  divulge  or  disseminate  Confidential
Information at any time during or after your  employment with the Company or any
of the  affiliated  companies,  except  with the prior  written  consent  of the
Company, or as otherwise required by law or legal process.  All records,  files,
memoranda, reports, customer lists, drawings, plans, documents and the like that
you use,  prepare or come into contact with during the course of your employment
shall remain the sole  property of the Company or one or more of the  affiliated
companies,  as  applicable,  and shall be  turned  over to the  Company  or such
affiliated company, as applicable, upon termination of your employment.

                  (b) Nonsolicitation.  You agree that you will not, at any time
during the Restricted  Period (as defined in paragraph 1(c) below),  without the
prior written consent of the Company,  directly or indirectly employ, or solicit
the employment of (whether as an employee,  officer, director, agent, consultant
or  independent  contractor),  any person  who was or is at any time  during the
previous  12 months an  employee,  representative,  officer or  director  of the
Company or any of its affiliated  companies  (except for such  employment by the
Company or any of its affiliated companies). You agree that you will not, at any
time during the Restricted Period, directly or indirectly, attempt in any manner
to persuade any client or customer of the Company or its affiliated companies to
cease to do business  or to reduce the amount of business  which any such client
or customer has customarily  done or contemplates  doing with the Company or its
affiliated  companies,  whether or not the  relationship  between the Company or
such affiliated company and such client or customer was originally  established,
in whole or in part,  through your efforts,  or to solicit  business of any such
client or  customer  of the  Company or its  affiliated

<PAGE>

Richard Stout
January 10, 2000
Page 2

companies,  unless  such  solicitation  is  rendered  on the  behalf  of, and in
furtherance of the business of, the Company.

                  (c)  Noncompetition.  During the Restricted Period (as defined
below),  you shall not, without the prior written consent of the Chief Executive
Officer  of the  Company,  engage in or  become  associated  with a  Competitive
Activity.  For purposes of this paragraph 1: (i) the  "Restricted  Period" means
the  period  commencing  on the  Effective  Time and  ending  on the  nine-month
anniversary  of the Effective  Time;  (ii) a  "Competitive  Activity"  means any
business or other endeavor, in any county in Connecticut (other than outside the
Town of Old Lyme in  Windham  or New  London  County),  that is  engaged  in the
banking  business,  whether as a bank,  a savings and loan,  a savings  bank,  a
credit union, mortgage company,  bank holding company,  savings and loan holding
company or other depositary  institution holding company in such jurisdiction as
of the Effective Time or any time  thereafter;  and (iii) you will be considered
to have become  "associated with a Competitive  Activity" if you become directly
or indirectly  involved as an owner,  principal,  employee,  officer,  director,
independent contractor,  representative,  stockholder,  financial backer, agent,
partner,  advisor, lender, or in any other individual or representative capacity
with any  individual,  partnership,  corporation or other  organization  that is
engaged in a Competitive Activity.  Notwithstanding the foregoing,  you may make
and retain  investments during the Restricted Period in less than one percent of
the equity of any entity  engaged in a Competitive  Activity,  if such equity is
listed  on  a  national   securities   exchange  or   regularly   traded  in  an
over-the-counter market.

                  2. In  consideration  for your  agreement not to engage in the
activities  set forth in  paragraph 1, the Company  hereby  agrees to pay you an
amount (the "Non-Compete Amount"),  currently valued by the parties at $146,979,
to be paid in equal  monthly  installments  over the duration of the  Restricted
Period,  provided that such payments  shall not commence  until such time as you
are no longer providing services to the Company or its affiliated companies. The
parties hereby agree to reconfirm and, to the extent  necessary or  permissible,
modify in writing the  Non-Compete  Amount and the  duration  of the  Restricted
Period on or before the date on which the Effective Time is expected to occur.

                  3. In the event  payments to you under this Agreement and with
or pertaining to any other plan, agreement or arrangement of the Company or MECH
(the "Total Payments"),  are determined by a final and nonappealable  order of a
court of competent jurisdiction or a final settlement approved by the Company to
be subject  to the  excise tax (the  "Excise  Tax")  under  Section  4999 of the
Internal Revenue Code (the "Code"),  the Company shall pay to you within 30 days
of such  determination an additional amount such that the net amount retained by
you,  after  deduction  of the Excise Tax on Total  Payments and any federal and
state income tax and Excise Tax upon the payment  provided for by this paragraph
3, shall be equal to the Total Payments. The parties agree that any calculations
required  pursuant to this  paragraph 3 shall be made by the Company;  provided,
however, that if you object in writing to the Company's  determination within 60
days, the  determination  shall be made by a "Big Five" accounting firm selected
by the Company and subject to your reasonable consent. The determination made by
such  accounting  firm  shall be  binding on you and the  Company.  The  parties
further agree that they shall reasonably cooperate with each other in connection
with any  administrative  or judicial  proceedings  concerning  the existence or
liability  for Excise Tax with  respect to the amounts  payable  hereunder.  The
Company  agrees  to  indemnify  you and hold  you  harmless  for any  penalties,
interest or expenses you  reasonably  incur in the event it is  determined  that
Excise Tax is owed. You hereby agree that you will not take any position on your
income tax return or otherwise  that is  inconsistent  with the positions of the
Company with respect to the treatment of any payment,  including the Non-Compete
Amount,  which may be contended is a "parachute  payment"  under Section 280G of
the Code.


<PAGE>

Richard Stout
January 10, 2000
Page 3


                  4. In  accordance  with  Section 1(a) of the Change in Control
Agreement  between  MECH and you dated as of June 28,  1996,  as  amended  as of
January  1, 1998 (the  "Prior  Agreement"),  as soon as  reasonably  practicable
following  the  Effective  Time and within 30 days of the  Effective  Time,  the
Company  shall make a lump sum  payment  to you equal to $  570,875,  subject to
reduction as provided for in Sections 1(e) and 1(f) of the Prior Agreement. Upon
the  Company's  request  given in  writing  not less  than 45 days  prior to the
Effective  Time, you hereby agree that you will provide  services to the Company
on the same basis as you  provided  services  to MECH  immediately  prior to the
Effective  Time, for a period of up to six months  following the Effective Time,
at your current base pay; provided,  however,  that in the event you receive and
accept  a bona  fide  employment  opportunity  that is not in  violation  of the
covenants  set forth in paragraph 1 hereof,  you may terminate  your  employment
before the end of the period  requested by the Company,  but in no event earlier
than the 90th day following the Effective Time.

                  5. In the event of a breach or threatened  breach of paragraph
1, you agree that the Company shall be entitled to injunctive  relief in a court
of appropriate  jurisdiction to remedy any such breach or threatened breach, and
you acknowledge that damages would be inadequate and insufficient.  With respect
to any  provision  of  paragraph 1 finally  determined  by a court of  competent
jurisdiction  to be  unenforceable,  you and the Company  hereby agree that such
court shall have  jurisdiction to reform this Agreement or any provision  hereof
so that it is  enforceable  to the  maximum  extent  permitted  by law,  and the
parties agree to abide by such court's determination. If any of the covenants of
paragraph  1 are  determined  to be wholly  or  partially  unenforceable  in any
jurisdiction,  such  determination  shall not be a bar to or in any way diminish
the  rights  of  the  Company  to  enforce  any  such   covenant  in  any  other
jurisdiction.

                  6.  The   existence   of  Excise  Tax  shall  not  affect  the
obligations  of  the  parties  to  perform  their  respective   covenants  under
paragraphs 1 and 2.

                  7. This  Agreement  shall be  governed  by and  subject to the
jurisdiction  of the laws of the State of  Connecticut  applicable  to contracts
made and to be performed within such State.

                  8.  This  Agreement  shall be  binding  upon and  inure to the
benefit of the parties hereto and their respective  successors and assigns. This
Agreement may not be amended or terminated  without the prior written consent of
the parties  hereto,  provided  that the parties agree to the  modifications  or
amendments as are  contemplated by paragraph 2. In the event of your death after
the  Effective   Time,  the   Non-Compete   Amount  shall  be  payable  to  your
beneficiaries or your estate. In the event of non-payment hereof by the Company,
you shall be  entitled  to payment of counsel  fees and  expenses to enforce the
Company's obligations as provided in Section 1(d) of the Prior Agreement.

                  9. This  Agreement  shall  terminate and have no further force
and effect  without  liability  of any kind to any of the parties  hereto,  upon
termination  of  the  Merger  Agreement  without   consummation  of  the  merger
contemplated  thereby.  Immediately following the Effective Time, this Agreement
shall supersede any other  employment,  severance or change of control agreement
between you and MECH,  including,  without limitation,  the Prior Agreement.  As
used in this  Agreement,  the term  "affiliated  companies"  shall  include  any
company controlled by, controlling or under common control with the Company.



<PAGE>


Richard Stout
January 10, 2000
Page 4


                  10. The Company may withhold  from any amounts  payable  under
this Agreement such Federal,  state, local or foreign taxes as shall be required
to be withheld pursuant to any applicable law or regulation.

                                    Very truly yours,


                                    WEBSTER FINANCIAL CORPORATION


                                    By: /s/ James C. Smith
                                       -----------------------------
                                       James C. Smith


Accepted and Agreed to:


/s/ Richard. W. Stout, Jr.
--------------------------
Richard W. Stout, Jr.


Accepted and Agreed to:

MECH FINANCIAL, INC.


By:      /s/ Edgar C. Gerwig
    --------------------------
         President




<PAGE>

                          WEBSTER FINANCIAL CORPORATION
                                  Webster Plaza
                             Waterbury, Connecticut

                                January 10, 2000

Thomas Wood
MECH Financial, Inc.
100 Peal Street
Hartford, Connecticut 06103

Dear Mr. Wood:

                  1. In consideration  for the payments set forth in paragraph 2
hereof,  you hereby agree that for a period of nine months  commencing  upon the
day  following  the  consummation  (the  "Effective  Time") of the  transactions
contemplated  by the  Agreement  and  Plan  of  Merger  by and  between  Webster
Financial Corporation (the "Company") and MECH Financial,  Inc. ("MECH"),  dated
as of  December  1,  1999  (the  "Merger  Agreement"),  you will  adhere  to the
restrictions and limitations set forth herein.

                  (a)  Confidential  Information.  You will hold in a  fiduciary
capacity for the benefit of the Company and its affiliated  companies all secret
or confidential  information,  knowledge or data relating to MECH or the Company
or any of its affiliated companies and their respective  businesses  (including,
without  limitation,  any  proprietary  and not publicly  available  information
concerning any processes,  methods, trade secrets,  research, secret data, costs
or names of users or  purchasers  of  their  respective  products  or  services,
business methods,  operating  procedures or programs or methods of promotion and
sale) that you obtain or obtained  during your employment by MECH or the Company
or any of the affiliated  companies and that is not public knowledge (other than
as  a  result  of  your  violation  of  this  paragraph   1(a))   ("Confidential
Information"). For the purposes of this paragraph 1(a), information shall not be
deemed to be  publicly  available  merely  because  it is  embraced  by  general
disclosures or because individual features or combinations  thereof are publicly
available.  You  will  not  communicate,  divulge  or  disseminate  Confidential
Information at any time during or after your  employment with the Company or any
of the  affiliated  companies,  except  with the prior  written  consent  of the
Company, or as otherwise required by law or legal process.  All records,  files,
memoranda, reports, customer lists, drawings, plans, documents and the like that
you use,  prepare or come into contact with during the course of your employment
shall remain the sole  property of the Company or one or more of the  affiliated
companies,  as  applicable,  and shall be  turned  over to the  Company  or such
affiliated company, as applicable, upon termination of your employment.

                  (b) Nonsolicitation.  You agree that you will not, at any time
during the Restricted  Period (as defined in paragraph 1(c) below),  without the
prior written consent of the Company,  directly or indirectly employ, or solicit
the employment of (whether as an employee,  officer, director, agent, consultant
or  independent  contractor),  any person  who was or is at any time  during the
previous  12 months an  employee,  representative,  officer or  director  of the
Company or any of its affiliated  companies  (except for such  employment by the
Company or any of its affiliated companies). You agree that you will not, at any
time during the Restricted Period, directly or indirectly, attempt in any manner
to persuade any client or customer of the Company or its affiliated companies to
cease to do business  or to reduce the amount of business  which any such client
or customer has customarily  done or contemplates  doing with the Company or its
affiliated  companies,  whether or not the  relationship  between the Company or
such affiliated company and such client or customer was originally  established,
in whole or in part,  through your efforts,  or to solicit  business of any such
client or  customer  of the  Company or its  affiliated  companies,  unless such
solicitation  is rendered on the behalf of, and in  furtherance  of the business
of, the Company.


<PAGE>

Thomas Wood
January 10, 2000
Page 2

                  (c)  Noncompetition.  During the Restricted Period (as defined
below),  you shall not, without the prior written consent of the Chief Executive
Officer  of the  Company,  engage in or  become  associated  with a  Competitive
Activity.  For purposes of this paragraph 1: (i) the  "Restricted  Period" means
the  period  commencing  on the  Effective  Time and  ending  on the  nine-month
anniversary  of the Effective  Time;  (ii) a  "Competitive  Activity"  means any
business or other endeavor, in any county in Connecticut, that is engaged in the
banking  business,  whether as a bank,  a savings and loan,  a savings  bank,  a
credit union, mortgage company,  bank holding company,  savings and loan holding
company or other depositary  institution holding company in such jurisdiction as
of the Effective Time or any time  thereafter;  and (iii) you will be considered
to have become  "associated with a Competitive  Activity" if you become directly
or indirectly  involved as an owner,  principal,  employee,  officer,  director,
independent contractor,  representative,  stockholder,  financial backer, agent,
partner,  advisor, lender, or in any other individual or representative capacity
with any  individual,  partnership,  corporation or other  organization  that is
engaged in a Competitive Activity.  Notwithstanding the foregoing,  you may make
and retain  investments during the Restricted Period in less than one percent of
the equity of any entity  engaged in a Competitive  Activity,  if such equity is
listed  on  a  national   securities   exchange  or   regularly   traded  in  an
over-the-counter market.

                  2. In  consideration  for your  agreement not to engage in the
activities  set forth in  paragraph 1, the Company  hereby  agrees to pay you an
amount (the "Non-Compete Amount"),  currently valued by the parties at $211,746,
to be paid in equal  monthly  installments  over the duration of the  Restricted
Period,  provided that such payments  shall not commence  until such time as you
are no longer providing services to the Company or its affiliated companies. The
parties hereby agree to reconfirm and, to the extent  necessary or  permissible,
modify in writing the  Non-Compete  Amount and the  duration  of the  Restricted
Period on or before the date on which the Effective Time is expected to occur.

                  3. In the event  payments to you under this Agreement and with
or pertaining to any other plan, agreement or arrangement of the Company or MECH
(the "Total Payments"),  are determined by a final and nonappealable  order of a
court of competent jurisdiction or a final settlement approved by the Company to
be subject  to the  excise tax (the  "Excise  Tax")  under  Section  4999 of the
Internal Revenue Code (the "Code"),  the Company shall pay to you within 30 days
of such  determination an additional amount such that the net amount retained by
you,  after  deduction  of the Excise Tax on Total  Payments and any federal and
state income tax and Excise Tax upon the payment  provided for by this paragraph
3, shall be equal to the Total Payments. The parties agree that any calculations
required  pursuant to this  paragraph 3 shall be made by the Company;  provided,
however, that if you object in writing to the Company's  determination within 60
days, the  determination  shall be made by a "Big Five" accounting firm selected
by the Company and subject to your reasonable consent. The determination made by
such  accounting  firm  shall be  binding on you and the  Company.  The  parties
further agree that they shall reasonably cooperate with each other in connection
with any  administrative  or judicial  proceedings  concerning  the existence or
liability  for Excise Tax with  respect to the amounts  payable  hereunder.  The
Company  agrees  to  indemnify  you and hold  you  harmless  for any  penalties,
interest or expenses you  reasonably  incur in the event it is  determined  that
Excise Tax is owed. You hereby agree that you will not take any position on your
income tax return or otherwise  that is  inconsistent  with the positions of the
Company with respect to the treatment of any payment,  including the Non-Compete
Amount,  which may be contended is a "parachute  payment"  under Section 280G of
the Code.

                  4. In  accordance  with  Section 1(a) of the Change in Control
Agreement  between  MECH and you dated as of June 28,  1996,  as  amended  as of
January  1, 1998 (the  "Prior  Agreement"),  as soon as  reasonably  practicable
following  the  Effective  Time and within 30 days of the  Effective  Time,  the
Company  shall  make a lump sum  payment  to you equal to  $599,122,  subject to
reduction as provided for in Sections 1(e) and 1(f) of the Prior Agreement. Upon
the

<PAGE>

Thomas Wood
January 10, 2000
Page 3


Company's  request given in writing not less than 45 days prior to the Effective
Time, you hereby agree that you will provide services to the Company on the same
basis as you provided  services to MECH immediately prior to the Effective Time,
for a period of up to six months  following the Effective  Time, at your current
base pay;  provided,  however,  that in the event you  receive and accept a bona
fide employment  opportunity that is not in violation of the covenants set forth
in paragraph 1 hereof,  you may terminate your employment  before the end of the
period  requested  by the  Company,  but in no event  earlier  than the 90th day
following the Effective Time.

                  5. In the event of a breach or threatened  breach of paragraph
1, you agree that the Company shall be entitled to injunctive  relief in a court
of appropriate  jurisdiction to remedy any such breach or threatened breach, and
you acknowledge that damages would be inadequate and insufficient.  With respect
to any  provision  of  paragraph 1 finally  determined  by a court of  competent
jurisdiction  to be  unenforceable,  you and the Company  hereby agree that such
court shall have  jurisdiction to reform this Agreement or any provision  hereof
so that it is  enforceable  to the  maximum  extent  permitted  by law,  and the
parties agree to abide by such court's determination. If any of the covenants of
paragraph  1 are  determined  to be wholly  or  partially  unenforceable  in any
jurisdiction,  such  determination  shall not be a bar to or in any way diminish
the  rights  of  the  Company  to  enforce  any  such   covenant  in  any  other
jurisdiction.

                  6.  The   existence   of  Excise  Tax  shall  not  affect  the
obligations  of  the  parties  to  perform  their  respective   covenants  under
paragraphs 1 and 2.

                  7. This  Agreement  shall be  governed  by and  subject to the
jurisdiction  of the laws of the State of  Connecticut  applicable  to contracts
made and to be performed within such State.

                  8.  This  Agreement  shall be  binding  upon and  inure to the
benefit of the parties hereto and their respective  successors and assigns. This
Agreement may not be amended or terminated  without the prior written consent of
the parties  hereto,  provided  that the parties agree to the  modifications  or
amendments as are  contemplated by paragraph 2. In the event of your death after
the  Effective   Time,  the   Non-Compete   Amount  shall  be  payable  to  your
beneficiaries or your estate. In the event of non-payment hereof by the Company,
you shall be  entitled  to payment of counsel  fees and  expenses to enforce the
Company's obligations as provided in Section 1(d) of the Prior Agreement.

                  9. This  Agreement  shall  terminate and have no further force
and effect  without  liability  of any kind to any of the parties  hereto,  upon
termination  of  the  Merger  Agreement  without   consummation  of  the  merger
contemplated  thereby.  Immediately following the Effective Time, this Agreement
shall supersede any other  employment,  severance or change of control agreement
between you and MECH,  including,  without limitation,  the Prior Agreement.  As
used in this  Agreement,  the term  "affiliated  companies"  shall  include  any
company controlled by, controlling or under common control with the Company.



<PAGE>

Thomas Wood
January 10, 2000
Page 4


                  10. The Company may withhold  from any amounts  payable  under
this Agreement such Federal,  state, local or foreign taxes as shall be required
to be withheld pursuant to any applicable law or regulation.

                                    Very truly yours,


                                    WEBSTER FINANCIAL CORPORATION


                                    By: /s/ James C. Smith
                                       -----------------------------
                                       James C. Smith


Accepted and Agreed to:


     /s/ Thomas M. Wood
-----------------------------
         Thomas Wood


Accepted and Agreed to:

MECH FINANCIAL, INC.


By:      /s/ Edgar C. Gerwig
    -----------------------------
         President