Document:

Exhibit 10.1

                             VIRGINIA COMMERCE BANK
                             1998 STOCK OPTION PLAN

         1.  PURPOSE OF THE PLAN.

         The purpose of this Virginia  Commerce Bank 1998 Stock Option Plan (the
"Plan") is to advance the interests of the Bank through  providing  selected key
Employees and Non-Employee Directors of the Bank with the opportunity to acquire
Shares. By encouraging such stock ownership,  the Bank seeks to attract,  retain
and  motivate  the  best  available   personnel  for  positions  of  substantial
responsibility;   to  provide   additional   incentive  to  key   Employees  and
Non-Employee  Directors  of the Bank to promote the  success of the  business as
measured by the value of its shares;  and generally to increase the  commonality
of interests between key employees, directors and other shareholders.

         2.  DEFINITIONS.

         As used herein, the following definitions shall apply.

         (a)  "Affiliate"  shall mean any "parent  corporation"  or  "subsidiary
corporation"  of the Bank, as such terms are defined in Section  424(e) and (f),
respectively, of the Code.

         (b)  "Agreement"  shall  mean  a  written  agreement  entered  into  in
accordance with Paragraph 5(c).

         (c) "Awards" shall mean a grant of Options,  unless the context clearly
indicates a different meaning.

         (d)  "Bank" shall mean Virginia Commerce Bank.

         (e)  "Board" shall mean the Board of Directors of the Bank.

         (f)  "Change in  Control"  shall mean any one of the  following  events
occurring after the Effective Date: (1) the acquisition of ownership of, holding
or power to vote more than 51% of the Bank`s voting stock,  (2) the  acquisition
of the power to control the election of a majority of the Bank's directors,  (3)
the exercise of a controlling  influence  over the management or policies of the
Bank by any  person or by persons  acting as a "group"  (within  the  meaning of
Section  13(d) of the  Securities  Exchange Act of 1934),  or (4) the failure of
Continuing  Directors to constitute at least  two-thirds of the Board during any
period  of two  consecutive  years.  For  purposes  of  this  Plan,  "Continuing
Directors" shall include only those individuals who were members of the Board at
the Effective Date and those other  individuals whose election or nomination for
election as a member of the Board was approved by a vote of at least  two-thirds
of the Continuing  Directors then in office.  For purposes of this  subparagraph
only, the term "person"  refers to an individual or a corporation,  partnership,
trust,  association,   joint  venture,  pool,  syndicate,  sole  proprietorship,
unincorporated  organization or any other form of entity not specifically listed
herein.  The  decision  of the  Committee  as to whether a change in control has
occurred shall be conclusive and binding.

         (g)  "Code" shall mean the Internal Revenue Code of 1986, as amended.

         (h) "Committee" shall mean the Stock Option Committee  appointed by the
Board in accordance with Paragraph 5(a) hereof,  or in the absence thereof,  the
Personnel and Compensation Committee of the Board.

         (i) "Common  Stock"  shall mean the common  stock,  par value $1.00 per
share, of the Bank.

         (j) "Continuous  Service" shall mean the absence of any interruption or
termination  of service as an  Employee  or  Non-Employee  Director of the Bank.
Continuous  Service  shall  not be  considered  interrupted  in the case of sick
leave,  military leave or any other leave of absence  approved by the Bank or in
the case of transfers between payroll locations of the Bank or between the Bank,
an Affiliate or a successor.

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         (k)  "Effective  Date" shall mean the date  specified  in Paragraph 13
hereof.

         (l)  "Employee"  shall mean any person  employed  by the Bank or by an
Affiliate.

         (m) "Exercise  Price" shall mean the price per Optioned  Share at which
an Option may be exercised.

         (n) "ISO"  means an option to  purchase  Common  Stock  which meets the
requirements  set  forth  in  the  Plan,  and  which  is  intended  to be and is
identified as an "incentive  stock option"  within the meaning of Section 422 of
the Code.

         (o)  "Market  Value"  shall  mean the fair  market  value of the Common
Stock, as determined under Paragraph 7(b) hereof.

         (p) "Non-Employee Director" shall mean any member of the Board who is a
"non-employee director" within the meaning of Rule 16b-3.

         (q) "Non-ISO"  means an option to purchase Common Stock which meets the
requirements  set forth in the Plan but which is not  intended  to be and is not
identified as an ISO.

         (r)  "Option" means an ISO and/or a Non-ISO.

         (s) "Optioned  Shares" shall mean Shares  subject to an Option  granted
pursuant to this Plan.

         (t)  "Participant"  shall  mean  any  person  who  receives  an  Award
pursuant to the Plan.

         (u)  "Plan"  shall mean the Virginia  Commerce  Bank 1998 Stock Option
Plan.

         (v)  "Rule  16b-3"  shall  mean  Rule  16b-3 of the  General  Rules and
Regulations under the Securities Exchange Act of 1934, as amended.

         (w)  "Share" shall mean one share of Common Stock.

         3.  TERM OF THE PLAN AND AWARDS.

         (a) Term of the Plan.  The Plan shall  continue in effect for a term of
ten  years  from the  Effective  Date,  unless  sooner  terminated  pursuant  to
Paragraph  16 hereof.  No Award shall be granted  under the Plan after ten years
from the Effective Date.

         (b) Term of Awards. The term of each Award granted under the Plan shall
be  established  by the  Committee,  but  shall not  exceed 10 years;  provided,
however,  that in the case of an ISO  granted  to an  Employee  who owns  Shares
representing more than 10% of the outstanding Common Stock at the time an ISO is
granted, the term of such ISO shall not exceed five years.

         4.  SHARES SUBJECT TO THE PLAN.

         Except as otherwise  required by the provisions of Paragraph 12 hereof,
the aggregate number of Shares  deliverable  pursuant to Awards shall not exceed
100,000 Shares.  Optioned Shares may either be authorized but unissued Shares or
Shares held in treasury.  If Awards should expire,  become  unexercisable  or be
forfeited for any reason without having been exercised or become vested in full,
the  Optioned  Shares  shall,  unless the Plan shall  have been  terminated,  be
available for the grant of additional Awards under the Plan.

         5.  ADMINISTRATION OF THE PLAN.

         (a) Composition of the Committee. The Plan shall be administered by the
Committee,  which shall

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consist  of not less than three (3)  members  of the Board who are  Non-Employee
Directors. Members of the Committee shall serve at the pleasure of the Board. In
the  absence  at any  time of a duly  appointed  Committee,  the  Plan  shall be
administered by Personnel and Compensation Committee of the Board.

         (b)  Powers  of  the  Committee.  Except  as  limited  by  the  express
provisions  of the Plan or by  resolutions  adopted by the Board,  the Committee
shall have sole and complete authority and discretion (i) to select Participants
and grant Awards,  (ii) to determine the form and content of Awards to be issued
in the form of Agreements  under the Plan,  (iii) to interpret the Plan, (iv) to
prescribe, amend and rescind rules and regulations relating to the Plan, and (v)
to make other  determinations  necessary or advisable for the  administration of
the Plan.  The  Committee  shall  have and may  exercise  such  other  power and
authority  as may be  delegated to it by the Board from time to time. A majority
of the entire  Committee shall  constitute a quorum and the action of a majority
of the  members  present at any  meeting at which a quorum is  present,  or acts
approved in writing by a majority of the Committee  without a meeting,  shall be
deemed the action of the Committee.

         (c)  Agreement.  Each Award shall be evidenced  by a written  agreement
containing  such  provisions  as may be  approved  by the  Committee.  Each such
Agreement  shall  constitute  a  binding  contract  between  the  Bank  and  the
Participant, and every Participant,  upon acceptance of such Agreement, shall be
bound by the terms and restrictions of the Plan and of such Agreement. The terms
of each such Agreement  shall be in accordance with the Plan, but each Agreement
may include  such  additional  provisions  and  restrictions  determined  by the
Committee,  in its  discretion,  provided that such  additional  provisions  and
restrictions are not inconsistent with the terms of the Plan. In particular, the
Committee shall set forth in each Agreement (i) the Exercise Price of an Option,
(ii) the number of Shares  subject  to, and the  expiration  date of, the Award,
(iii) the manner, time and rate (cumulative or otherwise) of exercise or vesting
of such Award, (iv) the  restrictions,  if any, to be placed upon such Award, or
upon Shares which may be issued upon exercise of such Award, and (v) whether the
Option is an ISO or a Non-ISO.

         The  Chairman  of the  Committee  and such other  officers  as shall be
designated  by the  Committee  are hereby  authorized  to execute  Agreements on
behalf  of the Bank and to  cause  them to be  delivered  to the  recipients  of
Awards.

         (d) Effect of the Committee's Decisions. All decisions,  determinations
and  interpretations  of the  Committee  shall be final  and  conclusive  on all
persons affected thereby.

         (e)   Indemnification.   In   addition   to  such   other   rights   of
indemnification  as they  may  have,  the  members  of the  Committee  shall  be
indemnified by the Bank in connection with any claim, action, suit or proceeding
relating to any action taken or failure to act under or in  connection  with the
Plan or any Award,  granted  hereunder to the full extent provided for under the
Bank's Articles of Incorporation  or Bylaws with respect to the  indemnification
of Directors.

         6.  GRANT OF OPTIONS.

         (a) General  Rule.  In its sole  discretion,  the  Committee  may grant
Options to Employees of the Bank or its  Affiliates,  and may grant  Non-ISOs to
Employees and to Non-Employee Directors of the Bank and its Affiliates.

         (b) Special Rules for ISOs. The aggregate  Market Value, as of the date
the Option is granted,  of the Shares with respect to which ISOs are exercisable
for the first time by an Employee  during any calendar year (under all incentive
stock option  plans,  as defined in Section 422 of the Code,  of the Bank or any
present or future Parent or  Subsidiary of the Bank) shall not exceed  $100,000.
Notwithstanding  the prior  provisions of this  paragraph or  designation  of an
Option as an ISO, the  Committee  may grant  Options in excess of the  foregoing
limitations,  in which case such  Options  granted in excess of such  limitation
shall be Options which are Non-ISOs.

         7.  EXERCISE PRICE FOR OPTIONS.

         (a)  Limits  on  Committee  Discretion.  The  Exercise  Price as to any
particular Option granted under the Plan shall not be less than the Market Value
of the Optioned Shares on the date of grant. In the case of an Employee who owns
Shares  representing  more than 10% of the Bank's  outstanding  Shares of Common
Stock at the time an ISO is granted,  the Exercise  Price shall not be less than
110% of the Market Value of the Optioned Shares at the time the ISO is granted.

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         (b) Standards for  Determining  Exercise  Price. If the Common Stock is
listed on a national  securities exchange (including the NASDAQ National Market)
on the date in question,  then the Market Value per Share shall be not less than
the  average of the highest and lowest  selling  price on such  exchange on such
date, or if there were no sales on such date,  then the Exercise  Price shall be
not less than the mean  between  the bid and asked  price on such  date.  If the
Common Stock is traded otherwise than on a national  securities  exchange on the
date in  question,  then the Market  Value per Share  shall be not less than the
mean  between the bid and asked  price on such date,  or, if there is no bid and
asked price on such date, then on the next prior business day on which there was
a bid and asked  price.  If no such bid and asked price is  available,  then the
Market  Value per Share  shall be its fair  market  value as  determined  by the
Committee, in its sole and absolute discretion.

         (c)  Reissuance  of  Options.  Notwithstanding  anything  herein to the
contrary,  the Committee shall have the authority to cancel outstanding  Options
with the  consent  of the  Participant  and to  reissue  new  Options at a lower
Exercise  Price equal to the then Market  Value per share of Common Stock in the
event that the Market  Value per share of Common  Stock at any time prior to the
date of exercise of outstanding Options falls below the Exercise Price.

         8.  EXERCISE OF OPTIONS.

         (a)  Generally.  Any Option granted  hereunder  shall be exercisable at
such times and under such conditions as shall be permissible  under the terms of
the Plan and of the  Agreement  granted to a  Participant.  An Option may not be
exercised for a fractional Share.

         (b) Procedure for Exercise. A Participant may exercise Options, subject
to provisions relative to its termination and limitations on its exercise,  only
by (1)  written  notice of intent to  exercise  the  Option  with  respect  to a
specified number of Shares, and (2) payment to the Bank  (contemporaneously with
delivery of such notice) in cash, in Common Stock,  or a combination of cash and
Common Stock,  of the amount of the Exercise Price for the number of Shares with
respect to which the  Option is then  being  exercised.  Each such  notice  (and
payment where required) shall be delivered,  or mailed by prepaid  registered or
certified mail,  addressed to the Secretary of the Bank at the Bank's  executive
offices.  Common Stock utilized in full or partial payment of the Exercise Price
for Options shall be valued at its Market Value at the date of exercise.

         (c) Period of  Exercisability.  Except to the extent otherwise provided
in the terms of an Agreement,  (i) a Non-ISO may be exercised by a  Non-Employee
Director  Participant  at any time  (but not  later  than the date on which  the
Non-ISO would otherwise expire),  and (ii) an ISO or Non-ISO may be exercised by
an  Employee  Participant  only  while  he is an  Employee  and  has  maintained
Continuous Service from the date of the grant of the ISO, or within three months
after  termination  of such  Continuous  Service (but not later than the date on
which the Option would otherwise  expire),  except if the Employee's  Continuous
Service terminates by reason of:

         (1) "Just Cause"  which for purposes  hereof shall have the meaning set
         forth in any unexpired  employment or severance  agreement  between the
         Participant  and the Bank  and/or the Bank (and,  in the absence of any
         such  agreement,  shall  mean  termination  because  of the  Employee's
         personal  dishonesty,   incompetence,  willful  misconduct,  breach  of
         fiduciary  duty  involving  personal  profit,  intentional  failure  to
         perform stated duties, willful violation of any law, rule or regulation
         (other  than  traffic   violations   or  similar   offenses)  or  final
         cease-and-desist order), then the Participant's rights to exercise such
         ISO shall expire on the date of such termination;

         (2) Death,  then to the  extent  that the  Participant  would have been
         entitled to exercise the ISO immediately  prior to his death,  such ISO
         of the deceased  Participant may be exercised within two years from the
         date of his  death  (but not later  than the date on which  the  Option
         would otherwise expire) by the personal  representatives  of his estate
         or person or  persons  to whom his  rights  under  such ISO shall  have
         passed by will or by laws of descent and distribution;

         (3) Permanent and Total  Disability (as such term is defined in Section
         22(e)(3) of the Code),  then to the extent

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         that the  Participant  would have been  entitled  to  exercise  the ISO
         immediately prior to his Permanent and Total  Disability,  such ISO may
         be exercised  within one year from the date of such Permanent and Total
         Disability,  but not  later  than  the  date  on  which  the ISO  would
         otherwise expire.

Notwithstanding  the provisions of any Option which provides for its exercise in
installments   as  designated  by  the  Committee,   such  Option  shall  become
immediately  exercisable  upon the  Participant's  death or Permanent  and Total
Disability.

         (d) Effect of the Committee's Decisions. The Committee's  determination
whether a Participant's  Continuous  Service has ceased,  and the effective date
thereof shall be final and conclusive on all persons affected thereby.

         9.  CHANGE IN CONTROL

         (a) General  Rule.  Notwithstanding  the  provisions of any Award which
provide  for its  exercise  or vesting in  installments,  all  Options  shall be
immediately  exercisable and fully vested upon a Change in Control. With respect
to Options,  at the time of a Change in Control,  the Participant  shall, at the
discretion of the  Committee,  be entitled to receive cash in an amount equal to
the excess of the Market Value of the Common  Stock  subject to such Option over
the Exercise  Price of such Shares,  in exchange  for the  cancellation  of such
Options by the Participant.

         (b) Exception to General Rule. Notwithstanding subparagraph (a) of this
Paragraph,  in no event may an Option be cancelled in exchange for cash,  within
the six-month period following the date of its grant.

         10.  EFFECT OF CHANGES IN COMMON STOCK SUBJECT TO THE PLAN.

         (a) Recapitalizations, Stock Splits, Etc. The number and kind of shares
reserved for issuance  under the Plan, and the number and kind of shares subject
to outstanding  Awards and the Exercise  Price thereof shall be  proportionately
adjusted  for any  increase,  decrease,  change  or  exchange  of  Shares  for a
different number or kind of shares or other securities of the Bank which results
from    a    merger,    consolidation,     recapitalization,     reorganization,
reclassification, stock dividend, stock split, combination of shares, or similar
event in which the number or kind of shares is changed  without  the  receipt or
payment of consideration by the Bank.  Notwithstanding the foregoing, the number
of shares  subject to issuance  upon the exercise of Options  granted under this
Plan shall not be adjusted to reflect the ten percent stock split to be effected
by the subdivision  proposed for approval by the stockholders of the Bank at the
annual  meeting of  stockholders  held on April 29,  1998,  if  approved at that
meeting.

         (b) Transactions in which the Bank is Not the Surviving Entity. Subject
to Paragraph 9 hereof, in the event of (i) the liquidation or dissolution of the
Bank,  (ii) a merger or  consolidation  in which  the Bank is not the  surviving
entity,  or (iii) the sale or  disposition  of all or  substantially  all of the
Bank's   assets  (any  of  the   foregoing   to  be  referred  to  herein  as  a
"Transaction"),  all Awards outstanding at the effectiveness of such Transaction
shall be surrendered.  With respect to each Award so surrendered,  the Committee
shall in its sole and absolute  discretion  determine  whether the holder of the
surrendered Award shall receive --

         (1) for each Share then subject to an outstanding  Award the number and
         kind of shares  into which each  outstanding  Share  (other than Shares
         held by dissenting stockholders) is changed or exchanged, together with
         an appropriate adjustment to the Exercise Price in the case of Options;
         or

         (2) a cash payment (from the Bank or the successor corporation),  in an
         amount equal to the Market Value of the Shares  subject to the Award on
         the date of the Transaction, less the Exercise Price of the Award.

         (c)  Special  Rule  for  ISOs.   Any   adjustment   made   pursuant  to
subparagraphs  (a) or  (b)(1)  hereof  shall be made in such a manner  as not to
constitute a modification,  within the meaning of Section 424(h) of the Code, of
outstanding ISOs.

         (d) Conditions and Restrictions on New, Additional, or Different Shares
or Securities.  If, by reason of any adjustment made pursuant to this Paragraph,
a Participant becomes entitled to new, additional,  or different shares of

<PAGE>

stock or  securities,  such new,  additional,  or  different  shares of stock or
securities  shall thereupon be subject to all of the conditions and restrictions
which were  applicable to the Shares pursuant to the Award before the adjustment
was made.

         (e) Other  Issuances.  Except as expressly  provided in this Paragraph,
the issuance by the Bank or an Affiliate of shares of stock of any class,  or of
securities  convertible  into  Shares  or stock of  another  class,  for cash or
property or for labor or services  either upon direct sale or upon the  exercise
of rights or warrants to subscribe therefor, shall not affect, and no adjustment
shall be made with respect to, the number,  class,  or Exercise  Price of Shares
then subject to Awards or reserved for issuance under the Plan.

         11.  NON-TRANSFERABILITY OF AWARDS.

         Awards may not be sold, pledged, assigned, hypothecated, transferred or
disposed  of in any  manner  other  than by will or by the laws of  descent  and
distribution, or pursuant to the terms of a "qualified domestic relations order"
(within  the  meaning  of  Section  414(p) of the Code and the  regulations  and
rulings thereunder).

         12.  TIME OF GRANTING AWARDS.

         The date of grant of an Award shall, for all purposes,  be the later of
the date on which the Committee makes the  determination of granting such Award,
and the  Effective  Date.  Notice  of the  determination  shall be given to each
Participant  to whom an Award is so granted  within a reasonable  time after the
date of such grant.

         13.  EFFECTIVE DATE.

         The Plan  shall be  effective  as of May 30,  1998.  Awards may be made
prior to approval of the Plan by the stockholders of the Bank if the exercise of
Awards in the form of Options are conditioned upon  stockholder  approval of the
Plan.

         14.  APPROVAL BY STOCKHOLDERS.

         The Plan shall be approved by  stockholders  of the Bank within  twelve
(12) months before or after the Effective Date.

         15.  MODIFICATION OF AWARDS.

         At any  time,  and from  time to time,  the  Board  may  authorize  the
Committee to direct execution of an instrument providing for the modification of
any outstanding Award,  provided no such modification shall confer on the holder
of said Award any right or benefit  which could not be  conferred  on him by the
grant of a new Award at such time,  or impair the Award  without  the consent of
the holder of the Award.

         16.  AMENDMENT AND TERMINATION OF THE PLAN.

         The Board may from time to time  amend the terms of the Plan and,  with
respect to any Shares at the time not  subject to Awards,  suspend or  terminate
the Plan. No amendment, suspension or termination of the Plan shall, without the
consent  of any  affected  holders  of an Award,  alter or impair  any rights or
obligations under any Award theretofore granted.

         17.  CONDITIONS UPON ISSUANCE OF SHARES.

         (a) Compliance with Securities  Laws.  Shares of Common Stock shall not
be issued with  respect to any Award  unless the  issuance  and delivery of such
Shares shall  comply with all relevant  provisions  of law,  including,  without
limitation,  the Securities Act of 1933, as amended,  the rules and  regulations
promulgated   thereunder,   any  applicable   state   securities  law,  and  the
requirements of any stock exchange upon which the Shares may then be listed. The
Plan is intended to comply with Rule 16b-3,  and any provision of the Plan which
the Committee  determines in its sole and absolute discretion to be inconsistent
with said Rule shall, to the extent of such inconsistency, be inoperative

<PAGE>

and null and void, and shall not affect the validity of the remaining provisions
of the Plan.

         (b) Special Circumstances. The inability of the Bank to obtain approval
from any  regulatory  body or  authority  deemed  by the  Bank's  counsel  to be
necessary to the lawful issuance and sale of any Shares  hereunder shall relieve
the Bank of any liability in respect of the non-issuance or sale of such Shares.
As a condition  to the  exercise  of an Option,  the Bank may require the person
exercising  the Option to make such  representations  and  warranties  as may be
necessary  to assure the  availability  of an  exemption  from the  registration
requirements of federal or state securities law.

         (c) Committee  Discretion.  The Committee shall have the  discretionary
authority to impose in  Agreements  such  restrictions  on Shares as it may deem
appropriate or desirable, including but not limited to the authority to impose a
right  of first  refusal  or to  establish  repurchase  rights  or both of these
restrictions.

         18.  RESERVATION OF SHARES.

         The Bank,  during the term of the Plan, will reserve and keep available
a number of Shares sufficient to satisfy the requirements of the Plan.

         19.  WITHHOLDING TAX.

         The Bank's  obligation to deliver Shares upon exercise of Options shall
be subject to the Participant's  satisfaction of all applicable  federal,  state
and local income and employment tax withholding  obligations.  The Committee, in
its discretion,  may permit the Participant to satisfy the obligation,  in whole
or in part,  by  irrevocably  electing to have the Bank withhold  Shares,  or to
deliver to the Bank  Shares  that he already  owns,  having a value equal to the
amount required to be withheld. The value of Shares to be withheld, or delivered
to the Bank,  shall be based on the  Market  Value of the Shares on the date the
amount of tax to be withheld is to be determined.  As an  alternative,  the Bank
may retain,  or sell without notice, a number of such Shares sufficient to cover
the amount required to be withheld.

         20.  NO EMPLOYMENT OR OTHER RIGHTS.

         In  no  event  shall  an  Employee's   eligibility  to  participate  or
participation  in the Plan create or be deemed to create any legal or  equitable
right of the Employee or any other party to continue  service with the Bank, the
Bank, or any Affiliate of such  corporations.  No Employee shall have a right to
be granted an Award or, having received an Award,  the right to again be granted
an Award.  However,  an Employee who has been granted an Award may, if otherwise
eligible, be granted an additional Award or Awards.

         21.  GOVERNING LAW.

         The Plan shall be governed by and construed in accordance with the laws
of the  Commonwealth  of Virginia except to the extent that federal law shall be
deemed to apply.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

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