EMPLOYMENT SEPARATION AGREEMENT

EMPLOYMENT SEPARATION AGREEMENT

THIS IS AN AGREEMENT (hereinafter referred to as "Agreement") made as of the 20th day of January, 2009 by and between Webster Financial Corporation and Webster Bank, N.A. Waterbury, Connecticut (hereinafter collectively referred to as "we," "us" "our" or "Webster") and Scott M. McBrair (hereinafter referred to as "you" and "your").

IN CONSIDERATION of the payments and benefits to be provided and the covenants undertaken in this Agreement and the Release, which is attached hereto, the parties signing below agree as follows:

Our Agreement

1. Your current employment as Executive Vice President - Retail Banking for Webster will continue until January 31, 2009 (the "Separation Date"). Until the Separation Date, you will continue to exercise your current responsibilities and continue to be eligible to receive your current compensation and benefits, including, but not limited to, the benefits provided to active Webster employees. You will continue to be subject to Webster's policies and practices governing the terms of your employment.

2. You will receive your 2008 Incentive Bonus calculated at the same percentage of target as other similarly situated executives in the amount of $107,413.

3. We will provide you continued compensation and benefits during the time periods set forth below. For the period February 1, 2009 until April 30, 2009, you will be in Special Assignment status (the "Transition Period"). For the period May 1, 2009 until April 30, 2010, you will be in a severance status (the "Severance Period").

4. Transition Period

• • (a) During the Transition Period, you will be in Special Assignment status and will provide support and service up to 20 hours per week. This support and service will include general assistance, advice and counsel pertaining to retail business structure and organization as well as specifically assigned strategic projects. You will report to James Smith, Chief Executive Officer. We will provide you with office space at our Farmington location, and will reimburse your reasonable expenses under our usual policies. You will have the use of a cell phone, Blackberry and electronic mail through the Transition Period.

    (b) During the Transition Period you will receive the following compensation and benefits:

    • • • • • • i) Your current weekly salary, less regular deductions for taxes, social security and other deductions authorized by law;

                ii) Continued group health insurance coverage on the same terms and conditions as if you were an active employee. We will deduct from your pay the applicable premium payments that active employees are required to pay;

                iii) Accrual of PTO time, including the carryover of nine PTO days from your 2008 allotment;

                iv) Participation in the Webster Bank Retirement Savings Plan;

                v) Participation in the Employee Stock Purchase Plan;

                vi) Participation in the Webster Financial Corporation 1992 Stock Option Plan ("Stock Option Plan"). Your stock options, restricted stock and performance shares will continue to vest on a prorata basis during the Transition Period as long as you provide service to us. If you begin other employment during the Transition Period, the vesting period for the restricted stock and stock options will end immediately.

    (c) During the Transition Period, you will not be eligible for compensation and benefits as follows:

    • • • • • • i) Any benefits not mentioned in paragraph (b) above, including but not limited to, short term disability, long term disability, or life insurance;

ii) Car allowance;

• • • • • • • • iv) Participation in the Webster Bank Supplemental Defined Contribution Plan for Executive Officers; and

• • • • • • • • v) Participation in the Webster Bank Deferred Compensation Plan for Directors and Officers.

5. Severance Period

• • (a) During the Severance Period, you will have no responsibilities for, or authority to act on behalf of, Webster.

    (b) As soon as practicable after May 1, 2009, but not later than June 1, 2009, we will pay you: (i) your choice of a lump sum payment or salary continuation payments equal to your current annual base salary of $330,500. You must elect the payment option by April 1, 2009 or you shall be paid in a lump sum; (ii) a lump sum payment equal to accrued but unused 2009 PTO time, not to exceed nine days, and (iii) the prorated portion of your 2009 Incentive Bonus, based on your target bonus for 2008, prorated to reflect credit for four months of 2009 in the amount of $71,608.00. We will reduce all payments by the amount of withholdings for taxes, social security and other deductions authorized by law.

    (c) Continued group health insurance coverage on the same terms and conditions as if you were an active employee. We will deduct from your pay the applicable premium payments that active employees are required to pay;

    • • • • • • i) At the conclusion of the Severance Period or earlier if you become eligible for another employer's group health insurance program, Webster will provide you and your eligible dependents information concerning your right to continue coverage under Webster's group health plan at your sole cost and expense in accordance with the federal Consolidated Omnibus Budget Reconciliation Act (COBRA). You will be eligible to continue coverage under COBRA provided you submit to us the necessary election and/or enrollment forms and any other requested information within any applicable time periods, and provided you timely make the necessary COBRA premium payments.

6. Stock Option Plan

• • (a) Any eligible unvested restricted stock will vest on a prorata basis and will be payable to you in accordance with the terms of the Stock Option Plan. In consideration for the stock you forfeited when leaving your prior employment, you will receive a cash payment equal to any remaining forfeited restricted stock multiplied by the closing price of Webster stock on April 30, 2009.

    (b) Any eligible unvested employee stock options will vest on a prorata basis and may be exercised by you in accordance with the terms of the Stock Option Plan. All of your vested stock options must be exercised within 90 days of April 30, 2009 in accordance with the terms of the Stock Option Plan.

    (c) You will receive a cash payment equal to a prorata portion of Performance-Based Stock awarded in 2007 multiplied by the closing price of Webster stock on April 30, 2009. This prorated portion will be based on the number of months worked since the award in December 2007 divided by the number of months of service required to achieve full vesting of the Performance-Based Stock award. You agree to relinquish claims to any additional Performance-Based Stock, if applicable, as a result of the scoring process in December 2010.

    (d) Unless modified by the specific provisions of this Agreement, the terms of the Stock Option Plan will control. You should contact the Compensation Administrator Karen Zarcone for details concerning your rights under the Stock Option Plan.

7. Retirement Plans

• • (a) In consideration for the retirement benefits you forfeited when leaving your prior employment, we will make a payment to you equal to the present value of your accrued single life benefit under the frozen Webster Bank Pension Plan.

    (b) In consideration for the retirement benefits you forfeited when leaving your prior employment, we will make a payment to you equal to the present value of your accrued single life benefit under the frozen Webster Bank Supplemental Executive Retirement Plan (SERP). Your total payments under Paragraphs 7(a) and 7(b) shall be no less than $74,400.00.

    (c) Your rights for distributions under the Webster Bank Retirement Savings Plan, the Webster Bank Supplemental Defined Contribution Plan for Executive Officers and the Webster Bank Deferred Compensation Plan for Directors and Officers will be governed by the terms of the respective Plans.

8. The terms of the Change in Control Agreement executed by you and Webster as of January 1, 2008, as amended December 16, 2008, will continue in effect until January 31, 2009.

9. Within 30 days of the sale of your Farmington residence, Webster will provide you a cash relocation assistance payment in the amount of $75,000 to assist in your move outside of the Connecticut area as long as you complete the sale of your Farmington residence no later than April 30, 2010.

10. The four year incremental vesting of the $100,000 provided to you upon hire to assist in the purchase of your Connecticut residence has been satisfied.

11. We will, at our expense, provide you with Executive Level career transition services consistent with Webster's Guidelines for Career Transition Services for six months following January 31, 2009.

12. At the conclusion of the Transition P