Document:

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                                                                  Exhibit 10.16
                                                                 CONFORMED COPY

                              EMPLOYMENT AGREEMENT

         THIS AGREEMENT, made effective as of February 1, 2001 by and between
MELLON FINANCIAL CORPORATION, a Pennsylvania corporation (the "Company"), and
MARTIN G. McGUINN (the "Executive"),

                                WITNESSETH THAT:

         WHEREAS, the Executive is currently serving as Chairman and Chief
Executive Officer of the Company and Mellon Bank, N.A. (the "Bank" and, together
with the Company, the "Companies"), and the Company desires to retain the
Executive to continue to serve in such capacities, and the Executive is willing
to continue to serve in such capacities, on the terms and conditions herein set
forth;

         NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto, each intending to be legally bound hereby, agree
as follows:

         1. Employment. The Company agrees to continue to employ the Executive,
and the Executive agrees to continue to be employed by the Companies, for the
Term provided in Paragraph 3(a) below and upon the other terms and conditions
hereinafter provided. The Executive hereby represents and warrants that he has
the legal capacity to execute and perform this Agreement, that it is a valid and
binding agreement, enforceable against him according to its terms, and that its
execution and performance by him do not violate the terms of any existing
agreement or understanding to which the Executive is a party.

         2. Position and Responsibilities. During the Term, the Executive agrees
to serve as the Chairman and Chief Executive Officer of the Company and the
Bank. In his capacity as the Chairman and Chief Executive Officer, he shall be
responsible for the general management of the affairs of the Company and the
Bank, respectively, reporting directly to their respective boards of directors.
The Executive (a) shall serve as a member of such boards for the period for
which he is and shall from time to time be elected, (b) shall be given such
authority as is appropriate to carry out the duties described above, and (c)
agrees to serve, if elected, as an officer and director of any other subsidiary
or affiliate of the Companies.

         3. Term and Duties.

         (a) Term of Agreement. The term of the Executive's employment under
this Agreement shall commence on February 1, 2001 and shall continue thereafter
through January 31, 2004 (the "Term").

         (b) Duties. During the Term, and except for illness or incapacity and
reasonable vacation periods of no more than 4 weeks in any calendar year (or
such other periods as shall be consistent with the Company's policies for other
key executives), the Executive shall devote all of his business time, attention,
skill and efforts exclusively to the business and affairs of the Companies and
their subsidiaries and affiliates, shall not be engaged in any other business
activity, and shall perform and discharge well and faithfully the duties which
may be assigned to him from time to time by the board of directors of the
Company (the "Board") or the Bank and that are consistent with his position and
status; provided, however, that nothing in this Agreement shall preclude the
Executive from devoting time during reasonable periods required for:

                  (i) serving, in accordance with the Company's policies and
         with the prior approval of the Board, which prior approval will not be
         unreasonably withheld, as a director of any company

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         or organization involving no actual or potential conflict of interest
         with the Companies or any of their subsidiaries or affiliates;

                  (ii)  delivering lectures and fulfilling speaking engagements;

                  (iii)  engaging in charitable and community activities; and

                  (iv) investing his personal assets in businesses in which his
         participation is solely that of an investor in such form or manner as
         will not violate Section 7 below or require any services on the part of
         the Executive in the operation or the affairs of such business,

provided, however, that such activities do not materially affect or interfere
with the performance of the Executive's duties and obligations to the Companies.
Not less frequently than annually, a listing of the Executive's positions with
unaffiliated companies and organizations will be presented to the Nominating
Committee of the Board for its review and approval of such service and granting
of indemnification in connection therewith.

         4. Compensation. For all services rendered by the Executive in any
capacity required hereunder during the Term, including, without limitation,
services as an executive, officer, director, or member of any committee of the
Company, the Bank or any subsidiary, affiliate or division thereof, the
Executive shall be compensated as set forth below. It is the intention of the
Company and the Executive that the Executive's total compensation be competitive
with that paid by similar financial institutions. To assure this, the Company
will conduct an annual survey of compensation practices of a group of peer
financial institutions designated by the Human Resources Committee of the Board
("HRC").

                  (a) Base Salary. The Executive shall be paid a fixed salary
         ("Base Salary") of $825,000 per annum as of the effective date of this
         Agreement. The Base Salary amount is subject to periodic review by the
         Board or the HRC (which shall occur at least annually, with the first
         such review to take place in May 2001). Base Salary shall be payable in
         accordance with the customary payroll practices of the Companies, but
         in no event less frequently than monthly.

                  (b) Bonus. The Executive shall be paid such amounts, if any,
         as may be due under the terms of the Mellon Financial Corporation
         Profit Bonus Plan (or any successor plan) (the "Bonus Plan"), with such
         payments of bonus to be made in accordance with the terms of the Bonus
         Plan. It is understood that the Executive may receive some portion of
         his Bonus Plan award in the form of restricted stock, and such awards
         are to be made on the same terms as apply to other members of the
         Executive Management Group.

                  (c) Equity-Based Compensation. The Company shall grant to the
         Executive during calendar year 2001 and in subsequent years as the HRC
         shall decide, awards (the "Awards") permitted to be granted under the
         Company's Long-Term Profit Incentive Plan (1996) or any successor plan
         (the "Long-Term Plan"), which Awards may include stock options, SARs,
         performance units, restricted stock and deferred share awards.

                  (d) Additional Benefits. Except as modified by this Agreement,
         the Executive shall be entitled to participate in all compensation or
         employee benefit plans or programs, and to receive all benefits,
         perquisites and emoluments, for which any member of senior management
         at the Company is eligible under any plan or program now or hereafter
         established and maintained by the Company or the Bank for senior
         officers, to the extent permissible under the general terms

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         and provisions of such plans or programs and in accordance with the
         provisions thereof, including group hospitalization, health, dental
         care, senior executive life or other life insurance, travel or accident
         insurance, disability plans, tax-qualified or non-qualified pension,
         savings, thrift and profit-sharing plans, deferred compensation plans,
         sick-leave plans, auto allowance or auto lease plans, and executive
         contingent compensation plans, including, without limitation, capital
         accumulation programs and stock purchase plans. Notwithstanding the
         foregoing, the Executive acknowledges and agrees that the severance
         payments provided in certain circumstances under this Agreement and the
         Prior Agreement (as defined in Section 6(g)) are in lieu of any rights
         which the Executive might otherwise have under any and all other
         displacement, separation or severance plans or programs of the
         Companies, including without limitation the Mellon Financial
         Corporation Displacement Program, and the Executive hereby waives all
         rights to participate in any of such plans or programs in the event of
         the termination of his employment during the Term.

                  (e) Perquisites. The Company will also furnish the Executive,
         without cost to him, with such perquisites as are commensurate with the
         Executive's position and status, including (i) membership in such
         country and business clubs as are reasonably necessary to the conduct
         of the Companies' business, (ii) an annual physical examination of the
         Executive by a physician selected by the Executive, (iii) participation
         in the Company's matching gifts program, (iv) use of a car and driver,
         and (v) personal financial, investment and tax advice, with any firm
         selected by the Executive, not to exceed a reasonable sum per annum, to
         the extent costs or expenses of the Executive to be reimbursed are
         properly documented. To the extent the furnishing of the perquisites
         listed in this section results in taxable income being imputed to the
         Executive, the Company will reimburse the Executive for all tax costs
         incurred to restore him to the same after-tax position in which he
         would have been had income not been imputed.

         5. Business Expenses. The Companies shall pay or reimburse the
Executive for all reasonable travel and other expenses incurred by the Executive
(and his spouse where there is a legitimate business reason for his spouse to
accompany him) in connection with the performance of his duties and obligations
under this Agreement, subject to the Executive's presentation of appropriate
vouchers in accordance with such policies and procedures as the Companies from
time to time establish for senior officers.

         6. Effect of Termination of Employment; Effect of Disability.

         (a) Without Cause Termination or Constructive Discharge. Subject to the
provisions of Section 7 below, in the event the Executive's employment hereunder
terminates due to either a Without Cause Termination or a Constructive
Discharge:

                  (i) Earned but unpaid Base Salary as of the Date of
         Termination (as defined in Section 14(b)) and any earned but unpaid
         bonuses for prior years (collectively, the "Accrued Obligations"),
         shall be payable in full, and the Company shall, as liquidated damages
         or severance pay, or both:

                           (A) continue to pay the Executive's Base Salary, as
                  in effect at the Date of Termination, from the Date of
                  Termination until the end of the Term. Moreover, if said
                  termination occurs within 12 months from the end of the Term
                  of this Agreement, the Company shall continue to pay the
                  Executive's Base Salary for a period of no less than the
                  shorter period of (1) 12 months from the Date of Termination,
                  or (2) the Date of

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                  Termination until the time when the Executive commences
                  full-time employment with another employer, and

                           (B) pay to the Executive for the year of termination
                  and for each subsequent calendar year or portion thereof
                  during the remainder of the Term, an amount (prorated in the
                  case of any partial year) equal to the Cash Bonus Amount of
                  the highest bonus received by the Executive under the Bonus
                  Plan for any year in the three years preceding the Date of
                  Termination, such payments to be made at the normal times for
                  payment of bonuses under the Bonus Plan.

         With respect to the payments provided for in this Section 6(a)(i), the
         Executive shall be entitled, to the extent permitted by law as
         determined by the Company in good faith, to participate in any
         compensation deferral plans or arrangements then provided by the
         Company to senior executives on the same basis as if he had remained an
         employee through the end of the Term.

                  (ii) To the extent permitted by law, the Company shall
         continue to provide the Executive through the remainder of the Term
         with (A) service credit under all qualified and nonqualified retirement
         plans and excess benefit plans and the Supplemental Retirement Benefit
         provided under this Agreement in which the Executive participated as of
         his Date of Termination and (B) eligibility to receive employer
         matching contributions on any pre-tax contributions made by the
         Executive to the Retirement Savings Plan at the maximum rate which
         would have been available to the Executive had his employment
         continued.

                  (iii) The Company shall continue to provide Executive (and
         Executive's dependents, if applicable) for the period of salary
         continuation set forth in Section 6(a)(i)(A) above with medical,
         dental, accident, disability and life insurance benefits upon
         substantially the same terms and conditions (including contributions
         required by the Executive for such benefits) as those of the applicable
         employee benefit plans in effect from time to time as applied to
         employees; provided, however, that if the Executive cannot continue to
         participate under the terms of the Company plans providing such
         benefits, the Company shall otherwise provide such benefits on (as
         nearly as reasonably practicable) the same after-tax basis as if
         continued participation had been permitted. Notwithstanding the
         foregoing, in the event the Executive becomes re-employed with another
         employer and becomes eligible to receive welfare benefits from such
         employer, the welfare benefits described herein shall be secondary to
         such benefits during the period of the Executive's eligibility, but
         only to the extent that the Company reimburses the Executive for any
         increased cost and provides any additional benefits necessary to give
         the Executive the benefits provided hereunder.

                  (iv) All stock options and restricted stock awards granted
         after February 1, 1998 under the Long-Term Plan and outstanding as of
         the Date of Termination (other than those under which vesting is
         performance-based or is dependent upon the satisfaction of conditions
         other than continued employment) shall become immediately and fully
         vested. The Executive shall have up to three (3) years to exercise all
         such outstanding stock options following the Date of Termination, but
         in no event beyond their specified term. All Type II

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         stock options and related deferred cash incentive awards granted after
         February 1, 1998 under the Long-Term Plan shall not terminate or be
         forfeited, as the case may be, but shall remain outstanding and
         exercisable or payable, as the case may be, as if Executive remained
         employed by the Company. The Chairman and Chief Executive Officer of
         the Company shall recommend to the HRC, with respect to any period for
         which Performance Goals (as defined in the Long-Term Plan) relating to
         such Type II stock options and deferred cash incentive awards are
         achieved, that the right to exercise the maximum possible number of
         Type II stock options be accelerated and that the maximum possible
         deferred cash incentive award be earned and payable to the Executive
         upon such exercise. The vesting of other Awards under which vesting is
         performance-based or is dependent upon the satisfaction of conditions
         other than continued employment shall be governed by the terms of the
         applicable award agreement. The award agreement for any Award of
         performance accelerated restricted stock granted during the Term shall
         provide that if the Executive's employment terminates due to a Without
         Cause Termination or a Constructive Discharge, the restricted stock
         shall not be forfeited, and the restrictions thereon shall lapse at the
         same times as if employment had continued.

                  (v) The perquisites set forth in Paragraphs 4(e)(i), (iv) and
         (v) shall continue through the first anniversary of the Executive's
         Date of Termination. In addition, the Company shall furnish the
         Executive with office space and secretarial support during the
         remainder of the Term or, if shorter, until the time the Executive
         commences full-time employment with another employer.

         (b) Disability. In the event of the Executive's Disability, the Company
may, by giving a Notice of Disability as provided in Section 14(c), remove the
Executive from active employment and in that event shall provide the Executive
for the remainder of the Term with the same payments and benefits as those
provided in Section 6(a), except that:

                  (i) in lieu of the bonus payments provided in Section
         6(a)(i)(B), the Executive shall receive, at the same time as bonus
         payments for the year of Disability would otherwise be made under the
         Bonus Plan, a prorated bonus for the year of Disability only equal to
         the Cash Bonus Amount of the bonus award the Executive would have
         received if he had been employed throughout the bonus year and had
         received the same performance rating as he received for the preceding
         year, prorated on a daily basis as of the Date of Disability;

                  (ii) except for Accrued Obligations, Base Salary payments
         shall be offset by any amounts otherwise payable to the Executive under
         the Company's disability program generally available to other
         employees; and

                  (iii) all stock options and restricted stock awards granted
         after February 1, 1998 under the Long-Term Plan and outstanding as of
         the Date of Disability (other than those under which vesting is
         performance-based or is dependent upon the satisfaction of conditions
         other than continued employment but including Type II stock options and
         related deferred cash incentive awards) shall become immediately and
         fully vested. The Executive shall have up to three (3) years to
         exercise all such outstanding stock options following the Date of
         Disability, but in no event beyond their specified term. The vesting of
         other Awards under which vesting is performance-based or is dependent
         upon the satisfaction of conditions other than continued employment
         shall be governed by the terms of the applicable award agreement.

         (c) Retirement. In the event the Executive's employment hereunder
terminates due to Retirement:

                  (i) Accrued Obligations as of the Date of Retirement shall
         be payable in full;

                  (ii) the Company shall pay to the Executive, at the same time
         as bonus payments for the year of Retirement would otherwise be made
         under the Bonus Plan, a prorated bonus for the year

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         of Retirement only equal to the Cash Bonus Amount of the bonus award
         the Executive would have received if he had been employed throughout
         the bonus year and had received the same performance rating as he
         received for the preceding year, prorated on a daily basis as of the
         Date of Retirement;

                  (iii) stock options, restricted stock and other Awards under
         the Long-Term Plan shall vest and be exercisable as provided in the
         Long-Term Plan and the applicable award agreement. The award agreement
         for any Award of performance accelerated restricted stock granted
         during the Term shall provide that, notwithstanding any other provision
         therein, (A) if the Executive's employment terminates due to Retirement
         prior to age 65, then to the extent such shares have not previously
         been earned, the restrictions shall lapse as to 14% of the original
         number of shares granted for each completed year of service subsequent
         to the date of grant and (B) if the Executive's employment terminates
         for any reason at or after attainment of age 65, the restrictions shall
         lapse as to 100% of the shares granted which have not previously been
         earned;

                  (iv) the Executive shall receive such retirement and other
         benefits as he is entitled to receive under the terms of the Companies'
         retirement and other benefit plans, including Section 8 hereof; and

                  (v) the Executive shall receive post-Retirement perquisites
         which are not less than those which as of the time of Retirement are
         customarily provided to similarly situated retired executives.

         (d) Death. In the event the Executive's employment hereunder terminates
due to death, Accrued Obligations as of the date of death shall be payable in
full, and the Company shall pay to the Executive's estate, at the same time as
bonus payments for the year of death would otherwise be made under the Bonus
Plan, a prorated bonus for the year of death only equal to the Cash Bonus Amount
of the bonus award the Executive would have received if he had been employed
throughout the bonus year and had received the same performance rating as he
received for the preceding year, prorated on a daily basis as of the date of
death.

         All stock options and restricted stock awards granted after February 1,
1998 under the Long-Term Plan and outstanding as of the date of death (other
than those under which vesting is performance-based or is dependent upon the
satisfaction of conditions other than continued employment but including Type II
stock options and related deferred cash incentive awards) shall become
immediately and fully vested. The Executive's personal representative,
beneficiary or person who may exercise stock options under the rules of descent
and distribution or under the Executive's will shall have up to three (3) years
to exercise all such outstanding stock options following the date of death, but
in no event beyond their specified term. The vesting of other Awards under which
vesting is performance-based or is dependent upon the satisfaction of conditions
other than continued employment shall be governed by the terms of the applicable
award agreement.

         (e) Other Termination of Employment. In the event the Executive's
employment hereunder terminates due to a Termination for Cause or the Executive
terminates employment with the Company for reasons other than due to a
Constructive Discharge, Disability, Retirement or death, vested benefits and
Accrued Obligations as of the Date of Termination shall be payable in full, and
vested Awards may be exercised according to the terms of the Long-Term Plan. No
other payments shall be made, or benefits provided, by the Company except for
benefits which have already become vested under the

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terms of employee benefit programs maintained by the Company or its affiliates
for its employees generally as provided in Section 10.

         (f) Definitions. For purposes of this Agreement, the following terms,
when capitalized, shall have the following meanings unless the context otherwise
requires:

                  (i) "Termination for Cause" means, to the maximum extent
         permitted by applicable law, a termination of the Executive's
         employment by the Company by a vote of the majority of the Board
         members then in office, because the Executive (a) has been convicted of
         a criminal offense covered by Section 19 of the Federal Deposit
         Insurance Act, 12 U.S.C. Section 1829, or any successor provision, or
         (b) has entered a plea of nolo contendere thereto, or (c) has breached
         or failed to perform his duties hereunder, and such breach or failure
         to perform constitutes self-dealing, willful misconduct or recklessness
         (within the meaning of Section 1713(a) of the Pennsylvania Business
         Corporation Law, as amended, or any successor provision), or (d) has
         violated a material provision of the Company's Code of Conduct (as the
         same may be modified from time to time), or (e) a final determination
         has been reached that the Executive has violated the representations
         made in Section 1 above, or the provisions of Section 7 below;
         provided, however, that the Board has given the Executive advance
         notice of such Termination for Cause including the reasons therefor,
         together with a reasonable opportunity for the Executive to appear with
         counsel before the Board and to reply to such notice.

                  (ii) "Constructive Discharge" means a termination of the
         Executive's employment by the Executive due to a failure of the
         Companies or their successors to fulfill their obligations under this
         Agreement in any material respect, including (a) any failure to elect
         or reelect or to appoint or reappoint the Executive to the offices of
         Chairman and Chief Executive Officer of the Company and the Bank or as
         a member of each of their boards of directors or (b) any other material
         change by the Companies in the functions, duties or responsibilities of
         the Executive's position with the Companies which would reduce the
         ranking or level, dignity, responsibility, importance or scope of such
         position, (c) any imposition on the Executive of a requirement to be
         permanently based at a location more than fifty miles from the
         principal office of the Company as of the date of this Agreement
         without the consent of the Executive, or (d) any reduction without the
         consent of the Executive in the Executive's salary below the amount
         then provided for under Paragraph 4(a) hereof.

                  (iii) "Without Cause Termination" means a termination of the
         Executive's employment by the Company other than due to Disability or
         expiration of the Term and other than a Termination for Cause.

                  (iv) "Disability" for purposes of this Agreement means the
         Executive shall be disabled so as to be unable to perform for 180 days
         in any 365-day period, with or without reasonable accommodation, the
         essential functions of his positions under this Agreement, as
         determined by the person or entity responsible for making
         determinations under the Company's long-term disability plan or, if any
         such person or entity is not able for any reason to make this
         determination, by another independent person or entity experienced in
         this field selected by the Company and acceptable to the Executive or
         his representative.

                  (v) "Retirement" means a voluntary termination of his
         employment by the Executive (1) on or after attainment of age 55, (2)
         on or after completion of at least five years of active employment with
         the Companies, (3) on not less than 6 months' Notice of Retirement as

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         provided in Section 14 and (4) under circumstances not constituting a
         Termination for Cause, Without Cause Termination, Constructive
         Discharge, Disability or death.

                  (vi) The "Cash Bonus Amount" of a Bonus Plan award for any
         period means the sum of (1) the amount of such award paid or payable in
         cash (whether or not deferred) plus (2) with respect to any portion of
         the award paid or payable in restricted stock, phantom stock or other
         interests in Company securities, the amount of cash which would
         otherwise have been paid, excluding any premium in value given to
         compensate for risk of forfeiture or otherwise.

                  (vii) The "Date of Termination," "Date of Disability" and
         "Date of Retirement" shall have the meanings ascribed to them in
         Section 14. To the fullest extent permitted by applicable law, to the
         extent this Agreement requires the payment of Base Salary and/or the
         provision of coverages and benefits subsequent to the Date of
         Termination or Date of Disability, the Executive's Date of Termination
         or Date of Disability, as applicable, shall not be treated as a
         termination of employment (a "Benefit Plan Termination Date") from the
         Companies for purposes of determining the Executive's rights,
         responsibilities and tax treatment under any and all employee pension,
         welfare and fringe benefit plans maintained by the Companies. Rather,
         the Benefit Plan Termination Date shall be the day following the last
         day for which any Base Salary and/or coverages and benefits are
         required to be provided by this Agreement.

         (g) Change in Control. Notwithstanding anything else contained herein,
if any termination of the Executive's employment hereunder constitutes a
"Qualifying Termination" during the "Termination Period," each as defined in the
Agreement between the Executive and the Company dated as of February 1, 1997
(the "Prior Agreement"), then the provisions of the Prior Agreement shall apply
to such termination in lieu of the provisions of this Section 6. Section 5 of
the Prior Agreement shall apply to any Payment (as therein defined) under this
Agreement to the extent provided therein. The definition of "Change in Control"
in Section 1(c) of the Prior Agreement is hereby amended by changing the phrase
"at least a majority of the members of the board of directors of the Parent
Corporation" in clause (C) of Paragraph 1(c)(iii) to read "at least half of the
members of the board of directors of the Parent Corporation."

         7.  Other Duties of Executive During and After Term.

         (a) Confidential Information. The Executive recognizes and acknowledges
that certain information pertaining to the affairs, business, clients, or
customers of the Companies or any of their subsidiaries or affiliates (any or
all of such entities hereinafter referred to as the "Business"), as such
information may exist from time to time, is confidential information and is a
unique and valuable asset of the Business, access to and knowledge of which are
essential to the performance of his duties under this Agreement. The Executive
shall not, through the end of the Term or at any time thereafter, except to the
extent reasonably necessary in the performance of his duties under this
Agreement, divulge to any person, firm, association, corporation or governmental
agency, any information concerning the affairs, business, clients, or customers
of the Business (except such information as is required by law to be divulged to
a government agency or pursuant to lawful process or such information which is
or shall become part of the public realm through no fault of the Executive), or
make use of any such information for his own purposes or for the benefit of any
person, firm, association or corporation (except the Business) and shall use his
reasonable best efforts to prevent the disclosure of any such information by
others. All records and documents relating to the Business, whether made by the
Executive or otherwise coming into his possession are, shall be, and shall
remain the property of the Business. No copies

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thereof shall be made which are not retained by the Business, and the Executive
agrees, on any termination of his employment, or on demand of the Company, to
deliver the same to the Company.

         (b) Non-Competition. Through the end of the Term, whether during the
Executive's employment or following the termination of his employment for any
reason except for a Without Cause Termination or Constructive Discharge, the
Executive shall not without express prior written approval by order of the HRC,
directly or indirectly:

                  (i) solicit for the account of any Financial Services Company
         (other than the Company or its affiliates) the sale of any products or
         services of a type then provided by the Company or its affiliates (A)
         during the Executive's employment, to any entity or individual or (B)
         following termination of the Executive's employment (1) to any entity
         or individual that was a customer or client of the Company or its
         affiliates at any time during the 12-month period immediately preceding
         the Executive's Date of Termination, Date of Disability or Date of
         Retirement, (2) to any individual who is a resident of a Restricted
         State or (3) to any entity where the customary office of the individual
         solicited or of the individual responsible for the entity's purchasing
         decision is located in a Restricted State.

                  (ii) solicit any employee of the Company or its affiliates to
         terminate such employment relationship.

         For purposes of this Section 7(b), the following definitions shall
apply:

                  (1) "Financial Services Company" shall mean any corporation,
         partnership, sole proprietorship or other entity engaged in the
         provision to unaffiliated customers of financial services, including,
         without limitation, retail or commercial banking, lending, lease
         financing, trade financing or other extension of credit, rate risk
         management products, loan servicing, credit card processing, investment
         banking, brokerage services, investment management or advisory
         services, sponsorship, administration or management of mutual funds or
         other collective investment vehicles, cash management, foreign
         exchange, fiduciary or custodial services, employee benefit plan
         administration, benefits consulting services, stock transfer services
         or underwriting or sale of insurance.

                  (2) "Restricted State" shall mean any State of the United
         States all or part of which is located east of the Mississippi River
         and the District of Columbia.

         In addition to the foregoing, it is understood that during his
employment the Executive is subject to all policies and procedures of the
Companies regarding investment in securities of competitors.

         (c) Remedies. The Company's obligation to make payments or provide for
or increase any benefits under this Agreement (except to the extent previously
vested) shall cease upon any violation of the provisions of this Section 7;
provided, however, that the Executive shall first have the right to appear
before the Board with counsel and that such cessation of payments or benefits
shall require a vote of a majority of the Board members then in office. In
addition, in the event of a violation by the Executive of the provisions of this
Section 7, the Company shall be entitled, if it shall so elect, to institute
legal proceedings to obtain damages for any such breach, or to enforce the
specific performance by the Executive of this Section 7 and to enjoin the
Executive from any further violation, and may exercise such remedies
cumulatively or in conjunction with such other remedies as may be available to
the Company at law or in equity. The Executive acknowledges, however, that the
remedies at law for any breach by him

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of the provisions of this Section 7 would be inadequate and agrees that the
Company shall be entitled to injunctive relief against him in the event of any
such breach.

         (d) Survival; Authorization to Modify Restrictions. The covenants of
the Executive contained in this Section 7 shall survive any termination of the
Executive's employment for the periods stated herein, except that the covenants
contained in Section 7(b) shall not survive any termination of employment (i)
for which a Notice of Termination is given during the Termination Period
following a Change in Control, each as defined in the Prior Agreement or (ii)
which is a termination of employment described in the second sentence of Section
1(j) of the Prior Agreement. The Executive represents that his experience and
capabilities are such that the enforcement of the provisions of this Section 7
will not prevent him from earning his livelihood, and acknowledges that it would
cause the Company serious and irreparable injury and cost if Executive were to
use his ability and knowledge in competition with the Company or to otherwise
breach the obligations contained in this Section 7. Accordingly, it is the
intention of the parties that the provisions of this Section 7 shall be
enforceable to the fullest extent permissible under applicable law, but that the
unenforceability (or modification to conform to such law) of any provision or
provisions hereof shall not render unenforceable, or impair, the remainder
thereof. If any provision or provisions hereof shall be deemed invalid or
unenforceable, either in whole or in part, this Agreement shall be deemed
amended to delete or modify, as necessary, the offending provision or provisions
and to alter the bounds thereof to the extent required in order to render it
valid and enforceable.

         8. Supplemental Retirement Benefit. The Executive will be entitled to
receive a monthly Supplemental Retirement Benefit (the "Supplemental Retirement
Benefit") commencing on the first day of the month coincident with or following
the later of the Executive's termination of employment or attainment of age 60
and continuing for the remainder of his life. Unless otherwise elected by the
Executive, the Supplemental Retirement Benefit shall be payable in the form of a
50% joint and survivor annuity which shall be unreduced for the actuarial value
of the survivor's benefit. If the Executive's spouse at the time of his death is
not more than four years younger than the Executive, the survivor benefit shall
be equal to 50% of the Executive's benefit and shall be payable to his spouse
for the remainder of the spouse's life. If the Executive's spouse at the time of
his death is more than four years younger than the Executive, the benefit
payable to the spouse shall be reduced to a benefit having the same actuarial
value as the benefit that would have been payable had the spouse been four years
younger than the Executive. The Executive shall also have the right to elect a
100% joint and survivor annuity, on an actuarially-reduced basis or a lump-sum
payment, on an actuarially-reduced basis (if the Executive makes a timely
lump-sum election which avoids constructive receipt), or any other form of
payment available or provided under the "Supplemental Plans" defined in this
Section 8. Actuarial reductions shall be based on the actual ages of the
Executive and his spouse at the time of retirement. If the Executive is not
married at the time of his retirement, actuarial adjustments shall be made as if
the Executive had a spouse with the same date of birth as the Executive. In the
event that the Executive elects a form of payment other than the automatic 50%
joint and survivor annuity or other than a lump sum payment, and remarries
subsequent to retirement, the benefits payable under this Section shall be
actuarially adjusted at the time of the Executive's death to reflect the age of
the subsequent spouse. If the Executive elects a lump sum payment at retirement,
no further benefits will be payable under this Section.

         The amount of the monthly retirement benefit as an unreduced 50% joint
and survivor annuity shall be equal to the product of (A) the "Service
Percentage" multiplied by (B) the Executive's "Final Average Compensation," with
such product reduced by (C) the total monthly amount of benefits (measured for
purposes of this offset as if the Executive elected a 50% joint and survivor
annuity payable

                                      -10-
<PAGE>   11

as of the date benefits commence under this Agreement) provided to or in respect
of the Executive under all tax-qualified retirement plans and related excess
benefit and other benefit restoration plans maintained by the Company or the
Bank for the Executive, including the Mellon Bank Benefit Restoration Plan and
the Mellon Bank IRC Section 401(a)(17) Plan (the "Supplemental Plans") and
benefits paid pursuant to Section 4.7 of the Mellon Financial Corporation
Elective Deferred Compensation Plan for Senior Officers, but not including
payments of any compensation previously deferred under any deferred compensation
plan of the Company or the Bank, or interest thereon, or payments from the
Mellon Financial Corporation Retirement Savings Plan, a 401(k) plan.

         The Executive owns interests in life insurance policies (the
"Policies") as a participant in the Mellon Bank Senior Executive Life Insurance
Plan. The Supplemental Retirement Benefit payable to the Executive hereunder
shall be further reduced by the Executive's interest in the cash value of the
Policies. This reduction shall be calculated in the same manner as under the
Supplemental Plans. In the event the United States federal income tax laws
change or are interpreted so as to cause Executive's ownership interests in
Policies to be subject to taxation, the Executive and the Company will negotiate
in good faith to mitigate the effects of such change.

         The Executive shall be vested in the Supplemental Retirement Benefit
provided under this Paragraph as of February 1, 1998.

         The Executive shall elect the form of payment of his Supplemental
Retirement Benefit at the same time and subject to the same provisions
(including timing requirements and all reductions and/or penalties for late
elections) as provided under the Supplemental Plans. After retirement, the
Executive (or beneficiary who is receiving payments) may elect to receive his
remaining Supplemental Retirement Benefits which are payable hereunder in a lump
sum payment, calculated in the same manner and subject to the same reductions as
under the Supplemental Plans. In the event that the Executive elects a form of
payment of his Supplemental Retirement Benefits which provides for payments to
continue after his death and the Executive dies without having received all
payments of Supplemental Retirement Benefits that may be payable hereunder, then
the unpaid balance of such benefits shall be paid in accordance with the form of
payment elected by the Executive. Any such remaining payments shall be made to
the Executive's beneficiary provided under the Supplemental Plans, subject to
any contrary written instructions from the Executive designating a different
beneficiary for such payments.

         The Executive may also elect, upon not less than 12 months' advance
written notice, to have the payment of the Supplemental Retirement Benefit
commence on the first day of any month coincident with or after the later of his
termination of employment or attainment of age 55. In this event, the
Supplemental Retirement Benefit will be subject to an early payment reduction
amount equal to 0.5% per month (6% per annum) for each month that payments
commence before attainment of age 60. In the event of such retirement, the Term
and the Company's obligations to make payments under Section 4 above shall cease
as of the retirement date.

         The Executive may also elect, upon not less than 12 months' advance
written notice prior to the commencement of Supplemental Retirement Benefit
payments, to have the lump sum value of the Supplemental Retirement Benefit to
which the Executive would otherwise be entitled applied to the purchase of a
single premium annuity in a form and from an issuer selected or concurred in by
the Executive. In the event of such an election by the Executive, the sole
responsibilities of the Company shall be to apply the amount of the lump sum
value of the Supplemental Retirement Benefit to the purchase of the annuity
selected or concurred in by the Executive and the distribution of such annuity
to the Executive. Thereafter, the Executive shall look solely to the issuer of
the annuity for payment on

                                      -11-
<PAGE>   12

account of or in connection with the Supplemental Retirement Benefit and agrees
that the Company and its affiliates, and each of their officers, directors and
employees, shall have no further liability in respect of the Supplemental
Retirement Benefit or by reason of the application of the lump sum value as
elected by the Executive or the selection of the form or issuer of the annuity.

         Notwithstanding the foregoing, in no event shall the Executive receive
any payments under this Section 8 or be deemed to be retired from the Company
while the Executive is entitled to payments under Paragraph 6(a) or Paragraph
6(b) or during any period for which the Executive receives additional service
credit in respect of a "Qualifying Termination" as provided in clause (B) of the
definition of "Service Percentage" below.

         As used in this Section 8:

                  (i) "Service Percentage" means 2% for each full or partial
         year of the Executive's employment with the Company (plus service with
         a prior employer if treated as credited service with the Company)
         commencing January 2, 1981 and ending as of the date his active
         employment with the Company terminates, plus 2% for (A) each full year,
         if any, that the Executive receives payments under Paragraph 6(a) or
         6(b) hereof (with such percentage pro-rated for the partial contract
         year in which such final termination of the Executive's employment
         occurs or in which such final payments under Paragraph 6(a) or 6(b)
         hereof are made, whichever shall be applicable) or (B) for each of the
         three years following any "Qualifying Termination" of the Executive's
         Employment during the "Termination Period," each as defined in the
         Prior Agreement.

                  (ii) "Final Average Compensation" means one-twelfth (1/12th)
         of the sum of the Executive's Base Salary paid and the Cash Bonus
         Amount of any bonus award earned for the calendar year within the final
         three (3) full calendar years of the Executive's employment by the
         Company which produces the highest amount. For purposes of determining
         Final Average Compensation (A) Bonus Plan awards shall be attributed to
         the calendar year in which earned, whether paid in that calendar year
         or the year following or deferred and (B) any portion of the
         Executive's Base Salary and bonus award which is deferred by the
         Executive under agreements with the Company or under any Company
         employee benefit plan shall be included for purposes of determining
         Final Average Compensation.

         Notwithstanding the foregoing, in the event of a "Qualifying
Termination" of the Executive's employment during the "Termination Period," each
as defined in the Prior Agreement, "Final Average Compensation" for purposes of
computing the Supplemental Retirement Benefit shall mean one-twelfth (1/12th) of
the sum of (i) the Executive's highest annual rate of base salary during the
12-month period immediately prior to the Executive's Date of Termination and
(ii) the Executive's Bonus Amount, as defined in the Prior Agreement. In
addition, the Supplemental Retirement Benefit shall be payable without any
reduction for early payment in the event the Executive is less than age 60 at
the time that payment is made. In the event of such a "Qualifying Termination,"
the present value of the Supplemental Retirement Benefit shall be payable to the
Executive in a lump sum at the same time payments are due to the Executive under
Section 4(a) of the Prior Agreement (i.e., within 20 days following the
Executive's Date of Termination). The present value shall be calculated in the
same manner and using the actuarial factors set forth in the Supplemental Plans
as of the effective date of this Agreement.

                                      -12-
<PAGE>   13

         In the event the Executive's termination of employment is due to death
prior to the commencement of the payment of Supplemental Retirement Benefits
under this Section 8, and he shall be survived by a spouse, entitlement to
Supplemental Retirement Benefits will become fully vested and such spouse shall
be entitled to receive a pre-retirement death benefit, payable in the form of a
lifetime annuity, equal to the benefit that would have been payable had he
retired immediately prior to death and elected a 50% joint and survivor annuity,
but without any early payment reductions applicable for payments prior to age
60. If the Executive's spouse at the time of his death is more than four years
younger than the Executive, the benefit payable to the survivor shall be reduced
to a benefit having the same actuarial value as the benefit that would have been
payable had the spouse been four years younger than the Executive.

         The Executive's entitlement to Supplemental Retirement Benefits under
this Section 8 shall survive the expiration of the Term and any other
termination of this Agreement.

         9. Resolution of Disputes. Except as otherwise provided in Section 7(c)
hereof, any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration in Pittsburgh,
Pennsylvania, by three arbitrators in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be entered on the
arbitrators' award in any court having jurisdiction. In the event of any
arbitration, litigation or other proceeding between the Company and the
Executive with respect to the subject matter of this Agreement and the
enforcement of rights hereunder, the Company shall reimburse the Executive for
his reasonable costs and expenses relating to such arbitration, litigation or
other proceeding, including attorneys' fees and expenses, provided that such
arbitration, litigation or other proceeding results in any: (i) settlement
requiring the Company to make a payment, continue to make payments or provide
any other benefit to the Executive; or (ii) judgment, order or award against the
Company in favor of the Executive or his spouse, legal representative or heirs,
unless such judgment, order or award is subsequently reversed on appeal or in a
collateral proceeding. At the request of the Executive, costs and expenses
(including attorneys' fees) incurred in connection with any arbitration,
litigation or other proceeding referred to in this Section shall be paid by the
Company in advance of the final disposition of the arbitration, litigation or
other proceeding upon receipt of an undertaking by or on behalf of the Executive
to repay the amounts advanced if it is ultimately determined that he is not
entitled to reimbursement of such costs and expenses by the Company as set forth
in this Section.

         10. Full Settlement; No Mitigation; Non-Exclusivity of Benefits. Except
as provided in Section 6(g), the Company's obligation to make any payment
provided for in this Agreement and otherwise to perform its obligations
hereunder shall be in lieu and in full settlement of all other severance
payments to the Executive under any other severance plan, arrangement or
agreement of the Company and its affiliates, including but not limited to the
Mellon Financial Corporation Displacement Program, and in full settlement of any
and all claims or rights of the Executive for severance, separation and/or
salary continuation payments resulting from the termination of his employment.
In no event shall the Executive be obligated to seek other employment or to take
other action by way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement, and except as specifically provided
herein, such amounts shall not be reduced whether or not the Executive obtains
other employment. Except as provided above in this Section 10, nothing in this
Agreement shall prevent or limit the Executive's continuing or future
participation in any plan, program, policy or practice provided by the Company
or any of its affiliates for which the Executive may qualify, nor, except as
otherwise specifically provided in this Agreement, shall anything herein limit
or otherwise affect such rights as the Executive may have under any contract or
agreement with the Company or any of its affiliates, including without
limitation any stock option or restricted stock agreement. Amounts or

                                      -13-
<PAGE>   14

benefits which are vested benefits or which the Executive is otherwise entitled
to receive under any such plan, program, policy, practice, contract or agreement
prior to, at or subsequent to any Date of Termination, Date of Disability or
Date of Retirement shall be paid or provided in accordance with the terms of
such plan, program, policy, practice, contract or agreement except as explicitly
modified by this Agreement.

         11. Employment and Payments by Affiliates. Except as herein otherwise
specifically provided, references in this Agreement to employment by the Company
shall include employment by affiliates of the Company, and the obligation of the
Company to make any payment or provide any benefit to the Executive hereunder
shall be deemed satisfied to the extent that such payment is made or such
benefit is provided by any affiliate of the Company.

         12. Withholding Taxes. The Company may directly or indirectly withhold
from any payments made under this Agreement all Federal, state, city or other
taxes as shall be required pursuant to any law or governmental regulation or
ruling.

         13. Consolidation, Merger, or Sale of Assets. Nothing in this Agreement
shall preclude the Company from consolidating or merging into or with, or
transferring all or substantially all of its assets to, another corporation or
entity which assumes this Agreement and all obligations and undertakings of the
Company hereunder. Upon such a consolidation, merger or transfer of assets and
assumption, the term, "Company" as used herein shall mean such other corporation
or entity, and this Agreement shall continue in full force and effect.

         14. Notices.

         (a) General. All notices, requests, demands and other communications
required or permitted hereunder shall be given in writing and shall be deemed to
have been duly given when delivered or 5 days after being deposited in the
United States mail, certified and return receipt requested, postage prepaid,
addressed as follows:

         (i)      To the Company:

                  Manager-Human Resources Department
                  Mellon Bank, N.A.
                  One Mellon Center
                  Pittsburgh, Pennsylvania 15258

         (ii)     To the Executive:

                  Martin G. McGuinn
                  714 Amberson Avenue
                  Pittsburgh, PA  15232-1446

                  with a copy to:

                  Mark Bookman, Esq.
                  Reed Smith LLP
                  435 Sixth Ave.
                  Pittsburgh, PA  15219

                                      -14-
<PAGE>   15

or to such other address as the addressee party shall have previously specified
in writing to the other.

         (b) Notice of Termination. Except in the case of death of the
Executive, any termination of the Executive's employment hereunder, whether by
the Executive or the Company, shall be effected only by a written notice given
to the other party in accordance with this Section 14 (a "Notice of
Termination"). Any Notice of Termination shall (i) indicate the specific
termination provision in Section 6 relied upon, (ii) in the case of a
termination for Cause or a Constructive Discharge, set forth in reasonable
detail the facts and circumstances claimed to provide a basis for such
termination and (iii) specify the effective date of such termination of
employment (the "Date of Termination"), which shall not be less than 15 days nor
more than 60 days after such notice is given. The failure of the Executive or
the Company to set forth in any Notice of Termination any fact or circumstance
which contributes to a showing of Cause or Constructive Discharge shall not
waive any right of the Executive or the Company hereunder or preclude the
Executive or the Company from asserting such fact or circumstance in enforcing
the Executive's or the Company's rights hereunder.

         (c) Notice of Disability. Any finding of Disability by the Company
shall be effected only by a written notice given to the Executive in accordance
with this Section 14 (a "Notice of Disability"). Any Notice of Disability shall
(i) set forth in reasonable detail the facts and circumstances claimed to
provide a basis for such finding of Disability and (ii) specify an effective
date (the "Date of Disability"), which shall not be less than 10 days after such
notice is given. The failure of the Company to set forth in any Notice of
Disability any fact or circumstance which contributes to a showing of Disability
shall not waive any right of the Company hereunder or preclude the Company from
asserting such fact or circumstance in enforcing the Company's rights hereunder.

         (d) Notice of Retirement. Retirement shall be effected only by a
written notice given by the Executive in accordance with this Section 14 (a
"Notice of Retirement"). Any Notice of Retirement shall (i) indicate that it is
a Notice of Retirement and (ii) specify an effective date (the "Date of
Retirement) which shall not be less than six months after such notice is given.

         15. No Attachment. Except as required by law, no right to receive
payments under this Agreement shall be subject to anticipation, commutation,
alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation or
to execution, attachment, levy or similar process or assignment by operation of
law, and any attempt, voluntary or involuntary, to effect any such action shall
be null, void and of no effect; provided, however, that nothing in this Section
15 shall preclude the assumption of such rights by executors, administrators, or
other legal representatives of the Executive or his estate or their assigning
any rights hereunder to the person or persons entitled thereto.

         16. Source of Payments. Subject to Section 11 hereof, all payments
provided for under this Agreement shall be paid in cash from the general funds
of the Company. The Company shall not be required to establish a special or
separate fund or other segregation of assets to assure such payments, and, if
the Company shall make any investments to aid it in meeting its obligations
hereunder, the Executive shall have no right, title or interest whatever in or
to any such investments except as may otherwise be expressly provided in a
separate written instrument relating to such investments. Nothing contained in
this Agreement, and no action taken pursuant to its provisions, shall create or
be construed to create a trust of any kind, or a fiduciary relationship, between
the Company and the Executive or any other person. To the extent that any person
acquires a right to receive payments from the Company hereunder, such right
shall be no greater than the right of an unsecured creditor.

                                      -15-
<PAGE>   16

         17. Binding Agreement. This Agreement shall be binding upon, and shall
inure to the benefit of, the Executive and the Company and, as permitted by this
Agreement, their respective successors, assigns, heirs, beneficiaries and
representatives.

         18. Governing Law. The validity, interpretation, performance and
enforcement of this Agreement shall be governed exclusively by the laws of the
Commonwealth of Pennsylvania, without regard to principles of conflicts of laws
thereof.

         19. Counterparts; Headings. This Agreement may be executed in
counterparts, each of which, when executed, shall be deemed to be an original
and all of which together shall be deemed to be one and the same instrument. The
underlined Section headings contained in this Agreement are for convenience of
reference only and shall not affect the interpretation or construction of any
provision hereof.

         IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed and its seal to be affixed hereunto by its officers thereunto duly
authorized, and the Executive has signed this Agreement, all as of the first
date above written.

ATTEST:                                   MELLON FINANCIAL CORPORATION

      /s/ Carl Krasik                     By:      /s/ Charles A. Corry
------------------------------                -------------------------------
         Carl Krasik                          Name:   Charles A. Corry
          Secretary                           Title:  Chairman of the Human
                                                      Resources Committee

                                                   /s/ Martin G. McGuinn
                                              -------------------------------
                                                      MARTIN G. MCGUINN

                                      -16-<PAGE>   1

                                                                   Exhibit 10.17
                                                                  CONFORMED COPY

                              EMPLOYMENT AGREEMENT

         THIS AGREEMENT, made effective as of February 1, 2001 by and between
MELLON FINANCIAL CORPORATION, a Pennsylvania corporation (the "Company"), and
CHRISTOPHER M. CONDRON (the "Executive"),

                                WITNESSETH THAT:

         WHEREAS, the Executive is currently serving as President and Chief
Operating Officer of the Company and Mellon Bank, N.A. (the "Bank" and, together
with the Company, the "Companies"), and the Company desires to retain the
Executive to continue to serve in such capacities, and the Executive is willing
to continue to serve in such capacities, on the terms and conditions herein set
forth;

         NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto, each intending to be legally bound hereby, agree
as follows:

         1. Employment. The Company agrees to continue to employ the Executive,
and the Executive agrees to continue to be employed by the Companies, for the
Term provided in Paragraph 3(a) below and upon the other terms and conditions
hereinafter provided. The Executive hereby represents and warrants that he has
the legal capacity to execute and perform this Agreement, that it is a valid and
binding agreement, enforceable against him according to its terms, and that its
execution and performance by him do not violate the terms of any existing
agreement or understanding to which the Executive is a party.

         2. Position and Responsibilities. During the Term, the Executive agrees
to serve as the President and Chief Operating Officer of the Company and the
Bank. In his capacity as the President and Chief Operating Officer, he shall be
responsible for the management of the operations of the Company and the Bank,
respectively, reporting directly to the Chairman and Chief Executive Officer of
the Company (the "Chairman") and the Bank. The Executive (a) shall serve as a
member of the boards of directors of the Company (the "Board") and the Bank for
the period for which he is and shall from time to time be elected, (b) shall be
given such authority as is appropriate to carry out the duties described above,
and (c) agrees to serve, if elected, as an officer and director of any other
subsidiary or affiliate of the Companies.

         3. Term and Duties.

         (a) Term of Agreement. The term of the Executive's employment under
this Agreement shall commence on February 1, 2001 and shall continue thereafter
through January 31, 2004 (the "Term").

         (b) Duties. During the Term, and except for illness or incapacity and
reasonable vacation periods of no more than 4 weeks in any calendar year (or
such other periods as shall be consistent with the Company's policies for other
key executives), the Executive shall devote all of his business time, attention,
skill and efforts exclusively to the business and affairs of the Companies and
their subsidiaries and affiliates, shall not be engaged in any other business
activity, and shall perform and discharge well and faithfully the duties which
may be assigned to him from time to time by the Chairman; provided, however,
that nothing in this Agreement shall preclude the Executive from devoting time
during reasonable periods required for:

                  (i) serving, in accordance with the Company's policies and
         with the prior approval of the Chairman, which prior approval will not
         be unreasonably withheld, as a director of any

<PAGE>   2

         company or organization involving no actual or potential conflict of
         interest with the Companies or any of their subsidiaries or affiliates;

                  (ii) delivering lectures and fulfilling speaking engagements;

                  (iii) engaging in charitable and community activities; and

                  (iv) investing his personal assets in businesses in which his
         participation is solely that of an investor in such form or manner as
         will not violate Section 7 below or require any services on the part of
         the Executive in the operation or the affairs of such business,

provided, however, that such activities do not materially affect or interfere
with the performance of the Executive's duties and obligations to the Companies.
When approved by the Chairman in accordance with the standards of CPP-805-1,
which provide that indemnification will be granted infrequently and only if
substantial specific benefits to the Company can be demonstrated, or any
successor Policy, the Company will indemnify the Executive for service as a
director of an unaffiliated company or organization.

         4. Compensation. For all services rendered by the Executive in any
capacity required hereunder during the Term, including, without limitation,
services as an executive, officer, director, or member of any committee of the
Company, the Bank or any subsidiary, affiliate or division thereof, the
Executive shall be compensated as set forth below. It is the intention of the
Company and the Executive that the Executive's total compensation be competitive
with that paid by similar financial institutions. To assure this, the Company
will conduct an annual survey of compensation practices of a group of peer
financial institutions designated by the Human Resources Committee of the Board
("HRC").

                  (a) Base Salary. The Executive shall be paid a fixed salary
         ("Base Salary") of $742,500 per annum as of the effective date of this
         Agreement. The Base Salary amount is subject to periodic review by the
         Board or the HRC (which shall occur at least annually, with the first
         such review to take place in May 2001). Base Salary shall be payable in
         accordance with the customary payroll practices of the Companies, but
         in no event less frequently than monthly.

                  (b) Bonus. The Executive shall be paid such amounts, if any,
         as may be due under the terms of the Mellon Financial Corporation
         Profit Bonus Plan (or any successor plan) (the "Bonus Plan"), with such
         payments of bonus to be made in accordance with the terms of the Bonus
         Plan. It is understood that the Executive may receive some portion of
         his Bonus Plan award in the form of restricted stock, and such awards
         are to be made on the same terms as apply to the Chairman and to other
         members of the Executive Management Group.

                  (c) Equity-Based Compensation. The Company shall grant to the
         Executive during calendar year 2001 and in subsequent years as the HRC
         shall decide, awards (the "Awards") permitted to be granted under the
         Company's Long-Term Profit Incentive Plan (1996) or any successor plan
         (the "Long-Term Plan"), which Awards may include stock options, SARs,
         performance units, restricted stock and deferred share awards.

                  (d) Additional Benefits. Except as modified by this Agreement,
         the Executive shall be entitled to participate in all compensation or
         employee benefit plans or programs, and to receive all benefits,
         perquisites and emoluments, for which the Chairman and any member of
         senior management at the Company is eligible under any plan or program
         now or hereafter established

                                      -2-
<PAGE>   3

         and maintained by the Company or the Bank for the Chairman or any
         senior officers, to the extent permissible under the general terms and
         provisions of such plans or programs and in accordance with the
         provisions thereof, including group hospitalization, health, dental
         care, senior executive life or other life insurance, travel or accident
         insurance, disability plans, tax-qualified or non-qualified pension,
         savings, thrift and profit-sharing plans, deferred compensation plans,
         sick-leave plans, auto allowance or auto lease plans, and executive
         contingent compensation plans, including, without limitation, capital
         accumulation programs and stock purchase plans. Notwithstanding the
         foregoing, the Executive acknowledges and agrees that the severance
         payments provided in certain circumstances under this Agreement and the
         Prior Agreement (as defined in Section 6(g)) are in lieu of any rights
         which the Executive might otherwise have under any and all other
         displacement, separation or severance plans or programs of the
         Companies, including without limitation the Mellon Financial
         Corporation Displacement Program, and the Executive hereby waives all
         rights to participate in any of such plans or programs in the event of
         the termination of his employment during the Term.

                  (e) Perquisites. The Company will also furnish the Executive,
         without cost to him, with such perquisites as are commensurate with the
         Executive's position and status, including (i) membership in such
         country and business clubs as are reasonably necessary to the conduct
         of the Companies' business, (ii) an annual physical examination of the
         Executive by a physician selected by the Executive, (iii) participation
         in the Company's matching gifts program, (iv) use of a car and driver,
         and (v) personal financial, investment and tax advice, with any firm
         selected by the Executive, not to exceed a reasonable sum per annum, to
         the extent costs or expenses of the Executive to be reimbursed are
         properly documented. To the extent the furnishing of the perquisites
         listed in this section results in taxable income being imputed to the
         Executive, the Company will reimburse the Executive for all tax costs
         incurred to restore him to the same after-tax position in which he
         would have been had income not been imputed.

         5. Business Expenses. The Companies shall pay or reimburse the
Executive for all reasonable travel and other expenses incurred by the Executive
(and his spouse where there is a legitimate business reason for his spouse to
accompany him) in connection with the performance of his duties and obligations
under this Agreement, subject to the Executive's presentation of appropriate
vouchers in accordance with such policies and procedures as the Companies from
time to time establish for senior officers.

         6. Effect of Termination of Employment; Effect of Disability.

         (a) Without Cause Termination or Constructive Discharge. Subject to the
provisions of Section 7 below, in the event the Executive's employment hereunder
terminates due to either a Without Cause Termination or a Constructive
Discharge:

                  (i) Earned but unpaid Base Salary as of the Date of
         Termination (as defined in Section 14(b)) and any earned but unpaid
         bonuses for prior years (collectively, the "Accrued Obligations"),
         shall be payable in full, and the Company shall, as liquidated damages
         or severance pay, or both:

                           (A) continue to pay the Executive's Base Salary, as
                  in effect at the Date of Termination, from the Date of
                  Termination until the end of the Term. Moreover, if said
                  termination occurs within 12 months from the end of the Term
                  of this Agreement, the Company shall continue to pay the
                  Executive's Base Salary for a period of no less than

                                      -3-
<PAGE>   4

                  the shorter period of (1) 12 months from the Date of
                  Termination, or (2) the Date of Termination until the time
                  when the Executive commences full-time employment with another
                  employer, and

                           (B) pay to the Executive for the year of termination
                  and for each subsequent calendar year or portion thereof
                  during the remainder of the Term, an amount (prorated in the
                  case of any partial year) equal to the Cash Bonus Amount of
                  the highest bonus received by the Executive under the Bonus
                  Plan for any year in the three years preceding the Date of
                  Termination, such payments to be made at the normal times for
                  payment of bonuses under the Bonus Plan.

         With respect to the payments provided for in this Section 6(a)(i), the
         Executive shall be entitled, to the extent permitted by law as
         determined by the Company in good faith, to participate in any
         compensation deferral plans or arrangements then provided by the
         Company to senior executives on the same basis as if he had remained an
         employee through the end of the Term.

                  (ii) To the extent permitted by law, the Company shall
         continue to provide the Executive through the remainder of the Term
         with (A) service credit under all qualified and nonqualified retirement
         plans and excess benefit plans and the Supplemental Retirement Benefit
         provided under this Agreement in which the Executive participated as of
         his Date of Termination and (B) eligibility to receive employer
         matching contributions on any pre-tax contributions made by the
         Executive to the Retirement Savings Plan at the maximum rate which
         would have been available to the Executive had his employment
         continued.

                  (iii) The Company shall continue to provide Executive (and
         Executive's dependents, if applicable) for the period of salary
         continuation set forth in Section 6(a)(i)(A) above with medical,
         dental, accident, disability and life insurance benefits upon
         substantially the same terms and conditions (including contributions
         required by the Executive for such benefits) as those of the applicable
         employee benefit plans in effect from time to time as applied to
         employees; provided, however, that if the Executive cannot continue to
         participate under the terms of the Company plans providing such
         benefits, the Company shall otherwise provide such benefits on (as
         nearly as reasonably practicable) the same after-tax basis as if
         continued participation had been permitted. Notwithstanding the
         foregoing, in the event the Executive becomes re-employed with another
         employer and becomes eligible to receive welfare benefits from such
         employer, the welfare benefits described herein shall be secondary to
         such benefits during the period of the Executive's eligibility, but
         only to the extent that the Company reimburses the Executive for any
         increased cost and provides any additional benefits necessary to give
         the Executive the benefits provided hereunder.

                  (iv) All stock options and restricted stock awards granted
         after February 1, 1998 under the Long-Term Plan and outstanding as of
         the Date of Termination (other than those under which vesting is
         performance-based or is dependent upon the satisfaction of conditions
         other than continued employment) shall become immediately and fully
         vested. The Executive shall have up to three (3) years to exercise all
         such outstanding stock options following the Date of Termination, but
         in no event beyond their specified term. All Type II stock options and
         related deferred cash incentive awards granted after February 1, 1998
         under the Long-Term Plan shall not terminate or be forfeited, as the
         case may be, but shall remain outstanding and exercisable or payable,
         as the case may be, as if Executive remained employed by the Company.
         The Chairman and Chief Executive Officer of the Company shall recommend
         to the HRC, with respect to any

                                      -4-
<PAGE>   5

         period for which Performance Goals (as defined in the Long-Term Plan)
         relating to such Type II stock options and deferred cash incentive
         awards are achieved, that the right to exercise the maximum possible
         number of Type II stock options be accelerated and that the maximum
         possible deferred cash incentive award be earned and payable to the
         Executive upon such exercise. The vesting of other Awards under which
         vesting is performance-based or is dependent upon the satisfaction of
         conditions other than continued employment shall be governed by the
         terms of the applicable award agreement. The award agreement for any
         Award of performance accelerated restricted stock granted during the
         Term shall provide that if the Executive's employment terminates due to
         a Without Cause Termination or a Constructive Discharge, the restricted
         stock shall not be forfeited, and the restrictions thereon shall lapse
         at the same times as if employment had continued.

                  (v) The perquisites set forth in Paragraphs 4(e)(i), (iv) and
         (v) shall continue through the first anniversary of the Executive's
         Date of Termination. In addition, the Company shall furnish the
         Executive with office space and secretarial support during the
         remainder of the Term or, if shorter, until the time the Executive
         commences full-time employment with another employer.

         (b) Disability. In the event of the Executive's Disability, the Company
may, by giving a Notice of Disability as provided in Section 14(c), remove the
Executive from active employment and in that event shall provide the Executive
for the remainder of the Term with the same payments and benefits as those
provided in Section 6(a), except that:

                  (i) in lieu of the bonus payments provided in Section
         6(a)(i)(B), the Executive shall receive, at the same time as bonus
         payments for the year of Disability would otherwise be made under the
         Bonus Plan, a prorated bonus for the year of Disability only equal to
         the Cash Bonus Amount of the bonus award the Executive would have
         received if he had been employed throughout the bonus year and had
         received the same performance rating as he received for the preceding
         year, prorated on a daily basis as of the Date of Disability;

                  (ii) except for Accrued Obligations, Base Salary payments
         shall be offset by any amounts otherwise payable to the Executive under
         the Company's disability program generally available to other
         employees; and

                  (iii) all stock options and restricted stock awards granted
         after February 1, 1998 under the Long-Term Plan and outstanding as of
         the Date of Disability (other than those under which vesting is
         performance-based or is dependent upon the satisfaction of conditions
         other than continued employment but including Type II stock options and
         related deferred cash incentive awards) shall become immediately and
         fully vested. The Executive shall have up to three (3) years to
         exercise all such outstanding stock options following the Date of
         Disability, but in no event beyond their specified term. The vesting of
         other Awards under which vesting is performance-based or is dependent
         upon the satisfaction of conditions other than continued employment
         shall be governed by the terms of the applicable award agreement.

         (c) Retirement. In the event the Executive's employment hereunder
terminates due to Retirement:

                  (i) Accrued Obligations as of the Date of Retirement shall be
         payable in full;

                                      -5-
<PAGE>   6

                  (ii) the Company shall pay to the Executive, at the same time
         as bonus payments for the year of Retirement would otherwise be made
         under the Bonus Plan, a prorated bonus for the year of Retirement only
         equal to the Cash Bonus Amount of the bonus award the Executive would
         have received if he had been employed throughout the bonus year and had
         received the same performance rating as he received for the preceding
         year, prorated on a daily basis as of the Date of Retirement;

                  (iii) stock options, restricted stock and other Awards under
         the Long-Term Plan shall vest and be exercisable as provided in the
         Long-Term Plan and the applicable award agreement;

                  (iv) the Executive shall receive such retirement and other
         benefits as he is entitled to receive under the terms of the Companies'
         retirement and other benefit plans, including Section 8 hereof; and

                  (v) the Executive shall receive post-Retirement perquisites
         which are not less than those which as of the time of Retirement are
         customarily provided to similarly situated retired executives.

         (d) Death. In the event the Executive's employment hereunder terminates
due to death, Accrued Obligations as of the date of death shall be payable in
full, and the Company shall pay to the Executive's estate, at the same time as
bonus payments for the year of death would otherwise be made under the Bonus
Plan, a prorated bonus for the year of death only equal to the Cash Bonus Amount
of the bonus award the Executive would have received if he had been employed
throughout the bonus year and had received the same performance rating as he
received for the preceding year, prorated on a daily basis as of the date of
death.

         All stock options and restricted stock awards granted after February 1,
1998 under the Long-Term Plan and outstanding as of the date of death (other
than those under which vesting is performance-based or is dependent upon the
satisfaction of conditions other than continued employment but including Type II
stock options and related deferred cash incentive awards) shall become
immediately and fully vested. The Executive's personal representative,
beneficiary or person who may exercise stock options under the rules of descent
and distribution or under the Executive's will shall have up to three (3) years
to exercise all such outstanding stock options following the date of death, but
in no event beyond their specified term. The vesting of other Awards under which
vesting is performance-based or is dependent upon the satisfaction of conditions
other than continued employment shall be governed by the terms of the applicable
award agreement.

         (e) Other Termination of Employment. In the event the Executive's
employment hereunder terminates due to a Termination for Cause or the Executive
terminates employment with the Company for reasons other than due to a
Constructive Discharge, Disability, Retirement or death, vested benefits and
Accrued Obligations as of the Date of Termination shall be payable in full, and
vested Awards may be exercised according to the terms of the Long-Term Plan. No
other payments shall be made, or benefits provided, by the Company except for
benefits which have already become vested under the terms of employee benefit
programs maintained by the Company or its affiliates for its employees generally
as provided in Section 10.

         (f) Definitions. For purposes of this Agreement, the following terms,
when capitalized, shall have the following meanings unless the context otherwise
requires:

                                      -6-
<PAGE>   7

                  (i) "Termination for Cause" means, to the maximum extent
         permitted by applicable law, a termination of the Executive's
         employment by the Company by a vote of the majority of the Board
         members then in office, because the Executive (a) has been convicted of
         a criminal offense covered by Section 19 of the Federal Deposit
         Insurance Act, 12 U.S.C. Section 1829, or any successor provision, or
         (b) has entered a plea of nolo contendere thereto, or (c) has breached
         or failed to perform his duties hereunder, and such breach or failure
         to perform constitutes self-dealing, willful misconduct or recklessness
         (within the meaning of Section 1713(a) of the Pennsylvania Business
         Corporation Law, as amended, or any successor provision), or (d) has
         violated a material provision of the Company's Code of Conduct (as the
         same may be modified from time to time), or (e) a final determination
         has been reached that the Executive has violated the representations
         made in Section 1 above, or the provisions of Section 7 below;
         provided, however, that the Board has given the Executive advance
         notice of such Termination for Cause including the reasons therefor,
         together with a reasonable opportunity for the Executive to appear with
         counsel before the Board and to reply to such notice.

                  (ii) "Constructive Discharge" means a termination of the
         Executive's employment by the Executive due to a failure of the
         Companies or their successors to fulfill their obligations under this
         Agreement in any material respect, including (a) any failure to elect
         or reelect or to appoint or reappoint the Executive to the offices of
         President and Chief Operating Officer of the Company and the Bank or as
         a member of each of their boards of directors or (b) any other material
         change by the Companies in the functions, duties or responsibilities of
         the Executive's position with the Companies which would reduce the
         ranking or level, dignity, responsibility, importance or scope of such
         position, (c) any imposition on the Executive of a requirement to be
         permanently based at a location more than fifty miles from the Borough
         of Manhattan without the consent of the Executive, (d) any reduction
         without the consent of the Executive in the Executive's salary below
         the amount then provided for under Paragraph 4(a) hereof or (e) if
         Martin G. McGuinn shall no longer be Chairman and Chief Executive
         Officer of the Company and the Bank during the Term for any reason
         other than due to his death, Disability or Retirement.

                  (iii) "Without Cause Termination" means a termination of the
         Executive's employment by the Company other than due to Disability or
         expiration of the Term and other than a Termination for Cause.

                  (iv) "Disability" for purposes of this Agreement means the
         Executive shall be disabled so as to be unable to perform for 180 days
         in any 365-day period, with or without reasonable accommodation, the
         essential functions of his positions under this Agreement, as
         determined by the person or entity responsible for making
         determinations under the Company's long-term disability plan or, if any
         such person or entity is not able for any reason to make this
         determination, by another independent person or entity experienced in
         this field selected by the Company and acceptable to the Executive or
         his representative.

                  (v) "Retirement" means a voluntary termination of his
         employment by the Executive (1) on or after attainment of age 55, (2)
         on or after completion of at least five years of active employment with
         the Companies, (3) on not less than 6 months' Notice of Retirement as
         provided in Section 14 and (4) under circumstances not constituting a
         Termination for Cause, Without Cause Termination, Constructive
         Discharge, Disability or death.

                                      -7-
<PAGE>   8

                  (vi) The "Cash Bonus Amount" of a Bonus Plan award for any
         period means the sum of (1) the amount of such award paid or payable in
         cash (whether or not deferred) plus (2) with respect to any portion of
         the award paid or payable in restricted stock, phantom stock or other
         interests in Company securities, the amount of cash which would
         otherwise have been paid, excluding any premium in value given to
         compensate for risk of forfeiture or otherwise.

                  (vii) The "Date of Termination," "Date of Disability" and
         "Date of Retirement" shall have the meanings ascribed to them in
         Section 14. To the fullest extent permitted by applicable law, to the
         extent this Agreement requires the payment of Base Salary and/or the
         provision of coverages and benefits subsequent to the Date of
         Termination or Date of Disability, the Executive's Date of Termination
         or Date of Disability, as applicable, shall not be treated as a
         termination of employment (a "Benefit Plan Termination Date") from the
         Companies for purposes of determining the Executive's rights,
         responsibilities and tax treatment under any and all employee pension,
         welfare and fringe benefit plans maintained by the Companies. Rather,
         the Benefit Plan Termination Date shall be the day following the last
         day for which any Base Salary and/or coverages and benefits are
         required to be provided by this Agreement.

         (g) Change in Control. Notwithstanding anything else contained herein,
if any termination of the Executive's employment hereunder constitutes a
"Qualifying Termination" during the "Termination Period," each as defined in the
Agreement between the Executive and the Company dated as of February 1, 1997
(the "Prior Agreement"), then the provisions of the Prior Agreement shall apply
to such termination in lieu of the provisions of this Section 6. Section 5 of
the Prior Agreement shall apply to any Payment (as therein defined) under this
Agreement to the extent provided therein. The definition of "Change in Control"
in Section 1(c) of the Prior Agreement is hereby amended by changing the phrase
"at least a majority of the members of the board of directors of the Parent
Corporation" in clause (C) of Paragraph 1(c)(iii) to read "at least half of the
members of the board of directors of the Parent Corporation."

         7. Other Duties of Executive During and After Term.

         (a) Confidential Information. The Executive recognizes and acknowledges
that certain information pertaining to the affairs, business, clients, or
customers of the Companies or any of their subsidiaries or affiliates (any or
all of such entities hereinafter referred to as the "Business"), as such
information may exist from time to time, is confidential information and is a
unique and valuable asset of the Business, access to and knowledge of which are
essential to the performance of his duties under this Agreement. The Executive
shall not, through the end of the Term or at any time thereafter, except to the
extent reasonably necessary in the performance of his duties under this
Agreement, divulge to any person, firm, association, corporation or governmental
agency, any information concerning the affairs, business, clients, or customers
of the Business (except such information as is required by law to be divulged to
a government agency or pursuant to lawful process or such information which is
or shall become part of the public realm through no fault of the Executive), or
make use of any such information for his own purposes or for the benefit of any
person, firm, association or corporation (except the Business) and shall use his
reasonable best efforts to prevent the disclosure of any such information by
others. All records and documents relating to the Business, whether made by the
Executive or otherwise coming into his possession are, shall be, and shall
remain the property of the Business. No copies thereof shall be made which are
not retained by the Business, and the Executive agrees, on any termination of
his employment, or on demand of the Company, to deliver the same to the Company.

                                      -8-
<PAGE>   9

         (b) Non-Competition. Through the end of the Term, whether during the
Executive's employment or following the termination of his employment for any
reason except for a Without Cause Termination or Constructive Discharge, the
Executive shall not without express prior written approval by order of the HRC,
directly or indirectly:

                  (i) solicit for the account of any Financial Services Company
         (other than the Company or its affiliates) the sale of any products or
         services of a type then provided by the Company or its affiliates (A)
         during the Executive's employment, to any entity or individual or (B)
         following termination of the Executive's employment (1) to any entity
         or individual that was a customer or client of the Company or its
         affiliates at any time during the 12-month period immediately preceding
         the Executive's Date of Termination, Date of Disability or Date of
         Retirement, (2) to any individual who is a resident of a Restricted
         State or (3) to any entity where the customary office of the individual
         solicited or of the individual responsible for the entity's purchasing
         decision is located in a Restricted State.

                  (ii) solicit any employee of the Company or its affiliates to
         terminate such employment relationship.

                  For purposes of this Section 7(b), the following definitions
shall apply:

                  (1) "Financial Services Company" shall mean any corporation,
         partnership, sole proprietorship or other entity engaged in the
         provision to unaffiliated customers of financial services, including,
         without limitation, retail or commercial banking, lending, lease
         financing, trade financing or other extension of credit, rate risk
         management products, loan servicing, credit card processing, investment
         banking, brokerage services, investment management or advisory
         services, sponsorship, administration or management of mutual funds or
         other collective investment vehicles, cash management, foreign
         exchange, fiduciary or custodial services, employee benefit plan
         administration, benefits consulting services, stock transfer services
         or underwriting or sale of insurance.

                  (2) "Restricted State" shall mean any State of the United
         States all or part of which is located east of the Mississippi River
         and the District of Columbia.

         In addition to the foregoing, it is understood that during his
employment the Executive is subject to all policies and procedures of the
Companies regarding investment in securities of competitors.

         (c) Remedies. The Company's obligation to make payments or provide for
or increase any benefits under this Agreement (except to the extent previously
vested) shall cease upon any violation of the provisions of this Section 7;
provided, however, that the Executive shall first have the right to appear
before the Board with counsel and that such cessation of payments or benefits
shall require a vote of a majority of the Board members then in office. In
addition, in the event of a violation by the Executive of the provisions of this
Section 7, the Company shall be entitled, if it shall so elect, to institute
legal proceedings to obtain damages for any such breach, or to enforce the
specific performance by the Executive of this Section 7 and to enjoin the
Executive from any further violation, and may exercise such remedies
cumulatively or in conjunction with such other remedies as may be available to
the Company at law or in equity. The Executive acknowledges, however, that the
remedies at law for any breach by him of the provisions of this Section 7 would
be inadequate and agrees that the Company shall be entitled to injunctive relief
against him in the event of any such breach.

                                      -9-
<PAGE>   10

         (d) Survival; Authorization to Modify Restrictions. The covenants of
the Executive contained in this Section 7 shall survive any termination of the
Executive's employment for the periods stated herein, except that the covenants
contained in Section 7(b) shall not survive any termination of employment (i)
for which a Notice of Termination is given during the Termination Period
following a Change in Control, each as defined in the Prior Agreement or (ii)
which is a termination of employment described in the second sentence of Section
1(j) of the Prior Agreement. The Executive represents that his experience and
capabilities are such that the enforcement of the provisions of this Section 7
will not prevent him from earning his livelihood, and acknowledges that it would
cause the Company serious and irreparable injury and cost if Executive were to
use his ability and knowledge in competition with the Company or to otherwise
breach the obligations contained in this Section 7. Accordingly, it is the
intention of the parties that the provisions of this Section 7 shall be
enforceable to the fullest extent permissible under applicable law, but that the
unenforceability (or modification to conform to such law) of any provision or
provisions hereof shall not render unenforceable, or impair, the remainder
thereof. If any provision or provisions hereof shall be deemed invalid or
unenforceable, either in whole or in part, this Agreement shall be deemed
amended to delete or modify, as necessary, the offending provision or provisions
and to alter the bounds thereof to the extent required in order to render it
valid and enforceable.

         8. Supplemental Retirement Benefit. The Executive will be entitled to
receive a monthly Supplemental Retirement Benefit (the "Supplemental Retirement
Benefit") commencing on the first day of the month coincident with or following
the later of the Executive's termination of employment or attainment of age 60
and continuing for the remainder of his life. Unless otherwise elected by the
Executive, the Supplemental Retirement Benefit shall be payable in the form of a
50% joint and survivor annuity which shall be unreduced for the actuarial value
of the survivor's benefit. If the Executive's spouse at the time of his death is
not more than four years younger than the Executive, the survivor benefit shall
be equal to 50% of the Executive's benefit and shall be payable to his spouse
for the remainder of the spouse's life. If the Executive's spouse at the time of
his death is more than four years younger than the Executive, the benefit
payable to the spouse shall be reduced to a benefit having the same actuarial
value as the benefit that would have been payable had the spouse been four years
younger than the Executive. The Executive shall also have the right to elect a
100% joint and survivor annuity, on an actuarially-reduced basis or a lump-sum
payment, on an actuarially-reduced basis (if the Executive makes a timely
lump-sum election which avoids constructive receipt), or any other form of
payment available or provided under the "Supplemental Plans" defined in this
Section 8. Actuarial reductions shall be based on the actual ages of the
Executive and his spouse at the time of retirement. If the Executive is not
married at the time of his retirement, actuarial adjustments shall be made as if
the Executive had a spouse with the same date of birth as the Executive. In the
event that the Executive elects a form of payment other than the automatic 50%
joint and survivor annuity or other than a lump sum payment, and remarries
subsequent to retirement, the benefits payable under this Section shall be
actuarially adjusted at the time of the Executive's death to reflect the age of
the subsequent spouse. If the Executive elects a lump sum payment at retirement,
no further benefits will be payable under this Section.

         The amount of the monthly retirement benefit as an unreduced 50% joint
and survivor annuity shall be equal to the product of (A) the "Service
Percentage" multiplied by (B) the Executive's "Final Average Compensation," with
such product reduced by (C) the total monthly amount of benefits (measured for
purposes of this offset as if the Executive elected a 50% joint and survivor
annuity payable as of the date benefits commence under this Agreement) provided
to or in respect of the Executive under all tax-qualified retirement plans and
related excess benefit and other benefit restoration plans maintained by the
Company or the Bank for the Executive, including the Mellon Bank Benefit

                                      -10-
<PAGE>   11

Restoration Plan and the Mellon Bank IRC Section 401(a)(17) Plan (the
"Supplemental Plans") and benefits paid pursuant to Section 4.7 of the Mellon
Financial Corporation Elective Deferred Compensation Plan for Senior Officers,
but not including payments of any compensation previously deferred under any
deferred compensation plan of the Company or the Bank, or interest thereon, or
payments from the Mellon Financial Corporation Retirement Savings Plan, a 401(k)
plan.

         The Executive owns interests in life insurance policies (the
"Policies") as a participant in the Mellon Bank Senior Executive Life Insurance
Plan. The Supplemental Retirement Benefit payable to the Executive hereunder
shall be further reduced by the Executive's interest in the cash value of the
Policies. This reduction shall be calculated in the same manner as under the
Supplemental Plans. In the event the United States federal income tax laws
change or are interpreted so as to cause Executive's ownership interests in
Policies to be subject to taxation, the Executive and the Company will negotiate
in good faith to mitigate the effects of such change.

         The Executive shall be vested in the Supplemental Retirement Benefit
provided under this Paragraph as of February 1, 1998.

         The Executive shall elect the form of payment of his Supplemental
Retirement Benefit at the same time and subject to the same provisions
(including timing requirements and all reductions and/or penalties for late
elections) as provided under the Supplemental Plans. After retirement, the
Executive (or beneficiary who is receiving payments) may elect to receive his
remaining Supplemental Retirement Benefits which are payable hereunder in a lump
sum payment, calculated in the same manner and subject to the same reductions as
under the Supplemental Plans. In the event that the Executive elects a form of
payment of his Supplemental Retirement Benefits which provides for payments to
continue after his death and the Executive dies without having received all
payments of Supplemental Retirement Benefits that may be payable hereunder, then
the unpaid balance of such benefits shall be paid in accordance with the form of
payment elected by the Executive. Any such remaining payments shall be made to
the Executive's beneficiary provided under the Supplemental Plans, subject to
any contrary written instructions from the Executive designating a different
beneficiary for such payments.

         The Executive may also elect, upon not less than 12 months' advance
written notice, to have the payment of the Supplemental Retirement Benefit
commence on the first day of any month coincident with or after the later of his
termination of employment or attainment of age 55. In this event, the
Supplemental Retirement Benefit will be subject to an early payment reduction
amount equal to 0.5% per month (6% per annum) for each month that payments
commence before attainment of age 60. In the event of such retirement, the Term
and the Company's obligations to make payments under Section 4 above shall cease
as of the retirement date.

         The Executive may also elect, upon not less than 12 months' advance
written notice prior to the commencement of Supplemental Retirement Benefit
payments, to have the lump sum value of the Supplemental Retirement Benefit to
which the Executive would otherwise be entitled applied to the purchase of a
single premium annuity in a form and from an issuer selected or concurred in by
the Executive. In the event of such an election by the Executive, the sole
responsibilities of the Company shall be to apply the amount of the lump sum
value of the Supplemental Retirement Benefit to the purchase of the annuity
selected or concurred in by the Executive and the distribution of such annuity
to the Executive. Thereafter, the Executive shall look solely to the issuer of
the annuity for payment on account of or in connection with the Supplemental
Retirement Benefit and agrees that the Company and its affiliates, and each of
their officers, directors and employees, shall have no further liability in
respect

                                      -11-
<PAGE>   12

of the Supplemental Retirement Benefit or by reason of the application of the
lump sum value as elected by the Executive or the selection of the form or
issuer of the annuity.

         Notwithstanding the foregoing, in no event shall the Executive receive
any payments under this Section 8 or be deemed to be retired from the Company
while the Executive is entitled to payments under Paragraph 6(a) or Paragraph
6(b) or during any period for which the Executive receives additional service
credit in respect of a "Qualifying Termination" as provided in clause (B) of the
definition of "Service Percentage" below.

         As used in this Section 8:

                  (i) "Service Percentage" means 2% for each full or partial
         year of the Executive's employment with the Company (plus service with
         a prior employer if treated as credited service with the Company)
         commencing May 1, 1978 and ending as of the date his active employment
         with the Company terminates, plus 2% for (A) each full year, if any,
         that the Executive receives payments under Paragraph 6(a) or 6(b)
         hereof (with such percentage pro-rated for the partial contract year in
         which such final termination of the Executive's employment occurs or in
         which such final payments under Paragraph 6(a) or 6(b) hereof are made,
         whichever shall be applicable) or (B) for each of the three years
         following any "Qualifying Termination" of the Executive's Employment
         during the "Termination Period," each as defined in the Prior
         Agreement.

                  (ii) "Final Average Compensation" means one-twelfth (1/12th)
         of the sum of the Executive's Base Salary paid and the Cash Bonus
         Amount of any bonus award earned for the calendar year within the final
         three (3) full calendar years of the Executive's employment by the
         Company which produces the highest amount. For purposes of determining
         Final Average Compensation (A) Bonus Plan awards shall be attributed to
         the calendar year in which earned, whether paid in that calendar year
         or the year following or deferred and (B) any portion of the
         Executive's Base Salary and bonus award which is deferred by the
         Executive under agreements with the Company or under any Company
         employee benefit plan shall be included for purposes of determining
         Final Average Compensation.

         Notwithstanding the foregoing, in the event of a "Qualifying
Termination" of the Executive's employment during the "Termination Period," each
as defined in the Prior Agreement, "Final Average Compensation" for purposes of
computing the Supplemental Retirement Benefit shall mean one-twelfth (1/12th) of
the sum of (i) the Executive's highest annual rate of base salary during the
12-month period immediately prior to the Executive's Date of Termination and
(ii) the Executive's Bonus Amount, as defined in the Prior Agreement. In
addition, the Supplemental Retirement Benefit shall be payable without any
reduction for early payment in the event the Executive is less than age 60 at
the time that payment is made. In the event of such a "Qualifying Termination,"
the present value of the Supplemental Retirement Benefit shall be payable to the
Executive in a lump sum at the same time payments are due to the Executive under
Section 4(a) of the Prior Agreement (i.e., within 20 days following the
Executive's Date of Termination). The present value shall be calculated in the
same manner and using the actuarial factors set forth in the Supplemental Plans
as of the effective date of this Agreement.

         In the event the Executive's termination of employment is due to death
prior to the commencement of the payment of Supplemental Retirement Benefits
under this Section 8, and he shall be survived by a spouse, entitlement to
Supplemental Retirement Benefits will become fully vested and

                                      -12-
<PAGE>   13

such spouse shall be entitled to receive a pre-retirement death benefit, payable
in the form of a lifetime annuity, equal to the benefit that would have been
payable had he retired immediately prior to death and elected a 50% joint and
survivor annuity, but without any early payment reductions applicable for
payments prior to age 60. If the Executive's spouse at the time of his death is
more than four years younger than the Executive, the benefit payable to the
survivor shall be reduced to a benefit having the same actuarial value as the
benefit that would have been payable had the spouse been four years younger than
the Executive.

         The Executive's entitlement to Supplemental Retirement Benefits under
this Section 8 shall survive the expiration of the Term and any other
termination of this Agreement.

         9. Resolution of Disputes. Except as otherwise provided in Section 7(c)
hereof, any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration in Pittsburgh,
Pennsylvania, by three arbitrators in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be entered on the
arbitrators' award in any court having jurisdiction. In the event of any
arbitration, litigation or other proceeding between the Company and the
Executive with respect to the subject matter of this Agreement and the
enforcement of rights hereunder, the Company shall reimburse the Executive for
his reasonable costs and expenses relating to such arbitration, litigation or
other proceeding, including attorneys' fees and expenses, provided that such
arbitration, litigation or other proceeding results in any: (i) settlement
requiring the Company to make a payment, continue to make payments or provide
any other benefit to the Executive; or (ii) judgment, order or award against the
Company in favor of the Executive or his spouse, legal representative or heirs,
unless such judgment, order or award is subsequently reversed on appeal or in a
collateral proceeding. At the request of the Executive, costs and expenses
(including attorneys' fees) incurred in connection with any arbitration,
litigation or other proceeding referred to in this Section shall be paid by the
Company in advance of the final disposition of the arbitration, litigation or
other proceeding upon receipt of an undertaking by or on behalf of the Executive
to repay the amounts advanced if it is ultimately determined that he is not
entitled to reimbursement of such costs and expenses by the Company as set forth
in this Section.

         10. Full Settlement; No Mitigation; Non-Exclusivity of Benefits. Except
as provided in Section 6(g), the Company's obligation to make any payment
provided for in this Agreement and otherwise to perform its obligations
hereunder shall be in lieu and in full settlement of all other severance
payments to the Executive under any other severance plan, arrangement or
agreement of the Company and its affiliates, including but not limited to the
Mellon Financial Corporation Displacement Program, and in full settlement of any
and all claims or rights of the Executive for severance, separation and/or
salary continuation payments resulting from the termination of his employment.
In no event shall the Executive be obligated to seek other employment or to take
other action by way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement, and except as specifically provided
herein, such amounts shall not be reduced whether or not the Executive obtains
other employment. Except as provided above in this Section 10, nothing in this
Agreement shall prevent or limit the Executive's continuing or future
participation in any plan, program, policy or practice provided by the Company
or any of its affiliates for which the Executive may qualify, nor, except as
otherwise specifically provided in this Agreement, shall anything herein limit
or otherwise affect such rights as the Executive may have under any contract or
agreement with the Company or any of its affiliates, including without
limitation any stock option or restricted stock agreement. Amounts or benefits
which are vested benefits or which the Executive is otherwise entitled to
receive under any such plan, program, policy, practice, contract or agreement
prior to, at or subsequent to any Date of Termination, Date of Disability or
Date of Retirement shall be paid or provided in accordance with the

                                      -13-
<PAGE>   14

terms of such plan, program, policy, practice, contract or agreement except as
explicitly modified by this Agreement.

         11. Employment and Payments by Affiliates. Except as herein otherwise
specifically provided, references in this Agreement to employment by the Company
shall include employment by affiliates of the Company, and the obligation of the
Company to make any payment or provide any benefit to the Executive hereunder
shall be deemed satisfied to the extent that such payment is made or such
benefit is provided by any affiliate of the Company.

         12. Withholding Taxes. The Company may directly or indirectly withhold
from any payments made under this Agreement all Federal, state, city or other
taxes as shall be required pursuant to any law or governmental regulation or
ruling.

         13. Consolidation, Merger, or Sale of Assets. Nothing in this Agreement
shall preclude the Company from consolidating or merging into or with, or
transferring all or substantially all of its assets to, another corporation or
entity which assumes this Agreement and all obligations and undertakings of the
Company hereunder. Upon such a consolidation, merger or transfer of assets and
assumption, the term, "Company" as used herein shall mean such other corporation
or entity, and this Agreement shall continue in full force and effect.

         14. Notices.

         (a) General. All notices, requests, demands and other communications
required or permitted hereunder shall be given in writing and shall be deemed to
have been duly given when delivered or 5 days after being deposited in the
United States mail, certified and return receipt requested, postage prepaid,
addressed as follows:

         (i)      To the Company:

                  Manager-Human Resources Department
                  Mellon Bank, N.A.
                  One Mellon Center
                  Pittsburgh, Pennsylvania 15258

         (ii)     To the Executive:

                  Christopher M. Condron
                  15 East 82nd Street
                  New York, NY  10028

or to such other address as the addressee party shall have previously specified
in writing to the other.

         (b) Notice of Termination. Except in the case of death of the
Executive, any termination of the Executive's employment hereunder, whether by
the Executive or the Company, shall be effected only by a written notice given
to the other party in accordance with this Section 14 (a "Notice of
Termination"). Any Notice of Termination shall (i) indicate the specific
termination provision in Section 6 relied upon, (ii) in the case of a
termination for Cause or a Constructive Discharge, set forth in reasonable
detail the facts and circumstances claimed to provide a basis for such
termination and (iii) specify the effective date of such termination of
employment (the "Date of Termination"), which shall not be less than 15

                                      -14-
<PAGE>   15

days nor more than 60 days after such notice is given. The failure of the
Executive or the Company to set forth in any Notice of Termination any fact or
circumstance which contributes to a showing of Cause or Constructive Discharge
shall not waive any right of the Executive or the Company hereunder or preclude
the Executive or the Company from asserting such fact or circumstance in
enforcing the Executive's or the Company's rights hereunder.

         (c) Notice of Disability. Any finding of Disability by the Company
shall be effected only by a written notice given to the Executive in accordance
with this Section 14 (a "Notice of Disability"). Any Notice of Disability shall
(i) set forth in reasonable detail the facts and circumstances claimed to
provide a basis for such finding of Disability and (ii) specify an effective
date (the "Date of Disability"), which shall not be less than 10 days after such
notice is given. The failure of the Company to set forth in any Notice of
Disability any fact or circumstance which contributes to a showing of Disability
shall not waive any right of the Company hereunder or preclude the Company from
asserting such fact or circumstance in enforcing the Company's rights hereunder.

         (d) Notice of Retirement. Retirement shall be effected only by a
written notice given by the Executive in accordance with this Section 14 (a
"Notice of Retirement"). Any Notice of Retirement shall (i) indicate that it is
a Notice of Retirement and (ii) specify an effective date (the "Date of
Retirement) which shall not be less than six months after such notice is given.

         15. No Attachment. Except as required by law, no right to receive
payments under this Agreement shall be subject to anticipation, commutation,
alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation or
to execution, attachment, levy or similar process or assignment by operation of
law, and any attempt, voluntary or involuntary, to effect any such action shall
be null, void and of no effect; provided, however, that nothing in this Section
15 shall preclude the assumption of such rights by executors, administrators, or
other legal representatives of the Executive or his estate or their assigning
any rights hereunder to the person or persons entitled thereto.

         16. Source of Payments. Subject to Section 11 hereof, all payments
provided for under this Agreement shall be paid in cash from the general funds
of the Company. The Company shall not be required to establish a special or
separate fund or other segregation of assets to assure such payments, and, if
the Company shall make any investments to aid it in meeting its obligations
hereunder, the Executive shall have no right, title or interest whatever in or
to any such investments except as may otherwise be expressly provided in a
separate written instrument relating to such investments. Nothing contained in
this Agreement, and no action taken pursuant to its provisions, shall create or
be construed to create a trust of any kind, or a fiduciary relationship, between
the Company and the Executive or any other person. To the extent that any person
acquires a right to receive payments from the Company hereunder, such right
shall be no greater than the right of an unsecured creditor.

         17. Binding Agreement. This Agreement shall be binding upon, and shall
inure to the benefit of, the Executive and the Company and, as permitted by this
Agreement, their respective successors, assigns, heirs, beneficiaries and
representatives.

         18. Governing Law. The validity, interpretation, performance and
enforcement of this Agreement shall be governed exclusively by the laws of the
Commonwealth of Pennsylvania, without regard to principles of conflicts of laws
thereof.

         19. Counterparts; Headings. This Agreement may be executed in
counterparts, each of which, when executed, shall be deemed to be an original
and all of which together shall be deemed to be one and

                                      -15-
<PAGE>   16

the same instrument. The underlined Section headings contained in this Agreement
are for convenience of reference only and shall not affect the interpretation or
construction of any provision hereof.

         IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed and its seal to be affixed hereunto by its officers thereunto duly
authorized, and the Executive has signed this Agreement, all as of the first
date above written.

ATTEST:                                 MELLON FINANCIAL CORPORATION

     /s/ Carl Krasik                    By: /s/ Martin G. McGuinn
----------------------------------         ------------------------------------
         Carl Krasik                              Martin G. McGuinn
          Secretary                        Chairman and Chief Executive Officer

                                            /s/ Christopher M. Condron
                                           -------------------------------------
                                            CHRISTOPHER M. CONDRON

                                      -16-

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