UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 19, 2011
Cortland Bancorp
(Exact name of registrant as specified in its charter)
         
Ohio   0-13814   34-1451118
         
(State or other jurisdiction
of incorporation) 		  (Commission File Number)   (IRS Employer Identification No.)
     
194 West Main Street,
Cortland, Ohio 		   
44410
     
(Address of principal executive offices)   (Zip Code)
Registrant’s telephone number, including area code: (330) 637-8040
N/A
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 

 

Item 5.02 Compensatory Arrangements of Certain Officers
On April 19, 2011, Cortland Bancorp entered into a Director Retirement Agreement with director Joseph E. Koch. Director Koch was appointed to Cortland Bancorp’s board effective on May 18, 2010, to fill a newly created vacancy. The Director Retirement Agreement and associated split dollar agreement with Director Koch are similar to the terms of the Director Retirement Agreements and split dollar agreements entered into with other nonemployee directors. Currently 54 years old, Director Koch’s normal retirement age under the agreement is age 70.
The Director Retirement Agreement promises a post-retirement benefit of $10,000 payable annually for 10 years if the director retires after reaching his normal retirement age. A reduced annual retirement benefit is payable if the director terminates service or becomes disabled before reaching the normal retirement age, but the benefit is not payable until the director finally attains normal retirement age. If termination of the director’s service occurs within one year after a change in control of Cortland Bancorp, the director will receive cash in a single lump sum equal to the retirement benefit expense accrued by Cortland Bancorp. In the event of a retired director’s death, any remaining Director Retirement Agreement benefits to which the director is entitled are payable to the named beneficiary; but if the director dies in active service to Cortland Bancorp before reaching his normal retirement age, the beneficiary will be entitled to cash in a single lump sum equal to the retirement benefit expense accrued by Cortland Bancorp.
Cortland Bancorp has purchased insurance on the lives of directors who are parties to the Director Retirement Agreements and entered into split dollar agreements with them, promising to share a portion of the life insurance death benefits with directors’ designated beneficiaries. On April 19, 2011, Cortland Bancorp’s board approved the purchase of insurance on Director Koch’s life. Each director’s portion of the policy’s death benefit is $100,000, payable to the director’s beneficiary whether the director’s death occurs while in active service to Cortland Bancorp or after retirement. Cortland Bancorp will receive any death benefits remaining after payment to the director’s beneficiary.
Cortland Bancorp purchased the split dollar life insurance policies as informal financing for its payment obligations under the Director Retirement Agreements. Although Cortland Bancorp expects the life insurance benefits to support the payment obligations, the non-employee directors’ contractual entitlements under the Director Retirement Agreements are not funded and remain contractual liabilities of Cortland Bancorp.
Also presented for review and approval were the Fourth Amended Split Dollar Agreements and Endorsements for James M. Gasior, President and Chief Executive Officer and Timothy Carney, Executive Vice President and Chief Operating Officer. The salary continuation plans for Mr. Gasior and Mr. Carney were amended in June 2010. The Bank previously purchased insurance on the lives of the executives who are parties to the amended salary continuation agreements and entered into split dollar agreements with them, promising to share a portion of the life insurance death benefits with the executives’ designated beneficiaries if the executive died while working for the Bank. The Bank purchased the split dollar life insurance policies as informal financing for the Bank’s payment obligations under the salary continuation agreements. As a result of the amendments to the salary continuation benefit, it is necessary to update the death benefit provisions of the split dollar agreements. Accordingly, Fourth Amended Split Dollar Agreements and Endorsements where the split dollar benefit and the benefit under the salary continuation benefit now coincide for each of the above-named officers were approved effective April 19, 2011.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits.

 

 

 

INDEX TO EXHIBITS
         
*10.13  
Director’s Retirement Agreement entered into by Cortland Bancorp as of April 19, 2011, with Director Joseph E. Koch
  8-K 10.13 04/22/11
   
 
   
*10.14  
Split Dollar Agreement and Endorsement entered into by Cortland Bancorp as of April 19, 2011, with Director Joseph E. Koch
  8-K 10.14 04/22/11
   
 
   
*10.24  
Fourth Amended Split Dollar Agreement and Endorsement between The Cortland Savings and Banking Company and Timothy Carney, dated as of April 19. 2011
  8-K 10.24 04/22/11
   
 
   
*10.26  
Fourth Amended Split Dollar Agreement and Endorsement between The Cortland Savings and Banking Company and James M. Gasior, dated as of April 19, 2011.
  8-K 10.26 04/22/11

 

 

 

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
         
  Cortland Bancorp
  		 
Date: April 22, 2011  /s/ James M. Gasior    
  James M. Gasior   
  President and Chief Executive Officer   

 

 

Exhibit 10.13
Cortland Bancorp
Director Retirement Agreement
This Director Retirement Agreement (this “Agreement”) is entered into as of this                      day of                                           , 2011, by and between Cortland Bancorp (the “Company”), a bank holding company located in Cortland, Ohio, and Joseph E. Koch, a director of the Company (the “Director”).
Whereas , to encourage the Director to remain a member of the Company’s board of directors, the Company desires to provide a retirement benefit for the Director after termination of director service, payable from the Company’s general assets, and
Whereas , none of the conditions or events included in the definition of the term “golden parachute payment” that is set forth in section 18(k)(4)(A)(ii) of the Federal Deposit Insurance Act [12 U.S.C. 1828(k)(4)(A)(ii)] and in Federal Deposit Insurance Corporation Rule 359.1(f)(1)(ii) [12 CFR 359.1(f)(1)(ii)] exists or, to the best knowledge of the Company, is contemplated insofar as the Company or The Cortland Savings and Banking Company is concerned.
Now Therefore , in consideration of the foregoing premises and other good and valuable consideration, the receipt and acceptance of which are hereby acknowledged, the Director and the Company hereby agree as follows.
Article 1
Definitions
1.1 “ Accrual Balance ” means the liability that should be accrued by the Company under generally accepted accounting principles (“GAAP”) for the Company’s obligation to the Director under this Agreement, by applying Accounting Principles Board Opinion No. 12, as amended by Statement of Financial Accounting Standards No. 106, and the calculation method and discount rate specified hereinafter. The Accrual Balance at Normal Retirement Age shall equal the present value of the normal retirement benefits. The discount rate means the rate used by the Plan Administrator for determining the Accrual Balance. The rate is based on the yield on a 20-year corporate bond rated Aa by Moody’s, rounded to the nearest 1 / 4 %. The Plan Administrator may adjust the discount rate to maintain the rate within reasonable standards according to GAAP.
1.2 “ Beneficiary ” means each designated person, determined according to Article 4, or the estate of the deceased Director, entitled to benefits, if any, at the Director’s death.
1.3 “ Beneficiary Designation Form ” means the form established from time to time by the Plan Administrator that the Director completes, signs, and returns to the Plan Administrator to designate one or more Beneficiaries.

 

 

 

1.4 “ Change in Control ” means a change in control as defined in Code section 409A and rules, regulations, and guidance of general application thereunder issued by the Department of the Treasury from time to time, which currently define the term change in control to include the following transactions —
(a) Change in ownership : a change in ownership of the Company occurs on the date any one person or group accumulates ownership of Company stock constituting more than 50% of the total fair market value or total voting power of Company stock,
(b) Change in effective control : ( x ) any one person, or more than one person acting as a group, acquires within a 12-month period ownership of Company stock possessing 30% or more of the total voting power of Company stock, or ( y ) a majority of the Company’s board of directors is replaced during any 12-month period by directors whose appointment or election is not endorsed in advance by a majority of the Company’s board of directors, or
(c) Change in ownership of a substantial portion of assets : a change in ownership of a substantial portion of the Company’s assets occurs if in a 12-month period any one person or more than one person acting as a group acquires from the Company assets having a total gross fair market value equal to or exceeding 40% of the total gross fair market value of all of the Company’s assets immediately before the acquisition or acquisitions. For this purpose, gross fair market value means the value of the Company’s assets, or the value of the assets being disposed of, determined without regard to any liabilities associated with the assets.
1.5 “ Code ” means the Internal Revenue Code of 1986, as amended, and rules, regulations, and guidance of general application issued by the Department of the Treasury under the Internal Revenue Code of 1986, as amended.
1.6 “ Disability ” means, because of a medically determinable physical or mental impairment that can be expected to result in death or that can be expected to last for a continuous period of at least 12 months, ( x ) the Director is unable to engage in any substantial gainful activity, or ( y ) the Director is receiving income replacement benefits for a period of at least three months under an accident and health plan. Medical determination of disability may be made either by the Social Security Administration or by the provider of an accident or health plan covering employees of the Company or its subsidiaries. Upon request of the Plan Administrator, the Director must submit proof to the Plan Administrator of the Social Security Administration’s or provider’s determination.
1.7 “ Early Termination ” means Separation from Service before Normal Retirement Age for reasons other than death, Disability, or Termination with Cause. Early Termination excludes a Separation from Service governed by section 2.4.
1.8 “ Effective Date ” means March 1, 2011.
1.9 “ Normal Retirement Age ” means age 70.
1.10 “ Plan Administrator ” or “ Administrator ” means the plan administrator described in Article 7.
1.11 “ Plan Year ” means each consecutive 12-month period from the Effective Date of this Agreement.
1.12 “ Separation from Service ” means the Director’s service as a director and independent contractor to the Company and any member of a controlled group, as defined in Code section 414, terminates for any reason, other than because of a leave of absence approved by the Company or the Director’s death. For purposes of this Agreement, if there is a dispute about the status of the Director or the date of the Director’s Separation from Service, the Company shall have the sole and absolute right to decide the dispute unless a Change in Control shall have occurred.

 

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1.13 “ Termination with Cause ” or “ Cause ” means the Director is not nominated by the board or nominating committee for reelection as a director after the expiration of his current term, or the Director is removed from the board of directors, in either case because of the Director’s —
(a) gross negligence or gross neglect of duties, or
(b) commission of a felony or commission of a misdemeanor involving moral turpitude, or
(c) fraud, disloyalty, dishonesty, or willful violation of any law or significant policy of the Company committed in the Director’s service and resulting in an adverse effect on the Company, or
(d) removal from service or permanent prohibition from participating in the Company’s or The Cortland Savings and Banking Company’s affairs by an order issued under section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act [12 U.S.C. 1818(e)(4) or (g)(1)].
Article 2
Lifetime Benefits
2.1 Normal Retirement . For Separation from Service after attaining Normal Retirement Age, the Company shall pay to the Director the benefit described in this section 2.1 instead of any other benefit under this Agreement. However, no benefits shall be payable if this Agreement terminates under Article 5.
2.1.1 Amount of benefit . The annual benefit under this section 2.1 is $10,000.
2.1.2 Payment of benefit . Beginning with the month immediately after the month in which the Director’s Separation from Service occurs, the Company shall pay the annual benefit to the Director in 12 equal monthly installments on the first day of each month. The annual benefit shall be paid to the Director for ten years.
2.2 Early Termination . After Early Termination, the Company shall pay to the Director the benefit described in this section 2.2 instead of any other benefit under this Agreement. However, no benefits shall be payable if this Agreement terminates under Article 5. Neither the Director nor the Company shall be entitled to elect in the 12-month period after a Change in Control between the benefit under this section 2.2 versus the benefit under section 2.4. If the Director’s Separation from Service occurs within 12 months after a Change in Control, no benefit shall be payable under this section 2.2 and the Director shall instead be entitled to the benefit under section 2.4 or, if the Director first attained Normal Retirement Age, section 2.1.
2.2.1 Amount of benefit . The annual benefit under this section 2.2 is calculated as the amount that fully amortizes the Accrual Balance existing at the end of the month immediately before the month in which Separation from Service occurs, amortizing that Accrual Balance over ten years and taking into account interest at the discount rate or rates established by the Plan Administrator.
2.2.2 Payment of benefit . Beginning with the month immediately after the month in which the Director attains Normal Retirement Age, the Company shall pay the annual benefit to the Director in 12 equal monthly installments on the first day of each month. The annual benefit shall be paid to the Director for ten years.

 

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2.3 Disability Benefit . If the Director’s Separation from Service occurs because of Disability before Normal Retirement Age, the Company shall pay to the Director the benefit described in this section 2.3 instead of any other benefit under this Agreement.
2.3.1 Amount of benefit . The annual benefit under this section 2.3 is calculated as the amount that fully amortizes the Accrual Balance existing at the end of the month immediately before the month in which Separation from Service occurs, amortizing that Accrual Balance over ten years and taking into account interest at the discount rate or rates established by the Plan Administrator.
2.3.2 Payment of benefit . Beginning with the month immediately after the month in which the Director attains Normal Retirement Age, the Company shall pay the annual benefit to the Director in 12 equal monthly installments on the first day of each month. The annual benefit shall be paid to the Director for ten years.
2.4 Change in Control . If the Director’s Separation from Service occurs within 12 months after a Change in Control, the Company shall pay to the Director the benefit described in this section 2.4 instead of any other benefit under this Agreement. However, no benefits shall be payable under this Agreement if this Agreement terminates under Article 5. Neither the Director nor the Company shall be entitled to elect in the 12-month period after a Change in Control between the benefit under this section 2.4 versus the Early Termination benefit under section 2.2. If the Director’s Separation from Service occurs within 12 months after a Change in Control, no benefit shall be payable under section 2.2 and the Director shall instead be entitled to the benefit under this section 2.4. But if the Director shall have attained Normal Retirement Age when Separation from Service within 12 months after a Change in Control occurs, the Director shall be entitled solely to the benefit provided by section 2.1, not this section 2.4.
2.4.1 Amount of benefit . The benefit under this section 2.4 is the Accrual Balance on the date of the Director’s Separation from Service.
2.4.2 Payment of benefit . The Company shall pay this benefit to the Director in a single lump sum three days after the Director’s Separation from Service.
2.5 Lump-Sum Payout of Remaining Normal Retirement Benefit, Early Termination Benefit, or Disability Benefit When a Change in Control Occurs . If a Change in Control occurs while the Director is receiving the Normal Retirement Age benefit under section 2.1, the Company shall pay the remaining salary continuation benefits to the Director in a single lump sum three days after the Change in Control. If a Change in Control occurs after Separation from Service but while the Director is receiving or is entitled at Normal Retirement Age to receive the Early Termination benefit under section 2.2 or the Disability benefit under section 2.3, the Company shall pay the remaining benefits to the Director in a single lump sum three days after the Change in Control. The lump-sum payment due to the Director as a result of a Change in Control shall be an amount equal to the Accrual Balance amount corresponding to the particular benefit when the Change in Control occurs.

 

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2.6 Annual Benefit Statement . Within 120 days after the end of each Plan Year, the Plan Administrator shall provide or cause to be provided to the Director an annual benefit statement showing benefits payable or potentially payable to the Director under this Agreement. Each annual benefit statement shall supersede the previous year’s annual benefit statement. If there is a contradiction between this Agreement and the annual benefit statement concerning the amount of a particular benefit payable or potentially payable to the Director under sections 2.2, 2.3, or 2.4 hereof, the amount of the benefit determined under the Agreement shall control.
2.7 Savings Clause Relating to Compliance with Code Section 409A . If any provision of this Agreement would subject the Director to additional tax or interest under Code section 409A, the Company shall reform the provision. However, the Company shall maintain to the maximum extent practicable the original intent of the applicable provision without subjecting the Director to additional tax or interest, and the Company shall not be required to incur any additional compensation expense as a result of the reformed provision.
2.8 One Benefit Only . Despite anything to the contrary in this Agreement, the Director and Beneficiary are entitled to one benefit only under this Agreement, which shall be determined by the first event to occur that is dealt with by this Agreement. Except as provided in section 2.5 or Article 3, subsequent occurrence of events dealt with by this Agreement shall not entitle the Director or Beneficiary to other or additional benefits under this Agreement.
Article 3
Death Benefits
3.1 Death Before Normal Retirement Age and Before Separation from Service . If the Director dies before Normal Retirement Age and before Separation from Service, 30 days after the Director’s death the Company shall pay to the Director’s Beneficiary in a single lump sum an amount equal to the Accrual Balance on the date of the Director’s death.
3.2 Death After Normal Retirement Age but Before Separation from Service . If the Director dies after Normal Retirement Age but before Separation from Service, the Company shall for a period of ten years pay to the Director’s Beneficiary the Normal Retirement Benefit specified in section 2.1.
3.3 Death Before Normal Retirement Age but After Separation from Service . (a) After payments begin . If, a Separation from Service before Normal Retirement Age having previously occurred, the Director dies after Early Termination benefits under section 2.2 or Disability benefits under section 2.3 begin but before receiving all such payments, the Company shall pay the remaining benefits to the Director’s Beneficiary at the same time and in the same amounts the payments would have been made to the Director had the Director survived.
(b)  Before payments begin . If, a Separation from Service before Normal Retirement Age having previously occurred, the Director is entitled at Normal Retirement Age to the Early Termination benefit under section 2.2 or the Disability benefit under section 2.3 but dies before the benefit payments begin, the Company shall pay to the Director’s Beneficiary the Early Termination benefit under section 2.2 or the Disability benefit under section 2.3, as the case may be, but the benefit payments shall begin on the first day of the month immediately after the month in which the Director’s death occurs.
3.4 Death After Separation from Service After Normal Retirement Age . (a) After payments begin . If, a Separation from Service on or after Normal Retirement Age having previously occurred, the Director dies after benefit payments under section 2.1 begin but before receiving all such payments, the Company shall pay the remaining benefits to the Director’s Beneficiary at the same time and in the same amounts the payments would have been made to the Director had the Director survived.

 

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(b)  Before payments begin . If, a Separation from Service on or after Normal Retirement Age having previously occurred, the Director is entitled to the benefit under section Article 2.1 but dies before the benefit payments begin, beginning with the month immediately after the month in which the Director’s death occurs the Company shall pay to the Director’s Beneficiary the Normal Retirement benefit under section 2.1.
Article 4
Beneficiaries
4.1 Beneficiary Designations . The Director shall have the right to designate at any time a Beneficiary to receive any benefits payable under this Agreement after the Director’s death. The Beneficiary designated under this Agreement may be the same as or different from the beneficiary designation under any other benefit plan of the Company in which the Director participates.
4.2 Beneficiary Designation: Change . The Director shall designate a Beneficiary by completing and signing the Beneficiary Designation Form and delivering it to the Plan Administrator or its designated agent. The Director’s Beneficiary designation shall be deemed automatically revoked if the Beneficiary predeceases the Director or if the Executive names a spouse as Beneficiary and the marriage is subsequently dissolved. The Director shall have the right to change a Beneficiary by completing, signing, and otherwise complying with the terms of the Beneficiary Designation Form and the Plan Administrator’s rules and procedures, as in effect from time to time. Upon the acceptance by the Plan Administrator of a new Beneficiary Designation Form, all Beneficiary designations previously filed shall be cancelled. The Plan Administrator shall be entitled to rely on the last Beneficiary Designation Form filed by the Executive and accepted by the Plan Administrator before the Director’s death.
4.3 Acknowledgment . No designation or change in designation of a Beneficiary shall be effective until received, accepted, and acknowledged in writing by the Plan Administrator or its designated agent.
4.4 No Beneficiary Designation . If the Director dies without a valid beneficiary designation or if all designated Beneficiaries predecease the Director, the Director’s spouse shall be the designated Beneficiary. If the Director has no surviving spouse, the benefit payments shall be made to the personal representative of the Director’s estate.
4.5 Facility of Payment . If a benefit is payable to a minor, to a person declared incapacitated, or to a person incapable of handling the disposition of his or her property, the Company may pay the benefit to the guardian, legal representative, or person having the care or custody of the minor, incapacitated person, or incapable person. The Company may require proof of incapacity, minority, or guardianship as it may deem appropriate before distribution of the benefit. Distribution shall completely discharge the Company from all liability for the benefit.

 

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Article 5
General Limitations
5.1 Termination with Cause . Despite any contrary provision of this Agreement, the Company shall not pay any benefit under this Agreement and this Agreement shall terminate if the Director’s Separation from Service is the result of Termination with Cause. Likewise, no benefits shall be paid under the Split Dollar Agreement and Endorsement, as amended, between the Company and the Director and the Split Dollar Agreement and Endorsement, as amended, also shall terminate if Separation from Service is a Termination with Cause. The board of directors or a duly authorized committee of the board shall have the sole and absolute right to determine whether the bases for denial of benefits for cause exist. Benefits may be denied for cause regardless of whether the Director continued to serve as a director after the board or committee made its determination not to nominate the Director for reelection.
5.2 Misstatement . The Company shall not pay any benefit under this Agreement if the Director has made any material misstatement of fact on any application for life insurance purchased by the Company.
5.3 Removal . If the Director is removed or permanently prohibited from participating in the Company’s or The Cortland Savings and Banking Company’s affairs by an order issued under section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act, 12 U.S.C. 1818(e)(4) or (g)(1), all obligations of the Company under this Agreement shall terminate as of the effective date of the order, and the Split Dollar Agreement and Endorsement, as amended, also shall terminate.
5.4 Default . Despite any contrary provision of this Agreement, if the Company or The Cortland Savings and Banking Company is in “default” or “in danger of default,” as those terms are defined in section 3(x) of the Federal Deposit Insurance Act, 12 U.S.C. 1813(x), all obligations under this Agreement shall terminate.
5.5 FDIC Open-Bank Assistance . All obligations under this Agreement shall terminate, except to the extent determined that continuation of the contract is necessary for the continued operation of The Cortland Savings and Banking Company, when the Federal Deposit Insurance Corporation enters into an agreement to provide assistance to or on behalf of The Cortland Savings and Banking Company under the authority contained in section 13(c) of the Federal Deposit Insurance Act. 12 U.S.C. 1823(c). Any rights of the parties that have already vested shall not be affected by such action, however.
Article 6
Claims and Review Procedures
6.1 Claims Procedure . The Company shall notify any person or entity that makes a claim for benefits under this Agreement (the “Claimant”) in writing, within 90 days after receiving Claimant’s written application for benefits, of his or her eligibility or noneligibility for benefits under the Agreement. If the Company determines that the Claimant is not eligible for benefits or full benefits, the notice shall set forth ( w ) the specific reasons for such denial, ( x ) a specific reference to the provisions of the Agreement on which the denial is based, ( y ) a description of any additional information or material necessary for the Claimant to perfect his or her claim, and a description of why it is needed, and ( z ) an explanation of the Agreement’s claims review procedure and other appropriate information as to the steps to be taken if the Claimant wishes to have the claim reviewed. If the Company determines that there are special circumstances requiring additional time to make a decision, the Company shall notify the Claimant of the special circumstances and the date by which a decision is expected to be made, and may extend the time for up to an additional 90 days.

 

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6.2 Review Procedure . If the Claimant is determined by the Company not to be eligible for benefits, or if the Claimant believes that he or she is entitled to greater or different benefits, the Claimant shall have the opportunity to have such claim reviewed by the Company by filing a petition for review with the Company within 60 days after receipt of the notice issued by the Company. Said petition shall state the specific reasons, which the Claimant believes entitle him or her to benefits or to greater or different benefits. Within 60 days after receipt by the Company of the petition, the Company shall afford the Claimant (and counsel, if any) an opportunity to present his or her position to the Company verbally or in writing, and the Claimant (or counsel) shall have the right to review the pertinent documents. The Company shall notify the Claimant of its decision in writing within the 60-day period, stating specifically the basis of its decision, written in a manner to be understood by the Claimant and the specific provisions of the Agreement on which the decision is based. If, because of the need for a hearing, the 60-day period is not sufficient, the decision may be deferred for up to another 60 days at the election of the Company, but notice of this deferral shall be given to the Claimant.
Article 7
Administration of Agreement
7.1 Plan Administrator Duties . This Agreement shall be administered by a Plan Administrator consisting of the Company’s board of directors or such committee or person as the board shall appoint. The Plan Administrator shall have the discretion and authority to ( x ) make, amend, interpret, and enforce all appropriate rules and regulations for the administration of this Agreement and ( y ) decide or resolve any and all questions that may arise, including interpretations of this Agreement.
7.2 Agents . In the administration of this Agreement, the Plan Administrator may employ agents and delegate to them such administrative duties as it sees fit (including acting through a duly appointed representative) and may from time to time consult with counsel, who may be counsel to the Company.
7.3 Binding Effect of Decisions . The decision or action of the Plan Administrator about any question arising out of the administration, interpretation, and application of the Agreement and the rules and regulations promulgated hereunder shall be final and conclusive and binding upon all persons having any interest in the Agreement. No Director or Beneficiary shall be deemed to have any right, vested or nonvested, regarding the continued use of any previously adopted assumptions, including but not limited to the discount rate and calculation method employed in the determination of the Accrual Balance.
7.4 Indemnity of Plan Administrator . The Company shall indemnify and hold harmless the members of the Plan Administrator against any and all claims, losses, damages, expenses, or liabilities arising from any action or failure to act with respect to this Agreement, except in the case of willful misconduct by the Plan Administrator or any of its members.
7.5 Company Information . To enable the Plan Administrator to perform its functions, the Company shall supply full and timely information to the Plan Administrator on all matters relating to the date and circumstances of the retirement, Disability, death, or Separation from Service of the Director, and such other pertinent information as the Plan Administrator may reasonably require.
Article 8
Miscellaneous
8.1 Amendment and Termination . This Agreement may be amended solely by a written agreement signed by the Company and by the Director. Except as provided in Article 5 this Agreement may be terminated solely by a written agreement signed by the Company and by the Director.

 

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8.2 Binding Effect . This Agreement shall bind the Director and the Company and their beneficiaries, survivors, executors, successors, administrators, and transferees.
8.3 No Guarantee of Service . This Agreement is not a contract for services. It does not give the Director the right to remain a Director of the Company nor does it interfere with the right of the Company’s shareholders not to re-elect the Director or the right of shareholders or the Board to remove an individual as a director of the Company. The Agreement also does not require the Director to remain a director or interfere with the Director’s right to terminate service at any time.
8.4 Non-Transferability . Benefits under this Agreement may not be sold, transferred, assigned, pledged, attached, or encumbered.
8.5 Successors ; Binding Agreement . By an assumption agreement in form and substance satisfactory to the Director, the Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform this Agreement had no succession occurred.
8.6 Tax Withholding . The Company shall withhold any taxes that are required to be withheld from the benefits provided under this Agreement.
8.7 Applicable Law . The Agreement and all rights hereunder shall be governed by the laws of the State of Ohio, except to the extent preempted by the laws of the United States of America.
8.8 Unfunded Arrangement . The Director and Beneficiary are general unsecured creditors of the Company for the payment of benefits under this Agreement. The benefits represent the mere promise by the Company to pay benefits. The rights to benefits are not subject to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by creditors. Any insurance on the Director’s life is a general asset of the Company to which the Director and Beneficiary have no preferred or secured claim.
8.9 Entire Agreement . This Agreement and the Split Dollar Agreement and Endorsement, as amended, constitute the entire agreement between the Company and the Director concerning the subject matter. No rights are granted to the Director under this Agreement other than those specifically set forth.
8.10 Severability . If any provision of this Agreement is held invalid, such invalidity shall not affect any other provision of this Agreement not held invalid and each such other provision shall continue in full force and effect to the full extent consistent with law. If any provision of this Agreement is held invalid in part, such invalidity shall not affect the remainder of such provision and the remainder of such provision, together with all other provisions of this Agreement, shall continue in full force and effect to the full extent consistent with law.
8.11 Captions and Counterparts . Captions and section headings in this Agreement are included solely for convenience of reference and shall not affect the meaning or interpretation of any provision of this Agreement. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

 

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8.12 Notices . All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if delivered by hand or mailed, certified or registered mail, return receipt requested, with postage prepaid, to the following addresses or to such other address as either party may designate by like notice. If to the Company, notice shall be given to the board of directors, Cortland Bancorp, 194 W. Main Street, P.O. Box 98, Cortland, Ohio 44410-1466, or to such other or additional person or persons as the Company shall have designated to the Director in writing. If to the Director, notice shall be given to the Director at the address of the Director appearing on the Company’s records, or to such other or additional person or persons as the Director shall have designated to the Company in writing.
In Witness Whereof , the Director and a duly authorized Company officer have executed this Director Retirement Agreement as of the date first written above.
             
Director   Cortland Bancorp  
 
           
 
  By:      
 
Joseph E. Koch
      Title:     

 

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Beneficiary Designation
Cortland Bancorp
Director Retirement Agreement
I, Joseph E. Koch, designate the following as beneficiary of any death benefits under this Director Retirement Agreement:
Primary:                                                                                                                                                                                                                                                                                                                                                             .
Contingent:                                                                                                                                                                                                                                                                                                                                                             .
Note:   To name a trust as beneficiary, please provide the name of the trustee(s) and the exact name and date of the trust agreement.
I understand that I may change these beneficiary designations by filing a new written designation with the Company. I further understand that the designations will be automatically revoked if the beneficiary predeceases me, or, if I have named my spouse as beneficiary and our marriage is subsequently dissolved.
         
Signature:
       
 
 
 
Joseph E. Koch 		   
         
Date:                                                                                          , 20__
Received by the Company this                       day of                                            , 20_____.
         
By:
     
 
  Title:    

 

11

Exhibit 10.14
Cortland Bancorp
Split Dollar Agreement and Endorsement
This Split Dollar Agreement and Endorsement (this “Split Dollar Agreement”) is entered into as of                                           , 2011, by and between Cortland Bancorp, an Ohio corporation (the “Company”), and Joseph E. Koch, a director of the Company (the “Director”). This Split Dollar Agreement shall append the Split Dollar Endorsement entered into on even date herewith, or as subsequently amended, by and between the Company and the Director.
Whereas , to encourage the Director to remain a director of the Company, the Company is willing to grant to the Director the right to designate the beneficiary of a portion of the death proceeds of an insurance policy on the Director’s life. The Company will pay life insurance premiums from its general assets.
Now Therefore , in consideration of the foregoing premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows.
Article 1
General Definitions
Capitalized terms not otherwise defined in this Split Dollar Agreement shall have the same meaning as defined in the Director Retirement Agreement between the Company and the Director dated as of the date hereof, as the same may be amended. The following terms shall have the meanings specified.
1.1 “ Administrator ” means the administrator described in Article 7.
1.2 “ Director’s Interest ” means the benefit set forth in section 2.2.
1.3 “ Insured ” means the Director.
1.4 “ Insurer ” means each life insurance carrier for which there is a Split Dollar Policy Endorsement attached to this Agreement.
1.5 “ Policy ” means the specific life insurance policy or policies issued by the Insurer.
1.6 “ Split Dollar Policy Endorsement ” means the form required by the Administrator or the Insurer to indicate the Director’s interest, if any, in a Policy on the Director’s life.

 

 

 

Article 2
Policy Ownership/Interests
2.1 Company Ownership . The Company is the sole owner of the Policy and shall have the right to exercise all incidents of ownership. The Company shall be the beneficiary of any death proceeds remaining after the Director’s interest is paid under section 2.2 below.
2.2 Death Benefit . Provided the Policy is not cancelled, surrendered, terminated, or allowed to lapse, at the Director’s death the Director’s beneficiary designated in accordance with the Split Dollar Policy Endorsement shall be entitled to death proceeds in the amount of $100,000 (the “Director’s Interest”). The Director shall have the right to designate the beneficiary of the Director’s Interest.
2.3 Option to Purchase . The Company shall not sell, surrender, or transfer ownership of the Policy while this Split Dollar Agreement is in effect unless the Company first gives the Director or the Director’s transferee a right of first refusal to purchase the Policy. The option to purchase the Policy shall lapse if not exercised within 60 days after the date the Company gives written notice of the Company’s intention to sell, surrender, or transfer ownership of the Policy. The purchase price shall be an amount equal to the Policy cash surrender value. This provision shall not impair the Company’s right to terminate this Split Dollar Agreement.
2.4 Comparable Coverage . The Company shall maintain the Policy in full force and effect. The Company may not amend, terminate, or otherwise abrogate the Director’s interest in the Policy unless the Company replaces the Policy with a comparable insurance policy to cover the benefit provided under this Split Dollar Agreement and executes a new split dollar agreement and endorsement for the comparable insurance policy. The Policy or any comparable policy shall be subject to claims of the Company’s creditors.
2.5 Internal Revenue Code Section 1035 Exchanges . The Director recognizes and agrees that the Company may after this Split Dollar Agreement is adopted wish to exchange the Policy of life insurance on the Director’s life for another contract of life insurance insuring the Director’s life. Provided that the Policy is replaced or intended to be replaced with a comparable policy of life insurance, the Director agrees to provide medical information and cooperate with medical insurance-related testing required by a prospective insurer for implementing the Policy or, if necessary, for modifying or updating to a comparable insurer.
Article 3
Premiums
3.1 Premium Payment . The Company shall pay any premiums due on the Policy.
3.2 Economic Benefit . The Company shall determine the economic benefit attributable to the Director based on the life insurance premium factor for the Director’s age multiplied by the aggregate death benefit payable to the Director’s Beneficiary. The life insurance premium factor is the minimum amount required to be imputed under Internal Revenue Service Regulations, section 1.61-22(d)(3)(ii), or any subsequent applicable authority. The Company shall impute the economic benefit to the Director annually by adding the economic benefit to the Director’s Form W-2 or, if applicable, Form 1099.
Article 4
Assignment
The Director may assign without consideration all interests in the Policy and in this Split Dollar Agreement to any person, entity, or trust. If the Director transfers all of the Director’s interest in the Policy, all of the Director’s interest in the Policy and in the Split Dollar Agreement shall be vested in the Director’s transferee, who shall be substituted as a party hereunder, and the Director shall have no further interest in the Policy or in this Split Dollar Agreement.

 

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Article 5
Insurer
The Insurer shall be bound only by the terms of the Policy. Any payments the Insurer makes or actions it takes in accordance with the Policy shall fully discharge it from all claims, suits, and demands of all entities or persons. The Insurer shall not be bound by or be deemed to have notice of the provisions of this Split Dollar Agreement.
Article 6
Claims Procedure
6.1 Claims Procedure . The Company shall notify any person or entity making a claim under this Split Dollar Agreement (the “Claimant”) in writing, within 90 days after receiving Claimant’s written application for benefits, of his or her eligibility or ineligibility for benefits under this Split Dollar Agreement. If the Company determines that the Claimant is not eligible for benefits or full benefits, the notice shall set forth ( w ) the specific reasons for denial, ( x ) a specific reference to the provisions of this Split Dollar Agreement on which the denial is based, ( y ) a description of any additional information or material necessary for the Claimant to perfect his or her claim, and a description of why it is needed, and ( z ) an explanation of this Split Dollar Agreement’s claims review procedure and other appropriate information concerning the steps to be taken if the Claimant wishes to have the claim reviewed. If the Company determines that there are special circumstances requiring additional time to make a decision, the Company shall notify the Claimant of the special circumstances and the date by which a decision is expected to be made, and may extend the time for up to an additional 90 days.
6.2 Review Procedure . If the Claimant is determined by the Company not to be eligible for benefits, or if the Claimant believes that he or she is entitled to greater or different benefits, the Claimant shall have the opportunity to have its claim reviewed by the Company by filing a petition for review with the Company within 60 days after receipt of the notice issued by the Company. The petition shall state the specific reasons the Claimant believes it is entitled to benefits or to greater or different benefits. Within 60 days after receipt by the Company of the petition, the Company shall afford the Claimant (and counsel, if any) an opportunity to present its position to the Company verbally or in writing, and the Claimant (or counsel) shall have the right to review the pertinent documents. The Company shall notify the Claimant of the Company’s decision in writing within the 60-day period, stating specifically the basis of its decision, written in a manner to be understood by the Claimant, and the specific provisions of this Split Dollar Agreement on which the decision is based. If, because of the need for a hearing, the 60-day period is not sufficient, the decision may be deferred for up to another 60-day period at the election of the Company, but notice of this deferral shall be given to the Claimant.
Article 7
Administration of Agreement
7.1 Plan Administrator Duties . This Split Dollar Agreement shall be administered by a Plan Administrator consisting of the Company’s board of directors or such committee or person as the board shall appoint. The Plan Administrator shall have the discretion and authority to ( x ) make, amend, interpret, and enforce all appropriate rules and regulations for the administration of this Agreement and ( y ) decide or resolve any and all questions that may arise, including interpretations of this Split Dollar Agreement.

 

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7.2 Agents . In the administration of this Split Dollar Agreement, the Plan Administrator may employ agents and delegate to them such administrative duties as it sees fit (including acting through a duly appointed representative) and may from time to time consult with counsel, who may be counsel to the Company.
7.3 Binding Effect of Decisions . The decision or action of the Plan Administrator about any question arising out of the administration, interpretation, and application of the Agreement and the rules and regulations promulgated hereunder shall be final and conclusive and binding upon all persons having any interest in this Split Dollar Agreement.
7.4 Indemnity of Plan Administrator . The Company shall indemnify and hold harmless the members of the Plan Administrator against any and all claims, losses, damages, expenses, or liabilities arising from any action or failure to act with respect to this Split Dollar Agreement, except in the case of willful misconduct by the Plan Administrator or any of its members.
7.5 Company Information . To enable the Plan Administrator to perform its functions, the Company shall supply full and timely information to the Plan Administrator on all matters relating to the date and circumstances of the retirement, Disability, death, or Termination of Service of the Director, and such other pertinent information as the Plan Administrator may reasonably require.
Article 8
Miscellaneous
8.1 Amendment and Termination . This Split Dollar Agreement may be amended solely by a written agreement signed by the Company and by the Director. This Split Dollar Agreement shall terminate if the Director Retirement Agreement terminates under Article 5 of the Director Retirement Agreement.
8.2 Binding Effect . This Split Dollar Agreement shall bind the Director and the Company and their beneficiaries, survivors, executors, administrators and transferees, and any Policy beneficiary.
8.3 No Guarantee of Service . This Split Dollar Agreement is not a service policy or contract. It does not give the Director the right to remain a director of the Company nor does it interfere with the right of the Company’s stockholders not to re-elect the Director or the right of stockholders or the board to remove an individual as a director of the Company. This Split Dollar Agreement also does not require the Director to remain a director or interfere with the Director’s right to terminate service at any time.
8.4 Applicable Law . The Split Dollar Agreement and all rights hereunder shall be governed by and construed according to the laws of the State of Ohio, except to the extent preempted by the laws of the United States of America.
8.5 Entire Agreement . This Split Dollar Agreement constitutes the entire agreement between the Company and the Director concerning the subject matter. No rights are granted to the Director under this Split Dollar Agreement other than those specifically set forth.
8.6 Severability . If any provision of this Split Dollar Agreement is held invalid, such invalidity shall not affect any other provision of this Split Dollar Agreement not held invalid and each such other provision shall continue in full force and effect to the full extent consistent with law. If any provision of this Split Dollar Agreement is held invalid in part, such invalidity shall not affect the remainder of such provision not held invalid and the remainder of such provision, together with all other provisions of this Split Dollar Agreement, shall continue in full force and effect to the full extent consistent with law.

 

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8.7 Captions and Counterparts . Captions and section headings in this Split Dollar Agreement are included solely for convenience of reference and shall not affect the meaning or interpretation of any provision of this Split Dollar Agreement. This Split Dollar Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.
8.8 Notices . All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if delivered by hand or mailed, certified or registered mail, return receipt requested, with postage prepaid, to the following addresses or to such other address as either party may designate by like notice. If to the Company, notice shall be given to the board of directors, Cortland Bancorp, 194 W. Main Street, P.O. Box 98, Cortland, Ohio 44410-1466, or to such other or additional person or persons as the Company shall have designated to the Director in writing. If to the Director, notice shall be given to the Director at the address of the Director appearing on the Company’s records, or to such other or additional person or persons as the Director shall have designated to the Company in writing.
In Witness Whereof , the Director and a duly authorized Company officer have executed this Split Dollar Agreement and Endorsement as of the date first written above.
             
Director   Cortland Bancorp  
 
           
 
  By:      
 
Joseph E. Koch
      Title:     
Agreement to Cooperate with Insurance Underwriting Incident to Internal Revenue Code section 1035 Exchange
I acknowledge that I have read the Split Dollar Agreement and Endorsement and agree to be bound by its terms, particularly the covenant on my part set forth in section 2.5 of the Split Dollar Agreement and Endorsement to provide medical information and cooperate with medical insurance-related testing required by an insurer to issue a comparable insurance policy to cover the benefit provided under this Split Dollar Agreement and Endorsement.
     
 
   
Witness
  Joseph E. Koch

 

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Split Dollar Policy Endorsement
Insured: Joseph E. Koch
Insurer:
Policy No.:
Pursuant to the terms of the Cortland Bancorp Split Dollar Agreement and Endorsement dated as of                      , 2011, the undersigned Owner requests that the above-referenced policy issued by the Insurer provides for the following beneficiary designation and limited contract ownership rights to the Insured:
1. Upon the death of the Insured, proceeds shall be paid in one sum to the Owner, its successors or assigns, to the extent of its interest in the policy. It is hereby provided that the Insurer may rely solely upon a statement from the Owner as to the amount of proceeds it is entitled to receive under this paragraph.
2. Any proceeds at the death of the Insured in excess of the amount paid under the provisions of the preceding paragraph shall be paid in one sum to:
 
Primary Beneficiary, Relationship/Social Security Number
 
Contingent Beneficiary, Relationship/Social Security Number
The exclusive rights to change the beneficiary for the proceeds payable under this paragraph and to assign all rights and interests granted under this paragraph are hereby granted to the Insured. The sole signature of the Insured shall be sufficient to exercise the rights. The Owner retains all contract rights not granted to the Insured under this paragraph.
3. It is agreed by the undersigned that this designation and limited assignment of rights shall be subject in all respects to the contractual terms of the policy.
4. Any payment directed by the Owner under this endorsement shall be a full discharge of the Insurer, and such discharge shall be binding on all parties claiming any interest under the policy.
The undersigned for the Owner is signing in a representative capacity and warrants that he or she has the authority to bind the entity on whose behalf this document is executed.
Signed at                                           , Ohio this                      day of                                            , 2011.
             
Insured :   Owner :

Cortland Bancorp 		 
 
           
  Joseph E. Koch
  By:      
 
      Its:     

 

 

Exhibit 10.24
Addendum A
The Cortland Savings and Banking Company
Fourth Amended Split Dollar Agreement and Endorsement
This Fourth Amended Split Dollar Agreement and Endorsement (this “Agreement”) is entered into as of this  _____  day of                      , 2011, by and between The Cortland Savings and Banking Company, an Ohio-chartered commercial bank (the “Bank”), and Timothy Carney, Executive Vice President and Chief Operating Officer of the Bank (the “Executive”). This Agreement shall append the Split Dollar Policy Endorsement entered into on even date herewith or as subsequently amended, by and between the aforementioned parties.
Whereas , to encourage the Executive to remain a Bank employee, the Bank and the Executive entered into a Third Amended Split Dollar Agreement and Endorsement dated as of December 3, 2008, providing for division of the death proceeds of a life insurance policy or policies on the Executive’s life,
Whereas , the Bank and the Executive entered into a Fourth Amended Salary Continuation Agreement dated as of June 1, 2010, providing for specified retirement benefits and amending and restating in its entirety the Third Amended Salary Continuation Agreement, which also was dated as of December 3, 2008, and
Whereas , the Bank and the Executive intend that this Fourth Amended Split Dollar Agreement and Endorsement shall be attached as Addendum A to the Fourth Amended Salary Continuation Agreement, amending and restating in its entirety the Third Amended Split Dollar Agreement and Endorsement.
Now Therefore , in consideration of the foregoing premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
Article 1
Definitions
Capitalized terms not otherwise defined in this Agreement are used herein as defined in the Fourth Amended Salary Continuation Agreement dated as of June 1, 2010, between the Bank and the Executive. The following terms shall have the meanings specified.
1.1 Administrator means the administrator described in Article 7.
1.2 Executive’s Interest means the benefit set forth in section 2.2.
1.3 Insured means the Executive.
1.4 Insurer means each life insurance carrier for which there is a Split Dollar Policy Endorsement attached to this Agreement.

 

 

 

1.5 Net Death Proceeds means the total death proceeds of the Policy minus the cash surrender value.
1.6 Policy means the specific life insurance policy or policies issued by the Insurer(s).
1.7 Salary Continuation Agreement means the Fourth Amended Salary Continuation Agreement dated as of June 1, 2010, between the Bank and the Executive, as the same may hereafter be amended.
1.8 Split Dollar Policy Endorsement means the form required by the Administrator or the Insurer to indicate the Executive’s interest, if any, in a Policy on such Executive’s life.
Article 2
Policy Ownership/Interests
2.1 Bank Ownership . The Bank is the sole owner of the Policy and shall have the right to exercise all incidents of ownership. The Bank shall be the beneficiary of the remaining death proceeds of the Policy after the Executive’s interest is paid according to section 2.2 below.
2.2 Death Benefit . Provided the Executive’s death occurs both before the Executive’s Separation from Service and before the Executive attains age 65, at the Executive’s death the Executive’s beneficiary designated in accordance with the Split Dollar Policy Endorsement shall be entitled to Policy proceeds in an amount equal to the lesser of (x) 100% of the Net Death Proceeds or (y) $1,147,374 (the lesser of the amounts specified in clauses (x) and (y) being referred to in this Agreement as the “Executive’s Interest”). The Executive’s Interest shall be extinguished at the earliest of the date of the Executive’s Separation from Service, the date the Executive attains age 65, or the date on which the Executive receives payment of the benefit provided under the Salary Continuation Agreement for a Change in Control, and the Executive’s beneficiary shall be entitled to no benefits under the Agreement of the Executive’s death occurring thereafter. The Executive shall have the right to designate the beneficiary of the Executive’s Interest.
2.3 Option to Purchase . Upon termination of this Agreement, the Bank shall not sell, surrender, or transfer ownership of the Policy without first giving the Executive or the Executive’s transferee the option to purchase the Policy for a period of 60 days from written notice of such intention. The purchase price shall be an amount equal to the cash surrender value of the Policy.
2.4 Comparable Coverage . The Bank may replace the Policy with a comparable insurance policy to cover the benefit provided under this Agreement, in which case the Bank and the Executive shall execute a new Split Dollar Policy Endorsement for the comparable insurance policy.
2.5 Internal Revenue Code Section 1035 Exchanges . The Executive recognizes and agrees that the Bank may after this Agreement is adopted wish to exchange the Policy of life insurance on the Executive’s life for another contract of life insurance insuring the Executive’s life. Provided that the Policy is replaced (or intended to be replaced) with a comparable policy of life insurance, the Executive agrees to provide medical information and cooperate with medical insurance-related testing required by a prospective insurer for implementing the Policy or, if necessary, for modifying or updating to a comparable insurer.

 

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Article 3
Premiums
3.1 Premium Payment . The Bank shall pay any premiums due on the Policy.
3.2 Economic Benefit . The Administrator shall annually determine the economic benefit attributable to the Executive based on the life insurance premium factor for the Executive’s age multiplied by the aggregate death benefit payable to the Executive’s beneficiary. The “life insurance premium factor” is the minimum factor applicable under guidance published pursuant to Treasury Reg. section 1.61-22(d)(3)(ii) or any subsequent authority.
3.3 Imputed Income . The Bank shall impute the economic benefit to the Executive on an annual basis by adding the economic benefit to the Executive’s W-2, or if applicable, Form 1099.
Article 4
Assignment
The Executive may irrevocably assign without consideration all of the Executive’s interest in the Policy and in this Agreement to any person, entity, or trust established by the Executive or the Executive’s spouse. If the Executive transfers all of the Executive’s interest in the Policy, all of the Executive’s interest in the Policy and in the Agreement shall be vested in the Executive’s transferee, who shall be substituted as a party hereunder and the Executive shall have no further interest in this Agreement.
Article 5
Insurer
The Insurer shall be bound by the terms of the Policy only. Any payments the Insurer makes or actions it takes in accordance with the Policy shall fully discharge it from all claims, suits, and demands of all entities or persons. The Insurer shall not be bound by or be deemed to have notice of the provisions of this Agreement.
Article 6
Claims and Review Procedures
6.1 Claims Procedure . Any person or entity who has not received benefits under this Agreement that he or she believes should be paid (the “claimant”) shall make a claim for benefits as follows —
6.1.1 Initiation — written claim . The claimant initiates a claim by submitting to the Administrator a written claim for benefits. If the claim relates to the contents of a notice received by the claimant, the claim must be made within 60 days after the notice was received by the claimant. All other claims must be made within 180 days after the date of the event that caused the claim to arise. The claim must state with particularity the determination desired by the claimant.

 

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6.1.2 Timing of Administrator response . The Administrator shall respond to the claimant within 90 days after receiving the claim. If the Administrator determines that special circumstances require additional time for processing the claim, the Administrator can extend the response period by an additional 90 days by notifying the claimant in writing, before the end of the initial 90-day period, that an additional period is required. The notice of extension must set forth the special circumstances and the date by which the Administrator expects to render its decision.
6.1.3 Notice of decision . If the Administrator denies part or all of the claim, the Administrator shall notify the claimant in writing of the denial. The Administrator shall write the notification in a manner calculated to be understood by the claimant. The notification shall set forth —
  (a)   The specific reasons for the denial,
  (b)   A reference to the specific provisions of this Agreement on which the denial is based,
  (c)   A description of any additional information or material necessary for the claimant to perfect the claim and an explanation of why it is needed,
  (d)   An explanation of the Agreement’s review procedures and the time limits applicable to such procedures, and
  (e)   A statement of the claimant’s right to bring a civil action under ERISA section 502(a) after an adverse benefit determination on review.
6.2 Review Procedure . If the Administrator denies part or all of the claim, the claimant shall have the opportunity for a full and fair review by the Administrator of the denial, as follows —
6.2.1 Initiation — written request . To initiate the review, the claimant must file with the Administrator a written request for review within 60 days after receiving the Administrator’s notice of denial.
6.2.2 Additional submissions — information access . The claimant shall then have the opportunity to submit written comments, documents, records, and other information relating to the claim. Upon request and free of charge, the Administrator shall also provide the claimant reasonable access to and copies of all documents, records, and other information relevant (as defined in applicable ERISA regulations) to the claimant’s claim for benefits.
6.2.3 Considerations on review . In considering the review, the Administrator shall take into account all materials and information the claimant submits relating to the claim, without regard to whether the information was submitted or considered in the initial benefit determination.
6.2.4 Timing of Administrator response . The Administrator shall respond in writing to the claimant within 60 days after receiving the request for review. If the Administrator determines that special circumstances require additional time for processing the claim, the Administrator can extend the response period by an additional 60 days by notifying the claimant in writing before the end of the initial 60-day period that an additional period is required. The notice of extension must set forth the special circumstances and the date by which the Administrator expects to render its decision.

 

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6.2.5 Notice of decision . The Administrator shall notify the claimant in writing of its decision on review. The Administrator shall write the notification in a manner calculated to be understood by the claimant. The notification shall set forth —
  (a)   The specific reasons for the denial,
  (b)   A reference to the specific provisions of the Agreement on which the denial is based,
  (c)   A statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to and copies of all documents, records, and other information relevant (as defined in applicable ERISA regulations) to the claimant’s claim for benefits, and
  (d)   A statement of the claimant’s right to bring a civil action under ERISA section 502(a).
Article 7
Administration of Agreement
7.1 Administrator Duties . This Agreement shall be administered by an Administrator, which shall consist of the Board or such committee as the Board shall appoint. The Executive may not be a member of the Administrator. The Administrator shall have the discretion and authority to ( x ) make, amend, interpret, and enforce all appropriate rules and regulations for the administration of this Agreement and ( y ) decide or resolve any and all questions that may arise, including interpretations of this Agreement.
7.2 Agents . In the administration of this Agreement, the Administrator may employ agents and delegate to them such administrative duties as the Administrator sees fit (including acting through a duly appointed representative) and may from time to time consult with counsel, who may be counsel to the Bank.
7.3 Binding Effect of Decisions . The decision or action of the Administrator concerning any question arising out of the administration, interpretation, and application of this Agreement and the rules and regulations promulgated hereunder shall be final and conclusive and binding upon all persons having any interest in the Agreement.
7.4 Indemnity of Administrator . The Bank shall indemnify and hold harmless the members of the Administrator against any and all claims, losses, damages, expenses, or liabilities arising from any action or failure to act with respect to this Agreement, except in the case of willful misconduct by the Administrator or any of its members.
7.5 Information . To enable the Administrator to perform its functions, the Bank shall supply full and timely information to the Administrator on all matters relating to the date and circumstances of the retirement, death, or Separation from Service of the Executive, and such other pertinent information as the Administrator may reasonably require.

 

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Article 8
Miscellaneous
8.1 Amendment and Termination of Agreement . This Agreement may be amended or terminated solely by a written agreement signed by the Bank and the Executive. However, this Agreement shall terminate upon the first to occur of ( u ) payment to the Executive of the benefit provided under the Salary Continuation Agreement for a Change in Control, or ( v ) surrender, lapse, or other termination of the Policy by the Bank, or ( w ) distribution of the death benefit proceeds in accordance with section 2.2 above, or ( x ) termination of the Salary Continuation Agreement under Article 5 of the Salary Continuation Agreement, or ( y ) the Executive’s Separation from Service, or ( z ) the date the Executive attains age 65.
8.2 Binding Effect . This Agreement shall bind the Executive and the Bank and their beneficiaries, survivors, executors, administrators, and transferees, and any Policy beneficiary.
8.3 No Guarantee of Employment . This Agreement is not an employment policy or contract. This Agreement does not give the Executive the right to remain an employee of the Bank nor does it interfere with the Bank’s right to discharge the Executive. This Agreement also does not require the Executive to remain an employee or interfere with the Executive’s right to terminate employment at any time.
8.4 Successors ; Binding Agreement . By an assumption agreement in form and substance satisfactory to the Executive, the Bank shall require any successor (whether direct or indirect, by purchase, merger, consolidation, or otherwise) to all or substantially all of the business or assets of the Bank to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Bank would be required to perform this Agreement had no succession occurred.
8.5 Applicable Law . This Agreement and all rights hereunder shall be governed by and construed according to the laws of the State of Ohio, except to the extent preempted by the laws of the United States of America.
8.6 Entire Agreement . This Agreement and the Salary Continuation Agreement constitute the entire agreement between the Bank and the Executive concerning the subject matter. No rights are granted to the Executive under this Agreement other than those specifically set forth. This Agreement amends and restates in its entirety the December 3, 2008 Third Amended Split Dollar Agreement and Endorsement.
8.7 Severability . If any provision of this Agreement is held invalid, such invalidity shall not affect any other provision of this Agreement not held invalid, and each such other provision shall continue in full force and effect to the full extent consistent with law. If any provision of this Agreement is held invalid in part, such invalidity shall not affect the remainder of the provision not held invalid, and the remainder of the provision together with all other provisions of this Agreement shall continue in full force and effect to the full extent consistent with law.

 

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8.8 Headings . Caption headings and subheadings herein are included solely for convenience of reference and shall not affect the meaning or interpretation of any provision of this Agreement.
8.9 Notices . All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if delivered by hand or mailed, certified or registered mail, return receipt requested, with postage prepaid, to the following addresses or to such other address as either party may designate by like notice. If to the Bank, notice shall be given to the board of directors, The Cortland Savings and Banking Company, 194 W. Main Street, P.O. Box 98, Cortland, Ohio 44410-1466, or to such other or additional person or persons as the Bank shall have designated to the Executive in writing. If to the Executive, notice shall be given to the Executive at the Executive’s address appearing on the Bank’s records, or to such other or additional person or persons as the Executive shall have designated to the Bank in writing.
In Witness Whereof , the Executive and a duly authorized representative of the Bank have executed this Agreement as of the date first written above.
                 
Executive :   Bank :

The Cortland Savings and Banking Company 		   
 
               
 
  By:            
             
Timothy Carney
      James M. Gasior    
 
      Title:   President and Chief Executive Officer    
Agreement to Cooperate with Insurance Underwriting Incident to Internal Revenue Code section 1035 Exchange
I acknowledge that I have read the Fourth Amended Split Dollar Agreement and Endorsement and agree to be bound by its terms, particularly the covenant on my part set forth in section 2.5 of the Fourth Amended Split Dollar Agreement and Endorsement to provide medical information and cooperate with medical insurance-related testing required by an insurer to issue a comparable insurance policy to cover the benefit provided under this Fourth Amended Split Dollar Agreement and Endorsement.
     
 
   
Witness
  Timothy Carney

 

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Split Dollar Policy Endorsement
Insured: Timothy Carney
Insurer: New York Life Insurance and Annuity Corporation
Policy No. 77251005
According to the terms of The Cortland Savings and Banking Company Fourth Amended Split Dollar Agreement and Endorsement dated as of                                           , 2011, the undersigned Owner requests that the above-referenced policy issued by the Insurer provide for the following beneficiary designation and limited contract ownership rights to the Insured:
1. Upon the death of the Insured, proceeds shall be paid in one sum to the Owner, its successors or assigns, to the extent of the Owner’s interest in the policy. It is hereby provided that the Insurer may rely solely upon a statement from the Owner concerning the amount of proceeds the Owner is entitled to receive under this paragraph.
2. Any proceeds at the death of the Insured in excess of the amount paid under the provisions of the preceding paragraph shall be paid in one sum to:
 
Primary Beneficiary, Relationship/Social Security Number
 
Contingent Beneficiary, Relationship/Social Security Number
The exclusive rights to change the beneficiary for the proceeds payable under this paragraph and to assign all rights and interests granted under this paragraph are hereby granted to the Insured. The sole signature of the Insured shall be sufficient to exercise the rights. The Owner retains all contract rights not granted to the Insured under this paragraph.
3. It is agreed by the undersigned that this designation and limited assignment of rights shall be subject in all respects to the contractual terms of the policy.
4. Any payment directed by the Owner under this endorsement shall be a full discharge of the Insurer, and such discharge shall be binding on all parties claiming any interest under the policy.
The undersigned for the Owner is signing in a representative capacity and warrants that he or she has the authority to bind the entity on whose behalf this document is executed.
Signed at                                           , Ohio this  _____  day of                                           , 2011.
         
Insured :   Owner :

The Cortland Savings and Banking Company
 
       
 
  By:     
 
     
Timothy Carney
    Its:   

 

 

 

Split Dollar Policy Endorsement
Insured: Timothy Carney
Insurer: Midland National Life Insurance Company
Policy No. 00690213
According to the terms of The Cortland Savings and Banking Company Fourth Amended Split Dollar Agreement and Endorsement dated as of               , 2011, the undersigned Owner requests that the above-referenced policy issued by the Insurer provide for the following beneficiary designation and limited contract ownership rights to the Insured:
1. Upon the death of the Insured, proceeds shall be paid in one sum to the Owner, its successors or assigns, to the extent of the Owner’s interest in the policy. It is hereby provided that the Insurer may rely solely upon a statement from the Owner concerning the amount of proceeds the Owner is entitled to receive under this paragraph.
2. Any proceeds at the death of the Insured in excess of the amount paid under the provisions of the preceding paragraph shall be paid in one sum to:
 
Primary Beneficiary, Relationship/Social Security Number
 
Contingent Beneficiary, Relationship/Social Security Number
The exclusive rights to change the beneficiary for the proceeds payable under this paragraph and to assign all rights and interests granted under this paragraph are hereby granted to the Insured. The sole signature of the Insured shall be sufficient to exercise the rights. The Owner retains all contract rights not granted to the Insured under this paragraph.
3. It is agreed by the undersigned that this designation and limited assignment of rights shall be subject in all respects to the contractual terms of the policy.
4. Any payment directed by the Owner under this endorsement shall be a full discharge of the Insurer, and such discharge shall be binding on all parties claiming any interest under the policy.
The undersigned for the Owner is signing in a representative capacity and warrants that he or she has the authority to bind the entity on whose behalf this document is executed.
Signed at                                             , Ohio this                       day of                                            , 2011.
             
Insured :   Owner :

The Cortland Savings and Banking Company 		   
 
           
 
  By:       
 
Timothy Carney
    Its:       

 

 

Exhibit 10.26
Addendum A
The Cortland Savings and Banking Company
Fourth Amended Split Dollar Agreement and Endorsement
This Fourth Amended Split Dollar Agreement and Endorsement (this “Agreement”) is entered into as of this  _____  day of                      , 2011, by and between The Cortland Savings and Banking Company, an Ohio-chartered commercial bank (the “Bank”), and James M. Gasior, President and Chief Executive Officer of the Bank (the “Executive”). This Agreement shall append the Split Dollar Policy Endorsement entered into on even date herewith or as subsequently amended, by and between the aforementioned parties.
Whereas , to encourage the Executive to remain a Bank employee, the Bank and the Executive entered into a Third Amended Split Dollar Agreement and Endorsement dated as of December 3, 2008, providing for division of the death proceeds of a life insurance policy or policies on the Executive’s life,
Whereas , the Bank and the Executive entered into a Fourth Amended Salary Continuation Agreement dated as of June 1, 2010, providing for specified retirement benefits and amending and restating in its entirety the Third Amended Salary Continuation Agreement, which also was dated as of December 3, 2008, and
Whereas , the Bank and the Executive intend that this Fourth Amended Split Dollar Agreement and Endorsement shall be attached as Addendum A to the Fourth Amended Salary Continuation Agreement, amending and restating in its entirety the Third Amended Split Dollar Agreement and Endorsement.
Now Therefore , in consideration of the foregoing premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
Article 1
Definitions
Capitalized terms not otherwise defined in this Agreement are used herein as defined in the Fourth Amended Salary Continuation Agreement dated as of June 1, 2010, between the Bank and the Executive. The following terms shall have the meanings specified.
1.1 Administrator means the administrator described in Article 7.
1.2 Executive’s Interest means the benefit set forth in section 2.2.
1.3 Insured means the Executive.
1.4 Insurer means each life insurance carrier for which there is a Split Dollar Policy Endorsement attached to this Agreement.

 

 

 

1.5 Net Death Proceeds means the total death proceeds of the Policy minus the cash surrender value.
1.6 Policy means the specific life insurance policy or policies issued by the Insurer(s).
1.7 Salary Continuation Agreement means the Fourth Amended Salary Continuation Agreement dated as of June 1, 2010, between the Bank and the Executive, as the same may hereafter be amended.
1.8 Split Dollar Policy Endorsement means the form required by the Administrator or the Insurer to indicate the Executive’s interest, if any, in a Policy on such Executive’s life.
Article 2
Policy Ownership/Interests
2.1 Bank Ownership . The Bank is the sole owner of the Policy and shall have the right to exercise all incidents of ownership. The Bank shall be the beneficiary of the remaining death proceeds of the Policy after the Executive’s interest is paid according to section 2.2 below.
2.2 Death Benefit . Provided the Executive’s death occurs both before the Executive’s Separation from Service and before the Executive attains age 65, at the Executive’s death the Executive’s beneficiary designated in accordance with the Split Dollar Policy Endorsement shall be entitled to Policy proceeds in an amount equal to the lesser of (x) 100% of the Net Death Proceeds or (y) $1,118,817 (the lesser of the amounts specified in clauses (x) and (y) being referred to in this Agreement as the “Executive’s Interest”). The Executive’s Interest shall be extinguished at the earliest of the date of the Executive’s Separation from Service, the date the Executive attains age 65, or the date on which the Executive receives payment of the benefit provided under the Salary Continuation Agreement for a Change in Control, and the Executive’s beneficiary shall be entitled to no benefits under the Agreement of the Executive’s death occurring thereafter. The Executive shall have the right to designate the beneficiary of the Executive’s Interest.
2.3 Option to Purchase . Upon termination of this Agreement, the Bank shall not sell, surrender, or transfer ownership of the Policy without first giving the Executive or the Executive’s transferee the option to purchase the Policy for a period of 60 days from written notice of such intention. The purchase price shall be an amount equal to the cash surrender value of the Policy.
2.4 Comparable Coverage . The Bank may replace the Policy with a comparable insurance policy to cover the benefit provided under this Agreement, in which case the Bank and the Executive shall execute a new Split Dollar Policy Endorsement for the comparable insurance policy.
2.5 Internal Revenue Code Section 1035 Exchanges . The Executive recognizes and agrees that the Bank may after this Agreement is adopted wish to exchange the Policy of life insurance on the Executive’s life for another contract of life insurance insuring the Executive’s life. Provided that the Policy is replaced (or intended to be replaced) with a comparable policy of life insurance, the Executive agrees to provide medical information and cooperate with medical insurance-related testing required by a prospective insurer for implementing the Policy or, if necessary, for modifying or updating to a comparable insurer.

 

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Article 3
Premiums
3.1 Premium Payment . The Bank shall pay any premiums due on the Policy.
3.2 Economic Benefit . The Administrator shall annually determine the economic benefit attributable to the Executive based on the life insurance premium factor for the Executive’s age multiplied by the aggregate death benefit payable to the Executive’s beneficiary. The “life insurance premium factor” is the minimum factor applicable under guidance published pursuant to Treasury Reg. section 1.61-22(d)(3)(ii) or any subsequent authority.
3.3 Imputed Income . The Bank shall impute the economic benefit to the Executive on an annual basis by adding the economic benefit to the Executive’s W-2, or if applicable, Form 1099.
Article 4
Assignment
The Executive may irrevocably assign without consideration all of the Executive’s interest in the Policy and in this Agreement to any person, entity, or trust established by the Executive or the Executive’s spouse. If the Executive transfers all of the Executive’s interest in the Policy, all of the Executive’s interest in the Policy and in the Agreement shall be vested in the Executive’s transferee, who shall be substituted as a party hereunder and the Executive shall have no further interest in this Agreement.
Article 5
Insurer
The Insurer shall be bound by the terms of the Policy only. Any payments the Insurer makes or actions it takes in accordance with the Policy shall fully discharge it from all claims, suits, and demands of all entities or persons. The Insurer shall not be bound by or be deemed to have notice of the provisions of this Agreement.
Article 6
Claims and Review Procedures
6.1 Claims Procedure . Any person or entity who has not received benefits under this Agreement that he or she believes should be paid (the “claimant”) shall make a claim for benefits as follows —
6.1.1 Initiation — written claim . The claimant initiates a claim by submitting to the Administrator a written claim for benefits. If the claim relates to the contents of a notice received by the claimant, the claim must be made within 60 days after the notice was received by the claimant. All other claims must be made within 180 days after the date of the event that caused the claim to arise. The claim must state with particularity the determination desired by the claimant.

 

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6.1.2 Timing of Administrator response . The Administrator shall respond to the claimant within 90 days after receiving the claim. If the Administrator determines that special circumstances require additional time for processing the claim, the Administrator can extend the response period by an additional 90 days by notifying the claimant in writing, before the end of the initial 90-day period, that an additional period is required. The notice of extension must set forth the special circumstances and the date by which the Administrator expects to render its decision.
6.1.3 Notice of decision . If the Administrator denies part or all of the claim, the Administrator shall notify the claimant in writing of the denial. The Administrator shall write the notification in a manner calculated to be understood by the claimant. The notification shall set forth —
  (a)   The specific reasons for the denial,
  (b)   A reference to the specific provisions of this Agreement on which the denial is based,
  (c)   A description of any additional information or material necessary for the claimant to perfect the claim and an explanation of why it is needed,
  (d)   An explanation of the Agreement’s review procedures and the time limits applicable to such procedures, and
  (e)   A statement of the claimant’s right to bring a civil action under ERISA section 502(a) after an adverse benefit determination on review.
6.2 Review Procedure . If the Administrator denies part or all of the claim, the claimant shall have the opportunity for a full and fair review by the Administrator of the denial, as follows —
6.2.1 Initiation — written request . To initiate the review, the claimant must file with the Administrator a written request for review within 60 days after receiving the Administrator’s notice of denial.
6.2.2 Additional submissions — information access . The claimant shall then have the opportunity to submit written comments, documents, records, and other information relating to the claim. Upon request and free of charge, the Administrator shall also provide the claimant reasonable access to and copies of all documents, records, and other information relevant (as defined in applicable ERISA regulations) to the claimant’s claim for benefits.
6.2.3 Considerations on review . In considering the review, the Administrator shall take into account all materials and information the claimant submits relating to the claim, without regard to whether the information was submitted or considered in the initial benefit determination.
6.2.4 Timing of Administrator response . The Administrator shall respond in writing to the claimant within 60 days after receiving the request for review. If the Administrator determines that special circumstances require additional time for processing the claim, the Administrator can extend the response period by an additional 60 days by notifying the claimant in writing before the end of the initial 60-day period that an additional period is required. The notice of extension must set forth the special circumstances and the date by which the Administrator expects to render its decision.

 

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6.2.5 Notice of decision . The Administrator shall notify the claimant in writing of its decision on review. The Administrator shall write the notification in a manner calculated to be understood by the claimant. The notification shall set forth —
  (a)   The specific reasons for the denial,
  (b)   A reference to the specific provisions of the Agreement on which the denial is based,
  (c)   A statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to and copies of all documents, records, and other information relevant (as defined in applicable ERISA regulations) to the claimant’s claim for benefits, and
  (d)   A statement of the claimant’s right to bring a civil action under ERISA section 502(a).
Article 7
Administration of Agreement
7.1 Administrator Duties . This Agreement shall be administered by an Administrator, which shall consist of the Board or such committee as the Board shall appoint. The Executive may not be a member of the Administrator. The Administrator shall have the discretion and authority to ( x ) make, amend, interpret, and enforce all appropriate rules and regulations for the administration of this Agreement and ( y ) decide or resolve any and all questions that may arise, including interpretations of this Agreement.
7.2 Agents . In the administration of this Agreement, the Administrator may employ agents and delegate to them such administrative duties as the Administrator sees fit (including acting through a duly appointed representative) and may from time to time consult with counsel, who may be counsel to the Bank.
7.3 Binding Effect of Decisions . The decision or action of the Administrator concerning any question arising out of the administration, interpretation, and application of this Agreement and the rules and regulations promulgated hereunder shall be final and conclusive and binding upon all persons having any interest in the Agreement.
7.4 Indemnity of Administrator . The Bank shall indemnify and hold harmless the members of the Administrator against any and all claims, losses, damages, expenses, or liabilities arising from any action or failure to act with respect to this Agreement, except in the case of willful misconduct by the Administrator or any of its members.
7.5 Information . To enable the Administrator to perform its functions, the Bank shall supply full and timely information to the Administrator on all matters relating to the date and circumstances of the retirement, death, or Separation from Service of the Executive, and such other pertinent information as the Administrator may reasonably require.

 

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Article 8
Miscellaneous
8.1 Amendment and Termination of Agreement . This Agreement may be amended or terminated solely by a written agreement signed by the Bank and the Executive. However, this Agreement shall terminate upon the first to occur of ( u ) payment to the Executive of the benefit provided under the Salary Continuation Agreement for a Change in Control, or ( v ) surrender, lapse, or other termination of the Policy by the Bank, or ( w ) distribution of the death benefit proceeds in accordance with section 2.2 above, or ( x ) termination of the Salary Continuation Agreement under Article 5 of the Salary Continuation Agreement, or ( y ) the Executive’s Separation from Service, or ( z ) the date the Executive attains age 65.
8.2 Binding Effect . This Agreement shall bind the Executive and the Bank and their beneficiaries, survivors, executors, administrators, and transferees, and any Policy beneficiary.
8.3 No Guarantee of Employment . This Agreement is not an employment policy or contract. This Agreement does not give the Executive the right to remain an employee of the Bank nor does it interfere with the Bank’s right to discharge the Executive. This Agreement also does not require the Executive to remain an employee or interfere with the Executive’s right to terminate employment at any time.
8.4 Successors ; Binding Agreement . By an assumption agreement in form and substance satisfactory to the Executive, the Bank shall require any successor (whether direct or indirect, by purchase, merger, consolidation, or otherwise) to all or substantially all of the business or assets of the Bank to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Bank would be required to perform this Agreement had no succession occurred.
8.5 Applicable Law . This Agreement and all rights hereunder shall be governed by and construed according to the laws of the State of Ohio, except to the extent preempted by the laws of the United States of America.
8.6 Entire Agreement . This Agreement and the Salary Continuation Agreement constitute the entire agreement between the Bank and the Executive concerning the subject matter. No rights are granted to the Executive under this Agreement other than those specifically set forth. This Agreement amends and restates in its entirety the December 3, 2008 Third Amended Split Dollar Agreement and Endorsement.
8.7 Severability . If any provision of this Agreement is held invalid, such invalidity shall not affect any other provision of this Agreement not held invalid, and each such other provision shall continue in full force and effect to the full extent consistent with law. If any provision of this Agreement is held invalid in part, such invalidity shall not affect the remainder of the provision not held invalid, and the remainder of the provision together with all other provisions of this Agreement shall continue in full force and effect to the full extent consistent with law.

 

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8.8 Headings . Caption headings and subheadings herein are included solely for convenience of reference and shall not affect the meaning or interpretation of any provision of this Agreement.
8.9 Notices . All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if delivered by hand or mailed, certified or registered mail, return receipt requested, with postage prepaid, to the following addresses or to such other address as either party may designate by like notice. If to the Bank, notice shall be given to the board of directors, The Cortland Savings and Banking Company, 194 W. Main Street, P.O. Box 98, Cortland, Ohio 44410-1466, or to such other or additional person or persons as the Bank shall have designated to the Executive in writing. If to the Executive, notice shall be given to the Executive at the Executive’s address appearing on the Bank’s records, or to such other or additional person or persons as the Executive shall have designated to the Bank in writing.
In Witness Whereof , the Executive and a duly authorized representative of the Bank have executed this Agreement as of the date first written above.
             
Executive :   Bank :

The Cortland Savings and Banking Company 		 
 
           
 
  By:       
 
James M. Gasior
      Title:     
Agreement to Cooperate with Insurance Underwriting Incident to Internal Revenue Code section 1035 Exchange
I acknowledge that I have read the Fourth Amended Split Dollar Agreement and Endorsement and agree to be bound by its terms, particularly the covenant on my part set forth in section 2.5 of the Fourth Amended Split Dollar Agreement and Endorsement to provide medical information and cooperate with medical insurance-related testing required by an insurer to issue a comparable insurance policy to cover the benefit provided under this Fourth Amended Split Dollar Agreement and Endorsement.
     
 
   
Witness
  James M. Gasior

 

7

 

Split Dollar Policy Endorsement
Insured: James M. Gasior
Insurer: New York Life Insurance and Annuity Corporation
Policy No. 77251006
According to the terms of The Cortland Savings and Banking Company Fourth Amended Split Dollar Agreement and Endorsement dated as of , 2011, the undersigned Owner requests that the above-referenced policy issued by the Insurer provide for the following beneficiary designation and limited contract ownership rights to the Insured:
1. Upon the death of the Insured, proceeds shall be paid in one sum to the Owner, its successors or assigns, to the extent of the Owner’s interest in the policy. It is hereby provided that the Insurer may rely solely upon a statement from the Owner concerning the amount of proceeds the Owner is entitled to receive under this paragraph.
2. Any proceeds at the death of the Insured in excess of the amount paid under the provisions of the preceding paragraph shall be paid in one sum to:
 
Primary Beneficiary, Relationship/Social Security Number
 
Contingent Beneficiary, Relationship/Social Security Number
The exclusive rights to change the beneficiary for the proceeds payable under this paragraph and to assign all rights and interests granted under this paragraph are hereby granted to the Insured. The sole signature of the Insured shall be sufficient to exercise the rights. The Owner retains all contract rights not granted to the Insured under this paragraph.
3. It is agreed by the undersigned that this designation and limited assignment of rights shall be subject in all respects to the contractual terms of the policy.
4. Any payment directed by the Owner under this endorsement shall be a full discharge of the Insurer, and such discharge shall be binding on all parties claiming any interest under the policy.
The undersigned for the Owner is signing in a representative capacity and warrants that he or she has the authority to bind the entity on whose behalf this document is executed.
Signed at                                           , Ohio this                      day of                                            , 2011.
             
Insured :   Owner :

The Cortland Savings and Banking Company 		   
 
           
 
  By:      
 
James M. Gasior
    Its:       

 

 

 

Split Dollar Policy Endorsement
Insured: James M. Gasior
Insurer: Midland National Life Insurance Company
Policy No. 690216
According to the terms of The Cortland Savings and Banking Company Fourth Amended Split Dollar Agreement and Endorsement dated as of                                           , 2011, the undersigned Owner requests that the above-referenced policy issued by the Insurer provide for the following beneficiary designation and limited contract ownership rights to the Insured:
1. Upon the death of the Insured, proceeds shall be paid in one sum to the Owner, its successors or assigns, to the extent of the Owner’s interest in the policy. It is hereby provided that the Insurer may rely solely upon a statement from the Owner concerning the amount of proceeds the Owner is entitled to receive under this paragraph.
2. Any proceeds at the death of the Insured in excess of the amount paid under the provisions of the preceding paragraph shall be paid in one sum to:
 
Primary Beneficiary, Relationship/Social Security Number
 
Contingent Beneficiary, Relationship/Social Security Number
The exclusive rights to change the beneficiary for the proceeds payable under this paragraph and to assign all rights and interests granted under this paragraph are hereby granted to the Insured. The sole signature of the Insured shall be sufficient to exercise the rights. The Owner retains all contract rights not granted to the Insured under this paragraph.
3. It is agreed by the undersigned that this designation and limited assignment of rights shall be subject in all respects to the contractual terms of the policy.
4. Any payment directed by the Owner under this endorsement shall be a full discharge of the Insurer, and such discharge shall be binding on all parties claiming any interest under the policy.
The undersigned for the Owner is signing in a representative capacity and warrants that he or she has the authority to bind the entity on whose behalf this document is executed.
Signed at                                           , Ohio this                      day of                                            , 2011.
             
Insured :   Owner :

The Cortland Savings and Banking Company 		   
 
           
 
  By:      
 
James M. Gasior
    Its: