EXHIBIT 10.1

THE CORTLAND SAVINGS & BANKING CO.
GROUP TERM CARVE OUT PLAN

THIS PLAN is made and entered into as of this 23rd day of February, 2001, by and between The Cortland Savings & Banking Co., an Ohio-chartered, FDIC-insured member bank with its main offices in Cortland, Ohio (the "Bank") and the Participant selected to participate in this Plan (the "Participant").

INTRODUCTION

The Bank wishes to attract and retain highly qualified executives. To further this objective, the Bank is willing to divide the death proceeds of certain life insurance policies which are owned by the Bank on the lives of the participating executives with the designated beneficiary of each insured participating executive. The Bank will pay the life insurance premiums from its general assets.

ARTICLE 1
DEFINITIONS

Whenever used in this Plan, the following terms shall have the meanings specified:

1.1 " Base Annual Salary" means the current base annual salary of the Participant at the earliest of (1) the date of the Participant's death; (2) the date of the Participant's Disability; (3) the date the Participant's employment with Cortland Bancorp. or the Bank terminates within one year after a Change of Control (except for Termination for Cause); (4) the Participant's Early Retirement Date; or (5) the Participant's Normal Retirement Date. Current Base Annual Salary shall be defined by reference to compensation of the type that would be required to be reported by Securities and Exchange Commission Rule
228.402(b) (17 C.F.R. Section 228.402(b)), specifically column (c) of that rule's Summary Compensation Table (or any successor provision).

1.2 "Change of Control" means any of the following events occur:

(a) The acquisition by a person or persons acting in concert of the power to vote twenty-five percent (25%) or more of a class of Cortland Bancorp.'s voting securities;

(b) The acquisition by a person of the power to direct Cortland Bancorp.'s management or policies, if the Board of Directors of Cortland Bancorp. has made a determination that such acquisition constitutes or will constitute an acquisition of control of Cortland Bancorp. for the purposes of the Bank Holding Company Act or the Change in Bank Control Act and the regulations thereunder;

(c) During any period of two (2) consecutive years, individuals who at the beginning of such period constitute the Board of Directors of Cortland Bancorp. cease for

any reason to constitute at least a majority thereof, provided, however, that - for purposes of this clause (c) - each director who is first elected by the Board of Cortland Bancorp. (or first nominated by that Board for election by shareholders) by a vote of at least two-thirds (2/3) of the directors then in office shall be deemed to have been a director at the beginning of the period;

(d) Cortland Bancorp. shall have merged into or consolidated with another corporation, or merged another corporation into Cortland Bancorp., on a basis whereby less than fifty percent (50%) of the total voting power of the surviving corporation is represented by shares held by persons who were shareholders of Cortland Bancorp. immediately before such merger or consolidation; or

(e) Cortland Bancorp. shall have sold substantially all of its assets to another person.

For purposes of this Plan, the term "person" refers to an individual, corporation, partnership, trust, association, joint venture, pool, syndicate, sole proprietorship, unincorporated organization or other entity.

Notwithstanding this definition of Change of Control, a Change of Control of Cortland Bancorp. shall not be deemed to occur solely because any person acquires beneficial ownership of more than 25% of Cortland Bancorp.'s voting securities as a result of the acquisition of Cortland Bancorp. voting securities by Cortland Bancorp. which reduces the number of Cortland Bancorp.'s voting securities outstanding; provided, that if after such acquisition by Cortland Bancorp. such person becomes the beneficial owner of additional Cortland Bancorp. voting securities that increases the percentage of outstanding Cortland Bancorp. voting securities beneficially owned by such person, a Change of Control of Cortland Bancorp shall then occur.

1.3 "Compensation Committee" means either the Compensation Committee designated from time to time by the Bank's Board of Directors (as of the date this Plan is created, the Bank identifies the board committee performing this function as the Executive Compensation Committee) or a majority of the Bank's Board of Directors, either of which shall hereinafter be referred to as the Compensation Committee.

1.4 "Disability" means, if the Participant is covered by a Bank-sponsored disability, policy, total disability as defined in such policy without regard to any waiting period. If the Participant is not covered by such a policy, Disability means the Participant suffering a sickness, accident or injury which, in the judgment of a physician satisfactory to the Bank, prevents the Participant from performing substantially all of the Participant's normal duties for the Bank. As a condition to any benefits, the Bank may require the Participant to submit to such physical or mental evaluations and tests as the Bank's Board of Directors deems appropriate. Any one of the following events also constitutes Disability: the total and irrecoverable loss of speech or hearing; the loss of sight of both eyes; the severance of both hands at or above the wrist; the severance of both feet at or above the ankles; or the severance of one entire hand and one entire foot.

1.5 "Early Retirement Age" means the Participant's attaining age 62.

1.6 "Early Termination" means the Termination of Employment before Early Retirement Age for reasons other than death, Disability, Termination for Cause or following a Change of Control.

1.7 "Early Termination Date" means the month, day and year in which Early Termination Occurs.

1.8 "Insured" means the individual whose life is insured.

1.9 "Insurer" means the insurance company issuing the life insurance policy on the life of the Insured.

1.10 "Normal Retirement Age" means the Participant attaining age 65.

1.11 "Normal Retirement Date" means the later of the Normal Retirement Age or the date that the Participant terminates or is terminated for any reason other than Termination for Cause.

1.12 "Participant" means the employee who is designated by the Compensation Committee as eligible to participate in the Plan, elects in writing to participate in the Plan using the form attached hereto as Exhibit A, and signs a Split Dollar Endorsement for the Policy in which he or she is the Insured.

1.13 "Policy" or "Policies" means the individual insurance policy or policies adopted by the Compensation Committee for purposes of insuring a Participant's life under this Plan.

1.14 "Plan" means this instrument, including all amendments thereto.

1.15 "Terminated for Cause" or "Termination for Cause" means that the Bank has terminated the Participant's employment for any of the following reasons:

(a) Gross negligence or gross neglect of duties;

(b) Commission of a felony or of a gross misdemeanor involving moral turpitude; or

(a) Fraud, disloyalty, dishonesty or willful violation of any law or significant Bank policy committed in connection with the Participant's employment and resulting in an adverse effect on the Bank. No act, or failure to act, on the Participant's part shall be considered "willful" unless he has acted, or failed to act, with an absence of good faith and without a reasonable belief that his action or failure to act was in the best interest of the Bank.

1.16 "Years of Service" means the total number of twelve-month periods during which

the Participant serves as an employee of the Bank.

ARTICLE 2
PARTICIPATION

2.1 Eligibility to Participate. The Compensation Committee in its sole discretion shall designate from time to time Participants that are eligible to participate in this Plan.

2.2 Participation. The eligible executive may participate in this Plan by executing an Election to Participate and a Split Dollar Endorsement. The Split Dollar Endorsement shall bind the Participant and his or her beneficiaries, assigns and transferees, to the terms and conditions of this Plan. An executive's participation is limited to only Policies where he or she is the Insured. Exhibit B attached hereto sets forth the original Insured Participants and the Policies on their lives.

2.3 Termination of Participation. A Participant's rights under this Plan shall cease and his or her participation in this Plan shall terminate if any of the following events occur:

(a) If the Participant is Terminated for Cause.

(b) If the Participant's employment with the Bank is terminated prior to the Early Retirement Age for reasons other than Disability or Change of Control.

(c) If the Participant terminates employment due to Disability and thereafter becomes gainfully employed with an entity other than the Bank.

In the event that the Bank decides to maintain the Policy after the Participant's termination of participation in the Plan, the Bank shall be the direct beneficiary of the entire death proceeds of the Policy.

2.4 Maintaining the Policy and Endorsement until Death. If any of the events listed below occur, the Bank shall maintain the Policy in full force and effect and, in no event, shall the Bank amend, terminate or otherwise abrogate the Participant's interest in the Policy, unless the Participant agrees pursuant to section 8.1. The Bank may replace the Policy with a comparable insurance policy to cover the benefit provided under this Agreement if the Bank and Participant execute a new Split Dollar Policy Endorsement for a comparable benefit, which Policy or any comparable policy shall be subject to the claims of the Bank's creditors.

(a) Disability. If the Participant's employment with the Bank is terminated due to Disability, except as set forth in section 2.3(c) herein.

(b) Retirement. If the Participant's employment with the Bank is terminated on or after Early Retirement Age.

(c) Change of Control. If the Participant's employment with Cortland Bancorp. or the Bank terminates within one year after a Change of Control (except for Termination for Cause).

ARTICLE 3
POLICY OWNERSHIP/INTERESTS

3.1 Participant's Interest. With respect to each Policy, the Participant or the Participant's assignee shall have the right to designate the beneficiary of one of the following death benefit amounts:

(a) Pre-Retirement Death Benefit. If the Participant was employed by the Bank at the time of death, the death benefit shall be the lesser of : (i) two times the Participant's Base Annual Salary, less the Participant's $50,000 group term life insurance benefit under the Bank's group term life insurance policy; or (ii) $500,000.

(b) Post-Retirement Death Benefit. If the Participant was no longer employed by the Bank at the time of death, but had terminated employment within one year after a Change of Control or had terminated employment due to Disability or on or after Early Retirement Age, the death benefit shall be the lesser of (i) one times the Participant's Base Annual Salary or (ii) $500,000.

The Participant shall also have the right to elect and change settlement options with the consent of the Bank and the Insurer.

3.2 Bank's Interest. The Bank shall own the Policies and shall have the right to exercise all incidents of ownership except that the Bank shall not sell, surrender or transfer ownership of a Policy so long as a Participant has an interest in the Policy during the time periods as described in section 3.1. This provision shall not impair the right of the Bank to terminate this Plan. With respect to each Policy, the Bank shall be the direct beneficiary of the remaining death proceeds of the Policy after the Participant's interest is determined according to section 3.1.

ARTICLE 4
PREMIUMS

4.1 Premium Payment. The Bank shall pay all premiums due on all Policies.

4.2 Imputed Income. The Bank shall impute income to the Participant in an amount equal to the current term rate for the Participant's age multiplied by the net death benefit payable to the Participant's beneficiary. The "current term rate" is the minimum amount required to be imputed under Revenue Rulings 64-328 and 66-110, or any subsequent applicable authority.

ARTICLE 5

ASSIGNMENT

Any Participant may assign without consideration all interests in his or her Policy and in this Plan to any person, entity or trust. In the event a Participant shall transfer all of his or her interest in the Policy, then all of that Participant's interest in his or her Policy and in the Plan shall be vested in his or her transferee, who shall be substituted as a party hereunder, and that Participant shall have no further interest in his or her Policy or in this Plan.

ARTICLE 6
INSURER

The Insurer shall be bound only by the terms of their corresponding Policy. Any payments the Insurer makes or actions it takes in accordance with a Policy shall fully discharge it from all claims, suits and demands of all persons relating to that Policy. The Insurer shall not be bound by the provisions of this Plan. The Insurer shall have the right to rely on the Bank's representations with regard to any definitions, interpretations, or Policy interests as specified under this Plan.

ARTICLE 7
CLAIMS PROCEDURE

7.1 Claims Procedure. The Bank shall notify any person or entity that makes a claim against this Plan (the "Claimant"), in writing, within ninety (90) days of Claimant's written application for benefits, of his or her eligibility or benefits under this Plan. If the Bank determines that Claimant is not eligible for benefits or full benefits, the notice shall set forth (1) the specific reasons for such denial, (2) a specific reference to the provisions of this Plan on which the denial is based, (3) 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 (4) an explanation of this Plan'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 Bank determines that there are special circumstances requiring additional time to make a decision, the Bank 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 ninety (90) days.

7.2 Review Procedure. If the Claimant is determined by the Bank 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 Bank by filing a petition for review with the Bank within sixty (60) days after receipt of the notice issued by the Bank. Said petition shall state the specific reasons which the Claimant believes entitles him or her to benefits or to greater or different benefits. Within sixty (60) days after receipt by the Bank of the petition, the Bank shall afford the Claimant (and counsel, if any) an opportunity to present his or her position to the Bank verbally or in writing, and the Claimant (or counsel) shall have the right to review the pertinent documents. The Bank shall notify the Claimant of its decision in writing within the sixty-day period, stating specifically the basis of its decision, written in a manner calculated to be understood by the Claimant and the specific provisions of this Plan on

which the decision is based. If, because of the need for a hearing, the sixty-day period is not sufficient, the decision may be deferred for up to another sixty (60) days at the election of the Bank, but notice of this deferral shall be given to the Claimant.

ARTICLE 8
AMENDMENTS AND TERMINATION

8.1 Amendment or Termination of Plan. Except as otherwise provided in section 2.4 and 8.2, (i) the Bank may amend or terminate the Plan at any time, and (ii) the Bank may amend or terminate a Participant's rights under the Plan at any time prior to a Participant's death by written notice to the Participant.

8.2 Amendment or Termination of Plan Upon Change of Control. Notwithstanding the provisions of section 8.1, in the event of a Change of Control, the Bank, or its successor, shall maintain in full force and effect each Policy that is in existence on the date the Change of Control occurs and shall not terminate or otherwise abrogate a Participant's interest in the Policy. However, the Bank may replace the Policy with a comparable insurance policy to cover the benefit provided under this Agreement. The Policy or any comparable policy shall be subject to the claims of the Bank's creditors. This section 8.2 shall apply to all Participants in the Plan on the date the Change of Control occurs, including but not limited to (i) a retired Participant who has an interest in a Policy; (ii) a disabled Participant who has an interest in the Policy; and (iii) a Participant whose employment is terminated as a result of a Change of Control.

8.3 Participant Waiver. A Participant may, in the Participant's sole and absolute discretion, waive his or her rights under the Plan at any time. Any waiver permitted under this section 8.3 shall be in writing and delivered to the Board of Directors of the Bank.

ARTICLE 9
MISCELLANEOUS

9.1 Binding Effect. This Plan in conjunction with each Split Dollar Endorsement shall bind each Participant and the Bank, their beneficiaries, survivors, executors, administrators and transferees and any Policy beneficiary.

9.2 No Guarantee of Employment. This Plan is not an employment policy or contract. It does not give a Participant the right to remain an employee of the Bank, nor does it interfere with the Bank's right to discharge a Participant. It also does not require a Participant to remain an employee nor interfere with a Participant's right to terminate employment at any time.

9.3 Applicable Law. The Plan 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.

9.4 Notice. Any notice, consent or demand required or permitted to be given under the provisions of this Plan by one party to another shall be in writing, shall be signed by the party giving or making the same, and may be given either by delivering the same to such other party

personally, or by mailing the same, by United States certified mail, postage prepaid, to such party, addressed to his/her last known address as shown on the records of the Bank. The date of such mailing shall be deemed the date of such mailed notice, consent or demand.

9.5 Entire Agreement. This Plan constitutes the entire agreement between the Bank and the Participant as to the subject matter hereof. No rights are granted to the Participant by virtue of this Plan other than those specifically set forth herein.

9.6 Administration. The Bank shall have powers which are necessary to administer this Plan, including but not limited to:

(a) Interpreting the provisions of the Plan;

(b) Establishing and revising the method of accounting for the Plan;

(c) Maintaining a record of benefit payments; and

(d) Establishing rules and prescribing any forms necessary or desirable to administer the Plan.

9.7 Designated Fiduciary. For purposes of the Employee Retirement Income Security Act of 1974, if applicable, the Bank shall be the named fiduciary and plan administrator under the Agreement. The named fiduciary may delegate to others certain aspects of the management and operation responsibilities of the Plan including the employment of advisors and the delegation of ministerial duties to qualified individuals.

9.8 Severability. If for any reason any provision of this Agreement is held invalid such invalidity shall not affect any other provision of this Agreement not held so invalid, and each such other provision shall, to the full extent consistent with the law, continue in full force and effect. If any provision of this Agreement shall be held invalid in part, such invalidity shall in no way affect the rest of such provision, not held so invalid, and the rest of such provision, together with all other provisions of this Agreement shall, to the full extent consistent with the law, continue in full force and effect.

9.9 Headings. The headings of Sections herein are included solely for convenience of reference and shall not affect the meaning or interpretation of any provision of this Agreement.

IN WITNESS WHEREOF, the Bank executes this Plan as of the date indicated above.

BANK:
THE CORTLAND SAVINGS & BANKING CO.

_____________, 2002

Name ___________________
Title __________________
The Cortland Savings & Banking Company
[ADDRESS LINE 1]
[ADDRESS LINE 2]

RE: PARTICIPATION IN GROUP TERM CARVE OUT PLAN OF THE CORTLAND SAVINGS &
BANKING COMPANY

Dear [NAME]:

The purpose of this notice is to inform you of certain changes for your participation in the Group Term Carve Out Plan dated February 23, 2001 (the "Plan"), which changes we, the Board of Directors of The Cortland Savings & Banking Company (the "Bank"), have agreed to. In accordance with the terms of the Plan, particularly Section 8.1 ("Amendment or Termination of Plan") thereof, Participants are hereby notified of the following amendments to the Plan. The changes as expressed in this letter are hereafter known as Amendment No. 1 of the Plan.

Except as expressly provided to the contrary herein, all terms defined in the Plan are used herein with the same meaning as provided therein. The changes we have agreed to are as follows:

1.2 Article 1.4 ("Disability") of the Plan shall be replaced in its entirety by the following:

"Disability" means the Participant's suffering a sickness, accident or injury which has been determined by the carrier of any individual or group disability insurance policy covering the Participant, or by the Social Security Administration, to be a disability rendering the Participant totally and permanently disabled. The Participant must submit proof to the Bank of the carrier's or Social Security Administration's determination upon the request of the Bank.

1.3 Article 7.1 ("Claims Procedure") of the Plan shall be replaced in its entirety by the following:

7.1 Claims Procedure. A person or beneficiary ("claimant") who has not received benefits under the Plan that he or she believes should be paid shall make a claim for such benefits as follows:

7.1.1 Initiation - Written Claim. The claimant initiates a claim by submitting to the Bank a written claim for the benefits.

7.1.2 Timing of Bank Response. The Bank shall respond to such claimant within 90 days after receiving the claim. If the Bank determines that special circumstances require additional time for processing the claim, the Bank can extend the response period by an additional 90 days by notifying the claimant in writing, prior to 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 Bank expects to render its decision.

7.1.3 Notice of Decision. If the Bank denies part or all of the claim, the Bank shall notify the claimant in writing of such denial. The Bank shall write the notification in a manner calculated to be understood by the claimant. The notification shall set forth:

7.1.3.1 The specific reasons for the denial,

7.1.3.2 A reference to the specific provisions of the Plan on which the denial is based,

7.1.3.3 A description of any additional information or material necessary for the claimant to perfect the claim and an explanation of why it is needed,

7.1.3.4 An explanation of the Plan's review procedures and the time limits applicable to such procedures, and

7.1.3.5 A statement of the claimant's right to bring a civil action under ERISA [Employees Retirement Income Security Act] Section 502(a) following an adverse benefit determination on review.

1.4 Article 7.2 of the Plan ("Review Procedure") shall be replaced in its entirety by the following:

7.2 Review Procedure. If the Bank denies part or all of the claim, the claimant shall have the opportunity for a full and fair review by the Bank of the denial, as follows:

7.2.1 Initiation - Written Request. To initiate the review, the claimant,

within 60 days after receiving the Bank's notice of denial, must file with the Bank a written request for review.

7.2.2 Additional Submissions - Information Access. The claimant shall then have the opportunity to submit written comments, documents, records and other information relating to the claim. The Bank shall also provide the claimant, 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.

7.2.3 Considerations on Review. In considering the review, the Bank shall take into account all materials and information the claimant submits relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.

7.2.4 Timing of Bank Response. The Bank shall respond in writing to such claimant within 60 days after receiving the request for review. If the Bank determines that special circumstances require additional time for processing the claim, the Bank can extend the response period by an additional 60 days by notifying the claimant in writing, prior to 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 Bank expects to render its decision.

7.2.5 Notice of Decision. The Bank shall notify the claimant in writing of its decision on review. The Bank shall write the notification in a manner calculated to be understood by the claimant. The notification shall set forth:

7.2.5.1 The specific reason for the denial,

7.2.5.2 A reference to the specific provisions of the Plan on which the denial is based,

7.2.5.3 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

7.2.5.4 A statement of the claimant's right to bring a civil action

under ERISA Section 502(a).

WHEREAS, the Compensation Committee of the Board of Directors of the Bank has authorized the aforementioned changes to the Plan pursuant to action on April 16, 2002.

Except as expressly modified herein, all the terms, covenants, and provisions of the Plan shall continue in full force and effect.

THE CORTLAND SAVINGS & BANKING COMPANY

EXHIBIT A

ELECTION TO PARTICIPATE

I, _________________________________ , an eligible employee as determined in section 2.1 of the Cortland Savings and Banking Co. Group Term Carve Out Plan (the "Plan") dated as of ___ February 23, 2001, hereby elect to become a Participant of the Plan in accordance with Section 2.2 of the Plan. Additionally, I acknowledge that I have read the Plan document and agree to be bound by its terms.

Executed this _______________ day of _________________, 2001.

PARTICIPANT'S NAME               INSURER                                        POLICY NUMBER
------------------               -------                                        -------------

Marcel Arnal                     Great-West Life & Annuity Ins. Co              85998008

Douglas L. Blay                  Great-West Life & Annuity Ins. Co              85998009

Timothy Carney                   Great-West Life & Annuity Ins. Co              85998010

James Duff                       Great-West Life & Annuity Ins. Co              85998011

Deborah Eazor                    Great-West Life & Annuity Ins. Co              85998012

Thomas Elliott, IV               Great-West Life & Annuity Ins. Co              85998013

Lawrence A. Fantauzzi            Great-West Life & Annuity Ins. Co              85998014

James M. Gasior                  Great-West Life & Annuity Ins. Co              85998015

Robert Horvath                   Great-West Life & Annuity Ins. Co              85998016

Marlene Lenio                    Great-West Life & Annuity Ins. Co              85998017

Steve Mack                       Great-West Life & Annuity Ins. Co              85998018

Mark Mediate                     Great-West Life & Annuity Ins. Co              85998019

Keith Mrozek                     Great-West Life & Annuity Ins. Co              85998020

Pietro Pascale                   Great-West Life & Annuity Ins. Co              85998021

Craig Phythyon                   Great-West Life & Annuity Ins. Co              85998022

Karen Rudge                      Great-West Life & Annuity Ins. Co              85998023

Judy Russell                     Great-West Life & Annuity Ins. Co              85998024

Barbara Sandrock                 Great-West Life & Annuity Ins. Co              85998025

Frank Sedall                     Great-West Life & Annuity Ins. Co              85998026

Stephen A. Telego                Great-West Life & Annuity Ins. Co              85998027

Kimberly Vogt                    Great-West Life & Annuity Ins. Co              85998028

Danny L. White                   Great-West Life & Annuity Ins. Co              85998029

(group term carve out plan. without split $ endorsement cortland )

EXHIBIT 10.2

GROUP TERM CARVE OUT PLAN
AMENDED SPLIT DOLLAR POLICY ENDORSEMENT
THE CORTLAND SAVINGS AND BANKING COMPANY

POLICY NO. 85998027 INSURED: Stephen A.Telego, Sr.

Supplementing and amending the application of The Cortland Savings and Banking Company (the "Bank") on January 5, 2001 to Great-West Life & Annuity Insurance Company (the "Insurer"), the applicant requests and directs that:

BENEFICIARIES

1. The beneficiary designated by the Insured, or his/her transferee shall be the beneficiary of one of the following death benefit amounts, subject to the provisions of paragraph 5 below:

(a) Pre-Retirement Death Benefit. If the Insured/Participant was employed by the Bank at the time of death, the death benefit shall be the lesser of : (1) two times the Participant's Base Annual Salary (defined in the Cortland Savings and Banking Company Group Term Carve Out Plan dated as of February 23, 2001, as amended (the "Plan")), less $50,000; or (2) $350,000.

(b) Post-Retirement Death Benefit. If the Insured/Participant was no longer employed by the Bank at the time of death, but terminated within one year after a Change of Control (defined in the Plan) or terminated due to Disability (defined in the Plan) or on or after Early Retirement Age (defined in the Plan), the death benefit shall be the lesser of: (1) one times the Participant's Base Annual Salary (defined in the Plan); or (2) $500,000.

The Insurer may rely on a certificate issued by an authorized officer of the Bank for a determination of the amount equal to one or two times Base Annual Salary of the Insured.

2. The beneficiary of any remaining death proceeds shall be The Cortland Savings and Banking Company, an Ohio-chartered, FDIC-insured member bank with its main offices in Cortland, Ohio.

OWNERSHIP

3. The Owner of the Policy shall be the Bank. The Owner shall have all ownership rights in the Policy except as may be specifically granted to the Insured or his/her transferee in paragraph (4) of this endorsement.

4. The Insured or his/her transferee shall have the right to assign all rights and interests in the Policy with respect to that portion of the death proceeds designated in paragraph

(1) of this endorsement, and to exercise all settlement options with respect to such death proceeds.

5. Notwithstanding the provisions of paragraph (4) above, the Insured or the Insured's transferee shall have no rights or interests in the Policy with respect to that portion of the death proceeds designated in paragraph (1) of this endorsement if any of the following events occur:

(a) If the Insured/Participant is Terminated for Cause (as defined in the Plan).

(b) If the Insured/Participant's employment with the Bank is terminated prior to Early Retirement Age (as defined in the Plan), for reasons other than Disability (as defined in the Plan) or Change of Control (as defined in the Plan).

(c) If the Insured/Participant terminates employment due to Disability (defined in the Plan) and thereafter becomes gainfully employed with an entity other than the Bank.

MODIFICATION OF ASSIGNMENT PROVISIONS OF THE POLICY

6. Upon the death of the Insured, the interest of any collateral assignee of the Owner of the Policy designated in paragraph (3) above shall be limited to the portion of the proceeds described in paragraph (2) above.

OWNER'S AUTHORITY

7. The Insurer is hereby authorized to recognize the Owner's claim to rights hereunder without investigating the reason for any action taken by the Owner, including the Owner's statement of the amount of premiums the Owner has paid on the Policy. The signature of the Owner shall be sufficient for the exercise of any rights under this Endorsement and the receipt of the Owner for any sums received by it shall be a full discharge and release to the Insurer. The Insurer may rely on a sworn statement in form satisfactory to it furnished by the Owner, its successors or assigns, as to their interest and any payments made pursuant to such statement shall discharge the Bank accordingly.

8. Any transferee's rights shall be subject to this Endorsement.

9. The Owner accepts and agrees to this split dollar endorsement.

PRIOR ENDORSEMENTS ARE SUPERSEDED

10. This Amended Split Dollar Policy Endorsement supersedes any and all endorsements previously executed by the undersigned Insured under the Plan with respect to the above-referenced Policy.

DEATH BENEFIT FORMULA SUPERSEDES THE PLAN FORMULA

11. Death benefits payable under the Plan and this endorsement to the beneficiary(ies) designated by the Insured shall be calculated solely by reference to the pre-retirement death benefit formula and the post-retirement death benefit formula stated in paragraph (1) of this endorsement, notwithstanding that the Plan may provide for a different calculation or formula.

SIGNATURES

The undersigned is signing in a representative capacity on behalf of the Bank and warrants that he or she has the authority to bind the entity on whose behalf this document is being executed.

Signed by the Bank at Cortland, Ohio, this ______ day of ________________ , 200__.

THE CORTLAND SAVINGS AND BANKING COMPANY

ACCEPTANCE AND BENEFICIARY DESIGNATION

The Insured accepts and agrees to the foregoing and, subject to the rights of the Owner as stated above, designates (relationship:
_____________________________________________________) as primary beneficiary(ies) and (relationship:
_____________________________________________________ ) as secondary/contingent beneficiary(ies) of the portion of the proceeds described in paragraph (1) above.

Signed by the Insured at , Ohio, this ______ day of ________________ , 200__.

INSURED

EXHIBIT 10.3

CORTLAND BANCORP
DIRECTOR RETIREMENT AGREEMENT

THIS DIRECTOR RETIREMENT AGREEMENT (this "Agreement") is made as of ___, 2005, by and between Cortland Bancorp, a bank holding company located in Cortland, Ohio (the "Company") and Jerry A. Carleton (the "Director").

To encourage the Director to remain a member of the Company's board of directors, the Company is willing to provide retirement benefits to the Director. The Company will pay the benefits from its general assets. 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.

AGREEMENT

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

Whenever used in this Agreement, the following words and phrases shall have the meanings specified:

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 shall be calculated assuming a level principal amount and interest as the discount rate is accrued each period. The principal accrual is determined such that when it is credited with interest each month, the Accrual Balance at Normal Retirement Age equals 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 initial discount rate is 6.75%. However, the Plan Administrator, in its sole discretion, may adjust the discount rate to maintain the rate within reasonable standards according to GAAP.

1.2 "Beneficiary" means each designated person, or the estate of the deceased Director, entitled to benefits, if any, upon the death of the Director, determined according to Article 4.

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 any of the following events occur:

(a) the acquisition by a person or persons acting in concert of the power to vote 25% or more of a class of the Company's voting securities,

(b) during any period of two consecutive years, individuals who at the beginning of such period constitute the board of directors of the Company cease for any reason to constitute at least a majority thereof, provided, however, that - for purposes of this clause (b) - each director who is first elected by the board (or first nominated by the board for election by shareholders) by a vote of at least two-thirds (2/3) of the directors then in office shall be deemed to have been a director at the beginning of the period,

(c) the Company shall have merged into or consolidated with another corporation, or merged another corporation into the Company, on a basis whereby less than 50% of the total voting power of the surviving corporation is held by persons who were shareholders of the Company immediately before the merger or consolidation, or

(d) the Company shall have sold substantially all of its assets to another person.

For purposes of this Agreement, the term "person" means an individual, corporation, partnership, trust, association, joint venture, pool, syndicate, sole proprietorship, unincorporated organization, or other entity.

Notwithstanding this definition of Change in Control, a Change in Control shall not be deemed to have occurred solely because a person's beneficial ownership of more than 25% of the Company's voting securities is the result of the Company's acquisition of its voting securities, reducing the number of the Company's voting securities outstanding; provided, however, that if such person acquires additional voting securities of the Company, increasing the percentage of outstanding Company voting securities beneficially owned by that person, a Change in Control shall be deemed to have occurred.

1.5 "Code" means the Internal Revenue Code of 1986, as amended.

1.6 "Disability" means, if the Director is covered by a Company-sponsored disability policy, total disability as defined in such policy without regard to any waiting period. If the Director is not covered by such a policy, Disability means the Director suffers a sickness, accident or injury that, in the judgment of a physician satisfactory to the Company, prevents the Director from performing substantially all of the Director's normal duties for the Company. As a condition to receiving any Disability benefits, the Company may require the Director to submit to such physical or mental evaluations and tests as the Company's board of directors deems appropriate.

1.7 "Early Termination" means Termination of Service before the Normal Retirement Age for reasons other than death, Disability, Termination for Cause, or following a Change in Control.

1.8 "Early Termination Date" means the month, day, and year of Early Termination.

1.9 "Effective Date" means March 1, 2005.

1.10 "Normal Retirement Age" means the Director's 70th birthday.

1.11 "Normal Retirement Date" means the later of the Normal Retirement Age or Termination of Service.

1.12 "Plan Administrator" means the plan administrator described in Article 7.

1.13 "Plan Year" means each twelve-month period from the Effective Date of this Agreement.

1.14 "Termination for 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 -

(a) because of the Director's gross negligence or gross neglect of duties, or

(b) because of the Director's commission of a felony, or commission of a misdemeanor involving moral turpitude, or

(c) because of the Director's fraud, disloyalty, dishonesty, or willful violation of any law or significant policy of the Company committed in connection with the Director's service and resulting in an adverse effect on the Company, or

(d) because the Director is removed from service 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)].

1.15 "Termination of Service" means the Director ceases to be a member of the Company's board of directors for any reason whatsoever. For purposes of this Agreement, if there is a dispute over the service status of the Director or the date of the Director's Termination of Service, the Company shall have the sole and absolute right to decide the dispute unless a Change in Control shall have occurred.

ARTICLE 2
LIFETIME BENEFITS

2.1 Normal Retirement Benefit. For Termination of Service on or after 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.

2.1.1 Amount of Benefit. The annual benefit under this Section 2.1 is $10,000.

2.1.2 Payment of Benefit. The Company shall pay the annual benefit to the Director in 12 equal monthly installments payable on the first day of each month, beginning with the month after the Director's Normal Retirement Date. The annual benefit shall be paid to the Director for 10 years.

2.2 Early Termination Benefit. 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.

2.2.1 Amount of Benefit. The benefit under this Section 2.2 is the Early Termination annual benefit set forth in Schedule A for the Plan Year ending immediately before the Early Termination Date (except during the first Plan Year, the benefit is the amount set forth for Plan Year 1).

2.2.2 Payment of Benefit. The Company shall pay the annual benefit to the Director in 12 equal monthly installments payable on the first day of each month, beginning with the month after the Normal Retirement Age. The annual benefit shall be paid to the Director for 10 years.

2.3 Disability Benefit. If the Director terminates service because of Disability before the 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 benefit under this Section 2.3 is the Disability annual benefit set forth in Schedule A for the Plan Year ending immediately before the

date of Termination of Service (except during the first Plan Year, the benefit is the amount set forth for Plan Year 1).

2.3.2 Payment of Benefit. The Company shall pay the annual benefit to the Director in 12 equal monthly installments payable on the first day of each month, beginning with the month after the Normal Retirement Age. The annual benefit shall be paid to the Director for 10 years.

2.4 Change in Control Benefit. If the Director's service with the Company terminates within one year after a Change in Control (except for Termination for Cause), the Company shall pay to the Director the benefit described in this
Section 2.4 instead of any other benefit under this Agreement.

2.4.1 Amount of Benefit. The benefit under this Section 2.4 is the Accrual Balance on the date of the Director's Termination of Service.

2.4.2 Payment of Benefit. The Company shall pay this benefit to the Director in a lump sum within 3 days after the Director's Termination of Service.

2.5 Contradiction in Terms of Agreement and Schedule A. If there is a contradiction in the terms of this Agreement and Schedule A attached hereto concerning the benefits due under Section 2.2, 2.3, or 2.4 hereof, then the actual amount of benefits prescribed by this Agreement shall control. If the Plan Administrator changes the discount rate employed for purposes of calculating the Accrual Balance, the Plan Administrator shall prepare or cause to be prepared a revised Schedule A, which shall supersede and replace any and all Schedules A previously prepared under or attached to this Agreement.

2.6 Savings Clause Relating to Compliance with Code Section 409A. If any provision of this Agreement does not satisfy the requirements of Code section 409A or rules, regulations, and guidance of general application issued by the Department of the Treasury under Code section 409A, such provision shall be applied in a manner consistent with those requirements, notwithstanding any provision of this Agreement.

ARTICLE 3
DEATH BENEFITS

Instead of any other benefit under this Agreement, the Director's Beneficiary shall be entitled to receive the following benefits under Articles 3.1, 3.2, 3.3, or 3.4, depending on whether the Director's death occurs during or after active service and before or after Normal Retirement Age.

3.1 Death in Active Service Before Normal Retirement Age. If the Director dies before Normal Retirement Age while in the active service of the Company, the Company shall pay to the Director's Beneficiary a lump sum benefit in an amount equal to the Accrual Balance

on the date of the Director's death. The Company shall pay this benefit to the Director's Beneficiary in a lump sum within 30 days after the Director's death.

3.2 Death in Active Service After Normal Retirement Age. If the Director dies after Normal Retirement Age while in the active service of the Company, the Company shall for a period of 10 years pay to the Director's Beneficiary the Normal Retirement Benefit provided in Article 2.1.1.

3.3 Death After Termination of Service Before Normal Retirement Age. (a) After Payments Commence. If, a Termination of Service before Normal Retirement Age having previously occurred, the Director dies after benefit payments commence under Article 2.2 of this Agreement 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 they would have been paid to the Director had the Director survived.

(b) Before Payments Commence. If, a Termination of Service before Normal Retirement Age having previously occurred, the Director is entitled to any benefit pursuant to Article 2.2 of this Agreement but dies before the benefit payments commence, the Company shall pay the same aggregate benefit payments to the Director's Beneficiary that the Director was entitled to before death, except that the benefit payments shall commence on the first day of the month after the date of the Director's death.

3.4 Death After Termination of Service After Normal Retirement Age. (a) After Payments Commence. If, a Termination of Service on or after Normal Retirement Age having previously occurred, the Director dies after benefit payments commence under Article 2.1 of this Agreement 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 they would have been paid to the Director had the Director survived.

(b) Before Payments Commence. If, a Termination of Service on or after Normal Retirement Age having previously occurred, the Director is entitled to any benefit pursuant to Article 2.1 of this Agreement but dies before the benefit payments commence, the Company shall pay the same aggregate benefit payments to the Director's Beneficiary that the Director was entitled to before death, except that the benefit payments shall commence on the first day of the month after the date of the Director's death.

ARTICLE 4
BENEFICIARIES

4.1 Beneficiary Designations. The Director shall designate a Beneficiary by filing a written designation with the Company. The Director may revoke or modify the designation at any time by filing a new designation. However, designations will only be effective if signed by the Director and received by the Company during the Director's lifetime. The Director's beneficiary designation shall be deemed automatically revoked if the Beneficiary predeceases the

Director or if the Director names a spouse as Beneficiary and the marriage is subsequently dissolved. If the Director dies without a valid beneficiary designation, the Director's estate shall be the Beneficiary.

4.2 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 such benefit to the guardian, legal representative, or person having the care or custody of such minor, incapacitated person, or incapable person. The Company may require proof of incapacity, minority, or guardianship as it may deem appropriate prior to distribution of the benefit. Such distribution shall completely discharge the Company from all liability with respect to such benefit.

ARTICLE 5
GENERAL LIMITATIONS

5.1 Termination for Cause. Notwithstanding any provision of this Agreement to the contrary, the Company shall not pay any benefit under this Agreement and this Agreement shall terminate if the Director's Termination of Service is the result of Termination for Cause. Likewise, no benefits shall be paid under the Split Dollar Agreement and Endorsement between the Company and the Director and the Split Dollar Agreement and Endorsement also shall terminate if Termination of Service is the result of Termination for 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 Suicide or Misstatement. The Company shall not pay any benefit under this Agreement if the Director commits suicide within two years after the date of this Agreement, or if the Director has made any material misstatement of fact on any application for life insurance purchased by the Company.

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 of 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 (1) the specific reasons for such denial, (2) a specific reference to the provisions of the Agreement on which the denial is based, (3) 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 (4) 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.

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(s) as the board shall appoint. The Director may be a member of the Plan Administrator. The Plan Administrator shall also have the discretion and authority to (a) make, amend, interpret, and enforce all appropriate rules and regulations for the administration of this Agreement and (b) decide or resolve any and all questions, including interpretations of this Agreement, as may arise in connection with the 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 with respect to any question arising out of or in connection with 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 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 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.

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 the Agreement 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 nor interfere with the Director's right to terminate service at any time.

8.4 Non-Transferability. Benefits under this Agreement cannot be sold, transferred, assigned, pledged, attached, or encumbered in any manner.

8.5 Successors; Binding Agreement. 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, by an assumption agreement in form and substance satisfactory to the Director, 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 if no such succession had 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 in any manner 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 constitute the entire agreement between the Company and the Director concerning the subject matter hereof. No rights are granted to the Director under this Agreement other than those specifically set forth herein.

8.10 Severability. If for any reason 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 Headings. The headings of Sections herein are included solely for convenience of reference and shall not affect the meaning or interpretation of any provision of this Agreement.

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 Agreement as of the date first written above.

DIRECTOR                                CORTLAND BANCORP


                                        By:
-------------------------------------       ------------------------------------
Jerry A. Carleton                       Title:
                                               ---------------------------------

BENEFICIARY DESIGNATION
CORTLAND BANCORP
DIRECTOR RETIREMENT AGREEMENT

I, Jerry A. Carleton, 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.

Date: ______________________, 2005

Received by the Company this ___________ day of _________________, 2005.

                                        EARLY
                                     TERMINATION      DISABILITY
                AGE                ANNUAL BENEFIT   ANNUAL BENEFIT
                AT                   PAYABLE AT       PAYABLE AT     CHANGE-IN-CONTROL
  PLAN YEAR    PLAN    ACCRUAL         NORMAL           NORMAL            BENEFIT
   ENDING      YEAR   BALANCE @    RETIREMENT AGE   RETIREMENT AGE      PAYABLE IN A
FEBRUARY 28,    END   6.75% (1)          (2)              (2)           LUMP SUM (3)
------------   ----   ---------    --------------   --------------   -----------------
    2006        63     $ 7,420         $ 1,602          $ 1,602           $ 7,420
    2007        64     $15,358         $ 3,099          $ 3,099           $15,358
    2008        65     $23,847         $ 4,499          $ 4,499           $23,847
    2009        66     $32,928         $ 5,807          $ 5,807           $32,928
    2010        67     $42,641         $ 7,031          $ 7,031           $42,641
    2011        68     $53,031         $ 8,175          $ 8,175           $53,031
    2012        69     $64,143         $ 9,244          $ 9,244           $64,143
  November      70     $72,983(4)      $10,000          $10,000           $72,983
    2012

(1) Calculations are approximations. Benefit calculations are based on prior year-end accrual balances. The accrual balance reflects payment at the beginning of each month during retirement, beginning December 1, 2012.

(2) Benefit is based on the present value of the current payment stream of the vested accrual balance using a standard discount rate (6.75%).

(3) The benefit payable under section 2.4 for Termination of Service after a Change in Control is the Accrual Balance on the date of the Director's Termination of Service. The benefit is shown for illustrative purposes only.

(4) Projected retirement occurs on November 22, 2012, with the first normal monthly retirement benefit commencing December 1, 2012.

If there is a contradiction between the terms of the Agreement and Schedule A concerning the actual amount of a particular benefit amount due the Executive under Section 2.2, 2.3, or 2.4 of the Agreement, then the actual amount of the benefit set forth in the Agreement shall control. If the Plan Administrator changes the discount rate employed for purposes of calculating the Accrual Balance, the Plan Administrator shall prepare or cause to be prepared a revised Schedule A, which shall supersede and replace any and all Schedules A previously prepared under or attached to the Agreement.

EXHIBIT 10.4

CORTLAND BANCORP
DIRECTOR RETIREMENT AGREEMENT

THIS AGREEMENT is made as of this lst day of March, 2001, by and between Cortland Bancorp., a bank holding company located in Cortland, Ohio (the "Company') and David C. Cole (the "Director").

To encourage the Director to remain a member of the Company's Board of Directors, the Company is willing to provide retirement benefits to the Director. The Company will pay the benefits from its general assets, 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. Section 1828(k)(4)(A)(ii)] and in Federal Deposit Insurance Corporation Rule 359.1(f)(1)(ii) [12 CFR 359.l (f)(1)(ii)] exists or, to the best knowledge of the Company, is contemplated insofar as the Company is concerned.

AGREEMENT

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

Whenever used in this Agreement, the following words and phrases shall have the meanings specified:

1.1 "Change in Control" means that any of the following events occur:

(a) The acquisition by a person or persons acting in concert of the power to vote 25% or more of a class of the Company's voting securities;

(b) The acquisition by a person of the power to direct the Company's management or policies, if the Board of Directors of the Company has made a determination that such acquisition constitutes or will constitute an acquisition of control of the Company for the purposes of the Bank Holding Company Act or the Change in Bank Control Act and the regulations thereunder,

(c) During any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of the Company cease for any reason to constitute at least a majority thereof provided. however, that -- for purposes of this clause (c) -- each director who is first elected by the Board of the Company (or first nominated by that Board for election by shareholders) by a vote of at least two-thirds (2/3) of the directors then in office shall be deemed to have been a director at the beginning of the period;

(d) The Company shall have merged into or consolidated with another corporation, or merged another corporation into the Company, on a basis whereby less than 50% of the total voting power of the surviving corporation is represented by shares held by persons who were shareholders of the Company immediately before such merger or consolidation, or

(e) The Company shall have sold substantially all of its assets to another person.

For purposes of this Agreement, the term "person" refers to an individual, corporation, partnership, trust, association, joint venture, pool, syndicate, sole proprietorship, unincorporated organization or other entity.

Notwithstanding this definition of Change in Control, a Change in Control of the Company shall not be deemed to occur solely because any person acquires beneficial ownership of more than 25% of the Company's voting securities as a result of the acquisition of the Company voting securities by the

Company which reduces the number of the Company's voting securities outstanding, provided, that if after such acquisition by the Company such person becomes the beneficial owner of additional Company voting securities that increases the percentage of outstanding Company voting securities beneficially owned by such person, a Change in Control of the Company shall then occur.

1.2 "Code" means the Internal Revenue Code of 1986, as amended.

1.3 "Disability" means, if the Director is covered by a Company-sponsored disability policy, total disability as defined in such policy without regard to any waiting period, If the Director is not covered by such a policy, Disability means the Director suffering a sickness, accident or injury, which, in the judgment of a physician satisfactory to the Company, prevents the Director from performing substantially all of the Director's normal duties for the Company. As a condition to receiving any Disability benefits, the Company may require the Director to submit to such physical or mental evaluations and tests as the Company's Board of Directors deems appropriate.

1.4 "Early Termination" means the Termination of Service before Normal Retirement Age for reasons other than death, Disability Termination for Cause or following a Change in Control

1.5 "Early Termination Date" means the month, day and year in which Early Termination occurs.

1.6 "Effective Date" means March 1, 2001,

1.7 "Normal Retirement Age" means the Director's 61st birthday.

1.8 "Normal Retirement Date" means the later of the Normal Retirement Age or Termination of Service.

1.9 "Plan Year" means each twelve-month period from the Effective Date of this Agreement

1.10 "Termination for Cause" See Section 5.2.

1.11 "Termination of Service" means that the Director ceases to be a member of the Company's Board of Directors for any reason whatsoever. For purposes of this Agreement, if there is a dispute over the service status of the Director or the date of the Director's Termination of Service, the Company shall have the sole and absolute tight to decide the dispute unless a Change in Control shall have occurred,

ARTICLE 2
LIFETIME BENEFITS

2.1 Normal Retirement Benefit. Upon Termination of Service on or after Normal Retirement Ag; the Company shall pay to the Director the benefit described in this Section 2.1 in lieu of any other benefit under this Agreement

2.1.1 Amount of Benefit. The annual benefit under this Section 2.1 is $10,000 (Ten Thousand Dollars). The Company's Board of Directors, in its sole discretion, may increase the annual benefit under this Section 2.1.1; however, any increase shall require the recalculation of Schedule A.

2.1.2 Payment of Benefit. The Company shall pay this annual benefit to the Director in 12 equal monthly installments payable on the first day of each month commencing with the month following the Director's Normal Retirement Date. The annual benefit shall be paid to the Director for 10 years.

2.1.3 Benefit Increases. Commencing on the first anniversary of the first benefit payment, and continuing on each subsequent anniversary, the Company's Board of Directors, in its sole discretion, may increase the benefit

2.2 Early Termination Benefit. Upon Early Termination, the Company shall pay to the Director the

benefit described in this Section 2.2 in lieu of any other benefit under this Agreement

2.2.1 Amount of Benefit. The benefit under this Section 2.2 is the Early Termination Annual Benefit set forth in Schedule A for the Plan Year ending immediately prior to the Early Termination Date (except during the first Plan Year, the benefit is the amount set forth for Plan Year 1). Any increase in the annual benefit under Section 2.1.1 shall require the recalculation of this benefit on Schedule A.

2.2.2 Payment of Benefit. The Company shall pay this annual benefit to the Director in 12 equal monthly installments payable on the first day of each month commencing with the month following Normal Retirement Age. The annual benefit shall be paid to the Director for 10 years.

2.2.3 Benefit Increases. Benefit payments may be increased as provided in Section 2.1.3.

2.3 Disability Benefit. If the Director terminates service due to Disability prior to Normal Retirement Age, the Company shall pay to the Director the benefit described in this Section 2.3 in lieu of any other benefit under this Agreement

2.3.1 Amount of Benefit. The benefit under this Section 2.3 is the Disability Annual Benefit set forth in Schedule A for the Plan Year ending immediately prior to the date in which Termination of Service occurs (except during the first Plan Year, the benefit is the amount set forth for Plan Year 1). Any increase in the annual benefit under Section 2.1.1 would require the recalculation of this benefit on Schedule A.

2.3.2 Payment of Benefit. The Company shall pay this annual benefit to the Director in 12 equal monthly installments payable on the first day of each month commencing with the month following Normal Retirement Age. The annual benefit shall be paid to the Director for 10 years.

2.3.3 Benefit Increases. Benefit payments may be increased as provided in Section 2.1.3.

2.4 Change in Control Benefit. If the Director's service with the Company terminates within one year after a Change in Control (except for Termination for Cause), the Company shall pay to the Director the benefit described in this
Section 2.4 in lieu of any other benefit under this Agreement

2.4.1 Amount of Benefit. The benefit under this Section 2.4 is the benefit determined under Schedule A based on the date of the Director's Termination of Service, which is determined by vesting the Director in 100% of the Accrual Balance. Any increase in the annual benefit under Section 2.1.1 would require the recalculation of this benefit on Schedule A.

2.4.2 Payment of Benefit. The Company shall pay this benefit to the Director in a lump sum within 3 days following the Director's Termination of Service.

ARTICLE 3
DEATH BENEFITS

In lieu of any other benefit under this Agreement, the Director's beneficiary(ies) shall be entitled to receive the following benefits under Articles 3.1, 3.2, 3.3 or 3.4, depending on whether the Director's death occurs during or after active service and before or after Normal Retirement Age.

3.1 Death in Active Service Before Normal Retirement Age. If the Director dies before Normal Retirement Age while in the active service of the Company, the Company shall pay to the Director's beneficiary(ies) a lump sum benefit determined by vesting the Director in 100% of the Accrual Balance on the Director's date of death. The Company shall pay this benefit to the Director's beneficiary(ies) in a lump sum within 30 days following the Director's death.

3.2 Death in Active Service After Normal Retirement Age. If the Director dies after Normal Retirement Age while in the active service of the Company, the Company shall for a period of 10 years pay to the Director's beneficiary(ies) the Normal Retirement Benefit provided in Article 2.1.1.

3.3 Death After Termination of Service Before Normal Retirement Age. (a) After Payments Commence. If, a Termination of Service before Normal Retirement Age having previously occurred, the Director dies after benefit payments commence under Article 2.2 of this Agreement but before receiving all such payments, the Company shall pay the remaining benefits to the Directors beneficiary(ies) at the same time and in the same amounts they would have been paid to the Director had the Director survived,

(b) Before Payments Commence. If, a Termination of Service before Normal Retirement Age having previously occurred, the Director is entitled to any benefit pursuant to Article 2.2 of this Agreement but dies before the benefit payments commence, the Company shall pay the same aggregate benefit payments to the Director's beneficiary(ies) that the Director was entitled to before death, except that the benefit payments shall commence on the first day of the month following the date of the Director's death.

3.4 Death After Termination of Service After Normal Retirement Age. (a) After Payments Commence. 1f, a Termination of Service on or after Normal Retirement Age having previously occurred, the Director dies after benefit payments commence under Article 2.1 of this Agreement but before receiving all such payments, the Company shall pay the remaining benefits to the Director's beneficiary(ies) at the same time and in the same amounts they would have been paid to the Director had the Director survived.

(b) Before Payments Commence. If, a Termination of Service on or after Normal Retirement Age having previously occurred, the Director is entitled to any benefit pursuant to Article 2.1 of this Agreement but dies before the benefit payments commence, the Company shall pay the same aggregate benefit payments to the Director's beneficiary(ies) that the Director was entitled to before death, except that the benefit payments shall commence on the first day of the month following the date of the Director's death.

ARTICLE 4
BENEFICIARIES

4.1 Beneficiary Designations. The Director shall designate a beneficiary by filing a written designation with the Company. The Director may revoke or modi1~y the designation at any time by filing a new designation. However, designations will only be effective if signed by the Director and received by the Company during the Director's lifetime. The Director's beneficiary designation shall be deemed automatically revoked if the beneficiary predeceases the Director or if the Director names a spouse as beneficiary and the marriage is subsequently dissolved, lithe Director dies without a valid beneficiary designation, the Director's estate shall be the beneficiary.

4.2 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 such benefit to the guardian, legal representative or person having the care or custody of such minor, incapacitated person or incapable person. The Company may require proof of incapacity, minority or guardianship as it may deem appropriate prior to distribution of the benefit such distribution shall completely discharge the Company from all liability with respect to such benefit

ARTICLE 5
GENERAL LIMITATIONS

5.1 Termination for Cause. Notwithstanding any provision of this Agreement to the contrary, the Company shall not pay any benefit under this Agreement if the Company terminates the Director's service for:

(a) Gross negligence or gross neglect of duties;

(b) Commission of a felony or of a gross misdemeanor involving moral turpitude; or

(c) Fraud, disloyally, dishonesty or willful violation of any law or significant Company policy committed in connection with the Director's service and resulting in an adverse effect on the Company.

5.2 Suicide or Misstatement. The Company shall not pay any benefit under this Agreement if the Director commits suicide within two years after the date of this Agreement, or 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 from service and/or permanently prohibited from participating in the conduct of the Company's affairs by an order issued under Section 8(e)(4) or (g)(l) of the Federal Deposit Insurance Act, 12 U.S.C. Section 18l8(e)(4) or (g)(1), all obligations of the Company under this Agreement shall terminate as of the effective date of the order.

ARTICLE 6
CLAIMS ANTI 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 of Claimant's written application for benefits, of his or her eligibility or noneligibility for benefits under the Agreement lithe Company determines that the Claimant is not eligible for benefits or full benefits, the notice shall set forth (1) the specific reasons for such denial, (2) a specific reference to the provisions of the Agreement on which the denial is based, (3) 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 (4) 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, lithe 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 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 sixty-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
AMENDMENTS AND TERMINATION

This Agreement may be amended or terminated only by a written agreement signed by the Company and the Director.

ARTICLE 8
MISCELLANEOUS

8.1 Binding Effect. This Agreement shall bind the Director and the Company, and their beneficiaries, survivors, executors, successors, administrators and transferees.

8.2 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 the Agreement interfere with the rights 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 nor interfere with the Director's right to terminate services at any time.

8.3 Non-Transferability. Benefits under this Agreement cannot be sold, transferred, assigned, pledged, attached or encumbered in any manner.

8.4 Successors; Binding Agreement. The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, by an assumption agreement in form and substance satisfactory to the Director, 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 if no such succession had taken place. Failure of the Company to obtain such assumption agreement prior to the effectiveness of any such succession shall be a breath of this Agreement and shall entitle the Director to the Change in Control Benefit provided in Section 2.4.

8.5 Tax Withholding. The Company shall withhold any taxes that are required to be withheld from the benefits provided under this Agreement

8.6 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.

8.7 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 such benefits. The rights to benefits are not subject in any manner 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.

8.8 Entire Agreement. This Agreement constitutes the entire agreement between the Company and the Director as to the subject matter hereof. No rights are granted to the Director by virtue of this Agreement other than those specifically set forth herein.

8.9 Administration. The Company shall have powers which are necessary to administer this Agreement, including but not limited to:

(a) Interpreting the provisions of the Agreement

(b) Establishing and revising the method of accounting for the Agreement,

(c) Maintaining a record of benefit payments; and

(d) Establishing riles and prescribing any forms necessary or desirable to administer the Agreement

8.10 Named Fiduciary. The Company shall be the named fiduciary and plan administrator under this Agreement. The named fiduciary may delegate to others certain aspects of the management and operation responsibilities of the plan including the employment of advisors and the delegation of ministerial duties to qualified individuals.

8.11 Severability. If for any reason any provision of this Agreement is held invalid, such invalidity shall not affect any other provision of this Agreement not held so invalid, and each such other provision shall, to the full -extent consistent with the law, continue in full force and effect. If any provision of this Agreement shall be held invalid in part, such invalidity shall in no way affect the rest of such provision, not held so invalid, and the rest of such provision, together with all other provisions of this Agreement shall, to the full extent consistent with the law,

continue in full force and effect

8.12 Headings. The headings of Sections herein are included solely for convenience of reference and shall not affect the meaning or interpretation of any provision of this Agreement

8.13 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.

(a) If to the Company, to: Board of Directors Cortland Bancorp.

194W, Main Street
P.O. Box 98
Cortland, Ohio 44410-1466

(b) If to the Director, to: David C. Cole

and to such other or additional person or persons as either party shall have designated to the other party in writing by like notice.

IN WITNESS WHEREOF, the Director and a duly authorized Company officer have signed this Agreement as of the day and year first written above.

DIRECTOR:                               COMPANY:

                                        CORTLAND BANCORP.


                                        By:
-------------------------------------       ------------------------------------
David C. Cole                           Title:
                                               ---------------------------------

BENEFICIARY DESIGNATION
CORTLAND BANCORP.
DIRECTOR RETIREMENT AGREEMENT

DAVID C. COLE

I 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.

Received by the Company this ______ day of _______,2001.

February __, 2004

Mr. David C. Cole
Director
Cortland Bancorp
194 West Main Street
Cortland, Ohio 44410-1466

RE: LETTER AMENDMENT OF DIRECTOR RETIREMENT AGREEMENT

Dear Mr. Cole:

The purpose of this letter is to memorialize in writing certain changes in your March 1, 2001 Director Retirement Agreement, which I refer to hereinafter as the "Agreement." Cortland Bancorp had been accruing for its liability under the Agreement using an 8.00% accrual rate assumption, but that assumed rate was changed to 6.75% effective on October 1, 2003, reflecting the decline in prevailing interest rates that has persisted since the Agreements were originally entered into. A similar change in the accrual rate assumption was recently made by Cortland Savings and Banking Company for its liability accruals under Salary Continuation Agreements with officers.

The changed accrual rate assumption affects anticipated benefit payment amounts, both under the Agreements and under the officers' Salary Continuation Agreements. Just as the Salary Continuation Agreements' Schedules A have been updated to reflect this changed assumption, we propose to replace the Schedule A attached to your Agreement with a new Schedule A. To make this process more fluid if a similar change needs to be made in the future, we are also proposing
(a) to add to the Agreement a definition of the term "Accrual Balance," (b) to add a provision clarifying that the Agreement's terms govern in all cases in which there is a conflict between the text of the Agreement versus the benefits reflected on Schedule A, and (c) to replace Sections 8.9 and 8.10 with a new Article 9 that has to do with administration of the Agreement. These new provisions make more clear the power of the administrator of the Agreement (the board) to make decisions about important accounting and interpretive issues under the Agreement, including changes in Schedule A of the Agreement.

The text of the amendment is set forth below. Following that text is a signature line. I ask that you sign and date the enclosed copy of this letter in the spaces provided, and that you return the executed copy to me. That will complete the amendment process. A revised Schedule A is also attached to this letter. Please retain the accompanying revised Schedule A. The revised Schedule A replaces and supersedes in its entirety the Schedule A currently associated with your Agreement. You may discard the old Schedule A.

FIRST AMENDMENT

A new definition of the term "Accrual Balance" is added to the Agreement as
Section 1.12, as follows:

1.12 "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 shall be calculated assuming a level principal amount and interest as the discount rate is accrued each period. The principal accrual is determined such that when it is credited with interest each month, the Accrual Balance at Normal Retirement Age equals 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 initial discount rate is 6.75%. However, the Plan Administrator, in its sole discretion, may adjust the discount rate to maintain the rate within reasonable standards according to GAAP. The Plan Administrator shall consist of the Company's board of directors or such committee or person(s) as the board shall appoint.

SECOND AMENDMENT

A new section 2.5 is added to the Agreement to clarify that the terms of the Agreement govern if there is a conflict between the text of the Agreement versus the benefits reflected on Schedule A attached to the Agreement, as follows:

2.5 Contradiction in Terms of Agreement and Schedule A. If there is a contradiction in the terms of this Agreement and Schedule A attached hereto concerning the benefits due under Section 2.2, 2.3, or 2.4 hereof, then the actual amount of benefits prescribed by this Agreement shall control.

THIRD AMENDMENT

The sections of the Agreement having to do with "Administration" (section 8.9) and "Named Fiduciary" (section 8.10) are hereby deleted in their entirety, and the sections that follow are renumbered accordingly sections 8.9 ("Severability"), 8.10 ("Headings"), and 8.11 ("Notices").

FOURTH AMENDMENT

A new Article 9 having to do with administration is added to the Agreement, as follows:

ARTICLE 9
ADMINISTRATION OF AGREEMENT

9.1 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(s) as the board shall appoint. The Director may be a member of the Plan Administrator. The Plan Administrator shall also have the discretion and authority to (a) make, amend, interpret, and enforce all appropriate rules and regulations for the administration of this Agreement and (b) decide or resolve any and all questions, including interpretations of this Agreement, as may arise in connection with the Agreement.

9.2 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.

9.3 Binding Effect of Decisions. The decision or action of the Plan Administrator with respect to any question arising out of or in connection with 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.

9.4 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.

9.5 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.

Please signify your acceptance of and agreement to the foregoing changes by executing and dating the enclosed copy of this letter in the spaces provided and returning it to the undersigned. The changes become effective as an amendment of your Director Retirement Agreement upon receipt by Cortland Bancorp of this letter executed by you.

Cortland Bancorp

Accepted and agreed to this _____ day of _________ , 2004 by the undersigned director of Cortland Bancorp.

                                          EARLY
                                       TERMINATION      DISABILITY
                   AGE               ANNUAL BENEFIT   ANNUAL BENEFIT   CHANGE-IN-
                   AT                  PAYABLE AT       PAYABLE AT       CONTROL
                  PLAN    ACCRUAL        NORMAL           NORMAL         BENEFIT
   PLAN YEAR      YEAR   BALANCE @   RETIREMENT AGE   RETIREMENT AGE   PAYABLE IN
ENDING FEBRUARY    END   6.75% (1)         (2)              (2)        A LUMP SUM
---------------   ----   ---------   --------------   --------------   ----------
      2004         45    $ 5,478         $ 2,083          $ 2,083        $ 5,478
      2005         46    $ 8,125         $ 2,889          $ 2,889        $ 8,125
      2006         47    $10,956         $ 3,642          $ 3,642        $10,956
      2007         48    $13,985         $  ,346          $ 4,346        $13,985
      2008         49    $17,224         $ 5,004          $ 5,004        $17,224
      2009         50    $20,689         $ 5,620          $  ,620        $20,689
      2010         51    $24,395         $ 6,195          $ 6,195        $24,395
      2011         52    $28,360         $ 6,733          $ 6,733        $28,360
      2012         53    $32,600         $ 7,236          $ 7,236        $32,600
      2013         54    $37,135         $ 7,706          $ 7,706        $37,135
      2014         55    $41,987         $ 8,146          $ 8,146        $41,987
      2015         56    $47,176         $ 8,557          $ 8,557        $47,176
      2016         57    $52,726         $ 8,941          $ 8,941        $52,726
      2017         58    $58,663         $ 9,300          $ 9,300        $58,663
      2018         59    $65,013         $ 9,636          $ 9,636        $65,013
      2019         60    $71,806         $ 9,950          $ 9,950        $71,806
   April 2019      61    $72,983(3)      $10,000          $10,000        $72,983

(1) Calculations are approximations. Benefit calculations are based on prior year-end accrual balances. The accrual balance reflects payment at the beginning of each month during retirement, beginning May 1, 2019.

(2) Benefit is based on the present value of the current payment stream of the vested accrual balance using a standard discount rate (6.75%).

(3) Projected retirement occurs April 20, 2019, with the first the first normal monthly retirement benefit commencing May 2019. The accrual balance at the end of April 2019 will be $72,983.

EXHIBIT 10.5

CORTLAND BANCORP
DIRECTOR RETIREMENT AGREEMENT

THIS AGREEMENT is made as of this 1st day of March, 2001, by and between Cortland Bancorp., a bank holding company located in Cortland, Ohio (the "Company') and George E. Gessner (the "Director").

To encourage the Director to remain a member of the Company's Board of Directors, the Company is willing to provide retirement benefits to the Director. The Company will pay the benefits from its general assets, 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. Section 1828(k)(4)(A)(ii)] and in Federal Deposit Insurance Corporation Rule 359.1(f)(1)(ii) [12 CFR 359.l (f)(1)(ii)] exists or, to the best knowledge of the Company, is contemplated insofar as the Company is concerned.

AGREEMENT

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

Whenever used in this Agreement, the following words and phrases shall have the meanings specified:

1.1 "Change in Control" means that any of the following events occur:

(a) The acquisition by a person or persons acting in concert of the power to vote 25% or more of a class of the Company's voting securities;

(b) The acquisition by a person of the power to direct the Company's management or policies, if the Board of Directors of the Company has made a determination that such acquisition constitutes or will constitute an acquisition of control of the Company for the purposes of the Bank Holding Company Act or the Change in Bank Control Act and the regulations thereunder,

(c) During any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of the Company cease for any reason to constitute at least a majority thereof provided. however, that -- for purposes of this clause (c) -- each director who is first elected by the Board of the Company (or first nominated by that Board for election by shareholders) by a vote of at least two-thirds (2/3) of the directors then in office shall be deemed to have been a director at the beginning of the period;

(d) The Company shall have merged into or consolidated with another corporation, or merged another corporation into the Company, on a basis whereby less than 50% of the total voting power of the surviving corporation is represented by shares held by persons who were shareholders of the Company immediately before such merger or consolidation, or

(e) The Company shall have sold substantially all of its assets to another person.

For purposes of this Agreement, the term "person" refers to an individual, corporation, partnership, trust, association, joint venture, pool, syndicate, sole proprietorship, unincorporated organization or other entity.

Notwithstanding this definition of Change in Control, a Change in Control of the Company shall not be deemed to occur solely because any person acquires beneficial ownership of more than 25% of the Company's voting securities as a result of the acquisition of the Company voting securities by the Company which reduces the number of the Company's voting securities outstanding, provided, that if after such acquisition by the Company such person becomes the beneficial owner of additional Company voting securities that increases the percentage of outstanding Company voting securities beneficially owned by such person, a Change in Control of the Company shall then occur.

1.2 "Code" means the Internal Revenue Code of 1986, as amended.

1.3 "Disability" means, if the Director is covered by a Company-sponsored disability policy, total disability as defined in such policy without regard to any waiting period, If the Director is not covered by such a policy, Disability means the Director suffering a sickness, accident or injury, which, in the judgment of a physician satisfactory to the Company, prevents the Director from performing substantially all of the Director's normal duties for the Company. As a condition to receiving any Disability benefits, the Company may require the Director to submit to such physical or mental evaluations and tests as the Company's Board of Directors deems appropriate.

1.4 "Early Termination" means the Termination of Service before Normal Retirement Age for reasons other than death, Disability Termination for Cause or following a Change in Control

1.5 "Early Termination Date" means the month, day and year in which Early Termination occurs.

1.6 "Effective Date" means March 1, 2001,

1.7 "Normal Retirement Age" means the Director's 66st birthday.

1.8 "Normal Retirement Date" means the later of the Normal Retirement Age or Termination of Service.

1.9 "Plan Year" means each twelve-month period from the Effective Date of this Agreement

1.10 "Termination for Cause" See Section 5.2.

1.11 "Termination of Service" means that the Director ceases to be a member of the Company's Board of Directors for any reason whatsoever. For purposes of this Agreement, if there is a dispute over the service status of the Director or the date of the Director's Termination of Service, the Company shall have the sole and absolute tight to decide the dispute unless a Change in Control shall have occurred,

ARTICLE 2
LIFETIME BENEFITS

2.1 Normal Retirement Benefit. Upon Termination of Service on or after Normal Retirement Ag; the Company shall pay to the Director the benefit described in this Section 2.1 in lieu of any other benefit under this Agreement

2.1.1 Amount of Benefit. The annual benefit under this Section 2.1 is $10,000 (Ten Thousand Dollars). The Company's Board of Directors, in its sole discretion, may increase the annual benefit under this Section 2.1.1; however, any increase shall require the recalculation of Schedule A.

2.1.2 Payment of Benefit. The Company shall pay this annual benefit to the Director in 12 equal monthly installments payable on the first day of each month commencing with the month following the Director's Normal Retirement Date. The annual benefit shall be paid to the Director for 10 years.

2.1.3 Benefit Increases. Commencing on the first anniversary of the first benefit payment, and continuing on each subsequent anniversary, the Company's Board of Directors, in its sole discretion, may increase the benefit

2.2 Early Termination Benefit. Upon Early Termination, the Company shall pay to the Director the benefit described in this Section 2.2 in lieu of any other benefit under this Agreement

2.2.1 Amount of Benefit. The benefit under this Section 2.2 is the Early Termination Annual Benefit set forth in Schedule A for the Plan Year ending immediately prior to the Early Termination Date (except during the first Plan Year, the benefit is the amount set forth for Plan Year 1). Any increase in the annual benefit under Section 2.1.1 shall require the recalculation of this benefit on Schedule A.

2.2.2 Payment of Benefit. The Company shall pay this annual benefit to the Director in 12 equal monthly installments payable on the first day of each month commencing with the month following Normal Retirement Age. The annual benefit shall be paid to the Director for 10 years.

2.2.3 Benefit Increases. Benefit payments may be increased as provided in Section 2.1.3.

2.3 Disability Benefit. If the Director terminates service due to Disability prior to Normal Retirement Age, the Company shall pay to the Director the benefit described in this Section 2.3 in lieu of any other benefit under this Agreement

2.3.1 Amount of Benefit. The benefit under this Section 2.3 is the Disability Annual Benefit set forth in Schedule A for the Plan Year ending immediately prior to the date in which Termination of Service occurs (except during the first Plan Year, the benefit is the amount set forth for Plan Year 1). Any increase in the annual benefit under Section 2.1.1 would require the recalculation of this benefit on Schedule A.

2.3.2 Payment of Benefit. The Company shall pay this annual benefit to the Director in 12 equal monthly installments payable on the first day of each month commencing with the month following Normal Retirement Age. The annual benefit shall be paid to the Director for 10 years.

2.3.3 Benefit Increases. Benefit payments may be increased as provided in Section 2.1.3.

2.4 Change in Control Benefit. If the Director's service with the Company terminates within one year after a Change in Control (except for Termination for Cause), the Company shall pay to the Director the benefit described in this
Section 2.4 in lieu of any other benefit under this Agreement

2.4.1 Amount of Benefit. The benefit under this Section 2.4 is the benefit determined under Schedule A based on the date of the Director's Termination of Service, which is determined by vesting the Director in 100% of the Accrual Balance. Any increase in the annual benefit under Section 2.1.1 would require the recalculation of this benefit on Schedule A.

2.4.2 Payment of Benefit. The Company shall pay this benefit to the Director in a lump sum within 3 days following the Director's Termination of Service.

ARTICLE 3
DEATH BENEFITS

In lieu of any other benefit under this Agreement, the Director's beneficiary(ies) shall be entitled to receive the following benefits under Articles 3.1, 3.2, 3.3 or 3.4, depending on whether the Director's death occurs during or after active service and before or after Normal Retirement Age.

3.1 Death in Active Service Before Normal Retirement Age. If the Director dies before Normal Retirement Age while in the active service of the Company, the Company shall pay to the Director's beneficiary(ies) a lump sum benefit determined by vesting the Director in 100% of the Accrual Balance on the Director's date of death. The Company shall pay this benefit to the Director's beneficiary(ies) in a lump sum within 30 days following the Director's death.

3.2 Death in Active Service After Normal Retirement Age. If the Director dies after Normal Retirement Age while in the active service of the Company, the Company shall for a period of 10 years pay to the Director's beneficiary(ies) the Normal Retirement Benefit provided in Article 2.1.1.

3.3 Death After Termination of Service Before Normal Retirement Age. (a) After Payments Commence. If, a Termination of Service before Normal Retirement Age having previously occurred, the Director dies after benefit payments commence under Article 2.2 of this Agreement but before receiving all such payments, the Company shall pay the remaining benefits to the Directors beneficiary(ies) at the same time and in the same amounts they would have been paid to the Director had the Director survived,

(b) Before Payments Commence. If, a Termination of Service before Normal Retirement

Age having previously occurred, the Director is entitled to any benefit pursuant to Article 2.2 of this Agreement but dies before the benefit payments commence, the Company shall pay the same aggregate benefit payments to the Director's beneficiary(ies) that the Director was entitled to before death, except that the benefit payments shall commence on the first day of the month following the date of the Director's death.

3.4 Death After Termination of Service After Normal Retirement Age. (a) After Payments Commence. 1f, a Termination of Service on or after Normal Retirement Age having previously occurred, the Director dies after benefit payments commence under Article 2.1 of this Agreement but before receiving all such payments, the Company shall pay the remaining benefits to the Director's beneficiary(ies) at the same time and in the same amounts they would have been paid to the Director had the Director survived.

(b) Before Payments Commence. If, a Termination of Service on or after Normal Retirement Age having previously occurred, the Director is entitled to any benefit pursuant to Article 2.1 of this Agreement but dies before the benefit payments commence, the Company shall pay the same aggregate benefit payments to the Director's beneficiary(ies) that the Director was entitled to before death, except that the benefit payments shall commence on the first day of the month following the date of the Director's death.

ARTICLE 4
BENEFICIARIES

4.1 Beneficiary Designations. The Director shall designate a beneficiary by filing a written designation with the Company. The Director may revoke or modi1~y the designation at any time by filing a new designation. However, designations will only be effective if signed by the Director and received by the Company during the Director's lifetime. The Director's beneficiary designation shall be deemed automatically revoked if the beneficiary predeceases the Director or if the Director names a spouse as beneficiary and the marriage is subsequently dissolved, lithe Director dies without a valid beneficiary designation, the Director's estate shall be the beneficiary.

4.2 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 such benefit to the guardian, legal representative or person having the care or custody of such minor, incapacitated person or incapable person. The Company may require proof of incapacity, minority or guardianship as it may deem appropriate prior to distribution of the benefit such distribution shall completely discharge the Company from all liability with respect to such benefit

ARTICLE 5
GENERAL LIMITATIONS

5.1 Termination for Cause. Notwithstanding any provision of this Agreement to the contrary, the Company shall not pay any benefit under this Agreement if the Company terminates the Director's service for:

(a) Gross negligence or gross neglect of duties;

(b) Commission of a felony or of a gross misdemeanor involving moral turpitude; or

(c) Fraud, disloyally, dishonesty or willful violation of any law or significant Company policy committed in connection with the Director's service and resulting in an adverse effect on the Company.

5.2 Suicide or Misstatement. The Company shall not pay any benefit under this Agreement if the Director commits suicide within two years after the date of this Agreement, or 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 from service and/or permanently prohibited from participating in the conduct of the Company's affairs by an order issued under Section 8(e)(4) or (g)(l) of the Federal Deposit Insurance Act, 12 U.S.C. Section 18l8(e)(4) or (g)(1), all obligations of the Company under this Agreement shall terminate as of the effective date of the order.

ARTICLE 6

CLAIMS ANTI 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 of Claimant's written application for benefits, of his or her eligibility or noneligibility for benefits under the Agreement lithe Company determines that the Claimant is not eligible for benefits or full benefits, the notice shall set forth (1) the specific reasons for such denial, (2) a specific reference to the provisions of the Agreement on which the denial is based, (3) 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 (4) 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, lithe 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 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 sixty-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
AMENDMENTS AND TERMINATION

This Agreement may be amended or terminated only by a written agreement signed by the Company and the Director.

ARTICLE 8
MISCELLANEOUS

8.1 Binding Effect. This Agreement shall bind the Director and the Company, and their beneficiaries, survivors, executors, successors, administrators and transferees.

8.2 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 the Agreement interfere with the rights 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 nor interfere with the Director's right to terminate services at any time.

8.3 Non-Transferability. Benefits under this Agreement cannot be sold, transferred, assigned, pledged, attached or encumbered in any manner.

8.4 Successors; Binding Agreement. The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, by an assumption agreement in form and substance satisfactory to the Director, 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 if no such succession had taken place. Failure of the Company to obtain such assumption agreement prior to the effectiveness of any such succession shall be a breath of this Agreement and shall entitle the Director to the Change in Control Benefit provided in Section 2.4.

8.5 Tax Withholding. The Company shall withhold any taxes that are required to be withheld from the benefits provided under this Agreement

8.6 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.

8.7 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 such benefits. The rights to benefits are not subject in any manner 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.

8.8 Entire Agreement. This Agreement constitutes the entire agreement between the Company and the Director as to the subject matter hereof. No rights are granted to the Director by virtue of this Agreement other than those specifically set forth herein.

8.9 Administration. The Company shall have powers which are necessary to administer this Agreement, including but not limited to:

(a) Interpreting the provisions of the Agreement

(b) Establishing and revising the method of accounting for the Agreement,

(c) Maintaining a record of benefit payments; and

(d) Establishing riles and prescribing any forms necessary or desirable to administer the Agreement

8.10 Named Fiduciary. The Company shall be the named fiduciary and plan administrator under this Agreement. The named fiduciary may delegate to others certain aspects of the management and operation responsibilities of the plan including the employment of advisors and the delegation of ministerial duties to qualified individuals.

8.11 Severability. If for any reason any provision of this Agreement is held invalid, such invalidity shall not affect any other provision of this Agreement not held so invalid, and each such other provision shall, to the full -extent consistent with the law, continue in full force and effect. If any provision of this Agreement shall be held invalid in part, such invalidity shall in no way affect the rest of such provision, not held so invalid, and the rest of such provision, together with all other provisions of this Agreement shall, to the full extent consistent with the law, continue in full force and effect

8.12 Headings. The headings of Sections herein are included solely for convenience of reference and shall not affect the meaning or interpretation of any provision of this Agreement

8.13 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.

(a) If to the Company, to: Board of Directors Cortland Bancorp.

194W, Main Street
P.O. Box 98
Cortland, Ohio 44410-1466

(b) If to the Director, to: George E. Gessner

and to such other or additional person or persons as either party shall have designated to the other party in writing by like notice.

IN WITNESS WHEREOF, the Director and a duly authorized Company officer have signed this Agreement as of the day and year first written above.

DIRECTOR:                               COMPANY:

                                        CORTLAND BANCORP.


------------------------------------    By:
George E. Gessner                           ------------------------------------

                                        Title:
                                               ---------------------------------

BENEFICIARY DESIGNATION
CORTLAND BANCORP.
DIRECTOR RETIREMENT AGREEMENT

GEORGE E. GESSNER

I 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.

Received by the Company this ______ day of _________ ,2001.

February __, 2004

Mr. George E. Gessner
Director
Cortland Bancorp
194 West Main Street
Cortland, Ohio 44410-1466

RE: LETTER AMENDMENT OF DIRECTOR RETIREMENT AGREEMENT

Dear Mr. Gessner:

The purpose of this letter is to memorialize in writing certain changes in your March 1, 2001 Director Retirement Agreement, which I refer to hereinafter as the "Agreement." Cortland Bancorp had been accruing for its liability under the Agreement using an 8.00% accrual rate assumption, but that assumed rate was changed to 6.75% effective on October 1, 2003, reflecting the decline in prevailing interest rates that has persisted since the Agreements were originally entered into. A similar change in the accrual rate assumption was recently made by Cortland Savings and Banking Company for its liability accruals under Salary Continuation Agreements with officers.

The changed accrual rate assumption affects anticipated benefit payment amounts, both under the Agreements and under the officers' Salary Continuation Agreements. Just as the Salary Continuation Agreements' Schedules A have been updated to reflect this changed assumption, we propose to replace the Schedule A attached to your Agreement with a new Schedule A. To make this process more fluid if a similar change needs to be made in the future, we are also proposing
(a) to add to the Agreement a definition of the term "Accrual Balance," (b) to add a provision clarifying that the Agreement's terms govern in all cases in which there is a conflict between the text of the Agreement versus the benefits reflected on Schedule A, and (c) to replace Sections 8.9 and 8.10 with a new Article 9 that has to do with administration of the Agreement. These new provisions make more clear the power of the administrator of the Agreement (the board) to make decisions about important accounting and interpretive issues under the Agreement, including changes in Schedule A of the Agreement.

The text of the amendment is set forth below. Following that text is a signature line. I ask that you sign and date the enclosed copy of this letter in the spaces provided, and that you return the executed copy to me. That will complete the amendment process. A revised Schedule A is also attached to this letter. Please retain the accompanying revised Schedule A. The revised Schedule A replaces and supersedes in its entirety the Schedule A currently associated with your Agreement. You may discard the old Schedule A.

FIRST AMENDMENT

A new definition of the term "Accrual Balance" is added to the Agreement as
Section 1.12, as follows:

1.12 "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 shall be calculated assuming a level

principal amount and interest as the discount rate is accrued each period. The principal accrual is determined such that when it is credited with interest each month, the Accrual Balance at Normal Retirement Age equals 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 initial discount rate is 6.75%. However, the Plan Administrator, in its sole discretion, may adjust the discount rate to maintain the rate within reasonable standards according to GAAP. The Plan Administrator shall consist of the Company's board of directors or such committee or person(s) as the board shall appoint.

SECOND AMENDMENT

A new section 2.5 is added to the Agreement to clarify that the terms of the Agreement govern if there is a conflict between the text of the Agreement versus the benefits reflected on Schedule A attached to the Agreement, as follows:

2.5 Contradiction in Terms of Agreement and Schedule A. If there is a contradiction in the terms of this Agreement and Schedule A attached hereto concerning the benefits due under Section 2.2, 2.3, or 2.4 hereof, then the actual amount of benefits prescribed by this Agreement shall control.

THIRD AMENDMENT

The sections of the Agreement having to do with "Administration" (section 8.9) and "Named Fiduciary" (section 8.10) are hereby deleted in their entirety, and the sections that follow are renumbered accordingly sections 8.9 ("Severability"), 8.10 ("Headings"), and 8.11 ("Notices").

FOURTH AMENDMENT

A new Article 9 having to do with administration is added to the Agreement, as follows:

ARTICLE 9
ADMINISTRATION OF AGREEMENT

9.1 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(s) as the board shall appoint. The Director may be a member of the Plan Administrator. The Plan Administrator shall also have the discretion and authority to (a) make, amend, interpret, and enforce all appropriate rules and regulations for the administration of this Agreement and (b) decide or resolve any and all questions, including interpretations of this Agreement, as may arise in connection with the Agreement.

9.2 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.

9.3 Binding Effect of Decisions. The decision or action of the Plan Administrator with respect to any question arising out of or in connection with 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.

9.4 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.

9.5 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.

Please signify your acceptance of and agreement to the foregoing changes by executing and dating the enclosed copy of this letter in the spaces provided and returning it to the undersigned. The changes become effective as an amendment of your Director Retirement Agreement upon receipt by Cortland Bancorp of this letter executed by you.

Cortland Bancorp

Accepted and agreed to this __________ day of ___________ , 2004 by the undersigned director of Cortland Bancorp.

                                          EARLY
                                       TERMINATION      DISABILITY
                   AGE               ANNUAL BENEFIT   ANNUAL BENEFIT     CHANGE-IN-
                   AT                  PAYABLE AT       PAYABLE AT        CONTROL
                  PLAN    ACCRUAL        NORMAL           NORMAL          BENEFIT
   PLAN YEAR      YEAR   BALANCE @   RETIREMENT AGE   RETIREMENT AGE     PAYABLE IN
ENDING FEBRUARY    END   6.75% (1)         (2)              (2)          A LUMP SUM
---------------   ----   ---------   --------------   --------------   -------------
      2004         59    $15,560         $ 3,396          $ 3,396         $15,560

      2005         60    $22,303         $ 4,551          $ 4,551         $22,303

      2006         61    $29,516         $ 5,631          $ 5,631         $29,516

      2007         62    $37,231         $ 6,640          $ 6,640         $37,231

      2008         63    $45,483         $ 7,584          $ 7,584         $45,483

      2009         64    $54,310         $ 8,466          $ 8,466         $54,310

      2010         65    $63,752         $ 9,291          $ 9,291         $63,752

    Jan 2011       66    $72,983(3)      $10,000          $10,000         $72,983

(1) Calculations are approximations. Benefit calculations are based on prior year-end accrual balances. The accrual balance reflects payment at the beginning of each month during retirement, beginning February 1, 2011.

(2) Benefit is based on the present value of the current payment stream of the vested accrual balance using a standard discount rate (6.75%).

(3) Projected retirement occurs January 24, 2011, with the first the first normal monthly retirement benefit commencing February 2011. The accrual balance at the end of January 2011 will be $72,983.

EXHIBIT 10.6

CORTLAND BANCORP
AMENDED DIRECTOR RETIREMENT AGREEMENT

THIS AMENDED DIRECTOR RETIREMENT AGREEMENT (this "Agreement") is made effective as of October 1, 2003, by and between Cortland Bancorp, a bank holding company located in Cortland, Ohio (the "Company") and William A. Hagood (the "Director").

WHEREAS, the Company and the Director entered into a Director Retirement Agreement dated as of March 1, 2001, which agreement provides for payment of retirement benefits to the Director after termination of his service,

WHEREAS, the March 1, 2001 Director Retirement Agreement provides for payment of $10,000 annually to the Director for 10 years if the Director retires on or after reaching the defined "Normal Retirement Age" of 73, and it provides for payment of reduced benefits if instead the Director retires before age 73,

WHEREAS, because the Company's Code of Regulations prohibits any person who has attained the age of 70 from standing for election as a director, and because the Director will be age 72 when his term expires at the Company's Annual Meeting of Shareholders to be held in 2004, the Company's Code of Regulations makes it impossible for the Director to attain the "Normal Retirement Age" defined in the March 1, 2001 Director Retirement Agreement before termination of his active director service with the Company,

WHEREAS, the Director has served the Company and subsidiaries as a member of the board of directors with distinction for more than 30 years, since 1972,

WHEREAS, the effect of the Code of Regulations' age limitation on director service was overlooked when the March 1, 2001 Director Retirement Agreement was entered into, and the intent of that March 1, 2001 Director Retirement Agreement was that the Director should be entitled to the full Normal Retirement Benefit of $10,000 annually for 10 years for retirement after reaching the mandatory retirement age limit under the Code of Regulations,

WHEREAS, the Company and the Director desire to correct that oversight by amending and restating in its entirety the March 1, 2001 Director Retirement Agreement by means of this Agreement, which shall supersede and replace the March 1, 2001 Director Retirement Agreement in its entirety on the effective date of this Agreement, and which shall, among other things, change the defined "Normal Retirement Age" from age 73 to age 72,

WHEREAS, the Director has stated his desire to retire from active director service effective on February 29, 2004,

WHEREAS, at the Company's request the Director has agreed to serve as Director Emeritus after termination of his active director service so that the board will continue to have the benefit of the Director's guidance and advice, and

WHEREAS, this Agreement supersedes and replaces in its entirety the March 1, 2001 Director Retirement Agreement, but the February 23, 2001 Split Dollar Agreement between the Company and the Director shall remain in full force and effect and shall not be amended, modified, or affected in any way by this Agreement.

NOW, THEREFORE, in consideration of these premises and the other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Director hereby agree as follows.

ARTICLE 1
DEFINITIONS

Whenever used in this Agreement, the following words and phrases shall have the meanings specified:

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 shall be calculated assuming a level principal amount and interest as the discount rate is accrued each period. The principal accrual is determined such that when it is credited with interest each month, the Accrual Balance at Normal Retirement Age equals 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 initial discount rate is 6.75%. However, the Plan Administrator, in its sole discretion, may adjust the discount rate to maintain the rate within reasonable standards according to GAAP. The Plan Administrator shall consist of the Company's board of directors or such committee or person(s) as the board shall appoint.

1.2 "Effective Date" means the date first written above, October 1, 2003.

1.3 "Normal Retirement Age" means the Director's 72nd birthday.

1.4 "Normal Retirement Date" means the later of the Normal Retirement Age or Termination of Service.

1.5 "Plan Year" means each twelve-month period beginning on March 1 of each year and ending on the last day of February of each year.

1.6 "Termination of Service" means that the Director ceases to be a member of the Company's board of directors for any reason whatsoever. For purposes of this Agreement, if the Director serves as Director Emeritus he shall nevertheless be considered to have ceased to be a member of the Company's board of directors. For purposes of this Agreement, if there is a dispute over the service status of the Director or the date of the Director's Termination of Service, the Company shall have the sole and absolute right to decide the dispute unless a Change in Control shall have occurred.

ARTICLE 2
LIFETIME BENEFITS

The Director having attained the Normal Retirement Age on August 25, 2003, upon Termination of Service the Company shall pay to the Director an annual benefit of $10,000. The annual benefit shall be payable to the Director in 12 equal monthly installments, payable on the first day of each month beginning with the month after the Director's Normal Retirement Date. The annual benefit shall be paid to the Director for 10 years. Commencing on the first anniversary of the first benefit payment, and continuing on each subsequent anniversary, the Company's board of directors may, in its sole discretion, increase the benefit.

ARTICLE 3
DEATH BENEFITS

If the Director dies before receiving all benefit payments under Article 2 of this Agreement, the Company shall pay the remaining benefits to the Director's beneficiary(ies) at the same time and in the same amounts they would have been paid to the Director had the Director survived.

ARTICLE 4
BENEFICIARIES

4.1 Beneficiary Designations. The Director shall designate a beneficiary by filing a written designation with the Company. The Director may revoke or modify the designation at any time by filing a new designation. However, designations will only be effective if signed by the Director and received by the Company during the Director's lifetime. The Director's beneficiary designation shall be deemed automatically revoked if the

beneficiary predeceases the Director or if the Director names a spouse as beneficiary and the marriage is subsequently dissolved. If the Director dies without a valid beneficiary designation, the Director's estate shall be the beneficiary.

4.2 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 such benefit to the guardian, legal representative, or person having the care or custody of such minor, incapacitated person, or incapable person. The Company may require proof of incapacity, minority, or guardianship as it may deem appropriate prior to distribution of the benefit. Such distribution shall completely discharge the Company from all liability with respect to such benefit.

ARTICLE 5
CLAIMS AND REVIEW PROCEDURES

5.1 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 of 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 (1) the specific reasons for such denial, (2) a specific reference to the provisions of the Agreement on which the denial is based, (3) 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 (4) 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.

5.2 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 sixty-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 6
MISCELLANEOUS

6.1 Amendment and Termination. This Agreement may be amended or terminated solely by a written agreement signed by the Company and the Director.

6.2 Binding Effect. This Agreement shall bind the Director and the Company, and their beneficiaries, survivors, executors, successors, administrators and transferees.

6.3 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 the Agreement interfere with the rights 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 nor interfere with the Director's right to terminate services at any time.

6.4 Non-Transferability. Benefits under this Agreement cannot be sold, transferred, assigned, pledged, attached, or encumbered in any manner.

6.5 Successors; Binding Agreement. The Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation, or otherwise) to all or substantially all of the business and/or assets of the Company, by an assumption agreement in form and substance satisfactory to the Director, 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 if no such succession had taken place.

6.6 Tax Withholding. The Company shall withhold any taxes that are required to be withheld from the benefits provided under this Agreement.

6.7 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.

6.8 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 such benefits. The rights to benefits are not subject in any manner 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.

6.9 Entire Agreement. This Agreement constitutes the entire agreement between the Company and the Director concerning the subject matter hereof. No rights are granted to the Director under this Agreement other than those specifically set forth herein. Effective as of the Effective Date of this Agreement, this Agreement supersedes and replaces in its entirety the Director Retirement Agreement between the Company and the Director dated as of March 1, 2001. However, the February 23, 2001 Split Dollar Agreement between the Company and the Director shall remain in full force and effect and shall not be amended, modified, or affected in any way by this Agreement.

6.10 Severability. If for any reason any provision of this Agreement is held invalid, such invalidity shall not affect any other provision of this Agreement not held so invalid, and each such other provision shall, to the full extent consistent with the law, continue in full force and effect. If any provision of this Agreement shall be held invalid in part, such invalidity shall in no way affect the rest of such provision, not held so invalid, and the rest of such provision, together with all other provisions of this Agreement shall, to the full extent consistent with the law, continue in full force and effect.

6.11 Headings. The headings and captions in this Agreement are included solely for convenience of reference and shall not affect the meaning or interpretation of any provision of this Agreement.

6.12 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.

(a) If to the Company, to: Board of Directors Cortland Bancorp 194 W. Main Street P.O. Box 98 Cortland, Ohio 44410-1466

(b) If to the Director, to: William A. Hagood Cortland Bancorp 194 W. Main Street

P.O. Box 98 Cortland, Ohio 44410-1466

and to such other or additional person or persons as either party shall have designated to the other party in writing by like notice.

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(s) as the board shall appoint. The Director may be a member of the Plan Administrator. The Plan Administrator shall also have the discretion and authority to (a) make, amend, interpret, and enforce all appropriate rules and regulations for the administration of this Agreement and (b) decide or resolve any and all questions, including interpretations of this Agreement, as may arise in connection with the 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 with respect to any question arising out of or in connection with 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. Neither the Director nor any 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, death, or Termination of Service of the Director, and such other pertinent information as the Plan Administrator may reasonably require.

IN WITNESS WHEREOF, the Director and a duly authorized Company officer have executed this Amended Director Retirement Agreement as of the date first written above.

DIRECTOR:                               COMPANY:
                                        Cortland Bancorp


                                        By:
-------------------------------------       ------------------------------------
William A. Hagood                       Title:
                                               ---------------------------------

BENEFICIARY DESIGNATION
CORTLAND BANCORP
AMENDED DIRECTOR RETIREMENT AGREEMENT

WILLIAM A. HAGOOD

I 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.

Received by the Company this _______ day of ______________, 2004.

EXHIBIT 10.7

CORTLAND BANCORP
DIRECTOR RETIREMENT AGREEMENT

THIS AGREEMENT is made as of this lst day of March, 2001, by and between Cortland Bancorp., a bank holding company located in Cortland, Ohio (the "Company') and James E. Hoffman III (the "Director").

To encourage the Director to remain a member of the Company's Board of Directors, the Company is willing to provide retirement benefits to the Director. The Company will pay the benefits from its general assets, 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. Section 1828(k)(4)(A)(ii)] and in Federal Deposit Insurance Corporation Rule 359.1(f)(1)(ii) [12 CFR 359.l (f)(1)(ii)] exists or, to the best knowledge of the Company, is contemplated insofar as the Company is concerned.

AGREEMENT

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

Whenever used in this Agreement, the following words and phrases shall have the meanings specified:

1.1 "Change in Control" means that any of the following events occur:

(a) The acquisition by a person or persons acting in concert of the power to vote 25% or more of a class of the Company's voting securities;

(b) The acquisition by a person of the power to direct the Company's management or policies, if the Board of Directors of the Company has made a determination that such acquisition constitutes or will constitute an acquisition of control of the Company for the purposes of the Bank Holding Company Act or the Change in Bank Control Act and the regulations thereunder,

(c) During any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of the Company cease for any reason to constitute at least a majority thereof provided. however, that -- for purposes of this clause (c) -- each director who is first elected by the Board of the Company (or first nominated by that Board for election by shareholders) by a vote of at least two-thirds (2/3) of the directors then in office shall be deemed to have been a director at the beginning of the period;

(d) The Company shall have merged into or consolidated with another corporation, or merged another corporation into the Company, on a basis whereby less than 50% of the total voting power of the surviving corporation is represented by shares held by persons who were shareholders of the Company immediately before such merger or consolidation, or

(e) The Company shall have sold substantially all of its assets to another person.

For purposes of this Agreement, the term "person" refers to an individual, corporation, partnership, trust, association, joint venture, pool, syndicate, sole proprietorship, unincorporated organization or other entity.

Notwithstanding this definition of Change in Control, a Change in Control of the Company shall not be deemed to occur solely because any person acquires beneficial ownership of more than 25% of the

Company's voting securities as a result of the acquisition of the Company voting securities by the Company which reduces the number of the Company's voting securities outstanding, provided, that if after such acquisition by the Company such person becomes the beneficial owner of additional Company voting securities that increases the percentage of outstanding Company voting securities beneficially owned by such person, a Change in Control of the Company shall then occur.

1.2 "Code" means the Internal Revenue Code of 1986, as amended.

1.3 "Disability" means, if the Director is covered by a Company-sponsored disability policy, total disability as defined in such policy without regard to any waiting period, If the Director is not covered by such a policy, Disability means the Director suffering a sickness, accident or injury, which, in the judgment of a physician satisfactory to the Company, prevents the Director from performing substantially all of the Director's normal duties for the Company. As a condition to receiving any Disability benefits, the Company may require the Director to submit to such physical or mental evaluations and tests as the Company's Board of Directors deems appropriate.

1.4 "Early Termination" means the Termination of Service before Normal Retirement Age for reasons other than death, Disability Termination for Cause or following a Change in Control

1.5 "Early Termination Date" means the month, day and year in which Early Termination occurs.

1.6 "Effective Date" means March 1, 2001,

1.7 "Normal Retirement Age" means the Director's 62st birthday.

1.8 "Normal Retirement Date" means the later of the Normal Retirement Age or Termination of Service.

1.9 "Plan Year" means each twelve-month period from the Effective Date of this Agreement

1.10 "Termination for Cause" See Section 5.2.

1.11 "Termination of Service" means that the Director ceases to be a member of the Company's Board of Directors for any reason whatsoever. For purposes of this Agreement, if there is a dispute over the service status of the Director or the date of the Director's Termination of Service, the Company shall have the sole and absolute tight to decide the dispute unless a Change in Control shall have occurred,

ARTICLE 2
LIFETIME BENEFITS

2.1 Normal Retirement Benefit. Upon Termination of Service on or after Normal Retirement Ag; the Company shall pay to the Director the benefit described in this Section 2.1 in lieu of any other benefit under this Agreement

2.1.1 Amount of Benefit. The annual benefit under this Section 2.1 is $10,000 (Ten Thousand Dollars). The Company's Board of Directors, in its sole discretion, may increase the annual benefit under this Section 2.1.1; however, any increase shall require the recalculation of Schedule A.

2.1.2 Payment of Benefit. The Company shall pay this annual benefit to the Director in 12 equal monthly installments payable on the first day of each month commencing with the month following the Director's Normal Retirement Date. The annual benefit shall be paid to the Director for 10 years.

2.1.3 Benefit Increases. Commencing on the first anniversary of the first benefit payment, and continuing on each subsequent anniversary, the Company's Board of Directors, in its sole discretion, may increase the benefit

2.2 Early Termination Benefit. Upon Early Termination, the Company shall pay to the Director the benefit described in this Section 2.2 in lieu of any other benefit under this Agreement

2.2.1 Amount of Benefit. The benefit under this Section 2.2 is the Early Termination Annual Benefit set forth in Schedule A for the Plan Year ending immediately prior to the Early Termination Date (except during the first Plan Year, the benefit is the amount set forth for Plan Year 1). Any increase in the annual benefit under Section 2.1.1 shall require the recalculation of this benefit on Schedule A.

2.2.2 Payment of Benefit. The Company shall pay this annual benefit to the Director in 12 equal monthly installments payable on the first day of each month commencing with the month following Normal Retirement Age. The annual benefit shall be paid to the Director for 10 years.

2.2.3 Benefit Increases. Benefit payments may be increased as provided in Section 2.1.3.

2.3 Disability Benefit. If the Director terminates service due to Disability prior to Normal Retirement Age, the Company shall pay to the Director the benefit described in this Section 2.3 in lieu of any other benefit under this Agreement

2.3.1 Amount of Benefit. The benefit under this Section 2.3 is the Disability Annual Benefit set forth in Schedule A for the Plan Year ending immediately prior to the date in which Termination of Service occurs (except during the first Plan Year, the benefit is the amount set forth for Plan Year 1). Any increase in the annual benefit under Section 2.1.1 would require the recalculation of this benefit on Schedule A.

2.3.2 Payment of Benefit. The Company shall pay this annual benefit to the Director in 12 equal monthly installments payable on the first day of each month commencing with the month following Normal Retirement Age. The annual benefit shall be paid to the Director for 10 years.

2.3.3 Benefit Increases. Benefit payments may be increased as provided in Section 2.1.3.

2.4 Change in Control Benefit. If the Director's service with the Company terminates within one year after a Change in Control (except for Termination for Cause), the Company shall pay to the Director the benefit described in this
Section 2.4 in lieu of any other benefit under this Agreement

2.4.1 Amount of Benefit. The benefit under this Section 2.4 is the benefit determined under Schedule A based on the date of the Director's Termination of Service, which is determined by vesting the Director in 100% of the Accrual Balance. Any increase in the annual benefit under Section 2.1.1 would require the recalculation of this benefit on Schedule A.

2.4.2 Payment of Benefit. The Company shall pay this benefit to the Director in a lump sum within 3 days following the Director's Termination of Service.

ARTICLE 3
DEATH BENEFITS

In lieu of any other benefit under this Agreement, the Director's beneficiary(ies) shall be entitled to receive the following benefits under Articles 3.1, 3.2, 3.3 or 3.4, depending on whether the Director's death occurs during or after active service and before or after Normal Retirement Age.

3.1 Death in Active Service Before Normal Retirement Age. If the Director dies before Normal Retirement Age while in the active service of the Company, the Company shall pay to the Director's beneficiary(ies)

a lump sum benefit determined by vesting the Director in 100% of the Accrual Balance on the Director's date of death. The Company shall pay this benefit to the Director's beneficiary(ies) in a lump sum within 30 days following the Director's death.

3.2 Death in Active Service After Normal Retirement Age. If the Director dies after Normal Retirement Age while in the active service of the Company, the Company shall for a period of 10 years pay to the Director's beneficiary(ies) the Normal Retirement Benefit provided in Article 2.1.1.

3.3 Death After Termination of Service Before Normal Retirement Age. (a) After Payments Commence. If, a Termination of Service before Normal Retirement Age having previously occurred, the Director dies after benefit payments commence under Article 2.2 of this Agreement but before receiving all such payments, the Company shall pay the remaining benefits to the Directors beneficiary(ies) at the same time and in the same amounts they would have been paid to the Director had the Director survived,

(b) Before Payments Commence. If, a Termination of Service before Normal Retirement Age having previously occurred, the Director is entitled to any benefit pursuant to Article 2.2 of this Agreement but dies before the benefit payments commence, the Company shall pay the same aggregate benefit payments to the Director's beneficiary(ies) that the Director was entitled to before death, except that the benefit payments shall commence on the first day of the month following the date of the Director's death.

3.4 Death After Termination of Service After Normal Retirement Age. (a) After Payments Commence. 1f, a Termination of Service on or after Normal Retirement Age having previously occurred, the Director dies after benefit payments commence under Article 2.1 of this Agreement but before receiving all such payments, the Company shall pay the remaining benefits to the Director's beneficiary(ies) at the same time and in the same amounts they would have been paid to the Director had the Director survived.

(b) Before Payments Commence. If, a Termination of Service on or after Normal Retirement Age having previously occurred, the Director is entitled to any benefit pursuant to Article 2.1 of this Agreement but dies before the benefit payments commence, the Company shall pay the same aggregate benefit payments to the Director's beneficiary(ies) that the Director was entitled to before death, except that the benefit payments shall commence on the first day of the month following the date of the Director's death.

ARTICLE 4
BENEFICIARIES

4.1 Beneficiary Designations. The Director shall designate a beneficiary by filing a written designation with the Company. The Director may revoke or modi1~y the designation at any time by filing a new designation. However, designations will only be effective if signed by the Director and received by the Company during the Director's lifetime. The Director's beneficiary designation shall be deemed automatically revoked if the beneficiary predeceases the Director or if the Director names a spouse as beneficiary and the marriage is subsequently dissolved, lithe Director dies without a valid beneficiary designation, the Director's estate shall be the beneficiary.

4.2 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 such benefit to the guardian, legal representative or person having the care or custody of such minor, incapacitated person or incapable person. The Company may require proof of incapacity, minority or guardianship as it may deem appropriate prior to distribution of the benefit such distribution shall completely discharge the Company from all liability with respect to such benefit

ARTICLE 5
GENERAL LIMITATIONS

5.1 Termination for Cause. Notwithstanding any provision of this Agreement to the contrary, the

Company shall not pay any benefit under this Agreement if the Company terminates the Director's service for:

(a) Gross negligence or gross neglect of duties;

(b) Commission of a felony or of a gross misdemeanor involving moral turpitude; or

(c) Fraud, disloyally, dishonesty or willful violation of any law or significant Company policy committed in connection with the Director's service and resulting in an adverse effect on the Company.

5.2 Suicide or Misstatement. The Company shall not pay any benefit under this Agreement if the Director commits suicide within two years after the date of this Agreement, or 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 from service and/or permanently prohibited from participating in the conduct of the Company's affairs by an order issued under Section 8(e)(4) or (g)(l) of the Federal Deposit Insurance Act, 12 U.S.C. Section 18l8(e)(4) or (g)(1), all obligations of the Company under this Agreement shall terminate as of the effective date of the order.

ARTICLE 6
CLAIMS ANTI 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 of Claimant's written application for benefits, of his or her eligibility or noneligibility for benefits under the Agreement lithe Company determines that the Claimant is not eligible for benefits or full benefits, the notice shall set forth (1) the specific reasons for such denial, (2) a specific reference to the provisions of the Agreement on which the denial is based, (3) 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 (4) 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, lithe 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 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 sixty-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
AMENDMENTS AND TERMINATION

This Agreement may be amended or terminated only by a written agreement signed by the Company and the Director.

ARTICLE 8

MISCELLANEOUS

8.1 Binding Effect. This Agreement shall bind the Director and the Company, and their beneficiaries, survivors, executors, successors, administrators and transferees.

8.2 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 the Agreement interfere with the rights 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 nor interfere with the Director's right to terminate services at any time.

8.3 Non-Transferability. Benefits under this Agreement cannot be sold, transferred, assigned, pledged, attached or encumbered in any manner.

8.4 Successors; Binding Agreement. The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, by an assumption agreement in form and substance satisfactory to the Director, 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 if no such succession had taken place. Failure of the Company to obtain such assumption agreement prior to the effectiveness of any such succession shall be a breath of this Agreement and shall entitle the Director to the Change in Control Benefit provided in Section 2.4.

8.5 Tax Withholding. The Company shall withhold any taxes that are required to be withheld from the benefits provided under this Agreement

8.6 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.

8.7 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 such benefits. The rights to benefits are not subject in any manner 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.

8.8 Entire Agreement. This Agreement constitutes the entire agreement between the Company and the Director as to the subject matter hereof. No rights are granted to the Director by virtue of this Agreement other than those specifically set forth herein.

8.9 Administration. The Company shall have powers which are necessary to administer this Agreement, including but not limited to:

(a) Interpreting the provisions of the Agreement

(b) Establishing and revising the method of accounting for the Agreement,

(c) Maintaining a record of benefit payments; and

(d) Establishing riles and prescribing any forms necessary or desirable to administer the Agreement

8.10 Named Fiduciary. The Company shall be the named fiduciary and plan administrator under this Agreement. The named fiduciary may delegate to others certain aspects of the management and operation responsibilities of the plan including the employment of advisors and the delegation of ministerial duties to qualified

individuals.

8.11 Severability. If for any reason any provision of this Agreement is held invalid, such invalidity shall not affect any other provision of this Agreement not held so invalid, and each such other provision shall, to the full -extent consistent with the law, continue in full force and effect. If any provision of this Agreement shall be held invalid in part, such invalidity shall in no way affect the rest of such provision, not held so invalid, and the rest of such provision, together with all other provisions of this Agreement shall, to the full extent consistent with the law, continue in full force and effect

8.12 Headings. The headings of Sections herein are included solely for convenience of reference and shall not affect the meaning or interpretation of any provision of this Agreement

8.13 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.

(a) If to the Company, to: Board of Directors Cortland Bancorp.

194W, Main Street
P.O. Box 98
Cortland, Ohio 44410-1466

(b) If to the Director, to: James E. Hoffman III

and to such other or additional person or persons as either party shall have designated to the other party in writing by like notice.

IN WITNESS WHEREOF, the Director and a duly authorized Company officer have signed this Agreement as of the day and year first written above.

DIRECTOR:                               COMPANY:

                                        CORTLAND BANCORP.


-------------------------------------   By:
James E. Hoffman III                        ------------------------------------
                                        Title:
                                               ---------------------------------

BENEFICIARY DESIGNATION
CORTLAND BANCORP.
DIRECTOR RETIREMENT AGREEMENT

JAMES E. HOFFMAN III

I 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.

Received by the Company this ______ day of __________, 2001.

February __, 2004

Mr. James E. Hoffman III
Director
Cortland Bancorp
194 West Main Street
Cortland, Ohio 44410-1466

RE: LETTER AMENDMENT OF DIRECTOR RETIREMENT AGREEMENT

Dear Mr. Hoffman:

The purpose of this letter is to memorialize in writing certain changes in your March 1, 2001 Director Retirement Agreement, which I refer to hereinafter as the "Agreement." Cortland Bancorp had been accruing for its liability under the Agreement using an 8.00% accrual rate assumption, but that assumed rate was changed to 6.75% effective on October 1, 2003, reflecting the decline in prevailing interest rates that has persisted since the Agreements were originally entered into. A similar change in the accrual rate assumption was recently made by Cortland Savings and Banking Company for its liability accruals under Salary Continuation Agreements with officers.

The changed accrual rate assumption affects anticipated benefit payment amounts, both under the Agreements and under the officers' Salary Continuation Agreements. Just as the Salary Continuation Agreements' Schedules A have been updated to reflect this changed assumption, we propose to replace the Schedule A attached to your Agreement with a new Schedule A. To make this process more fluid if a similar change needs to be made in the future, we are also proposing
(a) to add to the Agreement a definition of the term "Accrual Balance," (b) to add a provision clarifying that the Agreement's terms govern in all cases in which there is a conflict between the text of the Agreement versus the benefits reflected on Schedule A, and (c) to replace Sections 8.9 and 8.10 with a new Article 9 that has to do with administration of the Agreement. These new provisions make more clear the power of the administrator of the Agreement (the board) to make decisions about important accounting and interpretive issues under the Agreement, including changes in Schedule A of the Agreement.

The text of the amendment is set forth below. Following that text is a signature line. I ask that you sign and date the enclosed copy of this letter in the spaces provided, and that you return the executed copy to me. That will complete the amendment process. A revised Schedule A is also attached to this letter. Please retain the accompanying revised Schedule A. The revised Schedule A replaces and supersedes in its entirety the Schedule A currently associated with your Agreement. You may discard the old Schedule A.

FIRST AMENDMENT

A new definition of the term "Accrual Balance" is added to the Agreement as
Section 1.12, as follows:

1.12 "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 shall be calculated assuming a level principal amount and interest as the discount rate is accrued each period. The principal accrual is determined such that when it is credited with interest each month, the Accrual Balance at Normal Retirement Age equals 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 initial discount rate is 6.75%. However, the Plan Administrator, in its sole discretion, may adjust the discount rate to maintain the rate within reasonable standards according to GAAP. The Plan Administrator shall consist of the Company's board of directors or such committee or person(s) as the board shall appoint.

SECOND AMENDMENT

A new section 2.5 is added to the Agreement to clarify that the terms of the Agreement govern if there is a conflict between the text of the Agreement versus the benefits reflected on Schedule A attached to the Agreement, as follows:

2.5 Contradiction in Terms of Agreement and Schedule A. If there is a contradiction in the terms of this Agreement and Schedule A attached hereto concerning the benefits due under Section 2.2, 2.3, or 2.4 hereof, then the actual amount of benefits prescribed by this Agreement shall control.

THIRD AMENDMENT

The sections of the Agreement having to do with "Administration" (section 8.9) and "Named Fiduciary" (section 8.10) are hereby deleted in their entirety, and the sections that follow are renumbered accordingly sections 8.9 ("Severability"), 8.10 ("Headings"), and 8.11 ("Notices").

FOURTH AMENDMENT

A new Article 9 having to do with administration is added to the Agreement, as follows:

ARTICLE 9
ADMINISTRATION OF AGREEMENT

9.1 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(s) as the board shall appoint. The Director may be a member of the Plan Administrator. The Plan Administrator shall also have the discretion and authority to (a) make, amend, interpret, and enforce all appropriate rules and regulations for the administration of this Agreement and (b) decide or resolve any and all questions, including interpretations of this Agreement, as may arise in connection with the Agreement.

9.2 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.

9.3 Binding Effect of Decisions. The decision or action of the Plan Administrator with respect to any question arising out of or in connection with 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.

9.4 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.

9.5 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.

Please signify your acceptance of and agreement to the foregoing changes by executing and dating the enclosed copy of this letter in the spaces provided and returning it to the undersigned. The changes become effective as an amendment of your Director Retirement Agreement upon receipt by Cortland Bancorp of this letter executed by you.

Cortland Bancorp

Accepted and agreed to this _____ day of _________, 2004 by the undersigned director of Cortland Bancorp.

                                           EARLY
                                        TERMINATION      DISABILITY
                   AGE                ANNUAL BENEFIT   ANNUAL BENEFIT   CHANGE-IN-
                   AT                   PAYABLE AT       PAYABLE AT       CONTROL
                  PLAN     ACCRUAL        NORMAL           NORMAL         BENEFIT
   PLAN YEAR      YEAR    BALANCE @   RETIREMENT AGE   RETIREMENT AGE   PAYABLE IN
ENDING FEBRUARY    END    6.75% (1)         (2)              (2)        A LUMP SUM
---------------   ----   ----------   --------------   --------------   ----------
      2004         52    $10,608          $ 2,724          $ 2,724        $10,608
      2005         53    $15,575          $ 3,740          $ 3,740        $15,575
      2006         54    $20,888          $ 4,689          $ 4,689        $20,888
      2007         55    $26,572          $ 5,576          $ 5,576        $26,572
      2008         56    $32,651          $ 6,406          $ 6,406        $32,651
      2009         57    $39,153          $ 7,182          $ 7,182        $39,153
      2010         58    $46,108          $ 7,907          $ 7,907        $46,108
      2011         59    $53,548          $ 8,585          $ 8,585        $53,548
      2012         60    $61,505          $ 9,219          $ 9,219        $61,505
      2013         61    $70,016          $ 9,811          $ 9,811        $70,016
   June 2013       62    $72,983(3)       $10,000          $10,000        $72,983

(1) Calculations are approximations. Benefit calculations are based on prior year-end accrual balances. The accrual balance reflects payment at the beginning of each month during retirement, beginning July 1, 2013.

(2) Benefit is based on the present value of the current payment stream of the vested accrual balance using a standard discount rate (6.75%).

(3) Projected retirement occurs June 12, 2013, with the first the first normal monthly retirement benefit commencing July 2013. The accrual balance at the end of June 2013 will be $72,983.

EXHIBIT 10.8

CORTLAND BANCORP
DIRECTOR RETIREMENT AGREEMENT

THIS DIRECTOR RETIREMENT AGREEMENT (this "Agreement") is made as of March 1, 2004, by and between Cortland Bancorp, a bank holding company located in Cortland, Ohio (the "Company") and Neil J. Kaback (the "Director").

To encourage the Director to remain a member of the Company's board of directors, the Company is willing to provide retirement benefits to the Director. The Company will pay the benefits from its general assets. 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.

AGREEMENT

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

Whenever used in this Agreement, the following words and phrases shall have the meanings specified:

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 shall be calculated assuming a level principal amount and interest as the discount rate is accrued each period. The principal accrual is determined such that when it is credited with interest each month, the Accrual Balance at Normal Retirement Age equals 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 initial discount rate is 6.75%. However, the Plan Administrator, in its sole discretion, may adjust the discount rate to maintain the rate within reasonable standards according to GAAP.

1.2 "Change in Control" means any of the following events occur:

(a) the acquisition by a person or persons acting in concert of the power to vote 25% or more of a class of the Company's voting securities,

(b) during any period of two consecutive years, individuals who at the beginning of such period constitute the board of directors of the Company cease for any reason to constitute at least a majority thereof, provided, however, that - for purposes of this clause (b) - each director who is first elected by the board (or first nominated by the board for election by shareholders) by a vote of at least two-thirds (2/3) of the directors then in office shall be deemed to have been a director at the beginning of the period,

(c) the Company shall have merged into or consolidated with another corporation, or merged another corporation into the Company, on a basis whereby less than 50% of the total voting power of the surviving corporation is held by persons who were shareholders of the Company immediately before the merger or consolidation, or

(d) the Company shall have sold substantially all of its assets to another person.

For purposes of this Agreement, the term "person" means an individual, corporation, partnership, trust, association, joint venture, pool, syndicate, sole proprietorship, unincorporated organization, or other entity.

Notwithstanding this definition of Change in Control, a Change in Control shall not be deemed to have occurred solely because a person's beneficial ownership of more than 25% of the Company's voting securities is the result of the Company's acquisition of its voting securities, reducing the number of the Company's voting securities outstanding; provided, however, that if such person acquires additional voting securities of the Company, increasing the percentage of outstanding Company voting securities beneficially owned by that person, a Change in Control shall be deemed to have occurred.

1.3 "Disability" means, if the Director is covered by a Company-sponsored disability policy, total disability as defined in such policy without regard to any waiting period. If the Director is not covered by such a policy, Disability means the Director suffers a sickness, accident or injury that, in the judgment of a physician satisfactory to the Company, prevents the Director from performing substantially all of the Director's normal duties for the Company. As a condition to receiving any Disability benefits, the Company may require the Director to submit to such physical or mental evaluations and tests as the Company's board of directors deems appropriate.

1.4 "Early Termination" means Termination of Service before the Normal Retirement Age for reasons other than death, Disability, Termination for Cause, or following a Change in Control.

1.5 "Early Termination Date" means the month, day, and year of Early Termination.

1.6 "Effective Date" means March 1, 2004.

1.7 "Normal Retirement Age" means the Director's 67th birthday.

1.8 "Normal Retirement Date" means the later of the Normal Retirement Age or Termination of Service.

1.9 "Plan Administrator" means the plan administrator described in Article 7.

1.10 "Plan Year" means each twelve-month period from the Effective Date of this Agreement.

1.11 "Termination for 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 -

(a) because of the Director's gross negligence or gross neglect of duties, or

(b) because of the Director's commission of a felony, or commission of a misdemeanor involving moral turpitude, or

(c) because of the Director's fraud, disloyalty, dishonesty, or willful violation of any law or significant policy of the Company committed in connection with the Director's service and resulting in an adverse effect on the Company, or

(d) because the Director is removed from service 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)].

1.12 "Termination of Service" means the Director ceases to be a member of the Company's board of directors for any reason whatsoever. For purposes of this Agreement, if there is a dispute over the service status of

the Director or the date of the Director's Termination of Service, the Company shall have the sole and absolute right to decide the dispute unless a Change in Control shall have occurred.

ARTICLE 2
LIFETIME BENEFITS

2.1 Normal Retirement Benefit. For Termination of Service on or after 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.

2.1.1 Amount of Benefit. The annual benefit under this Section 2.1 is $10,000.

2.1.2 Payment of Benefit. The Company shall pay the annual benefit to the Director in 12 equal monthly installments payable on the first day of each month, beginning with the month after the Director's Normal Retirement Date. The annual benefit shall be paid to the Director for 10 years.

2.2 Early Termination Benefit. 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.

2.2.1 Amount of Benefit. The benefit under this Section 2.2 is the Early Termination annual benefit set forth in Schedule A for the Plan Year ending immediately prior to the Early Termination Date (except during the first Plan Year, the benefit is the amount set forth for Plan Year 1).

2.2.2 Payment of Benefit. The Company shall pay the annual benefit to the Director in 12 equal monthly installments payable on the first day of each month, beginning with the month after the Normal Retirement Age. The annual benefit shall be paid to the Director for 10 years.

2.3 Disability Benefit. If the Director terminates service because of Disability before the 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 benefit under this Section 2.3 is the Disability annual benefit set forth in Schedule A for the Plan Year ending immediately prior to the date of Termination of Service (except during the first Plan Year, the benefit is the amount set forth for Plan Year 1).

2.3.2 Payment of Benefit. The Company shall pay the annual benefit to the Director in 12 equal monthly installments payable on the first day of each month, beginning with the month after the Normal Retirement Age. The annual benefit shall be paid to the Director for 10 years.

2.4 Change in Control Benefit. If the Director's service with the Company terminates within one year after a Change in Control (except for Termination for Cause), the Company shall pay to the Director the benefit described in this
Section 2.4 instead of any other benefit under this Agreement.

2.4.1 Amount of Benefit. The benefit under this Section 2.4 is the benefit determined under Schedule A based on the date of the Director's Termination of Service, which is determined by vesting the Director in 100% of the Accrual Balance.

2.4.2 Payment of Benefit. The Company shall pay this benefit to the Director in a lump sum within 3 days after the Director's Termination of Service.

2.5 Contradiction in Terms of Agreement and Schedule A. If there is a contradiction in the terms of this Agreement and Schedule A attached hereto concerning the benefits due under Section 2.2, 2.3, or 2.4 hereof, then the actual amount of benefits prescribed by this Agreement shall control.

ARTICLE 3

DEATH BENEFITS

Instead of any other benefit under this Agreement, the Director's beneficiary(ies) shall be entitled to receive the following benefits under Articles 3.1, 3.2, 3.3, or 3.4, depending on whether the Director's death occurs during or after active service and before or after Normal Retirement Age.

3.1 Death in Active Service Before Normal Retirement Age. If the Director dies before Normal Retirement Age while in the active service of the Company, the Company shall pay to the Director's beneficiary(ies) a lump sum benefit determined by vesting the Director in 100% of the Accrual Balance on the Director's date of death. The Company shall pay this benefit to the Director's beneficiary(ies) in a lump sum within 30 days following the Director's death.

3.2 Death in Active Service After Normal Retirement Age. If the Director dies after Normal Retirement Age while in the active service of the Company, the Company shall for a period of 10 years pay to the Director's beneficiary(ies) the Normal Retirement Benefit provided in Article 2.1.1.

3.3 Death After Termination of Service Before Normal Retirement Age. (a) After Payments Commence. If, a Termination of Service before Normal Retirement Age having previously occurred, the Director dies after benefit payments commence under Article 2.2 of this Agreement but before receiving all such payments, the Company shall pay the remaining benefits to the Director's beneficiary(ies) at the same time and in the same amounts they would have been paid to the Director had the Director survived.

(b) Before Payments Commence. If, a Termination of Service before Normal Retirement Age having previously occurred, the Director is entitled to any benefit pursuant to Article 2.2 of this Agreement but dies before the benefit payments commence, the Company shall pay the same aggregate benefit payments to the Director's beneficiary(ies) that the Director was entitled to before death, except that the benefit payments shall commence on the first day of the month after the date of the Director's death.

3.4 Death After Termination of Service After Normal Retirement Age. (a) After Payments Commence. If, a Termination of Service on or after Normal Retirement Age having previously occurred, the Director dies after benefit payments commence under Article 2.1 of this Agreement but before receiving all such payments, the Company shall pay the remaining benefits to the Director's beneficiary(ies) at the same time and in the same amounts they would have been paid to the Director had the Director survived.

(b) Before Payments Commence. If, a Termination of Service on or after Normal Retirement Age having previously occurred, the Director is entitled to any benefit pursuant to Article 2.1 of this Agreement but dies before the benefit payments commence, the Company shall pay the same aggregate benefit payments to the Director's beneficiary(ies) that the Director was entitled to before death, except that the benefit payments shall commence on the first day of the month after the date of the Director's death.

ARTICLE 4
BENEFICIARIES

4.1 Beneficiary Designations. The Director shall designate a beneficiary by filing a written designation with the Company. The Director may revoke or modify the designation at any time by filing a new designation. However, designations will only be effective if signed by the Director and received by the Company during the Director's lifetime. The Director's beneficiary designation shall be deemed automatically revoked if the beneficiary predeceases the Director or if the Director names a spouse as beneficiary and the marriage is subsequently dissolved. If the Director dies without a valid beneficiary designation, the Director's estate shall be the beneficiary.

4.2 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 such benefit to the guardian, legal representative, or person having the care or custody of such minor, incapacitated person, or incapable

person. The Company may require proof of incapacity, minority, or guardianship as it may deem appropriate prior to distribution of the benefit. Such distribution shall completely discharge the Company from all liability with respect to such benefit.

ARTICLE 5
GENERAL LIMITATIONS

5.1 Termination for Cause. Notwithstanding any provision of this Agreement to the contrary, the Company shall not pay any benefit under this Agreement, and this Agreement shall terminate, if the Director's Termination of Service is the result of Termination for Cause. Likewise, the Company shall not pay any benefits under the Split Dollar Agreement and Endorsement, and the Split Dollar Agreement and Endorsement also shall terminate, if Termination of Service is the result of Termination for 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 Suicide or Misstatement. The Company shall not pay any benefit under this Agreement if the Director commits suicide within two years after the date of this Agreement, or if the Director has made any material misstatement of fact on any application for life insurance purchased by the Company.

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 of 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 (1) the specific reasons for such denial, (2) a specific reference to the provisions of the Agreement on which the denial is based, (3) 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 (4) 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.

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(s) as the board shall appoint. The Director may be a member of the Plan Administrator. The Plan Administrator shall also have the discretion and

authority to (a) make, amend, interpret, and enforce all appropriate rules and regulations for the administration of this Agreement and (b) decide or resolve any and all questions, including interpretations of this Agreement, as may arise in connection with the 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 with respect to any question arising out of or in connection with 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 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 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.

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 the Agreement interfere with the rights 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 nor interfere with the Director's right to terminate services at any time.

8.4 Non-Transferability. Benefits under this Agreement cannot be sold, transferred, assigned, pledged, attached, or encumbered in any manner.

8.5 Successors; Binding Agreement. 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, by an assumption agreement in form and substance satisfactory to the Director, 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 if no such succession had occurred. Failure of the Company to obtain such assumption agreement before effectiveness of any such succession shall be a breach of this Agreement and shall entitle the Director to the Change in Control benefit provided in Section 2.4.

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 in any manner 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 constitute the entire agreement between the Company and the Director concerning the subject matter hereof. No rights are granted to the Director under this Agreement other than those specifically set forth herein.

8.10 Severability. If for any reason 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 Headings. The headings of Sections herein are included solely for convenience of reference and shall not affect the meaning or interpretation of any provision of this Agreement.

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 Agreement as of the date first written above.

DIRECTOR                                CORTLAND BANCORP


                                        By:
-------------------------------------       ------------------------------------
Neil J. Kaback                          Title:
                                               ---------------------------------

BENEFICIARY DESIGNATION
CORTLAND BANCORP
DIRECTOR RETIREMENT AGREEMENT

I, Neil J. Kaback, 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.

Date: __________________, 2004

Received by the Company this ________ day of _________, 2004.

                                          EARLY
                                       TERMINATION      DISABILITY
                   AGE               ANNUAL BENEFIT   ANNUAL BENEFIT   CHANGE-IN-
                   AT                  PAYABLE AT       PAYABLE AT       CONTROL
                  PLAN    ACCRUAL        NORMAL           NORMAL         BENEFIT
   PLAN YEAR      YEAR   BALANCE @   RETIREMENT AGE   RETIREMENT AGE   PAYABLE IN
ENDING FEBRUARY    END   6.75% (1)         (2)              (2)        A LUMP SUM
---------------   ----   ---------   --------------   --------------   ----------
      2005         44    $ 1,334         $   822          $   822        $ 1,334
      2006         45    $ 2,761         $ 1,590          $ 1,590        $ 2,761
      2007         46    $ 4,287         $ 2,308          $ 2,308        $ 4,287
      2008         47    $ 5,919         $ 2,980          $ 2,980        $ 5,919
      2009         48    $ 7,666         $ 3,608          $ 3,608        $ 7,666
      2010         49    $ 9,533         $ 4,195          $ 4,195        $ 9,533
      2011         50    $11,531         $ 4,744          $ 4,744        $11,531
      2012         51    $13,668         $ 5,257          $ 5,257        $13,668
      2013         52    $15,953         $ 5,736          $ 5,736        $15,953
      2014         53    $18,398         $ 6,185          $ 6,185        $18,398
      2015         54    $21,013         $ 6,604          $ 6,604        $21,013
      2016         55    $23,810         $ 6,996          $ 6,996        $23,810
      2017         56    $26,802         $ 7,362          $ 7,362        $26,802
      2018         57    $30,002         $ 7,705          $ 7,705        $30,002
      2019         58    $33,425         $ 8,025          $ 8,025        $33,425
      2020         59    $37,086         $ 8,325          $ 8,325        $37,086
      2021         60    $41,003         $ 8,605          $ 8,605        $41,003
      2022         61    $45,191         $ 8,866          $ 8,866        $45,191
      2023         62    $49,672         $ 9,111          $ 9,111        $49,672
      2024         63    $54,464         $ 9,340          $ 9,340        $54,464
      2025         64    $59,591         $ 9,554          $ 9,554        $59,591
      2026         65    $65,074         $ 9,754          $ 9,754        $65,074
      2027         66    $70,939         $ 9,940          $ 9,940        $70,939
   June 2027       67    $72,983 (3)     $10,000          $10,000        $72,983

(1) Calculations are approximations. Benefit calculations are based on prior year-end accrual balances. The accrual balance reflects payment at the beginning of each month during retirement, beginning July 1, 2027.

(2) Benefit is based on the present value of the current payment stream of the vested accrual balance using a standard discount rate (6.75%).

(3) Projected retirement occurs on June 20, 2027, with the first normal monthly retirement benefit commencing July 1, 2027.

EXHIBIT 10.9

CORTLAND BANCORP
DIRECTOR RETIREMENT AGREEMENT

THIS AGREEMENT is made as of this lst day of March, 2001, by and between Cortland Bancorp., a bank holding company located in Cortland, Ohio (the "Company') and Karl R. Mahan (the "Director").

To encourage the Director to remain a member of the Company's Board of Directors, the Company is willing to provide retirement benefits to the Director. The Company will pay the benefits from its general assets, 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. Section 1828(k)(4)(A)(ii)] and in Federal Deposit Insurance Corporation Rule 359.1(f)(1)(ii) [12 CFR 359.l (f)(1)(ii)] exists or, to the best knowledge of the Company, is contemplated insofar as the Company is concerned.

AGREEMENT

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

Whenever used in this Agreement, the following words and phrases shall have the meanings specified:

1.1 "Change in Control" means that any of the following events occur:

(a) The acquisition by a person or persons acting in concert of the power to vote 25% or more of a class of the Company's voting securities;

(b) The acquisition by a person of the power to direct the Company's management or policies, if the Board of Directors of the Company has made a determination that such acquisition constitutes or will constitute an acquisition of control of the Company for the purposes of the Bank Holding Company Act or the Change in Bank Control Act and the regulations thereunder,

(c) During any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of the Company cease for any reason to constitute at least a majority thereof provided. however, that -- for purposes of this clause (c) -- each director who is first elected by the Board of the Company (or first nominated by that Board for election by shareholders) by a vote of at least two-thirds (2/3) of the directors then in office shall be deemed to have been a director at the beginning of the period;

(d) The Company shall have merged into or consolidated with another corporation, or merged another corporation into the Company, on a basis whereby less than 50% of the total voting power of the surviving corporation is represented by shares held by persons who were shareholders of the Company immediately before such merger or consolidation, or

(e) The Company shall have sold substantially all of its assets to another person.

For purposes of this Agreement, the term "person" refers to an individual, corporation, partnership, trust, association, joint venture, pool, syndicate, sole proprietorship, unincorporated organization or other entity.

Notwithstanding this definition of Change in Control, a Change in Control of the Company shall not be deemed to occur solely because any person acquires beneficial ownership of more than 25% of the Company's voting securities as a result of the acquisition of the Company voting securities by the Company which reduces the number of the Company's voting securities outstanding, provided, that if after such acquisition by the Company such person becomes the beneficial owner of additional Company voting securities that increases the percentage of outstanding Company voting securities beneficially owned by

such person, a Change in Control of the Company shall then occur.

1.2 "Code" means the Internal Revenue Code of 1986, as amended.

1.3 "Disability" means, if the Director is covered by a Company-sponsored disability policy, total disability as defined in such policy without regard to any waiting period, If the Director is not covered by such a policy, Disability means the Director suffering a sickness, accident or injury, which, in the judgment of a physician satisfactory to the Company, prevents the Director from performing substantially all of the Director's normal duties for the Company. As a condition to receiving any Disability benefits, the Company may require the Director to submit to such physical or mental evaluations and tests as the Company's Board of Directors deems appropriate.

1.4 "Early Termination" means the Termination of Service before Normal Retirement Age for reasons other than death, Disability Termination for Cause or following a Change in Control

1.5 "Early Termination Date" means the month, day and year in which Early Termination occurs.

1.6 "Effective Date" means March 1, 2001,

1.7 "Normal Retirement Age" means the Director's 63rd birthday.

1.8 "Normal Retirement Date" means the later of the Normal Retirement Age or Termination of Service.

1.9 "Plan Year" means each twelve-month period from the Effective Date of this Agreement

1.10 "Termination for Cause" See Section 5.2.

1.11 "Termination of Service" means that the Director ceases to be a member of the Company's Board of Directors for any reason whatsoever. For purposes of this Agreement, if there is a dispute over the service status of the Director or the date of the Director's Termination of Service, the Company shall have the sole and absolute tight to decide the dispute unless a Change in Control shall have occurred,

ARTICLE 2
LIFETIME BENEFITS

2.1 Normal Retirement Benefit. Upon Termination of Service on or after Normal Retirement Ag; the Company shall pay to the Director the benefit described in this Section 2.1 in lieu of any other benefit under this Agreement

2.1.1 Amount of Benefit. The annual benefit under this Section 2.1 is $10,000 (Ten Thousand Dollars). The Company's Board of Directors, in its sole discretion, may increase the annual benefit under this Section 2.1.1; however, any increase shall require the recalculation of Schedule A.

2.1.2 Payment of Benefit. The Company shall pay this annual benefit to the Director in 12 equal monthly installments payable on the first day of each month commencing with the month following the Director's Normal Retirement Date. The annual benefit shall be paid to the Director for 10 years.

2.1.3 Benefit Increases. Commencing on the first anniversary of the first benefit payment, and continuing on each subsequent anniversary, the Company's Board of Directors, in its sole discretion, may increase the benefit

2.2 Early Termination Benefit. Upon Early Termination, the Company shall pay to the Director the benefit described in this Section 2.2 in lieu of any other benefit under this Agreement

2.2.1 Amount of Benefit. The benefit under this Section 2.2 is the Early Termination Annual Benefit set forth in Schedule A for the Plan Year ending immediately prior to the Early Termination Date

(except during the first Plan Year, the benefit is the amount set forth for Plan Year 1). Any increase in the annual benefit under Section 2.1.1 shall require the recalculation of this benefit on Schedule A.

2.2.2 Payment of Benefit. The Company shall pay this annual benefit to the Director in 12 equal monthly installments payable on the first day of each month commencing with the month following Normal Retirement Age. The annual benefit shall be paid to the Director for 10 years.

2.2.3 Benefit Increases. Benefit payments may be increased as provided in Section 2.1.3.

2.3 Disability Benefit. If the Director terminates service due to Disability prior to Normal Retirement Age, the Company shall pay to the Director the benefit described in this Section 2.3 in lieu of any other benefit under this Agreement

2.3.1 Amount of Benefit. The benefit under this Section 2.3 is the Disability Annual Benefit set forth in Schedule A for the Plan Year ending immediately prior to the date in which Termination of Service occurs (except during the first Plan Year, the benefit is the amount set forth for Plan Year 1). Any increase in the annual benefit under Section 2.1.1 would require the recalculation of this benefit on Schedule A.

2.3.2 Payment of Benefit. The Company shall pay this annual benefit to the Director in 12 equal monthly installments payable on the first day of each month commencing with the month following Normal Retirement Age. The annual benefit shall be paid to the Director for 10 years.

2.3.3 Benefit Increases. Benefit payments may be increased as provided in Section 2.1.3.

2.4 Change in Control Benefit. If the Director's service with the Company terminates within one year after a Change in Control (except for Termination for Cause), the Company shall pay to the Director the benefit described in this
Section 2.4 in lieu of any other benefit under this Agreement

2.4.1 Amount of Benefit. The benefit under this Section 2.4 is the benefit determined under Schedule A based on the date of the Director's Termination of Service, which is determined by vesting the Director in 100% of the Accrual Balance. Any increase in the annual benefit under Section 2.1.1 would require the recalculation of this benefit on Schedule A.

2.4.2 Payment of Benefit. The Company shall pay this benefit to the Director in a lump sum within 3 days following the Director's Termination of Service.

ARTICLE 3
DEATH BENEFITS

In lieu of any other benefit under this Agreement, the Director's beneficiary(ies) shall be entitled to receive the following benefits under Articles 3.1, 3.2, 3.3 or 3.4, depending on whether the Director's death occurs during or after active service and before or after Normal Retirement Age.

3.1 Death in Active Service Before Normal Retirement Age. If the Director dies before Normal Retirement Age while in the active service of the Company, the Company shall pay to the Director's beneficiary(ies) a lump sum benefit determined by vesting the Director in 100% of the Accrual Balance on the Director's date of death. The Company shall pay this benefit to the Director's beneficiary(ies) in a lump sum within 30 days following the Director's death.

3.2 Death in Active Service After Normal Retirement Age. If the Director dies after Normal Retirement Age while in the active service of the Company, the Company shall for a period of 10 years pay to the Director's beneficiary(ies) the Normal Retirement Benefit provided in Article 2.1.1.

3.3 Death After Termination of Service Before Normal Retirement Age. (a) After Payments Commence. If, a Termination of Service before Normal Retirement Age having previously occurred, the Director dies after benefit payments commence under Article 2.2 of this Agreement but before receiving all such payments, the Company shall pay the remaining benefits to the Directors beneficiary(ies) at the same time and in the same

amounts they would have been paid to the Director had the Director survived,

(b) Before Payments Commence. If, a Termination of Service before Normal Retirement Age having previously occurred, the Director is entitled to any benefit pursuant to Article 2.2 of this Agreement but dies before the benefit payments commence, the Company shall pay the same aggregate benefit payments to the Director's beneficiary(ies) that the Director was entitled to before death, except that the benefit payments shall commence on the first day of the month following the date of the Director's death.

3.4 Death After Termination of Service After Normal Retirement Age. (a) After Payments Commence. 1f, a Termination of Service on or after Normal Retirement Age having previously occurred, the Director dies after benefit payments commence under Article 2.1 of this Agreement but before receiving all such payments, the Company shall pay the remaining benefits to the Director's beneficiary(ies) at the same time and in the same amounts they would have been paid to the Director had the Director survived.

(b) Before Payments Commence. If, a Termination of Service on or after Normal Retirement Age having previously occurred, the Director is entitled to any benefit pursuant to Article 2.1 of this Agreement but dies before the benefit payments commence, the Company shall pay the same aggregate benefit payments to the Director's beneficiary(ies) that the Director was entitled to before death, except that the benefit payments shall commence on the first day of the month following the date of the Director's death.

ARTICLE 4
BENEFICIARIES

4.1 Beneficiary Designations. The Director shall designate a beneficiary by filing a written designation with the Company. The Director may revoke or modi1~y the designation at any time by filing a new designation. However, designations will only be effective if signed by the Director and received by the Company during the Director's lifetime. The Director's beneficiary designation shall be deemed automatically revoked if the beneficiary predeceases the Director or if the Director names a spouse as beneficiary and the marriage is subsequently dissolved, lithe Director dies without a valid beneficiary designation, the Director's estate shall be the beneficiary.

4.2 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 such benefit to the guardian, legal representative or person having the care or custody of such minor, incapacitated person or incapable person. The Company may require proof of incapacity, minority or guardianship as it may deem appropriate prior to distribution of the benefit such distribution shall completely discharge the Company from all liability with respect to such benefit

ARTICLE 5
GENERAL LIMITATIONS

5.1 Termination for Cause. Notwithstanding any provision of this Agreement to the contrary, the Company shall not pay any benefit under this Agreement if the Company terminates the Director's service for:

(a) Gross negligence or gross neglect of duties;

(b) Commission of a felony or of a gross misdemeanor involving moral turpitude; or

(c) Fraud, disloyally, dishonesty or willful violation of any law or significant Company policy committed in connection with the Director's service and resulting in an adverse effect on the Company.

5.2 Suicide or Misstatement. The Company shall not pay any benefit under this Agreement if the Director commits suicide within two years after the date of this Agreement, or 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 from service and/or permanently prohibited from participating in the conduct of the Company's affairs by an order issued under Section 8(e)(4) or (g)(l) of the Federal

Deposit Insurance Act, 12 U.S.C. Section 18l8(e)(4) or (g)(1), all obligations of the Company under this Agreement shall terminate as of the effective date of the order.

ARTICLE 6
CLAIMS ANTI 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 of Claimant's written application for benefits, of his or her eligibility or noneligibility for benefits under the Agreement lithe Company determines that the Claimant is not eligible for benefits or full benefits, the notice shall set forth (1) the specific reasons for such denial, (2) a specific reference to the provisions of the Agreement on which the denial is based, (3) 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 (4) 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, lithe 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 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 sixty-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
AMENDMENTS AND TERMINATION

This Agreement may be amended or terminated only by a written agreement signed by the Company and the Director.

ARTICLE 8
MISCELLANEOUS

8.1 Binding Effect. This Agreement shall bind the Director and the Company, and their beneficiaries, survivors, executors, successors, administrators and transferees.

8.2 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 the Agreement interfere with the rights 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 nor interfere with the Director's right to terminate services at any time.

8.3 Non-Transferability. Benefits under this Agreement cannot be sold, transferred, assigned, pledged, attached or encumbered in any manner.

8.4 Successors; Binding Agreement. The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, by an assumption agreement in form and substance satisfactory to the Director, 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 if no such succession had taken place. Failure of the Company to obtain such

assumption agreement prior to the effectiveness of any such succession shall be a breath of this Agreement and shall entitle the Director to the Change in Control Benefit provided in Section 2.4.

8.5 Tax Withholding. The Company shall withhold any taxes that are required to be withheld from the benefits provided under this Agreement

8.6 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.

8.7 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 such benefits. The rights to benefits are not subject in any manner 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.

8.8 Entire Agreement. This Agreement constitutes the entire agreement between the Company and the Director as to the subject matter hereof. No rights are granted to the Director by virtue of this Agreement other than those specifically set forth herein.

8.9 Administration. The Company shall have powers which are necessary to administer this Agreement, including but not limited to:

(a) Interpreting the provisions of the Agreement

(b) Establishing and revising the method of accounting for the Agreement,

(c) Maintaining a record of benefit payments; and

(d) Establishing riles and prescribing any forms necessary or desirable to administer the Agreement

8.10 Named Fiduciary. The Company shall be the named fiduciary and plan administrator under this Agreement. The named fiduciary may delegate to others certain aspects of the management and operation responsibilities of the plan including the employment of advisors and the delegation of ministerial duties to qualified individuals.

8.11 Severability. If for any reason any provision of this Agreement is held invalid, such invalidity shall not affect any other provision of this Agreement not held so invalid, and each such other provision shall, to the full -extent consistent with the law, continue in full force and effect. If any provision of this Agreement shall be held invalid in part, such invalidity shall in no way affect the rest of such provision, not held so invalid, and the rest of such provision, together with all other provisions of this Agreement shall, to the full extent consistent with the law, continue in full force and effect

8.12 Headings. The headings of Sections herein are included solely for convenience of reference and shall not affect the meaning or interpretation of any provision of this Agreement

8.13 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.

(a) If to the Company, to: Board of Directors

                          Cortland Bancorp.
`                         194W, Main Street
                          P.O. Box 98
                          Cortland, Ohio 44410-1466

(b) If to the Director, to: Karl R. Mahan

and to such other or additional person or persons as either party shall have designated to the other party in writing by like notice.

IN WITNESS WHEREOF, the Director and a duly authorized Company officer have signed this Agreement as of the day and year first written above.

DIRECTOR:                               COMPANY:

                                        CORTLAND BANCORP.


-------------------------------------   By:
Karl R. Mahan                               ------------------------------------
                                        Title:
                                               ---------------------------------

BENEFICIARY DESIGNATION
CORTLAND BANCORP.
DIRECTOR RETIREMENT AGREEMENT

KARL R. MAHAN

I 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.

Received by the Company this ______ day of ____________________ ,2001.

                                                                               CHANGE OF
                                                                DISABILITY      CONTROL
                             VESTED           EARLY               ANNUAL       LUMP SUM
PLAN   ACCRUAL    VESTING   ACCRUAL     TERMINATION ANNUAL       BENEFIT        PAYABLE
YEAR   BALANCE   SCHEDULE   BALANCE   BENEFIT PAYABLE AT 63   PAYABLE AT 63   IMMEDIATELY
----   -------   --------   -------   ---------------------   -------------   -----------
  1    $32,974     100%     $32,974          $ 5,199             $ 5,199        $32,974
  2    $68,685     100%     $68,685          $10,000             $10,000        $68,685

EXHIBIT 10.10

CORTLAND BANCORP
AMENDED AND RESTATED DIRECTOR RETIREMENT AGREEMENT

THIS AMENDED AND RESTATED DIRECTOR RETIREMENT AGREEMENT (this "Agreement") is made as of May 1, 2004, by and between Cortland Bancorp, a bank holding company located in Cortland, Ohio (the "Company") and Richard B. Thompson (the "Director").

WHEREAS, to encourage the Director to remain a member of the Company's Board of Directors, the Company desires to provide the Director with retirement benefits payable from the Company's general assets,

WHEREAS, for this purpose the Company and the Director entered into a Director Retirement Agreement dated as of October 1, 2001, which provides for specified retirement benefits for the Director after termination of his service,

WHEREAS, the Company's goal was to provide a largely uniform form of retirement agreement for its directors, but it has come to the Company's attention that the Director's October 1, 2001 Director Retirement Agreement provides in section 3.1 for no death benefit if the Director dies in active service to the Company, whereas other directors' retirement agreements provide for a death benefit in that circumstance that is based on the Accrual Balance existing on the date of the directors' death,

WHEREAS, the October 1, 2001 Director Retirement Agreement was amended in certain respects in February 2004 with inclusion of a definition of the term "Accrual Balance," addition of Article 9 having to do with plan administration, and miscellaneous other changes,

WHEREAS, the Company desires to correct the oversight in section 3.1 of the Director's October 1, 2001 Director Retirement Agreement and to incorporate into this Agreement any other changes made since the October 1, 2001 Director Retirement Agreement was entered into,

WHEREAS, the Company and the Director desire that this Agreement shall supersede and replace in its entirety the October 1, 2001 Director Retirement Agreement, effective immediately, 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 Bank, is contemplated insofar as the Bank is concerned.

NOW THEREFORE, in consideration of the foregoing premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Director and the Company hereby agree as follows -

ARTICLE 1
DEFINITIONS

Whenever used in this Agreement, the following words and phrases shall have the meanings specified:

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 shall be calculated assuming a level principal amount and interest as the discount rate is accrued each period. The principal accrual is determined such that when it is credited with interest each month, the Accrual Balance at Normal Retirement Age equals 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 initial discount rate is 6.75%. However, the Plan

Administrator, in its sole discretion, may adjust the discount rate to maintain the rate within reasonable standards according to GAAP. The Plan Administrator shall consist of the Company's board of directors or such committee or person(s) as the board shall appoint.

1.2 "Change in Control" means that any of the following events occur:

(a) The acquisition by a person or persons acting in concert of the power to vote 25% or more of a class of the Company's voting securities;

(b) The acquisition by a person of the power to direct the Company's management or policies, if the Board of Directors of the Company has made a determination that such acquisition constitutes or will constitute an acquisition of control of the Company for the purposes of the Bank Holding Company Act or the Change in Bank Control Act and the regulations thereunder;

(c) During any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of the Company cease for any reason to constitute at least a majority thereof, provided, however, that - for purposes of this clause (c) - each director who is first elected by the Board of the Company (or first nominated by that Board for election by shareholders) by a vote of at least two-thirds (2/3) of the directors then in office shall be deemed to have been a director at the beginning of the period;

(d) The Company shall have merged into or consolidated with another corporation, or merged another corporation into the Company, on a basis whereby less than 50% of the total voting power of the surviving corporation is represented by shares held by persons who were shareholders of the Company immediately before such merger or consolidation; or

(e) The Company shall have sold substantially all of its assets to another person.

For purposes of this Agreement, the term "person" refers to an individual, corporation, partnership, trust, association, joint venture, pool, syndicate, sole proprietorship, unincorporated organization or other entity.

Notwithstanding this definition of Change in Control, a Change in Control of the Company shall not be deemed to occur solely because any person acquires beneficial ownership of more than 25% of the Company's voting securities as a result of the acquisition of the Company voting securities by the Company which reduces the number of the Company's voting securities outstanding; provided, that if after such acquisition by the Company such person becomes the beneficial owner of additional Company voting securities that increases the percentage of outstanding Company voting securities beneficially owned by such person, a Change in Control of the Company shall then occur.

1.3 "Code" means the Internal Revenue Code of 1986, as amended.

1.4 "Disability" means, if the Director is covered by a Company-sponsored disability policy, total disability as defined in such policy without regard to any waiting period. If the Director is not covered by such a policy, Disability means the Director suffering a sickness, accident or injury, which, in the judgment of a physician satisfactory to the Company, prevents the Director from performing substantially all of the Director's normal duties for the Company. As a condition to receiving any Disability benefits, the Company may require the Director to submit to such physical or mental evaluations and tests as the Company's Board of Directors deems appropriate.

1.5 "Early Termination" means the Termination of Service before Normal Retirement Age for reasons other than death, Disability, Termination for Cause or following a Change in Control.

1.6 "Early Termination Date" means the month, day and year in which Early Termination occurs.

1.7 "Effective Date" means October 1, 2001.

1.8 "Normal Retirement Age" means the Director's 70th birthday.

1.9 "Normal Retirement Date" means the later of the Normal Retirement Age or Termination of Service.

1.10 "Plan Year" means each twelve-month period from the Effective Date of this Agreement.

1.11 "Termination for Cause" See Section 5.1.

1.12 "Termination of Service" means that the Director ceases to be a member of the Company's Board of Directors for any reason whatsoever. For purposes of this Agreement, if there is a dispute over the service status of the Director or the date of the Director's Termination of Service, the Company shall have the sole and absolute right to decide the dispute unless a Change in Control shall have occurred.

ARTICLE 2
LIFETIME BENEFITS

2.1 Normal Retirement Benefit. Upon Termination of Service on or after Normal Retirement Age, the Company shall pay to the Director the benefit described in this Section 2.1 in lieu of any other benefit under this Agreement.

2.1.1 Amount of Benefit. The annual benefit under this Section 2.1 is $10,000 (Ten Thousand Dollars). The Company's Board of Directors, in its sole discretion, may increase the annual benefit under this Section 2.1.1; however, any increase shall require the recalculation of Schedule A.

2.1.2 Payment of Benefit. The Company shall pay this annual benefit to the Director in 12 equal monthly installments payable on the first day of each month commencing with the month following the Director's Normal Retirement Date. The annual benefit shall be paid to the Director for 10 years.

2.1.3 Benefit Increases. Commencing on the first anniversary of the first benefit payment, and continuing on each subsequent anniversary, the Company's Board of Directors, in its sole discretion, may increase the benefit.

2.2 Early Termination Benefit. Upon Early Termination, the Company shall pay to the Director the benefit described in this Section 2.2 in lieu of any other benefit under this Agreement.

2.2.1 Amount of Benefit. The benefit under this Section 2.2 is the Early Termination Annual Benefit set forth in Schedule A for the Plan Year ending immediately prior to the Early Termination Date (except during the first Plan Year, the benefit is the amount set forth for Plan Year 1). Any increase in the annual benefit under Section 2.1.1 shall require the recalculation of this benefit on Schedule A.

2.2.2 Payment of Benefit. The Company shall pay this annual benefit to the Director in 12 equal monthly installments payable on the first day of each month commencing with the month following Normal Retirement Age. The annual benefit shall be paid to the Director for 10 years.

2.2.3 Benefit Increases. Benefit payments may be increased as provided in Section 2.1.3.

2.3 Disability Benefit. If the Director terminates service due to Disability prior to Normal Retirement Age, the Company shall pay to the Director the benefit described in this Section 2.3 in lieu of any other benefit under this Agreement.

2.3.1 Amount of Benefit. The benefit under this Section 2.3 is the Disability Annual Benefit set forth in Schedule A for the Plan Year ending immediately prior to the date in which Termination of Service occurs (except during the first Plan Year, the benefit is the amount set forth for Plan Year 1). Any increase in the annual benefit under Section 2.1.1 would require the recalculation of this benefit on Schedule A.

2.3.2 Payment of Benefit. The Company shall pay this annual benefit to the Director in 12 equal monthly installments payable on the first day of each month commencing with the month following Normal Retirement Age. The annual benefit shall be paid to the Director for 10 years.

2.3.3 Benefit Increases. Benefit payments may be increased as provided in Section 2.1.3.

2.4 Change in Control Benefit. If the Director's service with the Company terminates within one year after a Change in Control (except for Termination for Cause), the Company shall pay to the Director the benefit described in this
Section 2.4 in lieu of any other benefit under this Agreement.

2.4.1 Amount of Benefit. The benefit under this Section 2.4 is the benefit determined under Schedule A based on the date of the Director's Termination of Service, which is determined by vesting the Director in 100% of the Accrual Balance. Any increase in the annual benefit under Section 2.1.1 would require the recalculation of this benefit on Schedule A.

2.4.2 Payment of Benefit. The Company shall pay this benefit to the Director in a lump sum within 3 days following the Director's Termination of Service.

2.5 Contradiction in Terms of Agreement and Schedule A. If there is a contradiction in the terms of this Agreement and Schedule A attached hereto concerning the benefits due under Section 2.2, 2.3, or 2.4 hereof, then the actual amount of benefits prescribed by this Agreement shall control.

ARTICLE 3
DEATH BENEFITS

In lieu of any other benefit under this Agreement, the Director's beneficiary(ies) shall be entitled to receive the following benefits under Articles 3.1, 3.2, 3.3 or 3.4, depending on whether the Director's death occurs during or after active service and before or after Normal Retirement Age.

3.1 Death in Active Service Before Normal Retirement Age. If the Director dies before Normal Retirement Age while in the active service of the Company, the Company shall pay to the Director's beneficiary(ies) a lump sum benefit determined by vesting the Director in 100% of the Accrual Balance on the Director's date of death. The Company shall pay this benefit to the Director's beneficiary(ies) in a lump sum within 30 days following the Director's death.

3.2 Death in Active Service After Normal Retirement Age. If the Director dies after Normal Retirement Age while in the active service of the Company, the Company shall for a period of 10 years pay to the Director's beneficiary(ies) the Normal Retirement Benefit provided in Article 2.1.1.

3.3 Death After Termination of Service Before Normal Retirement Age. (a) After Payments Commence. If, a Termination of Service before Normal Retirement Age having previously occurred, the Director dies after benefit payments commence under Article 2.2 of this Agreement but before receiving all such payments, the Company shall pay the remaining benefits to the Director's beneficiary(ies) at the same time and in the same amounts they would have been paid to the Director had the Director survived.

(b) Before Payments Commence. If, a Termination of Service before Normal Retirement Age having previously occurred, the Director is entitled to any benefit pursuant to Article 2.2 of this Agreement but dies before the benefit payments commence, the Company shall pay the same aggregate benefit payments to the

Director's beneficiary(ies) that the Director was entitled to before death, except that the benefit payments shall commence on the first day of the month following the date of the Director's death.

3.4 Death After Termination of Service After Normal Retirement Age. (a) After Payments Commence. If, a Termination of Service on or after Normal Retirement Age having previously occurred, the Director dies after benefit payments commence under Article 2.1 of this Agreement but before receiving all such payments, the Company shall pay the remaining benefits to the Director's beneficiary(ies) at the same time and in the same amounts they would have been paid to the Director had the Director survived.

(b) Before Payments Commence. If, a Termination of Service on or after Normal Retirement Age having previously occurred, the Director is entitled to any benefit pursuant to Article 2.1 of this Agreement but dies before the benefit payments commence, the Company shall pay the same aggregate benefit payments to the Director's beneficiary(ies) that the Director was entitled to before death, except that the benefit payments shall commence on the first day of the month following the date of the Director's death.

ARTICLE 4
BENEFICIARIES

4.1 Beneficiary Designations. The Director shall designate a beneficiary by filing a written designation with the Company. The Director may revoke or modify the designation at any time by filing a new designation. However, designations will only be effective if signed by the Director and received by the Company during the Director's lifetime. The Director's beneficiary designation shall be deemed automatically revoked if the beneficiary predeceases the Director or if the Director names a spouse as beneficiary and the marriage is subsequently dissolved. If the Director dies without a valid beneficiary designation, the Director's estate shall be the beneficiary.

4.2 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 such benefit to the guardian, legal representative or person having the care or custody of such minor, incapacitated person or incapable person. The Company may require proof of incapacity, minority or guardianship as it may deem appropriate prior to distribution of the benefit. Such distribution shall completely discharge the Company from all liability with respect to such benefit.

ARTICLE 5
GENERAL LIMITATIONS

5.1 Termination for Cause. Notwithstanding any provision of this Agreement to the contrary, the Company shall not pay any benefit under this Agreement if the Company terminates the Director's service for:

(a) Gross negligence or gross neglect of duties;

(b) Commission of a felony or of a gross misdemeanor involving moral turpitude; or

(c) Fraud, disloyalty, dishonesty or willful violation of any law or significant Company policy committed in connection with the Director's service and resulting in an adverse effect on the Company.

5.2 Suicide or Misstatement. The Company shall not pay any benefit under this Agreement if the Director commits suicide within two years after the Effective Date of this Agreement, or 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 from service and/or permanently prohibited from participating in the conduct of the 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.

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 of 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 (1) the specific reasons for such denial, (2) a specific reference to the provisions of the Agreement on which the denial is based, (3) 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 (4) 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.

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 sixty-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
AMENDMENTS AND TERMINATION

This Agreement may be amended or terminated only by a written agreement signed by the Company and the Director.

ARTICLE 8
MISCELLANEOUS

8.1 Binding Effect. This Agreement shall bind the Director and the Company, and their beneficiaries, survivors, executors, successors, administrators and transferees.

8.2 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 the Agreement interfere with the rights 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 nor interfere with the Director's right to terminate services at any time.

8.3 Non-Transferability. Benefits under this Agreement cannot be sold, transferred, assigned, pledged, attached or encumbered in any manner.

8.4 Successors; Binding Agreement. The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of

the Company, by an assumption agreement in form and substance satisfactory to the Director, 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 if no such succession had taken place. Failure of the Company to obtain such assumption agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle the Director to the Change in Control Benefit provided in Section 2.4.

8.5 Tax Withholding. The Company shall withhold any taxes that are required to be withheld from the benefits provided under this Agreement.

8.6 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.

8.7 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 such benefits. The rights to benefits are not subject in any manner 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.

8.8 Entire Agreement. This Agreement constitutes the entire agreement between the Company and the Director concerning the subject matter hereof. No rights are granted to the Director by this Agreement other than those specifically set forth herein. This Agreement supersedes and replaces in its entirety the October 1, 2001 Director Retirement Agreement, as amended, effective immediately.

8.9 Severability. If for any reason any provision of this Agreement is held invalid, such invalidity shall not affect any other provision of this Agreement not held so invalid, and each such other provision shall, to the full extent consistent with the law, continue in full force and effect. If any provision of this Agreement shall be held invalid in part, such invalidity shall in no way affect the rest of such provision, not held so invalid, and the rest of such provision, together with all other provisions of this Agreement shall, to the full extent consistent with the law, continue in full force and effect.

8.10 Headings. The headings of Sections herein are included solely for convenience of reference and shall not affect the meaning or interpretation of any provision of this Agreement.

8.11 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, notices, requests, demands and other communications hereunder shall be addressed to the Board of Directors, Cortland Bancorp, 194 West 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 by like notice. If to the Director, notices, requests, demands and other communications hereunder shall be addressed to the Director's address 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 by like notice.

ARTICLE 9
ADMINISTRATION OF AGREEMENT

9.1 Plan Administrator Duties. This Agreement shall be administered by a Plan Administrator consisting of the Company's board of directors or such other committee or person(s) as the board shall appoint. The Director may be a member of the Plan Administrator. The Plan Administrator shall also have the discretion and authority to (a) make, amend, interpret, and enforce all appropriate rules and regulations for the administration of

this Agreement and (b) decide or resolve any and all questions, including interpretations of this Agreement, as may arise in connection with the Agreement.

9.2 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.

9.3 Binding Effect of Decisions. The decision or action of the Plan Administrator with respect to any question arising out of or in connection with 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.

9.4 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.

9.5 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.

IN WITNESS WHEREOF, the Director and a duly authorized Company officer have signed this Amended and Restated Director Retirement Agreement as of the date first written above.

DIRECTOR:                               COMPANY:
                                        CORTLAND BANCORP


                                        By:
-------------------------------------       ------------------------------------
Richard B. Thompson                     Title:
                                               ---------------------------------

BENEFICIARY DESIGNATION
CORTLAND BANCORP
AMENDED AND RESTATED DIRECTOR RETIREMENT AGREEMENT

RICHARD B. THOMPSON

I designate the following as beneficiary of any death benefits under this Amended and Restated 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.

Received by the Company this _________ day of ____________, 2004.

                                    EARLY
                                TERMINATION       DISABILITY
             AGE               ANNUAL BENEFIT   ANNUAL BENEFIT
             AT                  PAYABLE AT       PAYABLE AT     CHANGE-IN-CONTROL
PLAN YEAR   PLAN    ACCRUAL        NORMAL           NORMAL            BENEFIT
  ENDING    YEAR   BALANCE @   RETIREMENT AGE   RETIREMENT AGE       PAYABLE IN
SEPTEMBER    END   6.75% (1)        (2)              (2)             A LUMP SUM
---------   ----   ---------   --------------   --------------   -----------------
2004         56     $ 6,873       $ 2,417          $ 2,417            $ 6,873
2005         57     $ 9,813       $ 3,225          $ 3,225            $ 9,813
2006         58     $12,957       $ 3,982          $ 3,982            $12,957
2007         59     $16,320       $ 4,689          $ 4,689            $16,320
2008         60     $19,917       $ 5,350          $ 5,350            $19,917
2009         61     $23,764       $ 5,968          $ 5,968            $23,764
2010         62     $27,880       $ 6,545          $ 6,545            $27,880
2011         63     $32,282       $ 7,085          $ 7,085            $32,282
2012         64     $36,990       $ 7,590          $ 7,590            $36,990
2013         65     $42,027       $ 8,062          $ 8,062            $42,027
2014         66     $47,414       $ 8,504          $ 8,504            $47,414
2015         67     $53,176       $ 8,916          $ 8,916            $53,176
2016         68     $59,339       $ 9,302          $ 9,302            $59,339
2017         69     $65,932       $ 9,663          $ 9,663            $65,932
2018         70     $72,983       $10,000          $10,000            $72,983

(1) Calculations are approximations. Benefit calculations are based on prior year-end accrual balances. The accrual balance reflects payment at the beginning of each month during retirement, beginning October 1, 2018.

(2) Benefit is based on the present value of the current payment stream of the vested accrual balance using a standard discount rate (6.75%).

EXHIBIT 10.11

CORTLAND BANCORP
DIRECTOR RETIREMENT AGREEMENT

THIS AGREEMENT is made as of this lst day of March, 2001, by and between Cortland Bancorp., a bank holding company located in Cortland, Ohio (the "Company') and Timothy K. Woofter (the "Director").

To encourage the Director to remain a member of the Company's Board of Directors, the Company is willing to provide retirement benefits to the Director. The Company will pay the benefits from its general assets, 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. Section 1828(k)(4)(A)(ii)] and in Federal Deposit Insurance Corporation Rule 359.1(f)(1)(ii) [12 CFR 359.l (f)(1)(ii)] exists or, to the best knowledge of the Company, is contemplated insofar as the Company is concerned.

AGREEMENT

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

Whenever used in this Agreement, the following words and phrases shall have the meanings specified:

1.1 "Change in Control" means that any of the following events occur:

(a) The acquisition by a person or persons acting in concert of the power to vote 25% or more of a class of the Company's voting securities;

(b) The acquisition by a person of the power to direct the Company's management or policies, if the Board of Directors of the Company has made a determination that such acquisition constitutes or will constitute an acquisition of control of the Company for the purposes of the Bank Holding Company Act or the Change in Bank Control Act and the regulations thereunder,

(c) During any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of the Company cease for any reason to constitute at least a majority thereof provided. however, that -- for purposes of this clause (c) -- each director who is first elected by the Board of the Company (or first nominated by that Board for election by shareholders) by a vote of at least two-thirds (2/3) of the directors then in office shall be deemed to have been a director at the beginning of the period;

(d) The Company shall have merged into or consolidated with another corporation, or merged another corporation into the Company, on a basis whereby less than 50% of the total voting power of the surviving corporation is represented by shares held by persons who were shareholders of the Company immediately before such merger or consolidation, or

(e) The Company shall have sold substantially all of its assets to another person.

For purposes of this Agreement, the term "person" refers to an individual, corporation, partnership, trust, association, joint venture, pool, syndicate, sole proprietorship, unincorporated organization or other entity.

Notwithstanding this definition of Change in Control, a Change in Control of the Company shall not be deemed to occur solely because any person acquires beneficial ownership of more than 25% of the Company's voting securities as a result of the acquisition of the Company voting securities by the Company which reduces the number of the Company's voting securities outstanding, provided, that if after such acquisition by the Company such person becomes the beneficial owner of additional Company voting

securities that increases the percentage of outstanding Company voting securities beneficially owned by such person, a Change in Control of the Company shall then occur.

1.2 "Code" means the Internal Revenue Code of 1986, as amended.

1.3 "Disability" means, if the Director is covered by a Company-sponsored disability policy, total disability as defined in such policy without regard to any waiting period, If the Director is not covered by such a policy, Disability means the Director suffering a sickness, accident or injury, which, in the judgment of a physician satisfactory to the Company, prevents the Director from performing substantially all of the Director's normal duties for the Company. As a condition to receiving any Disability benefits, the Company may require the Director to submit to such physical or mental evaluations and tests as the Company's Board of Directors deems appropriate.

1.4 "Early Termination" means the Termination of Service before Normal Retirement Age for reasons other than death, Disability Termination for Cause or following a Change in Control

1.5 "Early Termination Date" means the month, day and year in which Early Termination occurs.

1.6 "Effective Date" means March 1, 2001,

1.7 "Normal Retirement Age" means the Director's 63rd birthday.

1.8 "Normal Retirement Date" means the later of the Normal Retirement Age or Termination of Service.

1.9 "Plan Year" means each twelve-month period from the Effective Date of this Agreement

1.10 "Termination for Cause" See Section 5.2.

1.11 "Termination of Service" means that the Director ceases to be a member of the Company's Board of Directors for any reason whatsoever. For purposes of this Agreement, if there is a dispute over the service status of the Director or the date of the Director's Termination of Service, the Company shall have the sole and absolute tight to decide the dispute unless a Change in Control shall have occurred,

ARTICLE 2
LIFETIME BENEFITS

2.1 Normal Retirement Benefit. Upon Termination of Service on or after Normal Retirement Ag; the Company shall pay to the Director the benefit described in this Section 2.1 in lieu of any other benefit under this Agreement

2.1.1 Amount of Benefit. The annual benefit under this Section 2.1 is $10,000 (Ten Thousand Dollars). The Company's Board of Directors, in its sole discretion, may increase the annual benefit under this Section 2.1.1; however, any increase shall require the recalculation of Schedule A.

2.1.2 Payment of Benefit. The Company shall pay this annual benefit to the Director in 12 equal monthly installments payable on the first day of each month commencing with the month following the Director's Normal Retirement Date. The annual benefit shall be paid to the Director for 10 years.

2.1.3 Benefit Increases. Commencing on the first anniversary of the first benefit payment, and continuing on each subsequent anniversary, the Company's Board of Directors, in its sole discretion, may increase the benefit

2.2 Early Termination Benefit. Upon Early Termination, the Company shall pay to the Director the benefit described in this Section 2.2 in lieu of any other benefit under this Agreement

2.2.1 Amount of Benefit. The benefit under this Section 2.2 is the Early Termination Annual Benefit set forth in Schedule A for the Plan Year ending immediately prior to the Early Termination Date (except during the first Plan Year, the benefit is the amount set forth for Plan Year 1). Any increase in the annual benefit under Section 2.1.1 shall require the recalculation of this benefit on Schedule A.

2.2.2 Payment of Benefit. The Company shall pay this annual benefit to the Director in 12 equal monthly installments payable on the first day of each month commencing with the month following Normal Retirement Age. The annual benefit shall be paid to the Director for 10 years.

2.2.3 Benefit Increases. Benefit payments may be increased as provided in Section 2.1.3.

2.3 Disability Benefit. If the Director terminates service due to Disability prior to Normal Retirement Age, the Company shall pay to the Director the benefit described in this Section 2.3 in lieu of any other benefit under this Agreement

2.3.1 Amount of Benefit. The benefit under this Section 2.3 is the Disability Annual Benefit set forth in Schedule A for the Plan Year ending immediately prior to the date in which Termination of Service occurs (except during the first Plan Year, the benefit is the amount set forth for Plan Year 1). Any increase in the annual benefit under Section 2.1.1 would require the recalculation of this benefit on Schedule A.

2.3.2 Payment of Benefit. The Company shall pay this annual benefit to the Director in 12 equal monthly installments payable on the first day of each month commencing with the month following Normal Retirement Age. The annual benefit shall be paid to the Director for 10 years.

2.3.3 Benefit Increases. Benefit payments may be increased as provided in Section 2.1.3.

2.4 Change in Control Benefit. If the Director's service with the Company terminates within one year after a Change in Control (except for Termination for Cause), the Company shall pay to the Director the benefit described in this
Section 2.4 in lieu of any other benefit under this Agreement

2.4.1 Amount of Benefit. The benefit under this Section 2.4 is the benefit determined under Schedule A based on the date of the Director's Termination of Service, which is determined by vesting the Director in 100% of the Accrual Balance. Any increase in the annual benefit under Section 2.1.1 would require the recalculation of this benefit on Schedule A.

2.4.2 Payment of Benefit. The Company shall pay this benefit to the Director in a lump sum within 3 days following the Director's Termination of Service.

ARTICLE 3
DEATH BENEFITS

In lieu of any other benefit under this Agreement, the Director's beneficiary(ies) shall be entitled to receive the following benefits under Articles 3.1, 3.2, 3.3 or 3.4, depending on whether the Director's death occurs during or after active service and before or after Normal Retirement Age.

3.1 Death in Active Service Before Normal Retirement Age. If the Director dies before Normal Retirement Age while in the active service of the Company, the Company shall pay to the Director's beneficiary(ies) a lump sum benefit determined by vesting the Director in 100% of the Accrual Balance on the Director's date of death. The Company shall pay this benefit to the Director's beneficiary(ies) in a lump sum within 30 days following the Director's death.

3.2 Death in Active Service After Normal Retirement Age. If the Director dies after Normal Retirement Age while in the active service of the Company, the Company shall for a period of 10 years pay to the Director's beneficiary(ies) the Normal Retirement Benefit provided in Article 2.1.1.

3.3 Death After Termination of Service Before Normal Retirement Age. (a) After Payments

Commence. If, a Termination of Service before Normal Retirement Age having previously occurred, the Director dies after benefit payments commence under Article 2.2 of this Agreement but before receiving all such payments, the Company shall pay the remaining benefits to the Directors beneficiary(ies) at the same time and in the same amounts they would have been paid to the Director had the Director survived,

(b) Before Payments Commence. If, a Termination of Service before Normal Retirement Age having previously occurred, the Director is entitled to any benefit pursuant to Article 2.2 of this Agreement but dies before the benefit payments commence, the Company shall pay the same aggregate benefit payments to the Director's beneficiary(ies) that the Director was entitled to before death, except that the benefit payments shall commence on the first day of the month following the date of the Director's death.

3.4 Death After Termination of Service After Normal Retirement Age. (a) After Payments Commence. 1f, a Termination of Service on or after Normal Retirement Age having previously occurred, the Director dies after benefit payments commence under Article 2.1 of this Agreement but before receiving all such payments, the Company shall pay the remaining benefits to the Director's beneficiary(ies) at the same time and in the same amounts they would have been paid to the Director had the Director survived.

(b) Before Payments Commence. If, a Termination of Service on or after Normal Retirement Age having previously occurred, the Director is entitled to any benefit pursuant to Article 2.1 of this Agreement but dies before the benefit payments commence, the Company shall pay the same aggregate benefit payments to the Director's beneficiary(ies) that the Director was entitled to before death, except that the benefit payments shall commence on the first day of the month following the date of the Director's death.

ARTICLE 4
BENEFICIARIES

4.1 Beneficiary Designations. The Director shall designate a beneficiary by filing a written designation with the Company. The Director may revoke or modi1~y the designation at any time by filing a new designation. However, designations will only be effective if signed by the Director and received by the Company during the Director's lifetime. The Director's beneficiary designation shall be deemed automatically revoked if the beneficiary predeceases the Director or if the Director names a spouse as beneficiary and the marriage is subsequently dissolved, lithe Director dies without a valid beneficiary designation, the Director's estate shall be the beneficiary.

4.2 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 such benefit to the guardian, legal representative or person having the care or custody of such minor, incapacitated person or incapable person. The Company may require proof of incapacity, minority or guardianship as it may deem appropriate prior to distribution of the benefit such distribution shall completely discharge the Company from all liability with respect to such benefit

ARTICLE 5
GENERAL LIMITATIONS

5.1 Termination for Cause. Notwithstanding any provision of this Agreement to the contrary, the Company shall not pay any benefit under this Agreement if the Company terminates the Director's service for:

(a) Gross negligence or gross neglect of duties;

(b) Commission of a felony or of a gross misdemeanor involving moral turpitude; or

(c) Fraud, disloyally, dishonesty or willful violation of any law or significant Company policy committed in connection with the Director's service and resulting in an adverse effect on the Company.

5.2 Suicide or Misstatement. The Company shall not pay any benefit under this Agreement if the Director commits suicide within two years after the date of this Agreement, or 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 from service and/or permanently prohibited from participating in the conduct of the Company's affairs by an order issued under Section 8(e)(4) or (g)(l) of the Federal Deposit Insurance Act, 12 U.S.C. Section 18l8(e)(4) or (g)(1), all obligations of the Company under this Agreement shall terminate as of the effective date of the order.

ARTICLE 6
CLAIMS ANTI 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 of Claimant's written application for benefits, of his or her eligibility or noneligibility for benefits under the Agreement lithe Company determines that the Claimant is not eligible for benefits or full benefits, the notice shall set forth (1) the specific reasons for such denial, (2) a specific reference to the provisions of the Agreement on which the denial is based, (3) 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 (4) 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, lithe 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 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 sixty-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
AMENDMENTS AND TERMINATION

This Agreement may be amended or terminated only by a written agreement signed by the Company and the Director.

ARTICLE 8
MISCELLANEOUS

8.1 Binding Effect. This Agreement shall bind the Director and the Company, and their beneficiaries, survivors, executors, successors, administrators and transferees.

8.2 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 the Agreement interfere with the rights 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 nor interfere with the Director's right to terminate services at any time.

8.3 Non-Transferability. Benefits under this Agreement cannot be sold, transferred, assigned, pledged, attached or encumbered in any manner.

8.4 Successors; Binding Agreement. The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, by an assumption agreement in form and substance satisfactory to the Director, 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 if no such succession had taken place. Failure of the Company to obtain such assumption agreement prior to the effectiveness of any such succession shall be a breath of this Agreement and shall entitle the Director to the Change in Control Benefit provided in Section 2.4.

8.5 Tax Withholding. The Company shall withhold any taxes that are required to be withheld from the benefits provided under this Agreement

8.6 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.

8.7 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 such benefits. The rights to benefits are not subject in any manner 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.

8.8 Entire Agreement. This Agreement constitutes the entire agreement between the Company and the Director as to the subject matter hereof. No rights are granted to the Director by virtue of this Agreement other than those specifically set forth herein.

8.9 Administration. The Company shall have powers which are necessary to administer this Agreement, including but not limited to:

(a) Interpreting the provisions of the Agreement

(b) Establishing and revising the method of accounting for the Agreement,

(c) Maintaining a record of benefit payments; and

(d) Establishing riles and prescribing any forms necessary or desirable to administer the Agreement

8.10 Named Fiduciary. The Company shall be the named fiduciary and plan administrator under this Agreement. The named fiduciary may delegate to others certain aspects of the management and operation responsibilities of the plan including the employment of advisors and the delegation of ministerial duties to qualified individuals.

8.11 Severability. If for any reason any provision of this Agreement is held invalid, such invalidity shall not affect any other provision of this Agreement not held so invalid, and each such other provision shall, to the full -extent consistent with the law, continue in full force and effect. If any provision of this Agreement shall be held invalid in part, such invalidity shall in no way affect the rest of such provision, not held so invalid, and the rest of such provision, together with all other provisions of this Agreement shall, to the full extent consistent with the law, continue in full force and effect

8.12 Headings. The headings of Sections herein are included solely for convenience of reference and shall not affect the meaning or interpretation of any provision of this Agreement

8.13 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.

(a) If to the Company, to: Board of Directors Cortland Bancorp.

194W, Main Street
P.O. Box 98
Cortland, Ohio 44410-1466

(b) If to the Director, to: Timothy K. Woofter

and to such other or additional person or persons as either party shall have designated to the other party in writing by like notice.

IN WITNESS WHEREOF, the Director and a duly authorized Company officer have signed this Agreement as of the day and year first written above.

DIRECTOR:                               COMPANY:

                                        CORTLAND BANCORP.


                                        By:
-------------------------------------       ------------------------------------
Timothy K. Woofter                      Title:
                                               ---------------------------------

BENEFICIARY DESIGNATION
CORTLAND BANCORP.
DIRECTOR RETIREMENT AGREEMENT

TIMOTHY K. WOOFTER

I 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.

Received by the Company this ______ day of ___________ ,2001.

February __ 2004

Mr. Timothy K. Woofter
Director
Cortland Bancorp
194 West Main Street
Cortland, Ohio 44410-1466

RE: LETTER AMENDMENT OF DIRECTOR RETIREMENT AGREEMENT

Dear Mr. Woofter:

The purpose of this letter is to memorialize in writing certain changes in your March 1, 2001 Director Retirement Agreement, which I refer to hereinafter as the "Agreement." Cortland Bancorp had been accruing for its liability under the Agreement using an 8.00% accrual rate assumption, but that assumed rate was changed to 6.75% effective October 1, 2003, reflecting the decline in prevailing interest rates that has persisted since the Agreements were originally entered into. A similar change in the accrual rate assumption was recently made by Cortland Savings and Banking Company for its liability accruals under Salary Continuation Agreements with officers.

The changed accrual rate assumption affects anticipated benefit payment amounts, both under the Agreements and under the officers' Salary Continuation Agreements. Just as the Salary Continuation Agreements' Schedules A have been updated to reflect this changed assumption, we propose to replace the Schedule A attached to your Agreement with a new Schedule A. To make this process more fluid if a similar change needs to be made in the future, we are also proposing
(a) to add to the Agreement a definition of the term "Accrual Balance," (b) to add a provision clarifying that the Agreement's terms govern in all cases in which there is a conflict between the text of the Agreement versus the benefits reflected on Schedule A, and (c) to replace Sections 8.9 and 8.10 with a new Article 9 that has to do with administration of the Agreement. These new provisions make more clear the power of the administrator of the Agreement (the board) to make decisions about important accounting and interpretive issues under the Agreement, including changes in Schedule A of the Agreement.

The text of the amendment is set forth below. Following that text is a signature line. I ask that you sign and date the enclosed copy of this letter in the spaces provided, and that you return the executed copy to me. That will complete the amendment process. A revised Schedule A is also attached to this letter. Please retain the accompanying revised Schedule A. The revised Schedule A replaces and supersedes in its entirety the Schedule A currently associated with your Agreement. You may discard the old Schedule A.

FIRST AMENDMENT

A new definition of the term "Accrual Balance" is added to the Agreement as
Section 1.12, as follows:

1.12 "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 shall be calculated assuming a level principal amount and interest as the discount rate is accrued each period. The principal accrual is determined such that when it is credited with interest each month, the Accrual Balance at Normal Retirement Age equals 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 initial discount rate is 6.75%. However, the Plan Administrator, in its sole discretion, may adjust the discount rate to maintain the rate within reasonable standards according to GAAP. The Plan Administrator shall consist of the Company's board of directors or such committee or person(s) as the board shall appoint.

SECOND AMENDMENT

A new section 2.5 is added to the Agreement to clarify that the terms of the Agreement govern if there is a conflict between the text of the Agreement versus the benefits reflected on Schedule A attached to the Agreement, as follows:

2.5 Contradiction in Terms of Agreement and Schedule A. If there is a contradiction in the terms of this Agreement and Schedule A attached hereto concerning the benefits due under Section 2.2, 2.3, or 2.4 hereof, then the actual amount of benefits prescribed by this Agreement shall control.

THIRD AMENDMENT

The sections of the Agreement having to do with "Administration" (section 8.9) and "Named Fiduciary" (section 8.10) are hereby deleted in their entirety, and the sections that follow are renumbered accordingly sections 8.9 ("Severability"), 8.10 ("Headings"), and 8.11 ("Notices").

FOURTH AMENDMENT

A new Article 9 having to do with administration is added to the Agreement, as follows:

ARTICLE 9
ADMINISTRATION OF AGREEMENT

9.1 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(s) as the board shall appoint. The Director may be a member of the Plan Administrator. The Plan Administrator shall also have the discretion and authority to (a) make, amend, interpret, and enforce all appropriate rules and regulations for the administration of this Agreement and (b) decide or resolve any and all questions, including interpretations of this Agreement, as may arise in connection with the Agreement.

9.2 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.

9.3 Binding Effect of Decisions. The decision or action of the Plan Administrator

with respect to any question arising out of or in connection with 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.

9.4 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.

9.5 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.

Please signify your acceptance of and agreement to the foregoing changes by executing and dating the enclosed copy of this letter in the spaces provided and returning it to the undersigned. The changes become effective as an amendment of your Director Retirement Agreement upon receipt by Cortland Bancorp of this letter executed by you.

Cortland Bancorp

Accepted and agreed to this _______ day of ____________, 2004 by the undersigned director of Cortland Bancorp.

                                     EARLY
                                  TERMINATION       DISABILITY
              AGE               ANNUAL BENEFIT    ANNUAL BENEFIT   CHANGE-IN-
              AT                  PAYABLE AT        PAYABLE AT       CONTROL
 PLAN YEAR   PLAN    ACCRUAL        NORMAL            NORMAL         BENEFIT
  ENDING     YEAR   BALANCE @   RETIREMENT AGE    RETIREMENT AGE    PAYABLE IN
 FEBRUARY     END   6.75% (1)         (2)              (2)         A LUMP SUM
----------   ----   ---------   --------------   ---------------   -----------
   2004       53    $10,654         $ 2,706          $ 2,706         $10,654
   2005       54    $15,740         $ 3,737          $ 3,737         $15,740
   2006       55    $21,179         $ 4,701          $ 4,701         $21,179
   2007       56    $26,997         $ 5,602          $ 5,602         $26,997
   2008       57    $33,221         $ 6,445          $ 6,445         $33,221
   2009       58    $39,877         $ 7,233          $ 7,233         $39,877
   2010       59    $46,998         $ 7,969          $ 7,969         $46,998
   2011       60    $54,613         $ 8,658          $ 8,658         $54,613
   2012       61    $62,760         $ 9,302          $ 9,302         $62,760
   2013       62    $71,473         $ 9,904          $ 9,904         $71,473
April 2013    63    $72,983(3)      $10,000          $10,000         $72,983

(1) Calculations are approximations. Benefit calculations are based on prior year-end accrual balances. The accrual balance reflects payment at the beginning of each month during retirement, beginning May 1, 2013.

(2) Benefit is based on the present value of the current payment stream of the vested accrual balance using a standard discount rate (6.75%).

(3) Projected retirement occurs April 30, 2013, with the first the first normal monthly retirement benefit commencing May 2013. The accrual balance at the end of April 2013 will be $72,983.

EXHIBIT 10.12

CORTLAND BANCORP.
SPLIT DOLLAR AGREEMENT

THIS SPLIT DOLLAR AGREEMENT is made and entered into as of this 23rd day of February, 2001, by and between Cortland Bancorp., a bank holding company located in Cortland, Ohio (the "Company") and ________________ (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 aforementioned parties.

To encourage the Director to remain a director of the Company, the Company is willing to divide the death proceeds of a life insurance policy on the Director's life. The Company will pay life insurance premiums from its general assets.

ARTICLE 1
GENERAL DEFINITIONS

Capitalized terms not otherwise defined in this Split Dollar Agreement shall have the same meaning as defined in the Salary Continuation Agreement of even date herewith. The following terms shall have the meanings specified:

1.1 "Insurer" means Great-West Life & Annuity Insurance Company.

1.2 "Policy" means insurance policy no. ________ issued by the Insurer.

1.3 "Insured" means the Director.

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 has been paid pursuant to Article 2.2 below.

2.2 Director's Interest. The Director shall have the right to designate the beneficiary of death proceeds in the amount of $100,000. The Director shall also have the right to elect and change settlement options specified in the Policy that may be permitted.

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 without first giving the Director or the Director's transferee a right of first refusal to purchase the Policy for the Policy's interpolated terminal reserve value. Such right of first refusal to purchase the Policy must be exercised within 60 days from the date the Company gives written notice of the Company's intention to sell, surrender or transfer ownership of the Policy. This provision shall not impair the right of the Company to terminate this Split Dollar Agreement.

2.4 Comparable Coverage. Upon execution of this Agreement, the Company shall maintain the Policy in full force and effect and in no event shall the Company 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 Agreement and executes a new Split Dollar Agreement and Endorsement for said comparable insurance policy. The Policy or any comparable policy shall be subject to the claims of the Company's creditors.

ARTICLE 3
PREMIUMS

3.1 Premium Payment. The Company shall pay any premiums due on the Policy.

3.2 Imputed Income. The Company shall impute income to the Director in an amount equal to the current term rate for the Director's age multiplied by the net death benefit payable to the Director's beneficiary. The "current term rate" is the minimum amount required to be imputed under Revenue Rulings 64-328 and 66-110, or any subsequent applicable authority.

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, then 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.

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 of 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 (1) the specific reasons for denial, (2) a specific reference to the provisions of this Split Dollar Agreement on which the denial is based, (3) 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 (4) 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
AMENDMENTS AND TERMINATION

This Split Dollar Agreement may be amended or terminated only by a written agreement signed by the Company and the Director.

ARTICLE 8
MISCELLANEOUS

8.1 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.

8.2 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 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. This Agreement also does not require the Director to remain a director nor interfere with the Director's right to terminate service at any time.

8.3 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.

8.4 Entire Agreement. This Split Dollar Agreement constitutes the entire split dollar agreement between the Company and the Director as to the subject matter hereof. No rights are granted to the Director by virtue of this Split Dollar Agreement other than those specifically set forth herein.

8.5 Administration. The Company shall have the powers necessary to administer this Split Dollar Agreement, including but not limited to:

(a) Interpreting the provisions of the Split Dollar Agreement;

(b) Establishing and revising the method of accounting for the Split Dollar Agreement;

(c) Maintaining a record of benefit payments; and

(d) Establishing rules and prescribing any forms necessary or desirable to administer the Split Dollar Agreement.

8.6 Named Fiduciary. The Company shall be the named fiduciary and plan administrator under the Split Dollar Agreement. It may delegate to others certain aspects of the management and operational responsibilities, including the employment of advisors and the delegation of ministerial duties to qualified individuals.

8.7 Severability. If for any reason 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 so invalid, and each such other provision shall, to the full extent consistent with the law, continue in full force and effect. If any provision of this Split Dollar Agreement is held invalid in part, such invalidity shall in no way affect the remainder of such provision not held so 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 the law.

8.8 Headings. The headings of Sections herein are included solely for convenience of reference and shall not affect the meaning or interpretation of any provision of this Split Dollar 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.

(a) If to the Company, to: Board of Directors Cortland Bancorp.

194 W. Main Street
P.O. Box 98
Cortland, Ohio 44410-1466

(b) If to the Director, to: ________________

and to such other or additional person or persons as either party shall have designated to the other party in writing by like notice.

IN WITNESS WHEREOF, the Director and a duly authorized Company officer have executed this Agreement as of the day and year first written above.

DIRECTOR:                               COMPANY:

                                        CORTLAND BANCORP.


                                        By:
-------------------------------------       ------------------------------------
                                        Title:
                                               ---------------------------------

SPLIT DOLLAR POLICY ENDORSEMENT
TO THE
CORTLAND BANCORP. SPLIT DOLLAR AGREEMENT

Policy No. __________________________ Insured: _______________________________

Supplementing and amending the application for insurance to _______________ ("Insurer") on January 8, 2001 (the application date), the applicant requests and directs that:

BENEFICIARIES

1. Cortland Bancorp., a bank holding company located in Cortland, Ohio (the "Company"), shall be the beneficiary of any death proceeds remaining after the Insured's interest has been paid pursuant to paragraph (2) below.

2. The Insured or the Insured's transferee shall designate the beneficiary of death proceeds in the amount of $100,000.

OWNERSHIP

3. The Owner of the Policy shall be the Company. The Owner shall have all ownership rights in the Policy except as may be specifically granted to the Insured or the Insured's transferee in paragraph (4) of this endorsement.

4. The Insured or the Insured's transferee shall have the right to assign his or her rights and interests in the Policy with respect to that portion of the death proceeds designated in paragraph (2) of this endorsement, and to exercise all settlement options with respect to such death proceeds.

MODIFICATION OF ASSIGNMENT PROVISIONS OF THE POLICY

Upon the death of the Insured, the interest of any collateral assignee of the Owner of the Policy designated in paragraph (3) above shall be limited to the portion of the proceeds described in paragraph (1) above.

OWNER'S AUTHORITY

The Insurer is hereby authorized to recognize the Owner's claim to rights hereunder without investigating the reason for any action taken by the Owner, including the Owner's statement of the amount of premiums the Owner has paid on the Policy. The signature of the Owner shall be sufficient for the exercise of any rights under this Endorsement, and the receipt of the Owner for any sums received by it shall be a full discharge and release therefor to the Insurer. The Insurer may rely on a sworn statement in form satisfactory to it furnished by the Owner, its successors or assigns, as to their interest, and any payments made pursuant to such statement shall discharge the Company accordingly.

Any transferee's rights shall be subject to this Endorsement.

The Owner accepts and agrees to this split dollar endorsement.

SPLIT DOLLAR POLICY ENDORSEMENT

TO THE
CORTLAND BANCORP. SPLIT DOLLAR AGREEMENT

The undersigned 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 being executed.

Signed at ___________________, Ohio, this _______ day of ___________, 2001.

CORTLAND BANCORP.

The Insured accepts and agrees to the foregoing and, subject to the rights of the Owner as stated above, designates ____________________________________, (relationship: ____________________) as primary beneficiary(s) and _____________ (relationship: ____________________________) as secondary beneficiary of the portion of the proceeds described in paragraph (2) above.

Signed at ___________________, Ohio, this _____ day of _____________, 2001.

THE INSURED

CORTLAND BANCORP

SPLIT DOLLAR AGREEMENT AND ENDORSEMENT

This SPLIT DOLLAR AGREEMENT AND ENDORSEMENT (this "Split Dollar Agreement") is made and entered into as of ________________________, 2005, by and between Cortland Bancorp, a bank holding company located in Cortland, Ohio (the "Company") and Jerry A. Carleton (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 aforementioned parties.

To encourage the Director to remain a director of the Company, the Company is willing to divide the death proceeds of a life insurance policy on the Director's life. The Company will pay life insurance premiums from its general assets.

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 of even date herewith between the Company and the Director. The following terms shall have the meanings specified:

1.1 "Insured" means the Director.

1.2 "Insurer" means each life insurance carrier for which there is a Split Dollar Policy Endorsement attached to this Split Dollar Agreement.

1.3 "Policy" means the specific life insurance policy or policies issued by the Insurer(s).

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 has been paid pursuant to Article 2.2 below.

2.2 Director's Interest. The Director shall have the right to designate the beneficiary of death proceeds in the amount of $100,000. The Director shall also have the right to elect and change settlement options specified in the Policy that may be permitted.

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 without first giving the Director or the Director's transferee a right of first refusal to purchase the Policy for the Policy's interpolated terminal reserve value. Such right of first refusal to purchase the Policy must be exercised within 60 days from the date the Company gives written notice of the Company's intention to

sell, surrender or transfer ownership of the Policy. This provision shall not impair the right of the Company to terminate this Split Dollar Agreement.

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 on an annual basis 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, then 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.

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 of 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 (1) the specific reasons for denial, (2) a specific reference to the provisions of this Split Dollar Agreement on which the denial is based, (3) 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 (4) 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(s) as the board shall appoint. The Director may be a member of the Plan Administrator. The Plan Administrator shall also have the discretion and authority to (a) make, amend, interpret, and enforce all appropriate rules and regulations for the administration of this Agreement and (b) decide or resolve any and all questions, including interpretations of this Split Dollar Agreement, as may arise in connection with this Split Dollar Agreement.

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 with respect to any question arising out of or in connection with 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. 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 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 commits suicide within two years after the date of this Split Dollar Agreement, or if the Director has made any material misstatement of fact on any application for life insurance purchased by the Company. Notwithstanding any provision of this Split Dollar Agreement to the contrary, this Split Dollar Agreement also shall terminate if the Director's Termination of Service is the result of Termination for 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. For this purpose, "Termination for 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 -

(a) because of the Director's gross negligence or gross neglect of duties, or

(b) because of the Director's commission of a felony, or commission of a misdemeanor involving moral turpitude, or

(c) because of the Director's fraud, disloyalty, dishonesty, or willful violation of any law or significant policy of the Company committed in connection with the Director's service and resulting in an adverse effect on the Company, or

(d) because the Director is removed from service 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)].

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 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. This Split Dollar Agreement also does not require the Director to remain a director nor 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 hereof. No rights are granted to the Director under this Split Dollar Agreement other than those specifically set forth herein.

8.6 Severability. If for any reason 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.

8.7 Headings. Caption headings are included solely for convenience of reference and shall not affect the meaning or interpretation of any provision of this Split Dollar Agreement.

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 as of the date first written above.

DIRECTOR                                CORTLAND BANCORP


                                        By:
-------------------------------------       ------------------------------------
Jerry A. Carleton                       Title:
                                               ---------------------------------

SPLIT DOLLAR POLICY ENDORSEMENT

Insured: Jerry Carleton
Insurer: Midland National Life Insurance Company Policy No. 688313

Pursuant to the terms of the Cortland Bancorp Split Dollar Agreement and Endorsement dated as of ______________________________, 2005, 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:

The exclusive rights to change the beneficiary for the proceeds payable under this paragraph, to elect any optional method of settlement for the proceeds paid under this paragraph that is available under the terms of the policy, 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.

INSURED:                                OWNER:
                                        Cortland Bancorp


                                        By:
-------------------------------------       ------------------------------------
Jerry A. Carleton                       Its:
                                             -----------------------------------

EXHIBIT 10.13

THE CORTLAND SAVINGS & BANKING COMPANY
SPLIT DOLLAR AGREEMENT

(composite: Article 6 as amended by letter agreement dated August 15, 2002 and Section 2.4 as amended by Second Amendment dated as of September 29, 2005)

THIS SPLIT DOLLAR AGREEMENT is made and entered into as of this 23rd day of February, 2001, by and between The Cortland Savings & Banking Company, an Ohio-chartered bank located in Cortland, Ohio (the "Company") and Rodger W. Platt (the "Executive"). This Split Dollar Agreement shall append the Split Dollar Endorsement entered into on even date herewith, or as subsequently amended, by and between the aforementioned parties.

To encourage the Executive to remain an employee of the Company, the Company is willing to divide the death proceeds of a life insurance policy on the Executive's life. The Company will pay life insurance premiums from its general assets.

ARTICLE 1
GENERAL DEFINITIONS

Capitalized terms not otherwise defined in this Split Dollar Agreement shall have the same meaning as defined in the Salary Continuation Agreement of even date herewith. The following terms shall have the meanings specified:

1.1 "Insurer" means Great-West Life & Annuity Insurance Company.

1.2 "Policy" means insurance policy no. 85998035 issued by the Insurer.

1.3 "Insured" means the Executive.

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 Executive's interest has been paid pursuant to Article 2.2 below.

2.2 Executive's Post-Retirement Death Benefit Interest. The Executive shall have the right to designate the beneficiary of death proceeds in an amount equal to 1 times the Executive's base annual salary at the time the Executive's employment with the Company terminates by reason of retirement. Base annual salary shall be defined by reference to compensation of the type (exclusive of board fees) that would be required to be reported by Securities and Exchange Commission Rule 228.402(b) (17 C.F.R. Section 228.402(b)), specifically, column
(c) of that rule's Summary Compensation Table (or any successor provision). For purposes of this Split Dollar Agreement, base annual salary will be the highest base annual salary amount achieved by the Executive during the Executive's last ten (10) years of employment with the Company prior to retirement. The Executive shall also have the right to elect and change settlement options specified in the Policy that may be permitted.

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 without first giving the Executive or the Executive's transferee a right of first refusal to purchase the Policy for the Policy's interpolated terminal reserve value. Such right of first refusal to purchase the Policy must be exercised within 60 days from the date the Company gives written notice of the Company's intention to sell, surrender or transfer ownership of the Policy. This provision shall not impair the right of the Company to terminate this Split Dollar Agreement.

2.4 Company-Paid Death Benefit if the Company Cancels the Policy. If the Policy is cancelled, surrendered, terminated, or allowed to lapse, in any such case without replacement, provided that when the

Executive's employment with the Company terminates the Executive is entitled to benefits under the August 15, 2002 Amended Salary Continuation Agreement in effect at the time of employment termination, or if employment termination occurs because of the Executive's death, then the Executive's beneficiary designated in accordance with the Endorsement shall be entitled to death proceeds payable by the Bank in an amount in cash equal to the sum of (1) the amount specified in Section 2.2, measured at the time the Policy is cancelled, surrendered, terminated, or allowed to lapse, plus (2) a tax gross-up payment to compensate for federal and state income taxes imposed on the benefit specified in clause (1) of this Section 2.4. The tax gross-up payment required under this clause (2) of Section 2.4 shall be calculated in two steps, first by dividing the total death benefit specified in clause (1) of this Section 2.4 by one minus the sum of (x) the highest marginal individual federal income tax rate under the Internal Revenue Code at the time of the Executive's death (offset or reduced to account for the deductibility at the federal level of state income taxes), plus
(y) the highest marginal individual state income tax rate under Ohio law at the time of the Executive's death. Second, the death benefit specified in clause (1) of this Section 2.4 shall then be subtracted from the amount calculated in that first step. The difference shall be the additional tax gross-up payment to be made to compensate for taxes, regardless of whether it exceeds or is less than taxes imposed on the Executive's estate for "income in respect of a decedent." To illustrate with a simple hypothetical based on an assumed death benefit amount of $100,000 paid directly by the Bank under clause (1) of this Section 2.4, the additional tax gross-up payment would be calculated as follows if the highest marginal individual income tax rates are 35% (federal) and 7.5% (Ohio), taking into account the deductibility at the federal level of state income taxes:

First Step:    $100,000 / divided by (1 - ((35% + 7.5%) - (35% x 7.5%))
             = $100,000 / divided by (1 minus 39.875%)
             = $100,000 / divided by 60.125%, or .60125
             = $166,320

Second Step:   $166,320 minus $100,000
             = $ 66,320, the amount of the additional tax gross-up payment

                               ARTICLE 3
                               PREMIUMS

3.1 Premium Payment. The Company shall pay any premiums due on the Policy.

3.2 Imputed Income. The Company shall impute income to the Executive in an amount equal to the current term rate for the Executive's age multiplied by the net death benefit payable to the Executive's beneficiary. The "current term rate" is the minimum amount required to be imputed under Revenue Rulings 64-328 and 66-110, or any subsequent applicable authority.

ARTICLE 4
ASSIGNMENT

The Executive may assign without consideration all interests in the Policy and in this Split Dollar Agreement to any person, entity or trust. If the Executive transfers all of the Executive's interest in the Policy, then all of the Executive's interest in the Policy and in the Split Dollar 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 the Policy or in this Split Dollar Agreement.

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

[Article 6 amended by Amendment No. 1 letter agreement dated August 15, 2002]

6.1 Claims Procedure. A person or beneficiary ("claimant") who has not received benefits under the Agreement that he or she believes should be paid shall make a claim for such benefits as follows:

6.1.1 Initiation - Written Claim. The claimant initiates a claim by submitting to the Bank a written claim for the benefits.

6.1.2 Timing of Bank Response. The Bank shall respond to such claimant within 90 days after receiving the claim. If the Bank determines that special circumstances require additional time for processing the claim, the Bank can extend the response period by an additional 90 days by notifying the claimant in writing, prior to 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 Bank expects to render its decision.

6.1.3 Notice of Decision. If the Bank denies part or all of the claim, the Bank shall notify the claimant in writing of such denial. The Bank shall write the notification in a manner calculated to be understood by the claimant. The notification shall set forth:

6.1.3.1 The specific reasons for the denial,

6.1.3.2 A reference to the specific provisions of the Agreement on which the denial is based,

6.1.3.3 A description of any additional information or material necessary for the claimant to perfect the claim and an explanation of why it is needed,

6.1.3.4 An explanation of the Agreement's review procedures and the time limits applicable to such procedures, and

6.1.3.5 A statement of the claimant's right to bring a civil action under ERISA [Employees Retirement Income Security Act] Section 502(a) following an adverse benefit determination on review.

6.2 Review Procedure. If the Bank denies part or all of the claim, the claimant shall have the opportunity for a full and fair review by the Bank of the denial, as follows:

6.2.1 Initiation - Written Request. To initiate the review, the claimant, within 60 days after receiving the Bank's notice of denial, must file with the Bank a written request for review.

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. The Bank shall also provide the claimant, 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.

6.2.3 Considerations on Review. In considering the review, the Bank shall take into account all materials and information the claimant submits relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.

6.2.4 Timing of Bank Response. The Bank shall respond in writing to such claimant within 60 days after receiving the request for review. If the Bank determines that special circumstances require additional time for processing the claim, the Bank can extend the response period by an additional

60 days by notifying the claimant in writing, prior to 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 Bank expects to render its decision.

6.2.5 Notice of Decision. The Bank shall notify the claimant in writing of its decision on review. The Bank shall write the notification in a manner calculated to be understood by the claimant. The notification shall set forth:

6.2.5.1 The specific reason for the denial,

6.2.5.2 A reference to the specific provisions of the Agreement on which the denial is based,

6.2.5.3 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

6.2.5.4 A statement of the claimant's right to bring a civil action under ERISA Section 502(a).

ARTICLE 7
AMENDMENTS AND TERMINATION

This Split Dollar Agreement may be amended or terminated only by a written agreement signed by the Company and the Executive.

ARTICLE 8
MISCELLANEOUS

8.1 Binding Effect. This Split Dollar Agreement shall bind the Executive and the Company and their beneficiaries, survivors, executors, administrators and transferees, and any Policy beneficiary.

8.2 No Guarantee of Employment. This Agreement is not an employment policy or contract. It does not give the Executive the right to remain an employee of the Company, nor does it interfere with the Company's right to discharge the Executive. It also does not require the Executive to remain an employee nor interfere with the Executive's right to terminate employment at any time.

8.3 Applicable Law. This 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.

8.4 Entire Agreement. This Split Dollar Agreement constitutes the entire split dollar agreement between the Company and the Executive as to the subject matter hereof. No rights are granted to the Executive by virtue of this Split Dollar Agreement other than those specifically set forth herein.

8.5 Administration. The Company shall have the powers necessary to administer this Split Dollar Agreement, including but not limited to:

(a) Interpreting the provisions of the Split Dollar Agreement;

(b) Establishing and revising the method of accounting for the Split Dollar Agreement;

(c) Maintaining a record of benefit payments; and

(d) Establishing rules and prescribing any forms necessary or desirable to administer the Split Dollar Agreement.

8.6 Named Fiduciary. The Company shall be the named fiduciary and plan administrator under the Split Dollar Agreement. It may delegate to others certain aspects of the management and operational responsibilities, including the employment of advisors and the delegation of ministerial duties to qualified individuals.

8.7 Severability. If for any reason 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 so invalid, and each such other provision shall, to the full extent consistent with the law, continue in full force and effect. If any provision of this Split Dollar Agreement is held invalid in part, such invalidity shall in no way affect the remainder of such provision not held so 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 the law.

8.8 Headings. The headings of Sections herein are included solely for convenience of reference and shall not affect the meaning or interpretation of any provision of this Split Dollar 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.

(a) If to the Company, to: Board of Directors The Cortland Savings and Banking Company 194 West Main Street P.O. Box 98 Cortland, Ohio 44410-1466

(b) If to the Executive, to: Rodger W. Platt 360 Cherry Hill Cortland, Ohio 44410

and to such other or additional person or persons as either party shall have designated to the other party in writing by like notice.

IN WITNESS WHEREOF, the Executive and a duly authorized Company officer have executed this Agreement as of the day and year first above written.

EXECUTIVE:                              BANK:
                                        THE CORTLAND SAVINGS AND BANKING COMPANY


/s/ Rodger W. Platt                     By: /s/ Lawrence A. Fantauzzi
-------------------------------------       ------------------------------------
Rodger W. Platt                             Lawrence A. Fantauzzi
                                            Senior Vice President, Controller,
                                            Secretary-Treasurer and Chief
                                            Financial Officer

EXHIBIT 10.14

THE CORTLAND SAVINGS AND BANKING COMPANY
ENDORSEMENT SPLIT DOLLAR AGREEMENT

THIS ENDORSEMENT SPLIT DOLLAR AGREEMENT is entered into as of this ______ day of ____________, 2005, by and between The Cortland Savings and Banking Company, an Ohio-chartered bank (the "Bank") and Rodger W. Platt (the "Executive").

WHEREAS, the Bank and the Executive entered into a Split Dollar Agreement dated as of February 23, 2001, as amended by letter amendment dated of as of August 15, 2002, which agreement grants to the Executive the right to designate the beneficiary of death proceeds from a policy on the Executive's life,

WHEREAS, the amount of death proceeds for which the Executive has the right to designate the beneficiary of death proceeds under the February 23, 2001 Split Dollar Agreement is equal to one times the Executive's base salary when the Executive's employment with the Bank terminates,

WHEREAS, the parties intend that the February 23, 2001 Split Dollar Agreement, as the same may have been or may hereafter be amended, shall remain in full force and effect, unaffected in any way by this Endorsement Split Dollar Agreement,

WHEREAS, the Bank and the Executive also entered into an Amended Salary Continuation Agreement and an associated Amended Split Dollar Agreement, each dated as of August 15, 2002,

WHEREAS, the August 15, 2002 Amended Salary Continuation Agreement provides for specified retirement benefits for the Executive after termination of his employment, and the associated August 15, 2002 Amended Split Dollar Agreement provides instead for a death benefit of $523,203 under an insurance policy on the Executive's life if the Executive dies in active service to the Bank,

WHEREAS, the August 15, 2002 Amended Split Dollar Agreement associated with the August 15, 2002 Amended Salary Continuation Agreement has terminated because the agreement provides that it shall terminate on the Executive's 70th birthday, which occurred in September 2005, and the Executive therefore no longer has any right to designate the beneficiary of $523,203 of the insurance policy death benefits under the August 15, 2002 Amended Split Dollar Agreement,

WHEREAS, the Executive has contributed substantially to the success of the Bank and its parent company, Cortland Bancorp, an Ohio corporation, and

WHEREAS, the Bank is willing to divide the death proceeds of a life insurance policy on the Executive's life.

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 Endorsement Split Dollar Agreement shall have the same meaning given in the August 15, 2002 Amended Salary Continuation Agreement. 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(a).

1.3 Insured means the Executive.

1.4 Insurer means each life insurance carrier in 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 Insurers.

1.7 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 any death proceeds remaining after the Executive's interest has been paid under Section 2.2 below.

2.2 Death Benefit. (a) Executive's Interest If the Policy Is Not Cancelled. The Executive shall have the right to designate the beneficiary of the Executive's Interest. Provided the Policy is not cancelled, surrendered, terminated, or allowed to lapse, if at the time of Termination of Employment the Executive is entitled to benefits under the August 15, 2002 Amended Salary Continuation Agreement in effect when Termination of Employment occurs, or if Termination of Employment occurs because of the Executive's death, then the Executive's beneficiary designated in accordance with the Split Dollar Policy Endorsement shall be entitled to the Net Death Proceeds less the amount of death proceeds for which the Executive has the right to designate the beneficiary under the February 23, 2001 Split Dollar Agreement. The amount to which the Executive's beneficiary is entitled is referred to in this Endorsement Split

Dollar Agreement as the "Executive's Interest." Whether under this Endorsement Split Dollar Agreement or the February 23, 2001 Split Dollar Agreement, in no case shall the Executive have the right to designate the beneficiary or beneficiaries of an amount of death proceeds in the aggregate exceeding the Net Death Benefit. The Executive or the Executive's transferee shall also have the right to elect and change settlement options that may be permitted for the Executive's Interest.

(b) If the Policy Is Cancelled. If the Policy is cancelled, surrendered, terminated, or allowed to lapse, in any such case without replacement, provided that at the time of Termination of Employment the Executive is entitled to benefits under the August 15, 2002 Amended Salary Continuation Agreement in effect at the time of Termination of Employment, or if Termination of Employment occurs because of the Executive's death, then the Executive's beneficiary designated in accordance with the Split Dollar Policy Endorsement shall be entitled to death proceeds payable by the Bank in an amount in cash equal to the sum of (1) the amount specified in paragraph (a) of this Section 2.2, measured at the time the Policy is cancelled, surrendered, terminated, or allowed to lapse, plus (2) a tax gross-up payment to compensate for federal and state income taxes imposed on the benefit specified in clause (1) of this Section
2.2(b). The tax gross-up payment required under this clause (2) of Section 2.2(b) shall be calculated in two steps, first by dividing the total death benefit specified in clause (1) of this Section 2.2(b) by one minus the sum of
(x) the highest marginal individual federal income tax rate under the Internal Revenue Code at the time of the Executive's death (offset or reduced to account for the deductibility at the federal level of state income taxes), plus (y) the highest marginal individual state income tax rate under Ohio law at the time of the Executive's death. Second, the death benefit specified in clause (1) of this
Section 2.2(b) shall then be subtracted from the amount calculated in that first step. The difference shall be the additional tax gross-up payment to be made to compensate for taxes, regardless of whether it exceeds or is less than taxes imposed on the Executive's estate for "income in respect of a decedent." To illustrate with a simple hypothetical based on an assumed death benefit amount of $100,000 paid directly by the Bank under clause (1) of this Section 2.2(b), the additional tax gross-up payment would be calculated as follows if the highest marginal individual income tax rates are 35% (federal) and 7.5% (Ohio), taking into account the deductibility at the federal level of state income taxes:

First Step: $100,000/divided by (1-((35% + 7.5%) - (35% X 7.5%)) = $100,000/divided by (1 minus 39.875%) = $100,000/divided by 60.125%, or .60125 = $166,320

Second Step: $166,320 minus $ 100,000 = $66,320, the amount of the additional tax gross-up payment

2.3 Option to Purchase. The Bank shall not sell, surrender or transfer ownership of the Policy while this Endorsement Split Dollar Agreement is in effect without first giving the Executive or the Executive's transferee a right of first refusal to purchase the Policy for the Policy's interpolated terminal reserve value. Such right of first refusal to purchase the Policy must be exercised within 60 days from the date the Bank gives written notice of the Bank's

intention to sell, surrender or transfer ownership of the Policy. This provision shall not impair the right of the Bank to terminate this Endorsement Split Dollar Agreement.

ARTICLE 3
PREMIUMS

3.1 Premium Payment. The Bank shall pay any premiums due on the Policy.

3.2 Economic Benefit. The Bank shall 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 amount required to be imputed under Internal Revenue Service Regulations, section 1.61-22(d)(3)(ii), or any subsequent applicable authority. The Bank shall impute the economic benefit to the Executive on an annual basis by adding the economic benefit to the Executive's Form W-2 or, if applicable, Form 1099.

ARTICLE 4
ASSIGNMENT

The Executive may assign without consideration all interests in the Policy and in this Endorsement Split Dollar Agreement to any person, entity or trust. If the Executive transfers all of the Executive's interest in the Policy, then all of the Executive's interest in the Policy and in the Endorsement Split Dollar 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 the Policy or in this Endorsement Split Dollar Agreement.

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 Endorsement Split Dollar Agreement.

ARTICLE 6
CLAIMS PROCEDURE

6.1 Claims Procedure. A person or beneficiary ("claimant") who has not received benefits under this Endorsement Split Dollar Agreement that he or she believes should be paid shall make a claim for such benefits as follows:

6.1.1 Initiation - Written Claim. The claimant initiates a claim by submitting to the Bank a written claim for the benefits.

6.1.2 Timing of Bank Response. The Bank shall respond to such claimant within 90 days after receiving the claim. If the Bank determines that special circumstances

require additional time for processing the claim, the Bank 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 Bank expects to render its decision.

6.1.3 Notice of Decision. If the Bank denies part or all of the claim, the Bank shall notify the claimant in writing of such denial. The Bank shall write the notification in a manner calculated to be understood by the claimant. The notification shall set forth:

6.1.3.1 The specific reasons for the denial,

6.1.3.2 A reference to the specific provisions of this Endorsement Split Dollar Agreement on which the denial is based,

6.1.3.3 A description of any additional information or material necessary for the claimant to perfect the claim and an explanation of why it is needed,

6.1.3.4 An explanation of this Endorsement Split Dollar Agreement's review procedures and the time limits applicable to such procedures, and

6.1.3.5 A statement of the claimant's right to bring a civil action under ERISA (the Employee Retirement Income Security Act of 1974) section 502(a) after an adverse benefit determination on review.

6.2 Review Procedure. If the Bank denies part or all of the claim, the claimant shall have the opportunity for a full and fair review by the Bank of the denial, as follows:

6.2.1 Initiation - Written Request. To initiate the review, within 60 days after receiving the Bank's notice of denial the claimant must file with the Bank a written request for review.

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 Bank 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 Bank shall take into account all materials and information the claimant submits relating to the claim,

without regard to whether such information was submitted or considered in the initial benefit determination.

6.2.4 Timing of Bank Response. The Bank shall respond in writing to such claimant within 60 days after receiving the request for review. If the Bank determines that special circumstances require additional time for processing the claim, the Bank 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 Bank expects to render its decision.

6.2.5 Notice of Decision. The Bank shall notify the claimant in writing of its decision on review. The Bank shall write the notification in a manner calculated to be understood by the claimant. The notification shall set forth:

6.2.5.1 The specific reason for the denial,

6.2.5.2 A reference to the specific provisions of this Endorsement Split Dollar Agreement on which the denial is based,

6.2.5.3 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

6.2.5.4 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 Endorsement Split Dollar Agreement shall be administered by an Administrator, which shall consist of the board or such committee as the board shall appoint. The Executive may be a member of the Administrator. The Administrator shall also have the discretion and authority to
(a) make, amend, interpret, and enforce all appropriate rules and regulations for the administration of this Endorsement Split Dollar Agreement and (b) decide or resolve any and all questions, including interpretations of this Endorsement Split Dollar Agreement, as may arise in connection with the Endorsement Split Dollar Agreement.

7.2 Agents. In the administration of this Endorsement Split Dollar Agreement, the 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 Bank.

7.3 Binding Effect of Decisions. The decision or action of the Administrator with respect to any question arising out of or in connection with the administration, interpretation, and application of this Endorsement Split Dollar Agreement and the rules and regulations promulgated hereunder shall be final and conclusive and binding upon all persons having any interest in the Endorsement Split Dollar 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 Endorsement Split Dollar 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 Termination of Employment of the Executive and such other pertinent information as the Administrator may reasonably require.

ARTICLE 8
MISCELLANEOUS

8.1 Amendment and Termination. This Endorsement Split Dollar Agreement may be amended or terminated only by a written agreement signed by the Bank and the Executive.

8.2 Binding Effect. This Endorsement Split Dollar 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 Endorsement Split Dollar Agreement is not an employment policy or contract. It 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. It also does not require the Executive to remain an employee nor interfere with the Executive's right to terminate employment at any time.

8.4 Successors; Binding Agreement. The Bank will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Bank, by an assumption agreement in form and substance satisfactory to the Executive, to expressly assume and agree to perform this Endorsement Split Dollar Agreement in the same manner and to the same extent that the Bank would be required to perform this Endorsement Split Dollar Agreement if no such succession had taken place.

8.5 Applicable Law. This Endorsement 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.

8.6 Entire Agreement. This Endorsement Split Dollar Agreement constitutes the entire agreement between the Bank and the Executive concerning the subject matter hereof.

However, nothing in this Endorsement Split Dollar Agreement affects in any way the February 23, 2001 Split Dollar Agreement, as the same may have been or may hereafter be amended, which agreement shall remain in full force and effect, unaffected in any way by this Endorsement Split Dollar Agreement. No rights are granted to the Executive under this Endorsement Split Dollar Agreement other than those specifically set forth herein.

8.7 Severability. If any provision of this Endorsement Split Dollar Agreement is held invalid, such invalidity shall not affect any other provision of this Endorsement 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 Endorsement 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 Endorsement Split Dollar Agreement, shall continue in full force and effect to the full extent consistent with law.

8.8 Headings. The headings of sections herein are included solely for convenience of reference and shall not affect the meaning or interpretation of any provision of this Endorsement Split Dollar 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. Unless otherwise changed by notice, notice shall be properly addressed to the Executive if addressed to the address of the Executive on the books and records of the Bank at the time of the delivery of such notice, and properly addressed to the Bank if addressed to the Board of Directors, The Cortland Savings and Banking Company, 194 West Main Street, P.O. Box 98, Cortland, Ohio 44410-1466.

IN WITNESS WHEREOF, the Bank and the Executive have executed this Endorsement Split Dollar Agreement as of the date first set forth above.

EXECUTIVE:                              BANK:
                                        THE CORTLAND SAVINGS AND BANKING COMPANY


                                        By:
-------------------------------------       ------------------------------------
Roger W. Platt                              Lawrence A. Fantauzzi
                                        Its: Senior Vice President, Controller,
                                             Chief Financial Officer, and
                                             Secretary-Treasurer

SPLIT DOLLAR POLICY ENDORSEMENT
THE CORTLAND SAVINGS AND BANKING COMPANY

Insured: Rodger W. Platt Insurer: Great-West Life & Annuity Insurance Company Policy No. 85998035

Pursuant to the terms of The Cortland Savings and Banking Company Endorsement Split Dollar Agreement dated as of _______________, 2005, 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 the Owner's 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 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:

The exclusive right to change the beneficiary for the proceeds payable under this paragraph, to elect any optional method of settlement for the proceeds paid under this paragraph which are available under the terms of the policy 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 said 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 being executed.

INSURED:                                OWNER:
                                        The Cortland Savings and Banking Company


                                        By:
-------------------------------------       ------------------------------------
Rodger W. Platt                             Lawrence A. Fantauzzi
                                        Its: Senior Vice President, Controller,
                                             Chief Financial Officer, and
                                             Secretary-Treasurer

EXHIBIT 10.15

INDEMNIFICATION AGREEMENT

This Indemnification Agreement (this "Agreement") is made as of this __________ day of ______________, 2005, by and between Cortland Bancorp, an Ohio corporation (the "Corporation"), and ___________________, a director, officer, employee, agent, or representative (as hereinafter defined) of the Corporation (the "Indemnitee").

RECITALS:

A. The Corporation and the Indemnitee are each aware of the exposure to litigation officers, directors, employees, agents, and representatives of the Corporation have as they exercise their duties to the Corporation,

B. The Corporation and the Indemnitee are also aware of conditions in the insurance industry that have affected and may continue to affect the Corporation's ability to obtain appropriate liability insurance on an economically acceptable basis,

C. The Corporation desires to continue to benefit from the services of highly qualified, experienced, and otherwise competent persons such as the Indemnitee, and

D. The Indemnitee desires to serve or to continue to serve the Corporation as a director, officer, employee, or agent or as a director, officer, employee, agent, or trustee of another corporation, joint venture, trust, or other enterprise in which the Corporation has a direct or indirect ownership interest, for so long as the Corporation continues to provide, on an acceptable basis, adequate and reliable indemnification against liabilities and expenses that may be incurred by the Indemnitee.

NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants herein contained, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows.

1. INDEMNIFICATION. Subject to the exclusions contained in Section 9 of this Agreement, the Corporation shall indemnify the Indemnitee with respect to his activities as a director, officer, employee, or agent of the Corporation or as a person who is serving or has served at the request of the Corporation ("representative") as a director, officer, employee, agent, or trustee of another corporation, joint venture, trust, or other enterprise, domestic or foreign, in which the Corporation has a direct or indirect ownership interest (an "affiliated entity") against expenses (including, without limitation, attorneys' and experts' fees, judgments, fines, and amounts paid or payable in settlement) actually and reasonably incurred by him ("Expenses") in connection with any claim against Indemnitee that is the subject of any threatened, pending, or completed action, suit, or other type of proceeding, whether civil, criminal, administrative, investigative, or otherwise and whether formal or informal (a "Proceeding"), to which Indemnitee was, is, or is threatened to be made a party by reason of facts that include Indemnitee's being or having been such a director, officer, employee, agent, or representative, to the extent of the highest and most advantageous to the Indemnitee, as determined by the Indemnitee, of one or any combination of the following -

(a) The benefits provided by the Corporation's Articles of Incorporation ("Articles") or Regulations, or the Articles of Incorporation or Bylaws or Regulations of an affiliated entity of which the Indemnitee serves as a representative, in each case as in effect on the date hereof,

(b) The benefits provided by the Corporation's Articles or Regulations, or the Articles of Incorporation or Bylaws or Regulations of an affiliated entity of which the Indemnitee serves as a representative, in each case as in effect at the time Expenses are incurred by the Indemnitee,

(c) The benefits allowable under Ohio law in effect at the date hereof or as amended to increase the scope of indemnification,

(d) The benefits allowable under the law of the jurisdiction under which the Corporation exists at the time Expenses are incurred by the Indemnitee,

(e) The benefits available under any liability insurance obtained by the Corporation in effect when a claim is made against Indemnitee,

(f) The benefits available under any liability insurance obtained by the Corporation in effect at the time Expenses are incurred by the Indemnitee, and

(g) Such other benefits as are or may be otherwise available to Indemnitee.

A combination of two or more of the benefits provided by (a) through (g) shall be available to the extent that the Applicable Document (as hereafter defined) does not require that the benefits provided therein be exclusive of other benefits. The document or law providing for the benefits listed in items
(a) through (g) above is called the "Applicable Document" in this Agreement. The Corporation hereby undertakes to use its best efforts to assist Indemnitee in all proper and legal ways to obtain the benefits selected by Indemnitee under item (a) through (g) above.

For purposes of this Agreement, references to "other enterprises" shall include employee benefit plans for employees of the Corporation or of any affiliated entity, without regard to ownership of such plans; references to "fines" shall include any excise taxes assessed on the Indemnitee with respect to any employee benefit plan; references to "serving at the request of the Corporation" shall include any service as a director, officer, employee, or agent of the Corporation that imposes duties on or involves services by the Indemnitee with respect to an employee benefit plan, its participants, or beneficiaries; references to the masculine shall include the feminine; references to the singular shall include the plural and vice versa; and if the Indemnitee acted in good faith and in a manner he reasonably believed to be in the best interests of the participants and beneficiaries of an employee benefit plan, he shall be deemed to have acted in a manner consistent with the standards required for indemnification by the Corporation under the Applicable Documents.

2. INSURANCE. The Corporation shall maintain liability insurance for so long as Indemnitee's services are covered hereunder, provided and to the extent that such insurance is available on a basis acceptable to the Corporation. However, the Corporation agrees that the provisions hereof shall remain in effect regardless of whether liability or other insurance coverage is at any time obtained or retained by the Corporation. But payments made to Indemnitee under an insurance policy obtained or retained by the Corporation shall reduce the obligation of the Corporation to make payments hereunder by the amount of the payments made under any such insurance policy.

3. PAYMENT OF EXPENSES. At Indemnitee's request, after receipt of written notice under Section 5 hereof and an undertaking in the form of Exhibit A attached hereto by or on behalf of Indemnitee to repay such amounts so paid on Indemnitee's behalf if it shall ultimately be determined under the Applicable Document that Indemnitee is not entitled to be indemnified by the Corporation for such Expenses, the Corporation shall pay the Expenses as and when incurred by Indemnitee. That portion of Expenses representing attorneys' fees and other costs incurred in defending any proceeding shall be paid by the Corporation within 30 days after the Corporation receives the request and reasonable documentation evidencing the amount and nature of the Expenses, subject to its also having received such a notice and undertaking.

4. ADDITIONAL RIGHTS. The indemnification provided in this Agreement shall not be exclusive of any other indemnification or right to which Indemnitee may be entitled and shall continue after Indemnitee has ceased to occupy a position as an officer, director, employee, agent, or representative as described in
Section 1 above with respect to Proceedings relating to or arising out of Indemnitee's acts or omissions during his service in such position. The benefits provided to Indemnitee under this Agreement for the Indemnitee's service as a representative of an affiliated entity shall be payable if and only if and only to the extent that reimbursement to Indemnitee by the affiliated entity with which Indemnitee has served as a representative, whether pursuant to agreement, applicable law, articles of incorporation or association, bylaws or regulations of the entity, or insurance maintained by such affiliated entity, is insufficient to compensate Indemnitee for Expenses actually incurred and otherwise payable by the Corporation under this Agreement. Any payments in fact made to or on behalf of the Indemnitee directly or indirectly by the affiliated entity with which Indemnitee served as a representative shall reduce the obligation of the Corporation hereunder.

5. NOTICE TO CORPORATION. Indemnitee shall provide to the Corporation prompt written notice of any Proceeding brought, threatened, asserted, or commenced against Indemnitee with respect to which Indemnitee may assert a right to indemnification hereunder; provided, however, that failure to provide such notice shall not in any way limit Indemnitee's rights under this Agreement.

6. COOPERATION IN DEFENSE AND SETTLEMENT. Indemnitee shall not make any admission or effect any settlement without the Corporation's written consent unless Indemnitee shall have determined to undertake his own defense in such matter and has waived the benefits of this Agreement. The Corporation shall not settle any Proceeding to which Indemnitee is a party in a manner that would impose any Expense on Indemnitee without his written consent. Neither Indemnitee nor the Corporation will unreasonably withhold consent to the proposed settlement. Indemnitee and the Corporation shall cooperate to the extent reasonably possible with each other and with the Corporation's insurers in attempts to defend or settle such Proceeding.

7. ASSUMPTION OF DEFENSE. Except as otherwise provided below, the Corporation jointly with any other indemnifying party similarly notified may assume Indemnitee's defense in any Proceeding, with counsel mutually satisfactory to Indemnitee and the Corporation. After notice from the Corporation to Indemnitee of the Corporation's election to assume such defense, the Corporation will not be liable to Indemnitee under this Agreement for Expenses subsequently incurred by Indemnitee in connection with the defense thereof, other than reasonable costs of investigation or as otherwise provided below. Indemnitee shall have the right to employ counsel in such Proceeding, but the fees and expenses of such counsel incurred after notice from the Corporation of its assumption of the defense thereof shall be at Indemnitee's expense unless:

(a) The employment of counsel by Indemnitee has been authorized by the Corporation,

(b) Counsel employed by the Corporation initially is unacceptable or later becomes unacceptable to Indemnitee and such unacceptability is reasonable under then existing circumstances,

(c) Indemnitee shall have reasonably concluded that there may be a conflict of interest between Indemnitee and the Corporation (or another party being represented jointly with the Corporation) in the conduct of the defense of such Proceeding, or

(d) The Corporation shall not have employed counsel promptly to assume the defense of such Proceeding,

in each of which cases the fees and expenses of counsel shall be at the expense of the Corporation and subject to payment pursuant to this Agreement. The Corporation shall not be entitled to assume the defense of Indemnitee in any Proceeding brought by or on behalf of the Corporation or as to which Indemnitee shall have made either of the conclusions provided for in clauses (b) or (c) above.

8. ENFORCEMENT. If a dispute or controversy arises under this Agreement between Indemnitee and the Corporation with respect to whether the Indemnitee is entitled to indemnification for any Proceeding or for Expenses incurred, then for each such dispute or controversy the Indemnitee may seek to enforce the Agreement through legal action or, at Indemnitee's sole option and written request, through arbitration. If the Indemnitee requests arbitration, the dispute or controversy shall be submitted by the parties to binding arbitration in Trumbull County, Ohio before a single arbitrator agreeable to both parties; provided, however, that indemnification for any claim, issue, or matter in a Proceeding brought against Indemnitee by or in the right of the Corporation and as to which Indemnitee is adjudged liable for negligence or misconduct in the performance of his duty to the Corporation shall be submitted to arbitration only to the extent permitted under the Applicable Document and applicable law then in effect. If the parties cannot agree on a designated arbitrator within 15 days after arbitration is requested in writing by the Indemnitee, the arbitration shall proceed in Trumbull County, Ohio before an arbitrator appointed by the American Arbitration Association. In either case, the arbitration proceeding shall commence promptly under the rules then in effect of that Association. And the arbitrator agreed to by the parties or appointed by that Association shall be an attorney other than an attorney who has been or is associated with a firm having associated with it an attorney who has been retained by or performed services for the Corporation or Indemnitee at any time during the five years preceding commencement of arbitration. The award shall be rendered in such form that judgment may be entered thereon in any court having jurisdiction thereof. The prevailing party shall be entitled to prompt reimbursement of any costs and expenses (including, without limitation, reasonable attorneys' fees) incurred in connection with such legal action or arbitration; provided, however, that the Indemnitee shall not be required to reimburse the Corporation unless the arbitrator or court resolving the dispute determines that Indemnitee acted in bad faith in bringing the action or arbitration.

9. EXCLUSIONS. Notwithstanding the scope of indemnification available to Indemnitees from time to time under any Applicable Document, no indemnification, reimbursement or payment shall be required of the Corporation hereunder with respect to -

(a) Any claim or any part thereof as to which Indemnitee shall have been determined by a court of competent jurisdiction, from which no appeal is or can be taken, by clear and convincing evidence, to have acted with deliberate intent to cause injury to the Corporation or with reckless disregard for the best interests of the Corporation,

(b) Any claim or any part thereof arising out of acts or omissions for which applicable law prohibits elimination of liability,

(c) Any claim or any part thereof arising under Section 16(b) of the Securities Exchange Act of 1934 pursuant to which Indemnitee shall be obligated to pay any penalty, fine, settlement or judgment,

(d) Any obligation of Indemnitee based upon or attributable to the Indemnitee gaining in fact any improper personal benefit, gain, profit, or advantage, or

(e) Any proceeding initiated by Indemnitee without the consent or authorization of the Board of Directors of the Corporation, provided that this exclusion shall not apply with respect to any claims brought by Indemnitee (1) to enforce his rights under this Agreement or (2) in any Proceeding initiated by another person or entity whether or not such claims were brought by Indemnitee against a person or entity who was otherwise a party to such proceeding.

Nothing in this Section 9 shall eliminate or diminish the Corporation's obligations to advance that portion of Indemnitee's Expenses representing attorneys' fees and other costs incurred in defending any proceeding pursuant to
Section 3 of this Agreement.

Furthermore, anything herein to the contrary notwithstanding, nothing in this Agreement requires indemnification, reimbursement or payment by the Corporation, and the Indemnitee shall not be entitled to demand indemnification, reimbursement or payment under this Agreement, if and to the extent indemnification, reimbursement, or payment constitutes a "prohibited indemnification payment" within the meaning of Federal Deposit Insurance Corporation Rule 359.1(l)(1) [12 CFR 359.1(l)(1)].

10. EXTRAORDINARY TRANSACTIONS. The Corporation covenants and agrees that in the event of any merger, consolidation, or reorganization in which the Corporation is not the surviving entity, any sale of all or substantially all of the assets of the Corporation, or any liquidation of the Corporation (each such event is hereinafter referred to as an "extraordinary transaction"), the Corporation shall -

(a) Have the obligations of the Corporation under this Agreement expressly assumed by the survivor, purchaser, or successor, as the case may be, in such extraordinary transaction, or

(b) Otherwise adequately provide for the satisfaction of the Corporation's obligations under this Agreement, in a manner acceptable to Indemnitee.

11. NO PERSONAL LIABILITY. Indemnitee agrees that neither the directors nor any officer, employee, representative, or agent of the Corporation shall be personally liable for the satisfaction of the Corporation's obligations under this Agreement, and Indemnitee shall look solely to the assets of the Corporation for satisfaction of any claims hereunder.

12. SEVERABILITY. If any provision, phrase, or other portion of this Agreement is determined by any court of competent jurisdiction to be invalid, illegal, or unenforceable, in whole or in part, and such determination becomes final, such provision, phrase, or other portion shall be deemed to be severed or limited, but only to the extent required to render the remaining provisions and portions of the Agreement enforceable, and the Agreement as thus amended shall be enforced to give effect to the intention of the parties insofar as that is possible.

13. SUBROGATION. If any payments are made under this Agreement, the Corporation shall be subrogated to the extent thereof to all rights to indemnification or reimbursement against any insurer or other entity or person vested in the Indemnitee, who shall execute all instruments and take all other actions as shall be reasonably necessary for the Corporation to enforce such rights.

14. GOVERNING LAW. The parties hereto agree that this Agreement shall be construed and enforced in accordance with and governed by the laws of the State of Ohio.

15. 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 Corporation, 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 Corporation shall have designated to the Indemnitee in writing. If to the Indemnitee, notice shall be given to the Indemnitee at the address of the Indemnitee appearing on the Corporation's records, or to such other or additional person or persons as the Indemnitee shall have designated to the Corporation in writing.

16. TERMINATION. This Agreement may be terminated by either party upon not less than 60 days' prior written notice delivered to the other party, but such termination shall not diminish the obligations of the Corporation hereunder with respect to Indemnitee's activities before the effective date of termination.

17. AMENDMENTS AND BINDING EFFECT. This Agreement and the rights and duties of Indemnitee and the Corporation hereunder may not be amended, modified, or terminated except by written instrument signed and delivered by the parties hereto. This Agreement is binding upon and shall inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors, and assigns.

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above written.

CORTLAND BANCORP

INDEMNITEE

EXHIBIT 1

FORM OF UNDERTAKING

THIS UNDERTAKING has been entered into by _______________ ("Indemnitee") pursuant to an Indemnification Agreement dated as of _______________________, 2005 (the "Indemnification Agreement"), by and between Cortland Bancorp, an Ohio corporation (the "Corporation"), and Indemnitee.

RECITALS:

A. Under the Indemnification Agreement, the Corporation has agreed to pay Expenses (within the meaning of the Indemnification Agreement) as and when incurred by Indemnitee in connection with any claim against Indemnitee that is the subject of any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, or investigative, to which Indemnitee was, is, or is threatened to be made a party by reason of facts that include Indemnitee's being or having been a director, officer, or representative (within the meaning of the Indemnification Agreement) of the Corporation,

B. Such a claim has arisen against Indemnitee and Indemnitee has notified the Corporation thereof in accordance with the terms of Section 5 of the Indemnification Agreement (hereinafter the "Proceeding"), and

C. Indemnitee believes that Indemnitee should prevail in the Proceeding, and it is in the interest of both Indemnitee and the Corporation to defend against the claims against Indemnitee thereunder.

NOW, THEREFORE, Indemnitee hereby agrees that in consideration of the Corporation's advance payment of Indemnitee's Expenses incurred before final disposition of the Proceeding, Indemnitee hereby undertakes to reimburse the Corporation for any and all expenses paid by the Corporation on behalf of Indemnitee before final disposition of the Proceeding if the Indemnitee is determined under the Applicable Document (within the meaning of the Indemnification Agreement) to be required to repay such amounts to the Corporation under the Indemnification Agreement and applicable law, provided that if Indemnitee is entitled under the Applicable Document to indemnification for some or a portion of such Expenses, Indemnitee's obligation to reimburse the Corporation shall only be for those Expenses for which Indemnitee is determined to be required to repay such amounts to the Corporation. Such reimbursement or arrangements for reimbursement by Indemnitee shall be consummated within 90 days after a determination that Indemnitee is required to repay such amounts to the Corporation under the Indemnification Agreement and applicable law.

Further, the Indemnitee agrees to reasonably cooperate with the Corporation concerning such proceeding.

IN WITNESS WHEREOF, the undersigned has set his hand this ______day of ______, 20_.

EXHIBIT 10.16

THE CORTLAND SAVINGS AND BANKING COMPANY
AMENDED SALARY CONTINUATION AGREEMENT

THIS AMENDED SALARY CONTINUATION AGREEMENT (this "Agreement") is made and entered into as of this ________ day of _________________ , 2002, by and between The Cortland Savings and Banking Company, an Ohio-chartered, FDIC-insured member bank with its main offices in Cortland, Ohio (the "Bank") and Rodger W. Platt (the "Executive").

WHEREAS, the Executive has contributed substantially to the success of the Bank and its parent company, Cortland Bancorp, an Ohio corporation, and the Bank desires that the Executive continue in its employ,

WHEREAS, to encourage the Executive to remain an employee of the Bank, the Bank is willing to provide salary continuation benefits to the Executive, payable out of the Bank's general assets,

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 Bank, is contemplated insofar as the Bank is concerned,

WHEREAS, the Bank and the Executive entered into a Salary Continuation Agreement dated as of March 1, 2001, providing for specified retirement benefits for the Executive after termination of his employment,

WHEREAS, regulations promulgated under ERISA (the Employees Retirement Income Security Act) that became effective on January 1, 2002 govern the regulation of claims procedures contained in the Executive's form of Salary Continuation Agreement,

WHEREAS, Clark/Bardes Consulting, a benefits consulting firm involved in the design and administration of the Executive's Salary Continuation Agreement, is recommending to its clients that the definition of disability should not create unwanted burdens under the revised ERISA regulations effective January 1, 2002,

WHEREAS, the revised disability definition in this Agreement, as well as the revised Claims and Review Procedure in Article 6 in this document, were drafted by ERISA counsel retained by Clark/Bardes Consulting, and

WHEREAS, the Bank and the Executive have negotiated and agreed to miscellaneous changes in the terms and conditions of the March 1, 2001 Salary Continuation Agreement, including but not limited to revision of the definition of "disability" and updating of the claims and review provisions of Article 6.

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

Whenever used in this Agreement, the following words and phrases shall have the meanings specified --

1.1 "Accrual Balance" means the amount reflected in Schedule A, which is the amount required to be accrued by the Bank according to generally accepted accounting principles to account for benefits that may become payable to the Executive under this Agreement.

1.2 "Change in Control" means any of the following events occur:

(a) Acquisition of Significant Stock Ownership: a report on Schedule 13D or another form or schedule (other than Schedule 13G) is filed or is required to be filed under Sections 13(d) or 14(d) of the Securities Exchange Act of 1934, if the schedule discloses that the filing person or persons acting in concert has or have become the

beneficial owner of 25% or more of a class of Cortland Bancorp's voting securities (but this clause (a) shall not apply to beneficial ownership of voting shares of Cortland Bancorp held by the Bank or another subsidiary of Cortland Bancorp in a fiduciary capacity). A Change in Control of Cortland Bancorp shall not be deemed to have occurred solely because acquisition by Cortland Bancorp of its own voting securities reduces the number of shares outstanding, causing a person's beneficial ownership to exceed 25% of Cortland Bancorp's voting securities; provided that, if after such acquisition by Cortland Bancorp such person becomes the beneficial owner of additional Cortland Bancorp voting securities, increasing the percentage of outstanding Cortland Bancorp voting securities beneficially owned by such person, a Change in Control of Cortland Bancorp shall be deemed to have occurred,

(b) Acquisition of Control under Federal Banking Law. a person acquires the power to direct Cortland Bancorp's management or policies, if Cortland Bancorp's board of directors determines that such acquisition constitutes or will constitute an acquisition of control of Cortland Bancorp for the purposes of the Bank Holding Company Act or the Change in Bank Control Act and the regulations thereunder,

(c) Change in Board Composition: during any period of two consecutive years, individuals who constitute Cortland Bancorp's board of directors at the beginning of the two-year period cease for any reason to constitute at least a majority thereof, provided, however, that -- for purposes of this clause (c) -- each director who is first elected by the board (or first nominated by the board for election by stockholders) by a vote of at least two-thirds (2/3) of the directors who were directors at the beginning of the two-year period shall be deemed to have been a director at the beginning of the two-year period,

(d) Merger: Cortland Bancorp merges into or consolidates with another corporation, or merges another corporation into Cortland Bancorp, and as a result less than 50% of the total voting power of the surviving corporation immediately after the merger or consolidation is held by persons who were the stockholders of Cortland Bancorp's voting securities immediately before the merger or consolidation, or

(e) Sale of Assets: Cortland Bancorp sells to a third party all or substantially all of Cortland Bancorp's assets. For purposes of this Agreement, sale of all or substantially all of Cortland Bancorp's assets includes sale of the Bank alone.

1.3 "Disability" means the Executive suffers a sickness, accident or injury that is determined by the carrier of any individual or group disability insurance policy covering the Executive, or by the Social Security Administration, to be a disability rendering the Executive totally and permanently disabled. At the Bank's request, the Executive must submit to the Bank proof of the carrier's or Social Security Administration's determination.

1.4 "Early Retirement Age" means the Executive's 65th birthday.

1.5 "Early Termination" means Termination of Employment before Normal Retirement Age for reasons other than death, Disability, Termination for Cause, or within one year after a Change in Control.

1.6 "Early Termination Date" means the month, day, and year in which Early Termination occurs.

1.7 "Effective Date" means March 1, 2001.

1.8 "Normal Retirement Age" means the Executive's 70th birthday.

1.9 "Normal Retirement Date" means the later of the Normal Retirement Age or Termination of Employment.

1.10 "Person" means an individual, corporation, partnership, trust, association, joint venture, pool, syndicate, sole proprietorship, unincorporated organization or other entity.

1.11 "Plan Year" means a twelve-month period commencing on March 1 and ending on the last day of February of each year. The initial Plan Year shall commence on the Effective Date of this Agreement.

1.12 "Termination for Cause" means the Bank terminates the Executive's employment for any one of the following reasons --

(a) gross negligence or gross neglect of duties,

(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 Bank policy committed in connection with the Executive's employment and resulting in an adverse effect on the Bank.

1.13 "Termination of Employment" means that the Executive ceases to be employed by the Bank for any reason whatsoever, other than because of a leave of absence approved by the Bank. For purposes of this Agreement, if there is a dispute over the employment status of the Executive or the date of the Executive's Termination of Employment, the Bank shall have the sole and absolute right to decide the dispute, unless a Change in Control shall have occurred.

ARTICLE 2
LIFETIME BENEFITS

2.1 Normal Retirement Benefit. For Termination of Employment on or after the Normal Retirement Age for reasons other than death, the Bank shall pay to the Executive the benefit described in this Section 2.1 instead of any other benefit under this Agreement.

2.1.1 Amount of Benefit. The annual benefit under this Section 2.1 is $60,000. In its sole discretion, the Bank's board of directors may increase the annual benefit under this Section 2.1.1, but any increase shall require recalculation of Schedule A.

2.1.2 Payment of Benefit. The Bank shall pay the annual benefit to the Executive in 12 equal monthly installments, payable on the last day of each month, beginning with the month after the Executive's Normal Retirement Date. The annual benefit shall be paid to the Executive for 15 years.

2.2 Early Termination Benefit. For Early Termination on or after the Executive's Early Retirement Age, the Bank shall pay to the Executive the benefit described in this Section 2.2 instead of any other benefit under this Agreement.

2.2.1 Amount of Benefit. The benefit under this Section 2.2 is the Early Termination annual benefit amount set forth in Schedule A for the Plan Year ending immediately before the Early Termination Date (except during the first Plan Year, the benefit is the amount set forth for Plan Year 1). If the Bank's board of directors increases the annual benefit under Section 2.1.1, the increase shall require recalculation of the Early Termination annual benefit on Schedule A.

2.2.2 Payment of Benefit. The Bank shall pay the Early Termination annual benefit to the Executive in 12 equal monthly installments, payable on the last day of each month, beginning with the month after the Normal Retirement Age. The annual benefit shall be paid to the Executive for 15 years.

2.3 Disability Benefit. For Termination of Employment because of Disability before the Normal Retirement Age, the Bank shall pay to the Executive the benefit described in this Section 2.3 instead of any other benefit under this Agreement.

2.3.1 Amount of Benefit. The benefit under this Section 2.3 is the Disability annual benefit amount set forth in Schedule A for the Plan Year ending immediately before the date on which Termination of Employment occurs (except during the first Plan Year, the benefit is the amount set forth for Plan

Year 1). If the Bank's board of directors increases the annual benefit under Section 2.1.1, the increase shall require recalculation of the Disability annual benefit on Schedule A.

2.3.2 Payment of Benefit. The Bank shall pay the Disability annual benefit amount to the Executive in 12 equal monthly installments, payable on the last day of each month, beginning with the month after the Normal Retirement Age. The annual benefit shall be paid to the Executive for 15 years.

2.4 Change-in-Control Benefit. If the Executive's employment with Cortland Bancorp or the Bank terminates within one year after a Change in Control (excepting Termination for Cause), the Bank shall pay to the Executive the benefit described in this Section 2.4 instead of any other benefit under this Agreement.

2.4.1 Amount of Benefit. The benefit under this Section 2.4 is the Change-in-Control benefit set forth in Schedule A. If the Bank's board of directors increases the annual benefit under Section 2.1.1, the increase shall require recalculation of the Change-in-Control lump sum benefit on Schedule A.

2.4.2 Payment of Benefit. The Bank shall pay the Change-in-Control benefit to the Executive in one lump sum within 3 days after the Executive's Termination of Employment.

2.5 Petition for Payment of Vested Normal Retirement Benefit, Vested Early Termination Benefit or Vested Disability Benefit. If the Executive is entitled to the normal retirement benefit provided by Section 2.1, the Early Termination benefit provided by Section 2.2, or the Disability benefit provided by Section 2.3, the Executive may petition the board of directors to have the Accrual Balance amount corresponding to that particular benefit paid to the Executive in a single lump sum after (a) deduction of any normal retirement benefits, Early Termination benefits, or Disability benefits already paid, and (b) addition of interest at the rate of 8.0% on the Accrual Balance not yet paid for the period from Termination of Employment to payment of the lump sum amount. The board of directors shall have sole and absolute discretion about whether to pay the remaining Accrual Balance in a lump sum. If the remaining Accrual Balance is paid in a single lump sum, the Bank shall have no further obligations under this Agreement.

2.6 Change-in-Control Payout of Vested Normal Retirement Benefit, Vested Early Termination Benefit or Vested Disability Benefit Being Paid to the Executive at the Time of a Change in Control. If a Change in Control occurs at any time during the entire 15-year salary continuation benefit payment period and if at the time of that Change in Control the Executive is receiving the benefit provided by Section 2.1.2, Section 2.2.2, or Section 2.3.2, the Bank shall pay the remaining salary continuation benefits to the Executive, his beneficiaries, or estate in a lump sum within three days after the Change in Control. The lump-sum payment due to the Executive, his beneficiaries, or estate as a result of a Change in Control shall be an amount equal to the Accrual Balance amount corresponding to that particular benefit then being paid to the Executive, his estate, or beneficiaries under Section 2.1.2, Section 2.2.2, or
Section 2.3.2 after (a) deduction of any normal retirement benefits, Early Termination benefits, or Disability benefits already paid, and (b) addition of interest at the rate of 8.0% on the Accrual Balance not yet paid for the period from Termination of Employment to payment of the lump sum amount.

2.7 Contradiction in Terms of Agreement and Schedule A. If there is a contradiction in the terms of this Agreement and Schedule A attached hereto concerning the benefits due under Section 2.2, 2.3, or 2.4 hereof, then the actual amount of benefits prescribed by this Agreement shall control.

ARTICLE 3
DEATH BENEFITS

3.1 Death During Active Service. If the Executive dies before the Normal Retirement Age while in the active service of the Bank, instead of any other benefit payable under this Agreement the Bank shall pay to the Executive's beneficiary(ies) the benefit described in the Amended Split Dollar Agreement and Endorsement attached to this Agreement as Addendum A.

3.2 Death During Benefit Period. If the Executive dies after benefit payments under Article 2 have commenced but before receiving all such payments, the Bank shall pay the remaining benefits to the Executive's beneficiary(ies) at the same time and in the same amounts they would have been paid to the Executive had the Executive survived. In that case, no death benefit shall be payable under this Article 3.

3.3 Death After Termination of Employment But Before Benefit Payments Commence. If the Executive is entitled to benefit payments under Article 2 but dies before payments commence, the benefits shall be payable to the Executive's beneficiary(ies), but payments shall commence on the last day of the month after the date of the Executive's death.

3.4 Petition for Benefit Payments. If the Executive dies before receiving any or all benefit payments to which he is entitled under Section 2.1, Section 2.2, or Section 2.3, respectively, the Executive's beneficiary(ies) or estate may petition the board of directors to have the Accrual Balance corresponding to that particular benefit paid to the Executive's beneficiary(ies) or estate in a single lump sum after (a) deduction of any normal retirement benefits, Early Termination benefits, or Disability benefits already paid, and (b) addition of interest at the rate of 8.0% on the Accrual Balance not yet paid for the period from the Executive's Termination of Employment to payment of the lump sum amount. The board of directors shall have sole and absolute discretion about whether to pay the remaining Accrual Balance in a lump sum. If the remaining Accrual Balance is paid in a single lump sum, the Bank shall have no further obligations under this Agreement.

3.5 Change-in-Control Payout of Vested Normal Retirement Benefit, Vested Early Termination Benefit or Vested Disability Benefit Being Paid to the Executive's Estate or Beneficiaries at the Time of a Change in Control. If a Change in Control occurs at any time during the entire 15-year salary continuation benefit payment period and if at the time of that Change in Control the Executive's estate or beneficiary(ies) is receiving the benefit provided by
Section 2.1.2, Section 2.2.2, or Section 2.3.2, the Bank shall pay the remaining salary continuation benefits to the Executive's beneficiary(ies) or estate in a lump sum within three days after the Change in Control. The lump-sum payment due to the Executive's beneficiary(ies) or estate as a result of a Change in Control shall be an amount equal to the Accrual Balance amount corresponding to that particular benefit then being paid to the Executive's estate or beneficiary(ies) under Section 2.1.2, Section 2.2.2, or Section 2.3.2 after (a) deduction of any normal retirement benefits, Early Termination benefits, or Disability benefits already paid, and (b) addition of interest at the rate of 8.0% on the Accrual Balance not yet paid for the period from Termination of Employment to payment of the lump sum amount.

ARTICLE 4
BENEFICIARIES

4.1 Beneficiary Designations. The Executive shall designate a beneficiary by filing a written designation with the Bank. The Executive may revoke or modify the designation at any time by filing a new designation. However, designations will only be effective if signed by the Executive and accepted by the Bank during the Executive's lifetime. The Executive's beneficiary designation shall be deemed automatically revoked if the beneficiary predeceases the Executive, or if the Executive names a spouse as beneficiary and the marriage is subsequently dissolved. If the Executive dies without a valid beneficiary designation, all payments shall be made to the Executive's estate.

4.2 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 Bank may pay such benefit to the guardian, legal representative or person having the care or custody of such minor, incapacitated person or incapable person. The Bank may require proof of incapacity, minority or guardianship as it may deem appropriate prior to distribution of the benefit. Such distribution shall completely discharge the Bank from all liability with respect to such benefit.

ARTICLE 5
GENERAL LIMITATIONS

5.1 Termination for Cause. Notwithstanding any provision of this Agreement to the contrary, the Bank shall not pay any benefit under this Agreement if Termination of Employment is a result of Termination for Cause.

5.2 Suicide or Misstatement. The Bank shall not pay any benefit under this Agreement if the Executive commits suicide within two years after the Effective Date of this Agreement, or if the Executive has made any material misstatement of fact on any application for life insurance purchased by the Bank.

5.3 Removal. If the Executive is removed from office or permanently prohibited from participating in the conduct of the Bank'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 Bank under this Agreement shall terminate as of the effective date of the order.

5.4 Insolvency. If the Superintendent of Financial Institutions appoints the Federal Deposit Insurance Corporation as receiver for the Bank pursuant to Ohio Revised Code section 1125.20, all obligations under this Agreement shall terminate as of the date of the Bank's declared insolvency, but vested rights of the contracting parties shall not be affected.

5.5 FDIC Open-Bank Assistance. All obligations under this Agreement shall be terminated, except to the extent determined that continuation of the contract is necessary for the continued operation of the Bank, at the time the Federal Deposit Insurance Corporation enters into an agreement to provide assistance to or on behalf of the Bank 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, however, shall not be affected by such action.

ARTICLE 6
CLAIMS AND REVIEW PROCEDURES

6.1 Claims Procedure. A person or beneficiary ("claimant") who has not received benefits under the Agreement that he or she believes should be paid shall make a claim for such benefits as follows --

6.1.1 Initiation - Written Claim. The claimant initiates a claim by submitting to the Bank a written claim for the benefits.

6.1.2 Timing of Bank Response. The Bank shall respond to such claimant within 90 days after receiving the claim. If the Bank determines that special circumstances require additional time for processing the claim, the Bank can extend the response period by an additional 90 days by notifying the claimant in writing, prior to 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 Bank expects to render its decision.

6.1.3 Notice of Decision. If the Bank denies part or all of the claim, the Bank shall notify the claimant in writing of such denial. The Bank shall write the notification in a manner calculated to be understood by the claimant. The notification shall set forth --

6.1.3.1 The specific reasons for the denial,

6.1.3.2 A reference to the specific provisions of the Agreement on which the denial is based,

6.1.3.3 A description of any additional information or material necessary for the claimant to perfect the claim and an explanation of why it is needed, 6.1.3.4 An explanation of the Agreement's review procedures and the time limits applicable to such procedures, and

6.1.3.5 A statement of the claimant's right to bring a civil action under ERISA (Employees Retirement Income Security Act) Section 502(a) following an adverse benefit determination on review.

6.2 Review Procedure. If the Bank denies part or all of the claim, the claimant shall have the opportunity for a full and fair review by the Bank of the denial, as follows --

6.2.1 Initiation - Written Request. To initiate the review, the claimant, within 60 days after receiving the Bank's notice of denial, must file with the Bank a written request for review.

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. The Bank shall also provide the claimant, 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.

6.2.3 Considerations on Review. In considering the review, the Bank shall take into account all materials and information the claimant submits relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.

6.2.4 Timing of Bank Response. The Bank shall respond in writing to such claimant within 60 days after receiving the request for review. If the Bank determines that special circumstances require additional time for processing the claim, the Bank can extend the response period by an additional 60 days by notifying the claimant in writing, prior to 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 Bank expects to render its decision.

6.2.5 Notice of Decision. The Bank shall notify the claimant in writing of its decision on review. The Bank shall write the notification in a manner calculated to be understood by the claimant. The notification shall set forth --

6.2.5.1 The specific reason for the denial,

6.2.5.2 A reference to the specific provisions of the Agreement on which the denial is based,

6.2.5.3 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

6.2.5.4 A statement of the claimant's right to bring a civil action under ERISA Section 502(a).

ARTICLE 7
MISCELLANEOUS

7.1 Amendment and Termination. This Agreement may be amended or terminated only by a written agreement signed by the Bank and the Executive.

7.2 Binding Effect. This Agreement shall bind the Executive and the Bank, and their beneficiaries, survivors, executors, successors, administrators, and transferees.

7.3 No Guarantee of Employment. This Agreement is not an employment policy or contract. It 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. It also does not require the Executive to remain an employee nor interfere with the Executive's right to terminate employment at any time.

7.4 Non-Transferability. Benefits under this Agreement cannot be sold, transferred, assigned, pledged, attached, or encumbered in any manner.

7.5 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 if no such succession had occurred. Failure of the Bank to obtain such assumption agreement before effectiveness of any such succession shall be a breach of this Agreement and shall entitle the Executive to the Change-in-Control benefit provided in
Section 2.4.

7.6 Tax Withholding. The Bank shall withhold any taxes that are required to be withheld from the benefits provided under this Agreement.

7.7 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.

7.8 Unfunded Arrangement. The Executive and beneficiary are general unsecured creditors of the Bank for the payment of benefits under this Agreement. The benefits represent the mere promise by the Bank to pay such benefits. The rights to benefits are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by creditors. Any insurance on the Executive's life is a general asset of the Bank to which the Executive and beneficiary have no preferred or secured claim.

7.9 Entire Agreement. This Agreement constitutes the entire agreement between the Bank and the Executive as to the subject matter hereof. No rights are granted to the Executive under this Agreement other than those specifically set forth herein.

7.10 Administration. The Bank shall have powers which are necessary to administer this Agreement, including but not limited to --

(a) interpreting the provisions of this Agreement,

(b) establishing and revising the method of accounting for this Agreement,

(c) maintaining a record of benefit payments, and

(d) establishing rules and prescribing any forms necessary or desirable to administer this Agreement.

7.11 Named Fiduciary. The Bank shall be the named fiduciary and plan administrator under this Agreement. The named fiduciary may delegate to others certain aspects of the management and operation responsibilities of the plan, including the employment of advisors and the delegation of ministerial duties to qualified individuals.

7.12 Severability. If for any reason any provision of this Agreement is held invalid, such invalidity shall not affect any other provision of this Agreement not held invalid, and to the full extent consistent with law each such other provision shall continue in full force and effect. If any provision of this Agreement is held invalid in part, such invalidity shall not affect the remainder of such provision not held invalid, and to the full extent consistent with law the remainder of such provision, together with all other provisions of this Agreement, shall continue in full force and effect.

7.13 Headings. The headings of sections herein are included solely for convenience of reference and shall not affect the meaning or interpretation of any provision of this Agreement.

7.14 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.

(a) If to the Bank, to -- Board of Directors The Cortland Savings and Banking Company 194 West Main Street P.O. Box 98 Cortland, Ohio 44410-1466

(b) If to the Executive, to -- Rodger W. Platt 360 Cherry Hill Cortland, Ohio 44410

and to such other or additional person or persons as either party shall have designated to the other party in writing by like notice.

7.15 Payment of Legal Fees. The Bank is aware that upon the occurrence of a Change in Control, then current management of the Bank may cause or attempt to cause the Bank to refuse to comply with its obligations under this Agreement, or may cause or attempt to cause the Bank to institute, or may institute, litigation seeking to have this Agreement declared unenforceable, or may take, or attempt to take, other action to deny Executive the benefits intended under this Agreement. In these circumstances, the purpose of this Agreement could be frustrated. It is the intent of the Bank that the Executive not be required to incur the expenses associated with the enforcement of his rights under this Agreement by litigation or other legal action because the cost and expense thereof would substantially detract from the benefits intended to be extended to Executive hereunder, nor be bound to negotiate any settlement of his rights hereunder under threat of incurring such expenses. Accordingly, if after a Change in Control it should appear to Executive that (a) the Bank has failed to comply with any of its obligations under this Agreement, or (b) in the event that the Bank or any other person takes any action to declare this Agreement void or unenforceable, or institutes any litigation or other legal action designed to deny, diminish or to recover from, Executive the benefits intended to be provided to Executive hereunder, the Bank irrevocably authorizes Executive from time to time to retain counsel of his choice at the expense of the Bank as provided in this Section 7.15, to represent Executive in connection with the initiation or defense of any litigation or other legal action, whether by or against the Bank or any director, officer, stockholder or other person affiliated with the Bank, in any jurisdiction. The fees and expenses of counsel selected from time to time by Executive as herein above provided shall be paid or reimbursed to Executive by the Bank on a regular, periodic basis upon presentation by Executive of a statement or statements prepared by such counsel in accordance with such counsel's customary practices, up to a maximum aggregate amount of $500,000. Notwithstanding any existing or previous attorney-client relationship between the Bank or Cortland Bancorp and any counsel chosen by the Executive under this Section 7.15, the Bank irrevocably consents to the Executive's entering into an attorney-client relationship with that counsel, and the Bank and the Executive agree that a confidential relationship shall exist between the Executive and that counsel.

7.16 Cost of Living Adjustment for Section 7.15 Payment of Legal Fees. Upon the occurrence of a Change in Control, the $500,000 cap on legal fee reimbursement provided by Section 7.15 will be subject to a cost of living adjustment equal to the value of the expression A x B, in which expression --

A = $500,000; and

B = Cost of living adjustment or inflation factor. This is computed by dividing the Consumer Price Index for All Urban Consumers ("CPI-U") prepared by the U.S. Bureau of Labor Statistics, or any successor thereto, for the January of the year during which the Change in Control occurs by the CPI-U for January 2000.

The cost of living adjustment provided in this Section 7.16 shall be considered to be part of the Executive's payment of legal fees for purposes of this Agreement.

To explain the cost of living adjustment calculation for Payment of Legal Fees, we use the following example.

First, we determine the appropriate CPI-Us. The Agreement calls for the use of the CPI-Us for January 2000 and the January of the year during which the Change in Control occurs. Assume a Change in Control occurs in April 2009. For illustrative purposes only, the CPI-U for January 2000 is 156.7, and the CPI-U for January 2009 is 213.3.

Second, we calculate the cost of living adjustment or inflation factor. To do this, we divide the CPI-U for January 2009 (213.3) by the CPI-U for January 2000 (156.7). Our result is 1.361 (i.e., a 36.1 percent increase).

Finally, we calculate the raw cost of living adjustment. To do this, we multiply the base Payment of Legal Fees amount by the inflation factor. In our example, $500,000 multiplied by the inflation factor of 1.361 equals $680,500.

7.17 Modified 280G Gross Up. (a) Additional Payment to Account for Excise Taxes. If as a result of a Change in Control the Executive becomes entitled to acceleration of benefits under this Agreement or otherwise (collectively, the "Total Benefits"), and if any part of the Total Benefits is subject to the excise tax under section 280G and section 4999 of the Internal Revenue Code of 1986, as amended, (the "Excise Tax"), Cortland Bancorp shall pay to the Executive the following additional amounts, consisting of (1) a payment equal to the Excise Tax payable by the Executive under section 4999 on the Total Benefits (the "Excise Tax Payment") and (2) the "Gross-Up Payment" (collectively, the "Adjusted Gross-Up Payment Amount"). The Adjusted Gross-Up Payment Amount shall be calculated by first determining the full gross-up amount needed to provide the Excise Tax Payment net of all income, payroll, and excise taxes. The difference between the full gross-up amount (which includes the Excise Tax Payment) and the Excise Tax Payment shall then be multiplied by 80% to determine the Gross-Up Payment. Schedule B is an illustration of how the Gross-Up Payment and the Adjusted Gross-Up Payment Amount due the Executive are calculated. Payment of the Adjusted Gross-Up Payment Amount shall be made in addition to the amount set forth in Section 2.4.

(b) Calculating the Excise Tax. For purposes of determining whether any of the Total Benefits will be subject to the Excise Tax and for purposes of determining the amount of the Excise Tax,

(1) Determination of "Parachute Payments" Subject to the Excise Tax: any other payments or benefits received or to be received by the Executive in connection with a Change in Control or the Executive's Termination of Employment (whether under the terms of this Agreement or any other agreement, or other plan or arrangement with Cortland Bancorp, the Bank, any person whose actions result in a Change in Control or any person affiliated with Cortland Bancorp, the Bank, or such person) shall be treated as "parachute payments" within the meaning of section 280G(b)(2) of the Internal Revenue Code, and all "excess parachute payments" within the meaning of section 280G(b)(1) shall be treated as subject to the Excise Tax, unless in the opinion of the certified public accounting firm that is retained by Cortland Bancorp as of the date immediately before the Change in Control (the "Accounting Firm") such other payments or benefits do not constitute (in whole or in part) parachute payments, or such excess parachute payments represent (in whole or in part) reasonable compensation for services actually rendered within the meaning of section 280G(b)(4) of the Internal Revenue Code in excess (as defined in section 280G(b)(3) of the Internal Revenue Code), or are otherwise not subject to the Excise Tax,

(2) Calculation of Benefits Subject to Excise Tax: the amount of the Total Benefits that shall be treated as subject to the Excise Tax shall be equal to the lesser of (a) the total amount

of the Total Benefits reduced by the amount of such Total Benefits that in the opinion of the Accounting Firm are not parachute payments, or (b) the amount of excess parachute payments within the meaning of section 280G(b)(1) (after applying clause (1) above), and

(3) Value of Noncash Benefits and Deferred Payments: the value of any noncash benefits or any deferred payment or benefit shall be determined by the Accounting Firm in accordance with the principles of sections 280G(d)(3) and (4) of the Internal Revenue Code.

(c) Assumed Marginal Income Tax Rate. For purposes of determining the Adjusted Gross-Up Payment Amount, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar years in which the Adjusted Gross-Up Payment Amount is to be made and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the date of Termination of Employment, net of the reduction in federal income taxes that can be obtained from deduction of such state and local taxes (calculated by assuming that any reduction under section 68 of the Internal Revenue Code in the amount of itemized deductions allowable to the Executive applies first to reduce the amount of such state and local income taxes that would otherwise be deductible by the Executive, and applicable federal FICA and Medicare withholding taxes).

(d) Return of Reduced Excise Tax Payment or Payment of Additional Excise Tax. If the Excise Tax is later determined to be less than the amount taken into account hereunder when the Executive's employment terminated, the Executive shall repay to Cortland Bancorp -- when the amount of the reduction in Excise Tax is finally determined -- the portion of the Adjusted Gross-Up Payment Amount attributable to the reduction (plus that portion of the Adjusted Gross-Up Payment Amount attributable to the Excise Tax, federal, state, and local income taxes and FICA and Medicare withholding taxes imposed on the Adjusted Gross-Up Payment Amount being repaid by the Executive to the extent that the repayment results in a reduction in Excise Tax, FICA, and Medicare withholding taxes and/or a federal, state, or local income tax deduction).

If the Excise Tax is later determined to be more than the amount taken into account hereunder when the Executive's employment terminated (due, for example, to a payment whose existence or amount cannot be determined at the time of the Adjusted Gross-Up Payment Amount), Cortland Bancorp shall make an additional Adjusted Gross-Up Payment Amount to the Executive for that excess (plus any interest, penalties, or additions payable by the Executive for the excess) when the amount of the excess is finally determined.

7.18 (a) Accounting Firm Gross-Up Determination. Subject to the provisions of Section 7.17, all determinations required to be made under this Section 7.18 -- including whether and when an Adjusted Gross-Up Payment Amount is required, the Adjusted Gross-Up Payment Amount and the assumptions to be used to arrive at the determination (collectively, the "Determination") -- shall be made by the Accounting Firm, which shall provide detailed supporting calculations both to Cortland Bancorp and the Executive within 15 business days after receipt of notice from Cortland Bancorp or the Executive that there has been an Adjusted Gross-Up Payment Amount, or such earlier time as is requested by Cortland Bancorp.

(b) Fees and Expenses of the Accounting Firm and Agreement with the Accounting Firm. All fees and expenses of the Accounting Firm shall be borne solely by Cortland Bancorp or the Bank. Cortland Bancorp and the Bank shall enter into any agreement requested by the Accounting Firm in connection with the performance of its services hereunder.

(c) Accounting Firm's Opinion. If the Accounting Firm determines that no Excise Tax is payable by the Executive, the Accounting Firm shall furnish the Executive with a written opinion to that effect, and to the effect that failure to report Excise Tax, if any, on the Executive's applicable federal income tax return will not result in the imposition of a negligence or similar penalty.

(d) Accounting Firm's Determination Is Binding. The Determination by the Accounting Firm shall be binding on Cortland Bancorp, the Bank, and the Executive.

(e) Underpayment and Overpayment. Because of the uncertainty in determining whether any of the Total Benefits will be subject to the Excise Tax at the time of the Determination, it is possible that an Adjusted Gross-Up Payment Amount that should have been made will not have been made by Cortland Bancorp ("Underpayment"), or that an Adjusted Gross-Up Payment Amount will be made that should not have been made by Cortland Bancorp ("Overpayment"), consistent with the calculations for the Adjusted Gross-Up Payment Amount required to be made hereunder.

If, after a Determination by the Accounting Firm, the Executive is required to make a payment of additional Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred. The Underpayment (together with interest at the rate provided in section 1274(d)(2)(B) of the Internal Revenue Code) shall be paid promptly by Cortland Bancorp to or for the benefit of the Executive.

If the Adjusted Gross-Up Payment Amount exceeds the amount necessary to reimburse the Executive for his Excise Tax, the Accounting Firm shall determine the amount of the Overpayment that has been made. The Overpayment (together with interest at the rate provided in section 1274(d)(2)(B) of the Internal Revenue Code) shall be paid promptly by the Executive to or for the benefit of Cortland Bancorp. Provided that his expenses are reimbursed by Cortland Bancorp or the Bank, the Executive shall cooperate with any reasonable requests by Cortland Bancorp in any contests or disputes with the Internal Revenue Service relating to the Excise Tax.

(f) Accounting Firm Conflict of Interest. If the Accounting Firm is serving as accountant or auditor for the individual, entity, or group effecting the Change in Control, the Executive may appoint another nationally recognized public accounting firm to make the Determinations required hereunder (in which case the term "Accounting Firm" as used in this Agreement shall be deemed to refer to the accounting firm appointed by the Executive under this paragraph).

IN WITNESS WHEREOF, the Executive and a duly authorized Bank officer have signed this Amended Salary Continuation Agreement as of the date first written above.

EXECUTIVE:                              BANK:
                                        THE CORTLAND SAVINGS AND BANKING COMPANY


                                        By:
-------------------------------------       ------------------------------------
Rodger W. Platt


                                        By:
                                            ------------------------------------
                                            Lawrence A. Fantauzzi
                                        Title: Senior Vice President,
                                               Controller,
                                               Chief Financial Officer, and
                                               Secretary-Treasurer

BENEFICIARY DESIGNATION

THE CORTLAND SAVINGS AND BANKING COMPANY
AMENDED SALARY CONTINUATION AGREEMENT

RODGER W. PLATT

I designate the following as beneficiary of any death benefits under this Amended Salary Continuation 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 Bank. 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.

Date: ___________ , 2002

Accepted by the Bank this _______ day of _____________, 2002.

                                  EARLY
                               TERMINATION                   CHANGE-IN-CONTROL
                                  ANNUAL       DISABILITY        LUMP SUM
                     VESTED      BENEFIT         ANNUAL           BENEFIT
 PLAN     ACCRUAL    ACCRUAL   PAYABLE AT       BENEFIT           PAYABLE
 YEAR     BALANCE    BALANCE        70       PAYABLE AT 70    IMMEDIATELY (1)
------   --------   --------   -----------   -------------   ----------------
   1     $ 88,652   $ 88,652     $13,986        $13,986          $900,000
   2     $184,661   $184,661     $26,899        $26,899          $900,000
   3     $288,640   $288,640     $38,823        $38,823          $900,000
   4     $401,248   $401,248     $49,834        $49,834          $900,000
   5     $523,203   $523,203     $60,000        $60,000          $900,000
   6                                                             $900,000
   7                                                             $900,000
   8                                                             $900,000
   9                                                             $900,000
  10
  11
  12
  13
  14
  15

(1) This assumes the Executive remains employed by the Bank and has not availed of (i) the Normal Retirement benefit following retirement after attaining age 70, (ii) the Early Retirement benefit following retirement after attaining age 65, or (iii) the Disability benefit.

                                                                                                ADJUSTED 50%
                                                                         TOTAL PARACHUTE    GROSS-UP PAYMENT DUE
                                                    TOTAL VALUE OF     PAYMENTS WITH FULL      EXECUTIVE UNDER
                                                   CHANGE-IN-CONTROL      SECTION 280G       SEVERANCE AGREEMENT
                                                       PAYMENTS             GROSS-UP            SECTION 2(B)
                                                   -----------------   ------------------   --------------------
BASE AMOUNT ....................................       $ 83,014

TOTAL PARACHUTE PAYMENTS:
   Nonqualified benefits arising
      under SERP ...............................        411,103

   Total parachute payments, before
      gross-up .................................        411,103

Threshold amount ((3 x Base Amount - $1.00)) ...        249,041

Parachute payments in excess of threshold
   amount ......................................       $162,062

EXCISE TAX ON PARACHUTE PAYMENT:
   Total parachute payments ....................                            $411,103
   Base Amount .................................                             (83,014)

Parachute payment subject to Excise Tax ........                             328,089
Multiplied by excise tax rate ..................                                 x20%

Initial Excise Tax on parachute payment ........                              65,618

GROSS-UP FOR TAXES, IF APPLICABLE:
   Federal income tax rate .....................                             39.6000%
   Excise Tax rate .............................                             20.0000%
   Ohio state income tax rate ..................                              7.0000%
   Local income tax rate .......................                              2.0000%
   FICA rate ...................................                              1.4500%
   Phase-out of itemized deductions ............                              1.1880%
   Federal tax benefit of state and local
      income tax ...............................                             (3.5640)%

Gross-up marginal tax rate .....................                             67.6740%

100% minus gross-up marginal rate ..............                             32.3260%

Full payment to gross up for taxes .............                            $202,988

ADJUSTED GROSS-UP PAYMENT AMOUNT:
   Full 100% gross-up amount ...................                                                  $202,988
   Minus Excise Tax payment ....................                                                   (65,618)

                                                                                                   137,370
   Multiplied by 80% ...........................                                                       x80%

                                                                                                   109,896
   Plus Excise Tax payment .....................                                                    65,618

      Adjusted Gross-Up Payment Amount .........                                                  $175,514

EXHIBIT 10.17

THE CORTLAND SAVINGS AND BANKING COMPANY
SECOND AMENDED SALARY CONTINUATION AGREEMENT

THIS SECOND AMENDED SALARY CONTINUATION AGREEMENT (this "Agreement") is made and entered into as of this ________ day of _______, 200 _____, by and between The Cortland Savings and Banking Company, an Ohio-chartered, FDIC-insured member bank with its main offices in Cortland, Ohio (the "Bank") and Timothy Carney, Senior Vice President and Chief Operations Officer of the Bank (the "Executive").

WHEREAS, the Executive has contributed substantially to the success of the Bank and its parent company, Cortland Bancorp, an Ohio corporation, and the Bank desires that the Executive continue in its employ,

WHEREAS, to encourage the Executive to remain an employee of the Bank, the Bank is willing to provide salary continuation benefits to the Executive, payable out of the Bank's general assets,

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 Bank, is contemplated insofar as the Bank is concerned,

WHEREAS, the Bank and the Executive entered into an Amended Salary Continuation Agreement dated as of September 4, 2002, providing for specified retirement benefits for the Executive after termination of his employment,

WHEREAS, the Bank and the Executive have negotiated and agreed to miscellaneous changes in the terms and conditions of the September 4, 2002 Amended Salary Continuation Agreement, effective immediately.

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

Whenever used in this Agreement, the following words and phrases shall have the meanings specified -

1.1 "Accrual Balance" means the liability that should be accrued by the Bank under generally accepted accounting principles ("GAAP") for the Bank's obligation to the Executive 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 shall be calculated assuming a level principal amount and interest as the discount rate is accrued each period. The principal accrual is determined such that when it is credited with interest each month, the Accrual Balance at Normal Retirement Age equals 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 initial discount rate is 6.75%. However, the Plan Administrator, in its sole discretion, may adjust the discount rate to maintain the rate within reasonable standards according to GAAP.

1.2 "Change in Control" means any of the following events occur:

(a) Acquisition of Significant Stock Ownership: a report on Schedule 13D or another form or schedule (other than Schedule 13G) is filed or is required to be filed under Sections 13(d) or 14(d) of the Securities Exchange Act of 1934, if the schedule discloses that the filing person or persons acting in concert has or have become the beneficial owner of 25% or more of a class of Cortland Bancorp's voting securities (but this clause (a) shall not apply to beneficial ownership of voting shares of Cortland Bancorp held by the Bank or another subsidiary of Cortland Bancorp in a fiduciary capacity). A Change in Control of Cortland Bancorp shall not be deemed to have occurred solely because acquisition by Cortland Bancorp of its own voting securities reduces the number of shares outstanding, causing a person's beneficial ownership to exceed 25% of Cortland Bancorp's voting securities; provided that, if after such acquisition by Cortland Bancorp such person becomes the beneficial owner of additional

Cortland Bancorp voting securities, increasing the percentage of outstanding Cortland Bancorp voting securities beneficially owned by such person, a Change in Control of Cortland Bancorp shall be deemed to have occurred,

(b) Change in Board Composition: during any period of two consecutive years, individuals who constitute Cortland Bancorp's board of directors at the beginning of the two-year period cease for any reason to constitute at least a majority thereof, provided, however, that - for purposes of this clause (b) - each director who is first elected by the board (or first nominated by the board for election by stockholders) by a vote of at least two-thirds (2/3) of the directors who were directors at the beginning of the two-year period shall be deemed to have been a director at the beginning of the two-year period,

(c) Merger: Cortland Bancorp merges into or consolidates with another corporation, or merges another corporation into Cortland Bancorp, and as a result less than 50% of the total voting power of the surviving corporation immediately after the merger or consolidation is held by persons who were the holders of Cortland Bancorp's voting securities immediately before the merger or consolidation, or

(d) Sale of Assets: Cortland Bancorp sells to a third party all or substantially all of Cortland Bancorp's assets. For purposes of this Agreement, sale of all or substantially all of Cortland Bancorp's assets includes sale of the Bank alone.

1.3 "Disability" means the Executive suffers a sickness, accident or injury that is determined by the carrier of any individual or group disability insurance policy covering the Executive, or by the Social Security Administration, to be a disability rendering the Executive totally and permanently disabled. At the Bank's request, the Executive must submit to the Bank proof of the carrier's or Social Security Administration's determination.

1.4 "Early Retirement Age" means the Executive's 62nd birthday.

1.5 "Early Termination" means Termination of Employment before Normal Retirement Age for reasons other than death, Disability, Termination for Cause, or within one year after a Change in Control.

1.6 "Early Termination Date" means the month, day, and year in which Early Termination occurs.

1.7 "Effective Date" means March 1, 2001.

1.8 "Normal Retirement Age" means the Executive's 65th birthday.

1.9 "Normal Retirement Date" means the later of the Normal Retirement Age or Termination of Employment.

1.10 "Person" means an individual, corporation, partnership, trust, association, joint venture, pool, syndicate, sole proprietorship, unincorporated organization or other entity.

1.11 "Plan Administrator" means the plan administrator described in Article 7.

1.12 "Plan Year" means a twelve-month period commencing on March 1 and ending on the last day of February of each year. The initial Plan Year shall commence on the Effective Date of this Agreement.

1.13 "Termination for Cause" means the Bank terminates the Executive's employment for any one of the following reasons -

(a) gross negligence or gross neglect of duties,

(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 Bank policy committed in connection with the Executive's employment and resulting in an adverse effect on the Bank.

1.14 "Termination of Employment" means that the Executive ceases to be employed by the Bank for any reason whatsoever, other than because of a leave of absence approved by the Bank. For purposes of this

Agreement, if there is a dispute over the employment status of the Executive or the date of the Executive's Termination of Employment, the Bank shall have the sole and absolute right to decide the dispute, unless a Change in Control shall have occurred.

ARTICLE 2
LIFETIME BENEFITS

2.1 Normal Retirement Benefit. For Termination of Employment on or after the Normal Retirement Age for reasons other than death, the Bank shall pay to the Executive the benefit described in this Section 2.1 instead of any other benefit under this Agreement.

2.1.1 Amount of Benefit. The annual benefit under this Section 2.1 is $67,200.

2.1.2 Payment of Benefit. The Bank shall pay the annual benefit to the Executive in 12 equal monthly installments, payable on the last day of each month, beginning with the month after the Executive's Normal Retirement Date. The annual benefit shall be paid to the Executive for 15 years.

2.2 Early Termination Benefit. For Early Termination on or after the Executive's Early Retirement Age, the Bank shall pay to the Executive the benefit described in this Section 2.2 instead of any other benefit under this Agreement.

2.2.1 Amount of Benefit. The benefit under this Section 2.2 is the Early Termination annual benefit amount set forth in Schedule A for the Plan Year ending immediately before the Early Termination Date.

2.2.2 Payment of Benefit. The Bank shall pay the Early Termination annual benefit to the Executive in 12 equal monthly installments, payable on the last day of each month, beginning with the month after the Normal Retirement Age. The annual benefit shall be paid to the Executive for 15 years.

2.3 Disability Benefit. For Termination of Employment because of Disability before the Normal Retirement Age, the Bank shall pay to the Executive the benefit described in this Section 2.3 instead of any other benefit under this Agreement.

2.3.1 Amount of Benefit. The benefit under this Section 2.3 is the Disability annual benefit amount set forth in Schedule A for the Plan Year ending immediately before the date on which Termination of Employment occurs.

2.3.2 Payment of Benefit. The Bank shall pay the Disability annual benefit amount to the Executive in 12 equal monthly installments, payable on the last day of each month, beginning with the month after the Normal Retirement Age. The annual benefit shall be paid to the Executive for 15 years.

2.4 Change-in-Control Benefit. If the Executive's employment with Cortland Bancorp or the Bank terminates within one year after a Change in Control (excepting Termination for Cause), the Bank shall pay to the Executive the benefit described in this Section 2.4 instead of any other benefit under this Agreement.

2.4.1 Amount of Benefit. The benefit under this Section 2.4 is the Normal Retirement Age Accrual Balance required by Section 2.1, discounting the Normal Retirement Age Accrual Balance to present value using a discount rate of 6.75%, or a discount rate selected by the Plan Administrator if the Plan Administrator determines that a different discount rate is appropriate; provided, however, that the discount rate selected shall not exceed the discount rate employed at the time of the Change in Control for purposes of calculating the Accrual Balance.

2.4.2 Payment of Benefit. The Bank shall pay the Change-in-Control benefit to the Executive in one lump sum within 3 days after the Executive's Termination of Employment.

2.5 Petition for Payment of Vested Normal Retirement Benefit, Vested Early Termination Benefit or Vested Disability Benefit. If the Executive is entitled to the normal retirement benefit provided by Section 2.1, the Early Termination benefit provided by Section 2.2, or the Disability benefit provided by Section 2.3, the Executive may petition the board of directors to have the Accrual Balance amount corresponding to that particular benefit paid to the Executive in a single lump sum. The board of directors shall have sole and absolute discretion about whether to pay the remaining Accrual Balance in a lump sum. If the remaining Accrual Balance is paid in a single lump sum, the Bank shall have no further obligations under this Agreement.

2.6 Change-in-Control Payout of Vested Normal Retirement Benefit, Vested Early Termination Benefit or Vested Disability Benefit Being Paid to the Executive at the Time of a Change in Control. If a Change in Control occurs at any time during the entire 15-year salary continuation benefit payment period and if at the time of that Change in Control the Executive is receiving the benefit provided by Section 2.1.2, Section 2.2.2, or Section 2.3.2, the Bank shall pay the remaining salary continuation benefits to the Executive in a lump sum within three days after the Change in Control. The lump-sum payment due to the Executive as a result of a Change in Control shall be an amount equal to the Accrual Balance amount corresponding to that particular benefit then being paid to the Executive under Section 2.1.2, Section 2.2.2, or Section 2.3.2.

2.7 Contradiction in Terms of Agreement and Schedule A. If there is a contradiction in the terms of this Agreement and Schedule A attached hereto concerning the benefits due under Section 2.2, 2.3, or 2.4 hereof, then the actual amount of benefits prescribed by this Agreement shall control.

ARTICLE 3
DEATH BENEFITS

3.1 Death During Active Service. If the Executive dies before the Normal Retirement Age while in the active service of the Bank, instead of any other benefit payable under this Agreement the Bank shall pay to the Executive's beneficiary(ies) the benefit described in the Second Amended Split Dollar Agreement and Endorsement dated as of the date hereof and attached to this Agreement as Addendum A.

3.2 Death During Benefit Period. If the Executive dies after benefit payments under Article 2 have commenced but before receiving all such payments, the Bank shall pay the remaining benefits to the Executive's beneficiary(ies) at the same time and in the same amounts they would have been paid to the Executive had the Executive survived. In that case, no death benefit shall be payable under this Article 3.

3.3 Death After Termination of Employment But Before Benefit Payments Commence. If the Executive is entitled to benefit payments under Article 2 but dies before payments commence, the benefits shall be payable to the Executive's beneficiary(ies), but payments shall commence on the last day of the month after the date of the Executive's death, and no death benefit shall be payable under this Article 3.

3.4 Petition for Benefit Payments. If the Executive dies before receiving any or all benefit payments to which he is entitled under Section 2.1, Section 2.2, or Section 2.3, respectively, the Executive's beneficiary(ies) or estate may petition the board of directors to have the Accrual Balance corresponding to that particular benefit paid to the Executive's beneficiary(ies) or estate in a single lump sum. The board of directors shall have sole and absolute discretion about whether to pay the remaining Accrual Balance in a lump sum. If the remaining Accrual Balance is paid in a single lump sum, the Bank shall have no further obligations under this Agreement.

3.5 Change-in-Control Payout of Vested Normal Retirement Benefit, Vested Early Termination Benefit or Vested Disability Benefit Being Paid to the Executive's Estate or Beneficiaries at the Time of a Change in Control. If a Change in Control occurs at any time during the entire 15-year salary continuation benefit payment period and if at the time of that Change in Control the Executive's estate or beneficiary(ies) is receiving the benefit provided by
Section 2.1.2, Section 2.2.2, or Section 2.3.2, the Bank shall pay the remaining salary continuation benefits to the Executive's beneficiary(ies) or estate in a lump sum within three days after the Change in Control. The lump-sum payment due to the Executive's beneficiary(ies) or estate as a result of a Change in Control shall be an amount equal to the Accrual Balance amount corresponding to that particular benefit then being paid to the Executive's estate or beneficiary(ies) under Section 2.1.2, Section 2.2.2, or Section 2.3.2.

ARTICLE 4
BENEFICIARIES

4.1 Beneficiary Designations. The Executive shall designate a beneficiary by filing a written designation with the Bank. The Executive may revoke or modify the designation at any time by filing a new designation. However, designations will only be effective if signed by the Executive and accepted by the Bank during the Executive's lifetime. The Executive's beneficiary designation shall be deemed automatically revoked if the beneficiary predeceases the Executive, or if the Executive names a spouse as beneficiary and the marriage is subsequently dissolved. If the Executive dies without a valid beneficiary designation, all payments shall be made to the Executive's estate.

4.2 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 Bank may pay such benefit to the guardian, legal representative or person having the care or custody of such minor, incapacitated person or incapable person. The Bank may require proof of incapacity, minority or guardianship as it may deem appropriate prior to distribution of the benefit. Such distribution shall completely discharge the Bank from all liability with respect to such benefit.

ARTICLE 5
GENERAL LIMITATIONS

5.1 Termination for Cause and Termination Before Vesting. Notwithstanding any provision of this Agreement to the contrary, the Bank shall not pay any benefit under this Agreement and this Agreement shall terminate if Termination of Employment is a result of Termination for Cause or if Early Termination benefits under Section 2.2 of this Agreement are neither paid nor payable because Early Termination occurred before vesting under Section 2.2 of this Agreement.

5.2 Suicide or Misstatement. The Bank shall not pay any benefit under this Agreement if the Executive commits suicide within two years after the Effective Date of this Agreement, or if the Executive has made any material misstatement of fact on any application for life insurance purchased by the Bank.

5.3 Removal. Notwithstanding any provision of this Agreement to the contrary, if the Executive is removed from office or permanently prohibited from participating in the conduct of the Bank'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 Bank under this Agreement shall terminate as of the effective date of the order.

5.4 Default. Notwithstanding any provision of this Agreement to the contrary, if the Bank is in "default" or "in danger of default", as those terms are defined in of 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 be terminated, except to the extent determined that continuation of the contract is necessary for the continued operation of the Bank, at the time the Federal Deposit Insurance Corporation enters into an agreement to provide assistance to or on behalf of the Bank 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. A person or beneficiary ("claimant") who has not received benefits under the Agreement that he or she believes should be paid shall make a claim for such benefits as follows -

6.1.1 Initiation - Written Claim. The claimant initiates a claim by submitting to the Bank a written claim for the benefits.

6.1.2 Timing of Bank Response. The Bank shall respond to such claimant within 90 days after receiving the claim. If the Bank determines that special circumstances require additional time for processing the claim, the Bank can extend the response period by an additional 90 days by notifying the

claimant in writing, prior to 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 Bank expects to render its decision.

6.1.3 Notice of Decision. If the Bank denies part or all of the claim, the Bank shall notify the claimant in writing of such denial. The Bank shall write the notification in a manner calculated to be understood by the claimant. The notification shall set forth -

6.1.3.1 The specific reasons for the denial,

6.1.3.2 A reference to the specific provisions of the Agreement on which the denial is based,

6.1.3.3 A description of any additional information or material necessary for the claimant to perfect the claim and an explanation of why it is needed,

6.1.3.4 An explanation of the Agreement's review procedures and the time limits applicable to such procedures, and

6.1.3.5 A statement of the claimant's right to bring a civil action under ERISA (Employee Retirement Income Security Act) Section 502(a) following an adverse benefit determination on review.

6.2 Review Procedure. If the Bank denies part or all of the claim, the claimant shall have the opportunity for a full and fair review by the Bank of the denial, as follows -

6.2.1 Initiation - Written Request. To initiate the review, the claimant, within 60 days after receiving the Bank's notice of denial, must file with the Bank a written request for review.

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. The Bank shall also provide the claimant, 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.

6.2.3 Considerations on Review. In considering the review, the Bank shall take into account all materials and information the claimant submits relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.

6.2.4 Timing of Bank Response. The Bank shall respond in writing to such claimant within 60 days after receiving the request for review. If the Bank determines that special circumstances require additional time for processing the claim, the Bank can extend the response period by an additional 60 days by notifying the claimant in writing, prior to 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 Bank expects to render its decision.

6.2.5 Notice of Decision. The Bank shall notify the claimant in writing of its decision on review. The Bank shall write the notification in a manner calculated to be understood by the claimant. The notification shall set forth -

6.2.5.1 The specific reason for the denial,

6.2.5.2 A reference to the specific provisions of the Agreement on which the denial is based,

6.2.5.3 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

6.2.5.4 A statement of the claimant's right to bring a civil action under ERISA Section 502(a).

ARTICLE 7
ADMINISTRATION OF AGREEMENT

7.1 Plan Administrator Duties. This Agreement shall be administered by a Plan Administrator consisting of the Board or such committee or person(s) as the Board shall appoint. The Executive may be a member of the Plan Administrator. The Plan Administrator shall also have the discretion and authority to (a) make, amend, interpret and enforce all appropriate rules and regulations for the administration of this Agreement and (b) decide or resolve any and all questions including interpretations of this Agreement, as may arise in connection with the 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 Bank.

7.3 Binding Effect of Decisions. The decision or action of the Plan Administrator with respect to any question arising out of or in connection with 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 Executive 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 Bank 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 Bank Information. To enable the Plan Administrator to perform its functions, the Bank 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 Employment of the Executive, and such other pertinent information as the Plan Administrator may reasonably require.

ARTICLE 8
MISCELLANEOUS

8.1 Amendments. This Agreement may be amended solely by a written agreement signed by the Bank and by the Executive.

8.2 Binding Effect. This Agreement shall bind the Executive and the Bank, and their beneficiaries, survivors, executors, successors, administrators, and transferees.

8.3 No Guarantee of Employment. This Agreement is not an employment policy or contract. It 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. It also does not require the Executive to remain an employee nor interfere with the Executive's right to terminate employment at any time.

8.4 Non-Transferability. Benefits under this Agreement cannot be sold, transferred, assigned, pledged, attached, or encumbered in any manner.

8.5 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 if no such succession had occurred. Failure of the Bank to obtain such assumption agreement before effectiveness of any such succession shall be a breach of this Agreement and shall entitle the Executive to the Change-in-Control benefit provided in
Section 2.4.

8.6 Tax Withholding. The Bank 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 Executive and beneficiary are general unsecured creditors of the Bank for the payment of benefits under this Agreement. The benefits represent the mere promise by the Bank to pay such benefits. The rights to benefits are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by creditors. Any insurance on the Executive's life is a general asset of the Bank to which the Executive and beneficiary have no preferred or secured claim.

8.9 Entire Agreement. This Agreement and the Second Amended Split Dollar Agreement and Endorsement attached as Addendum A constitute the entire agreement between the Bank and the Executive as to the subject matter hereof. No rights are granted to the Executive under this Agreement other than those specifically set forth herein. This Agreement supersedes in its entirety the September 4, 2002 Amended Salary Continuation Agreement, effective immediately.

8.10 Severability. If for any reason any provision of this Agreement is held invalid, such invalidity shall not affect any other provision of this Agreement not held invalid, and to the full extent consistent with law each such other provision shall continue in full force and effect. If any provision of this Agreement is held invalid in part, such invalidity shall not affect the remainder of such provision not held invalid, and to the full extent consistent with law the remainder of such provision, together with all other provisions of this Agreement, shall continue in full force and effect.

8.11 Headings. The headings of sections herein are included solely for convenience of reference and shall not affect the meaning or interpretation of any provision of this Agreement.

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.

(a) If to the Bank, to - Board of Directors The Cortland Savings and Banking Company 194 West Main Street P.O. Box 98 Cortland, Ohio 44410-1466

(b) If to the Executive, to - Timothy Carney The Cortland Savings and Banking Company 194 West Main Street P.O. Box 98 Cortland, Ohio 44410-1466

and to such other or additional person or persons as either party shall have designated to the other party in writing by like notice.

8.13 Payment of Legal Fees. The Bank is aware that upon the occurrence of a Change in Control, management of the Bank may cause or attempt to cause the Bank to refuse to comply with its obligations under this Agreement, or may cause or attempt to cause the Bank to institute, or may institute, litigation seeking to have this Agreement declared unenforceable, or may take, or attempt to take, other action to deny Executive the benefits intended under this Agreement. In these circumstances, the purpose of this Agreement could be frustrated. It is the intent of the Bank that the Executive not be required to incur the expenses associated with the enforcement of his

rights under this Agreement by litigation or other legal action because the cost and expense thereof would substantially detract from the benefits intended to be extended to Executive hereunder, nor be bound to negotiate any settlement of his rights hereunder under threat of incurring such expenses. Accordingly, if after a Change in Control it appears to Executive that (a) the Bank has failed to comply with any of its obligations under this Agreement, or (b) the Bank or any other person has taken any action to declare this Agreement void or unenforceable, or instituted any litigation or other legal action designed to deny, diminish or to recover from, Executive the benefits intended to be provided to Executive hereunder, the Bank irrevocably authorizes Executive from time to time to retain counsel of his choice at the Bank's expense as provided in this Section 8.13, to represent Executive in connection with the initiation or defense of any litigation or other legal action, whether by or against the Bank or any director, officer, stockholder or other person affiliated with the Bank, in any jurisdiction. The fees and expenses of counsel selected from time to time by Executive as herein above provided shall be paid or reimbursed to Executive by the Bank on a regular, periodic basis upon presentation by Executive of a statement or statements prepared by such counsel in accordance with such counsel's customary practices, up to a maximum aggregate amount of $500,000. The Bank's obligation to pay the Executive's legal fees provided by this Section 8.13 operates separately from, and in addition to, any legal fee reimbursement obligation the Bank or the Bank's parent Cortland Bancorp may have with the Executive by virtue of a Severance Agreement by and among the Executive, the Bank, and Cortland Bancorp.

IN WITNESS WHEREOF, the Executive and a duly authorized Bank officer have executed this Second Amended Salary Continuation Agreement as of the date first written above.

EXECUTIVE:                              BANK:
                                        THE CORTLAND SAVINGS AND BANKING COMPANY


-------------------------------------   By:
Timothy Carney                              -----------------------------------
                                            Rodger W. Platt
                                        Title: President, Chairman of the
                                               Board and Chief Executive Officer

BENEFICIARY DESIGNATION

THE CORTLAND SAVINGS AND BANKING COMPANY
SECOND AMENDED SALARY CONTINUATION AGREEMENT

TIMOTHY CARNEY

I designate the following as beneficiary of any death benefits under this Second Amended Salary Continuation 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 Bank. 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.

Date: _____________, 200

Accepted by the Bank this _______ day of __________, 200 ____.

                                            EARLY
                                         TERMINATION      DISABILITY
                    AGE                ANNUAL BENEFIT   ANNUAL BENEFIT
                    AT                   PAYABLE AT       PAYABLE AT     CHANGE-IN-CONTROL
       PLAN YEAR   PLAN     ACCRUAL        NORMAL           NORMAL            BENEFIT
PLAN     ENDING    YEAR    BALANCE @   RETIREMENT AGE   RETIREMENT AGE       PAYABLE IN
YEAR    FEBRUARY    END    6.75% (1)         (2)              (2)            A LUMP SUM
----   ---------   ----   ----------   --------------   --------------   -----------------
  1       2002      36     $  3,278        $     0          $ 3,796           $ 38,861
  2       2003      37     $  6,828        $     0          $ 7,301           $ 42,086
  3       2004      38     $ 13,706        $     0          $ 8,471           $108,734
  4       2005      39     $ 22,590        $     0          $13,126           $115,655
  5       2006      40     $ 32,092        $     0          $17,433           $123,707
  6       2007      41     $ 42,255        $     0          $21,460           $132,321
  7       2008      42     $ 53,126        $     0          $25,224           $141,534
  8       2009      43     $ 64,754        $     0          $28,744           $151,389
  9       2010      44     $ 77,192        $     0          $32,034           $161,930
 10       2011      45     $ 90,496        $     0          $35,111           $173,204
 11       2012      46     $104,726        $     0          $37,987           $185,264
 12       2013      47     $119,946        $     0          $40,675           $198,164
 13       2014      48     $136,227        $     0          $43,189           $211,962
 14       2015      49     $153,641        $     0          $45,539           $226,720
 15       2016      50     $172,268        $     0          $47,737           $242,506
 16       2017      51     $192,192        $     0          $49,791           $259,391
 17       2018      52     $213,502        $     0          $51,711           $277,452
 18       2019      53     $236,297        $     0          $53,507           $296,771
 19       2020      54     $260,679        $     0          $55,185           $317,434
 20       2021      55     $286,759        $     0          $56,754           $339,536
 21       2022      56     $314,654        $     0          $58,221           $363,178
 22       2023      57     $344,492        $     0          $59,593           $388,465
 23       2024      58     $376,407        $     0          $60,875           $415,513
 24       2025      59     $410,544        $     0          $62,074           $444,444
 25       2026      60     $447,059        $     0          $63,195           $475,390
 26       2027      61     $486,115        $     0          $64,243           $508,490
 27       2028      62     $527,892        $65,223          $65,223           $543,896

                                            EARLY
                                         TERMINATION      DISABILITY
                    AGE                ANNUAL BENEFIT   ANNUAL BENEFIT
                    AT                   PAYABLE AT       PAYABLE AT     CHANGE-IN-CONTROL
       PLAN YEAR   PLAN     ACCRUAL        NORMAL           NORMAL            BENEFIT
PLAN     ENDING    YEAR    BALANCE @   RETIREMENT AGE   RETIREMENT AGE       PAYABLE IN
YEAR    FEBRUARY    END    6.75% (1)         (2)              (2)            A LUMP SUM
----   ---------   ----   ----------   --------------   --------------   -----------------
 28       2029      63     $572,577        $66,139          $66,139           $581,766
 29       2030      64     $620,373        $66,995          $66,995           $622,273
 30     May 2030    65     $632,833        $67,200          $67,200           $632,833

(1) Calculations are approximations. Benefit calculations are based on prior year-end accrual balances. The accrual balance reflects payment at the end of each month during retirement, beginning June 30, 2030.

(2) Benefit is based on the present value of the current payment stream of the vested accrual balance using a standard discount rate (6.75%).

EXHIBIT 10.18

THE CORTLAND SAVINGS AND BANKING COMPANY
SECOND AMENDED SALARY CONTINUATION AGREEMENT

THIS SECOND AMENDED SALARY CONTINUATION AGREEMENT (this "Agreement") is made and entered into as of this ________ day of _____________________________, 200_________, by and between The Cortland Savings and Banking Company, an Ohio-chartered, FDIC-insured member bank with its main offices in Cortland, Ohio (the "Bank") and Lawrence A. Fantauzzi, Senior Vice President and Chief Financial Officer of the Bank (the "Executive").

WHEREAS, the Executive has contributed substantially to the success of the Bank and its parent company, Cortland Bancorp, an Ohio corporation, and the Bank desires that the Executive continue in its employ,

WHEREAS, to encourage the Executive to remain an employee of the Bank, the Bank is willing to provide salary continuation benefits to the Executive, payable out of the Bank's general assets,

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 Bank, is contemplated insofar as the Bank is concerned,

WHEREAS, the Bank and the Executive entered into an Amended Salary Continuation Agreement dated as of November 6, 2002, providing for specified retirement benefits for the Executive after termination of his employment,

WHEREAS, the Bank and the Executive have negotiated and agreed to miscellaneous changes in the terms and conditions of the November 6, 2002 Amended Salary Continuation Agreement, effective immediately.

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

Whenever used in this Agreement, the following words and phrases shall have the meanings specified -

1.1 "Accrual Balance" means the liability that should be accrued by the Bank under generally accepted accounting principles ("GAAP") for the Bank's obligation to the Executive 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 shall be calculated assuming a level principal amount and interest as the discount rate is accrued each period. The principal accrual is determined such that when it is credited with interest each month, the Accrual Balance at Normal Retirement Age equals 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 initial discount rate is 6.75%. However, the Plan Administrator, in its sole discretion, may adjust the discount rate to maintain the rate within reasonable standards according to GAAP.

1.2 "Change in Control" means any of the following events occur:

(a) Acquisition of Significant Stock Ownership: a report on Schedule 13D or another form or schedule (other than Schedule 13G) is filed or is required to be filed under Sections 13(d) or 14(d) of the Securities Exchange Act of 1934, if the schedule discloses that the filing person or persons acting in concert has or have become the beneficial owner of 25% or more of a class of Cortland Bancorp's voting securities (but this clause (a) shall not apply to beneficial ownership of voting shares of Cortland Bancorp held by the Bank or another subsidiary of Cortland Bancorp in a fiduciary capacity). A Change in Control of Cortland Bancorp shall not be deemed to have occurred solely because acquisition by Cortland Bancorp of its own voting securities reduces the number of shares outstanding, causing a person's beneficial ownership to exceed 25% of Cortland Bancorp's voting securities; provided that, if after such acquisition by Cortland Bancorp such person becomes the beneficial owner of additional

Cortland Bancorp voting securities, increasing the percentage of outstanding Cortland Bancorp voting securities beneficially owned by such person, a Change in Control of Cortland Bancorp shall be deemed to have occurred,

(b) Change in Board Composition: during any period of two consecutive years, individuals who constitute Cortland Bancorp's board of directors at the beginning of the two-year period cease for any reason to constitute at least a majority thereof, provided, however, that - for purposes of this clause (b) - each director who is first elected by the board (or first nominated by the board for election by stockholders) by a vote of at least two-thirds (2/3) of the directors who were directors at the beginning of the two-year period shall be deemed to have been a director at the beginning of the two-year period,

(c) Merger: Cortland Bancorp merges into or consolidates with another corporation, or merges another corporation into Cortland Bancorp, and as a result less than 50% of the total voting power of the surviving corporation immediately after the merger or consolidation is held by persons who were the holders of Cortland Bancorp's voting securities immediately before the merger or consolidation, or

(d) Sale of Assets: Cortland Bancorp sells to a third party all or substantially all of Cortland Bancorp's assets. For purposes of this Agreement, sale of all or substantially all of Cortland Bancorp's assets includes sale of the Bank alone.

1.3 "Disability" means the Executive suffers a sickness, accident or injury that is determined by the carrier of any individual or group disability insurance policy covering the Executive, or by the Social Security Administration, to be a disability rendering the Executive totally and permanently disabled. At the Bank's request, the Executive must submit to the Bank proof of the carrier's or Social Security Administration's determination.

1.4 "Early Retirement Age" means the Executive's 62nd birthday.

1.5 "Early Termination" means Termination of Employment before Normal Retirement Age for reasons other than death, Disability, Termination for Cause, or within one year after a Change in Control.

1.6 "Early Termination Date" means the month, day, and year in which Early Termination occurs.

1.7 "Effective Date" means March 1, 2001.

1.8 "Normal Retirement Age" means the Executive's 65th birthday.

1.9 "Normal Retirement Date" means the later of the Normal Retirement Age or Termination of Employment.

1.10 "Person" means an individual, corporation, partnership, trust, association, joint venture, pool, syndicate, sole proprietorship, unincorporated organization or other entity.

1.11 "Plan Administrator" means the plan administrator described in Article 7.

1.12 "Plan Year" means a twelve-month period commencing on March 1 and ending on the last day of February of each year. The initial Plan Year shall commence on the Effective Date of this Agreement.

1.13 "Termination for Cause" means the Bank terminates the Executive's employment for any one of the following reasons -

(a) gross negligence or gross neglect of duties,

(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 Bank policy committed in connection with the Executive's employment and resulting in an adverse effect on the Bank.

1.14 "Termination of Employment" means that the Executive ceases to be employed by the Bank for any reason whatsoever, other than because of a leave of absence approved by the Bank. For purposes of this Agreement, if there is a dispute over the employment status of the Executive or the date of the Executive's

Termination of Employment, the Bank shall have the sole and absolute right to decide the dispute, unless a Change in Control shall have occurred.

ARTICLE 2
LIFETIME BENEFITS

2.1 Normal Retirement Benefit. For Termination of Employment on or after the Normal Retirement Age for reasons other than death, the Bank shall pay to the Executive the benefit described in this Section 2.1 instead of any other benefit under this Agreement.

2.1.1 Amount of Benefit. The annual benefit under this Section 2.1 is $85,700.

2.1.2 Payment of Benefit. The Bank shall pay the annual benefit to the Executive in 12 equal monthly installments, payable on the last day of each month, beginning with the month after the Executive's Normal Retirement Date. The annual benefit shall be paid to the Executive for 15 years.

2.2 Early Termination Benefit. For Early Termination on or after the Executive's Early Retirement Age, the Bank shall pay to the Executive the benefit described in this Section 2.2 instead of any other benefit under this Agreement.

2.2.1 Amount of Benefit. The benefit under this Section 2.2 is the Early Termination annual benefit amount set forth in Schedule A for the Plan Year ending immediately before the Early Termination Date.

2.2.2 Payment of Benefit. The Bank shall pay the Early Termination annual benefit to the Executive in 12 equal monthly installments, payable on the last day of each month, beginning with the month after the Normal Retirement Age. The annual benefit shall be paid to the Executive for 15 years.

2.3 Disability Benefit. For Termination of Employment because of Disability before the Normal Retirement Age, the Bank shall pay to the Executive the benefit described in this Section 2.3 instead of any other benefit under this Agreement.

2.3.1 Amount of Benefit. The benefit under this Section 2.3 is the Disability annual benefit amount set forth in Schedule A for the Plan Year ending immediately before the date on which Termination of Employment occurs.

2.3.2 Payment of Benefit. The Bank shall pay the Disability annual benefit amount to the Executive in 12 equal monthly installments, payable on the last day of each month, beginning with the month after the Normal Retirement Age. The annual benefit shall be paid to the Executive for 15 years.

2.4 Change-in-Control Benefit. If the Executive's employment with Cortland Bancorp or the Bank terminates within one year after a Change in Control (excepting Termination for Cause), the Bank shall pay to the Executive the benefit described in this Section 2.4 instead of any other benefit under this Agreement.

2.4.1 Amount of Benefit. The benefit under this Section 2.4 is the Normal Retirement Age Accrual Balance required by Section 2.1, discounting the Normal Retirement Age Accrual Balance to present value using a discount rate of 6.75%, or a discount rate selected by the Plan Administrator if the Plan Administrator determines that a different discount rate is appropriate; provided, however, that the discount rate selected shall not exceed the discount rate employed at the time of the Change in Control for purposes of calculating the Accrual Balance.

2.4.2 Payment of Benefit. The Bank shall pay the Change-in-Control benefit to the Executive in one lump sum within 3 days after the Executive's Termination of Employment.

2.5 Petition for Payment of Vested Normal Retirement Benefit, Vested Early Termination Benefit or Vested Disability Benefit. If the Executive is entitled to the normal retirement benefit provided by Section 2.1, the Early Termination benefit provided by Section 2.2, or the Disability benefit provided by Section 2.3, the Executive

may petition the board of directors to have the Accrual Balance amount corresponding to that particular benefit paid to the Executive in a single lump sum. The board of directors shall have sole and absolute discretion about whether to pay the remaining Accrual Balance in a lump sum. If the remaining Accrual Balance is paid in a single lump sum, the Bank shall have no further obligations under this Agreement.

2.6 Change-in-Control Payout of Vested Normal Retirement Benefit, Vested Early Termination Benefit or Vested Disability Benefit Being Paid to the Executive at the Time of a Change in Control. If a Change in Control occurs at any time during the entire 15-year salary continuation benefit payment period and if at the time of that Change in Control the Executive is receiving the benefit provided by Section 2.1.2, Section 2.2.2, or Section 2.3.2, the Bank shall pay the remaining salary continuation benefits to the Executive in a lump sum within three days after the Change in Control. The lump-sum payment due to the Executive as a result of a Change in Control shall be an amount equal to the Accrual Balance amount corresponding to that particular benefit then being paid to the Executive under Section 2.1.2, Section 2.2.2, or Section 2.3.2.

2.7 Contradiction in Terms of Agreement and Schedule A. If there is a contradiction in the terms of this Agreement and Schedule A attached hereto concerning the benefits due under Section 2.2, 2.3, or 2.4 hereof, then the actual amount of benefits prescribed by this Agreement shall control.

ARTICLE 3
DEATH BENEFITS

3.1 Death During Active Service. If the Executive dies before the Normal Retirement Age while in the active service of the Bank, instead of any other benefit payable under this Agreement the Bank shall pay to the Executive's beneficiary(ies) the benefit described in the Second Amended Split Dollar Agreement and Endorsement dated as of the date hereof and attached to this Agreement as Addendum A.

3.2 Death During Benefit Period. If the Executive dies after benefit payments under Article 2 have commenced but before receiving all such payments, the Bank shall pay the remaining benefits to the Executive's beneficiary(ies) at the same time and in the same amounts they would have been paid to the Executive had the Executive survived. In that case, no death benefit shall be payable under this Article 3.

3.3 Death After Termination of Employment But Before Benefit Payments Commence. If the Executive is entitled to benefit payments under Article 2 but dies before payments commence, the benefits shall be payable to the Executive's beneficiary(ies), but payments shall commence on the last day of the month after the date of the Executive's death, and no death benefit shall be payable under this Article 3.

3.4 Petition for Benefit Payments. If the Executive dies before receiving any or all benefit payments to which he is entitled under Section 2.1, Section 2.2, or Section 2.3, respectively, the Executive's beneficiary(ies) or estate may petition the board of directors to have the Accrual Balance corresponding to that particular benefit paid to the Executive's beneficiary(ies) or estate in a single lump sum. The board of directors shall have sole and absolute discretion about whether to pay the remaining Accrual Balance in a lump sum. If the remaining Accrual Balance is paid in a single lump sum, the Bank shall have no further obligations under this Agreement.

3.5 Change-in-Control Payout of Vested Normal Retirement Benefit, Vested Early Termination Benefit or Vested Disability Benefit Being Paid to the Executive's Estate or Beneficiaries at the Time of a Change in Control. If a Change in Control occurs at any time during the entire 15-year salary continuation benefit payment period and if at the time of that Change in Control the Executive's estate or beneficiary(ies) is receiving the benefit provided by
Section 2.1.2, Section 2.2.2, or Section 2.3.2, the Bank shall pay the remaining salary continuation benefits to the Executive's beneficiary(ies) or estate in a lump sum within three days after the Change in Control. The lump-sum payment due to the Executive's beneficiary(ies) or estate as a result of a Change in Control shall be an amount equal to the Accrual Balance amount corresponding to that particular benefit then being paid to the Executive's estate or beneficiary(ies) under Section 2.1.2, Section 2.2.2, or Section 2.3.2.

ARTICLE 4
BENEFICIARIES

4.1 Beneficiary Designations. The Executive shall designate a beneficiary by filing a written designation with the Bank. The Executive may revoke or modify the designation at any time by filing a new

designation. However, designations will only be effective if signed by the Executive and accepted by the Bank during the Executive's lifetime. The Executive's beneficiary designation shall be deemed automatically revoked if the beneficiary predeceases the Executive, or if the Executive names a spouse as beneficiary and the marriage is subsequently dissolved. If the Executive dies without a valid beneficiary designation, all payments shall be made to the Executive's estate.

4.2 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 Bank may pay such benefit to the guardian, legal representative or person having the care or custody of such minor, incapacitated person or incapable person. The Bank may require proof of incapacity, minority or guardianship as it may deem appropriate prior to distribution of the benefit. Such distribution shall completely discharge the Bank from all liability with respect to such benefit.

ARTICLE 5
GENERAL LIMITATIONS

5.1 Termination for Cause and Termination Before Vesting. Notwithstanding any provision of this Agreement to the contrary, the Bank shall not pay any benefit under this Agreement and this Agreement shall terminate if Termination of Employment is a result of Termination for Cause or if Early Termination benefits under Section 2.2 of this Agreement are neither paid nor payable because Early Termination occurred before vesting under Section 2.2 of this Agreement.

5.2 Suicide or Misstatement. The Bank shall not pay any benefit under this Agreement if the Executive commits suicide within two years after the Effective Date of this Agreement, or if the Executive has made any material misstatement of fact on any application for life insurance purchased by the Bank.

5.3 Removal. Notwithstanding any provision of this Agreement to the contrary, if the Executive is removed from office or permanently prohibited from participating in the conduct of the Bank'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 Bank under this Agreement shall terminate as of the effective date of the order.

5.4 Default. Notwithstanding any provision of this Agreement to the contrary, if the Bank is in "default" or "in danger of default", as those terms are defined in of 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 be terminated, except to the extent determined that continuation of the contract is necessary for the continued operation of the Bank, at the time the Federal Deposit Insurance Corporation enters into an agreement to provide assistance to or on behalf of the Bank 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. A person or beneficiary ("claimant") who has not received benefits under the Agreement that he or she believes should be paid shall make a claim for such benefits as follows -

6.1.1 Initiation - Written Claim. The claimant initiates a claim by submitting to the Bank a written claim for the benefits.

6.1.2 Timing of Bank Response. The Bank shall respond to such claimant within 90 days after receiving the claim. If the Bank determines that special circumstances require additional time for processing the claim, the Bank can extend the response period by an additional 90 days by notifying the claimant in writing, prior to 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 Bank expects to render its decision.

6.1.3 Notice of Decision. If the Bank denies part or all of the claim, the Bank shall notify the claimant in writing of such denial. The Bank shall write the notification in a manner calculated to be understood by the claimant. The notification shall set forth -

6.1.3.1 The specific reasons for the denial,

6.1.3.2 A reference to the specific provisions of the Agreement on which the denial is based,

6.1.3.3 A description of any additional information or material necessary for the claimant to perfect the claim and an explanation of why it is needed,

6.1.3.4 An explanation of the Agreement's review procedures and the time limits applicable to such procedures, and

6.1.3.5 A statement of the claimant's right to bring a civil action under ERISA (Employee Retirement Income Security Act) Section 502(a) following an adverse benefit determination on review.

6.2 Review Procedure. If the Bank denies part or all of the claim, the claimant shall have the opportunity for a full and fair review by the Bank of the denial, as follows -

6.2.1 Initiation - Written Request. To initiate the review, the claimant, within 60 days after receiving the Bank's notice of denial, must file with the Bank a written request for review.

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. The Bank shall also provide the claimant, 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.

6.2.3 Considerations on Review. In considering the review, the Bank shall take into account all materials and information the claimant submits relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.

6.2.4 Timing of Bank Response. The Bank shall respond in writing to such claimant within 60 days after receiving the request for review. If the Bank determines that special circumstances require additional time for processing the claim, the Bank can extend the response period by an additional 60 days by notifying the claimant in writing, prior to 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 Bank expects to render its decision.

6.2.5 Notice of Decision. The Bank shall notify the claimant in writing of its decision on review. The Bank shall write the notification in a manner calculated to be understood by the claimant. The notification shall set forth -

6.2.5.1 The specific reason for the denial,

6.2.5.2 A reference to the specific provisions of the Agreement on which the denial is based,

6.2.5.3 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

6.2.5.4 A statement of the claimant's right to bring a civil action under ERISA Section 502(a).

ARTICLE 7
ADMINISTRATION OF AGREEMENT

7.1 Plan Administrator Duties. This Agreement shall be administered by a Plan Administrator consisting of the Board or such committee or person(s) as the Board shall appoint. The Executive may be a member of the Plan Administrator. The Plan Administrator shall also have the discretion and authority to (a) make, amend, interpret, and enforce all appropriate rules and regulations for the administration of this Agreement and (b) decide or resolve any and all questions, including interpretations of this Agreement, as may arise in connection with the 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 Bank.

7.3 Binding Effect of Decisions. The decision or action of the Plan Administrator with respect to any question arising out of or in connection with 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 Executive 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 Bank 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 Bank Information. To enable the Plan Administrator to perform its functions, the Bank 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 Employment of the Executive, and such other pertinent information as the Plan Administrator may reasonably require.

ARTICLE 8
MISCELLANEOUS

8.1 Amendments. This Agreement may be amended solely by a written agreement signed by the Bank and by the Executive.

8.2 Binding Effect. This Agreement shall bind the Executive and the Bank, and their beneficiaries, survivors, executors, successors, administrators, and transferees.

8.3 No Guarantee of Employment. This Agreement is not an employment policy or contract. It 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. It also does not require the Executive to remain an employee nor interfere with the Executive's right to terminate employment at any time.

8.4 Non-Transferability. Benefits under this Agreement cannot be sold, transferred, assigned, pledged, attached, or encumbered in any manner.

8.5 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 if no such succession had occurred. Failure of the Bank to obtain such assumption agreement before effectiveness of any such succession shall be a breach of this Agreement and shall entitle the Executive to the Change-in-Control benefit provided in
Section 2.4.

8.6 Tax Withholding. The Bank 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 Executive and beneficiary are general unsecured creditors of the Bank for the payment of benefits under this Agreement. The benefits represent the mere promise by the Bank to pay such benefits. The rights to benefits are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by creditors. Any insurance on the Executive's life is a general asset of the Bank to which the Executive and beneficiary have no preferred or secured claim.

8.9 Entire Agreement. This Agreement and the Second Amended Split Dollar Agreement and Endorsement attached to this Agreement as Addendum A constitute the entire agreement between the Bank and the Executive as to the subject matter hereof. No rights are granted to the Executive under this Agreement other than those specifically set forth herein. This Agreement supersedes in its entirety the November 6, 2002 Amended Salary Continuation Agreement, effective immediately.

8.10 Severability. If for any reason any provision of this Agreement is held invalid, such invalidity shall not affect any other provision of this Agreement not held invalid, and to the full extent consistent with law each such other provision shall continue in full force and effect. If any provision of this Agreement is held invalid in part, such invalidity shall not affect the remainder of such provision not held invalid, and to the full extent consistent with law the remainder of such provision, together with all other provisions of this Agreement, shall continue in full force and effect.

8.11 Headings. The headings of sections herein are included solely for convenience of reference and shall not affect the meaning or interpretation of any provision of this Agreement.

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.

(a) If to the Bank, to - Board of Directors The Cortland Savings and Banking Company 194 West Main Street P.O. Box 98 Cortland, Ohio 44410-1466

(b) If to the Executive, to - Lawrence A. Fantauzzi The Cortland Savings and Banking Company 194 West Main Street P.O. Box 98 Cortland, Ohio 44410-1466

and to such other or additional person or persons as either party shall have designated to the other party in writing by like notice.

8.13 Payment of Legal Fees. The Bank is aware that upon the occurrence of a Change in Control, management of the Bank may cause or attempt to cause the Bank to refuse to comply with its obligations under this Agreement, or may cause or attempt to cause the Bank to institute, or may institute, litigation seeking to have this Agreement declared unenforceable, or may take, or attempt to take, other action to deny Executive the benefits intended under this Agreement. In these circumstances, the purpose of this Agreement could be frustrated. It is the intent of the Bank that the Executive not be required to incur the expenses associated with the enforcement of his rights under this Agreement by litigation or other legal action because the cost and expense thereof would substantially detract from the benefits intended to be extended to Executive hereunder, nor be bound to negotiate any settlement of his rights hereunder under threat of incurring such expenses. Accordingly, if after a Change in Control it appears to Executive that (a) the Bank has failed to comply with any of its obligations under this

Agreement, or (b) the Bank or any other person has taken any action to declare this Agreement void or unenforceable or instituted any litigation or other legal action designed to deny, diminish or to recover from, Executive the benefits intended to be provided to Executive hereunder, the Bank irrevocably authorizes Executive from time to time to retain counsel of his choice at the Bank's expense as provided in this Section 8.13, to represent Executive in connection with the initiation or defense of any litigation or other legal action, whether by or against the Bank or any director, officer, stockholder or other person affiliated with the Bank, in any jurisdiction. The fees and expenses of counsel selected from time to time by Executive as herein above provided shall be paid or reimbursed to Executive by the Bank on a regular, periodic basis upon presentation by Executive of a statement or statements prepared by such counsel in accordance with such counsel's customary practices, up to a maximum aggregate amount of $500,000. The Bank's obligation to pay the Executive's legal fees provided by this Section 8.13 operates separately from, and in addition to, any legal fee reimbursement obligation the Bank or the Bank's parent Cortland Bancorp may have with the Executive under a severance or employment agreement by and among the Executive, the Bank, and Cortland Bancorp.

IN WITNESS WHEREOF, the Executive and a duly authorized Bank officer have executed this Second Amended Salary Continuation Agreement as of the date first written above.

EXECUTIVE:                              BANK:
                                        THE CORTLAND SAVINGS AND BANKING COMPANY


                                        By:
------------------------                    ------------------------------------
Lawrence A. Fantauzzi                       Rodger W. Platt
                                        Title: President, Chairman of the Board
                                               and Chief Executive Officer

BENEFICIARY DESIGNATION

THE CORTLAND SAVINGS AND BANKING COMPANY
SECOND AMENDED SALARY CONTINUATION AGREEMENT

LAWRENCE A. FANTAUZZI

I designate the following as beneficiary of any death benefits under this Second Amended Salary Continuation 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 Bank. 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.

Date: ________________, 200_

Accepted by the Bank this _____ day of _______________________, 200_.

                                             EARLY
                                          TERMINATION      DISABILITY
                                        ANNUAL BENEFIT   ANNUAL BENEFIT   CHANGE-IN-
                   AGE AT                 PAYABLE AT       PAYABLE AT       CONTROL
       PLAN YEAR    PLAN     ACCRUAL        NORMAL           NORMAL         BENEFIT
PLAN     ENDING     YEAR    BALANCE @   RETIREMENT AGE   RETIREMENT AGE   PAYABLE IN
YEAR    FEBRUARY     END    6.75% (1)         (2)              (2)        A LUMP SUM
----   ---------   ------   ---------   --------------   --------------   ----------
  1       2002       54      $ 26,903       $     0          $ 7,416       $216,199
  2       2003       55      $ 56,039       $     0          $14,264       $234,144
  3       2004       56      $105,404       $     0          $19,946       $452,883
  4       2005       57      $167,084       $     0          $29,726       $481,707
  5       2006       58      $233,060       $     0          $38,764       $515,247
  6       2007       59      $303,629       $     0          $47,214       $551,123
  7       2008       60      $379,111       $     0          $55,115       $589,497
  8       2009       61      $459,850       $     0          $62,500       $630,542
  9       2010       62      $546,210       $69,405          $69,405       $674,445
 10       2011       63      $638,583       $75,861          $75,861       $721,406
 11       2012       64      $737,388       $81,896          $81,896       $771,636
 12     October      65      $807,051       $85,700          $85,700       $807,051
          2012

(1) Calculations are approximations. Benefit calculations are based on prior year-end accrual balances. The accrual balance reflects payment at the end of each month during retirement, beginning November 30, 2012.

(2) Benefit is based on the present value of the current payment stream of the vested accrual balance using a standard discount rate (6.75%).

Exhibit 10.19

THE CORTLAND SAVINGS AND BANKING COMPANY
SECOND AMENDED SALARY CONTINUATION AGREEMENT

THIS SECOND AMENDED SALARY CONTINUATION AGREEMENT (this "Agreement") is made and entered into as of this ______________ day of _____________, 200_________, by and between The Cortland Savings and Banking Company, an Ohio-chartered, FDIC-insured member bank with its main offices in Cortland, Ohio (the "Bank") and James M. Gasior, Senior Vice President and Chief of Administration and Lending of the Bank (the "Executive").

WHEREAS, the Executive has contributed substantially to the success of the Bank and its parent company, Cortland Bancorp, an Ohio corporation, and the Bank desires that the Executive continue in its employ,

WHEREAS, to encourage the Executive to remain an employee of the Bank, the Bank is willing to provide salary continuation benefits to the Executive, payable out of the Bank's general assets,

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 Bank, is contemplated insofar as the Bank is concerned,

WHEREAS, the Bank and the Executive entered into an Amended Salary Continuation Agreement dated as of November 21, 2002, providing for specified retirement benefits for the Executive after termination of his employment,

WHEREAS, the Bank and the Executive have negotiated and agreed to miscellaneous changes in the terms and conditions of the November 21, 2002 Amended Salary Continuation Agreement, effective immediately.

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

Whenever used in this Agreement, the following words and phrases shall have the meanings specified -

1.1 "Accrual Balance" means the liability that should be accrued by the Bank under generally accepted accounting principles ("GAAP") for the Bank's obligation to the Executive 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 shall be calculated assuming a level principal amount and interest as the discount rate is accrued each period. The principal accrual is determined such that when it is credited with interest each month, the Accrual Balance at Normal Retirement Age equals 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 initial discount rate is 6.75%. However, the Plan Administrator, in its sole discretion, may adjust the discount rate to maintain the rate within reasonable standards according to GAAP.

1.2 "Change in Control" means any of the following events occur:

(a) Acquisition of Significant Stock Ownership: a report on Schedule 13D or another form or schedule (other than Schedule 13G) is filed or is required to be filed under Sections 13(d) or 14(d) of the Securities Exchange Act of 1934, if the schedule discloses that the filing person or persons acting in concert has or have become the beneficial owner of 25% or more of a class of Cortland Bancorp's voting securities (but this clause (a) shall not apply to beneficial ownership of voting shares of Cortland Bancorp held by the Bank or another subsidiary of Cortland Bancorp in a fiduciary capacity). A Change in Control of Cortland Bancorp shall not be deemed to have occurred solely because acquisition by Cortland Bancorp of its own voting securities reduces the number of shares outstanding, causing a person's beneficial ownership to exceed 25% of Cortland Bancorp's voting securities; provided that, if after such acquisition by Cortland Bancorp such person becomes the beneficial owner of additional Cortland Bancorp voting securities, increasing the percentage of outstanding Cortland Bancorp voting securities beneficially owned by such person, a Change in Control of Cortland Bancorp shall be deemed to have occurred,

(b) Change in Board Composition: during any period of two consecutive years, individuals who constitute Cortland Bancorp's board of directors at the beginning of the two-year period cease for any reason to constitute at least a majority thereof, provided, however, that - for purposes of this clause (b) - each director who is first elected by the board (or first nominated by the board for election by stockholders) by a vote of at least two-thirds (2/3) of the directors who were directors at the beginning of the two-year period shall be deemed to have been a director at the beginning of the two-year period,

(c) Merger: Cortland Bancorp merges into or consolidates with another corporation, or merges another corporation into Cortland Bancorp, and as a result less than 50% of the total voting power of the surviving corporation immediately after the merger or consolidation is held by persons who were the holders of Cortland Bancorp's voting securities immediately before the merger or consolidation, or

(d) Sale of Assets: Cortland Bancorp sells to a third party all or substantially all of Cortland Bancorp's assets. For purposes of this Agreement, sale of all or substantially all of Cortland Bancorp's assets includes sale of the Bank alone.

1.3 "Disability" means the Executive suffers a sickness, accident, or injury that is determined by the carrier of any individual or group disability insurance policy covering the Executive, or by the Social Security Administration, to be a disability rendering the Executive totally and permanently disabled. At the Bank's request, the Executive must submit to the Bank proof of the carrier's or Social Security Administration's determination.

1.4 "Early Retirement Age" means the Executive's 62nd birthday.

1.5 "Early Termination" means Termination of Employment before Normal Retirement Age for reasons other than death, Disability, Termination for Cause, or within one year after a Change in Control.

1.6 "Early Termination Date" means the month, day, and year in which Early Termination occurs.

1.7 "Effective Date" means March 1, 2001.

1.8 "Normal Retirement Age" means the Executive's 65th birthday.

1.9 "Normal Retirement Date" means the later of the Normal Retirement Age or Termination of Employment.

1.10 "Person" means an individual, corporation, partnership, trust, association, joint venture, pool, syndicate, sole proprietorship, unincorporated organization or other entity.

1.11 "Plan Administrator" means the plan administrator described in Article 7.

1.12 "Plan Year" means a twelve-month period commencing on March 1 and ending on the last day of February of each year. The initial Plan Year shall commence on the Effective Date of this Agreement.

1.13 "Termination for Cause" means the Bank terminates the Executive's employment for any one of the following reasons -

(a) gross negligence or gross neglect of duties,

(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 Bank policy committed in connection with the Executive's employment and resulting in an adverse effect on the Bank.

1.14 "Termination of Employment" means that the Executive ceases to be employed by the Bank for any reason whatsoever, other than because of a leave of absence approved by the Bank. For purposes of this Agreement, if there is a dispute over the employment status of the Executive or the date of the Executive's Termination of Employment, the Bank shall have the sole and absolute right to decide the dispute, unless a Change in Control shall have occurred.

ARTICLE 2

LIFETIME BENEFITS

2.1 Normal Retirement Benefit. For Termination of Employment on or after the Normal Retirement Age for reasons other than death, the Bank shall pay to the Executive the benefit described in this Section 2.1 instead of any other benefit under this Agreement.

2.1.1 Amount of Benefit. The annual benefit under this Section 2.1 is $72,100.

2.1.2 Payment of Benefit. The Bank shall pay the annual benefit to the Executive in 12 equal monthly installments, payable on the last day of each month, beginning with the month after the Executive's Normal Retirement Date. The annual benefit shall be paid to the Executive for 15 years.

2.2 Early Termination Benefit. For Early Termination on or after the Executive's Early Retirement Age, the Bank shall pay to the Executive the benefit described in this Section 2.2 instead of any other benefit under this Agreement.

2.2.1 Amount of Benefit. The benefit under this Section 2.2 is the Early Termination annual benefit amount set forth in Schedule A for the Plan Year ending immediately before the Early Termination Date.

2.2.2 Payment of Benefit. The Bank shall pay the Early Termination annual benefit to the Executive in 12 equal monthly installments, payable on the last day of each month, beginning with the month after the Normal Retirement Age. The annual benefit shall be paid to the Executive for 15 years.

2.3 Disability Benefit. For Termination of Employment because of Disability before the Normal Retirement Age, the Bank shall pay to the Executive the benefit described in this Section 2.3 instead of any other benefit under this Agreement.

2.3.1 Amount of Benefit. The benefit under this Section 2.3 is the Disability annual benefit amount set forth in Schedule A for the Plan Year ending immediately before the date on which Termination of Employment occurs.

2.3.2 Payment of Benefit. The Bank shall pay the Disability annual benefit amount to the Executive in 12 equal monthly installments, payable on the last day of each month, beginning with the month after the Normal Retirement Age. The annual benefit shall be paid to the Executive for 15 years.

2.4 Change-in-Control Benefit. If the Executive's employment with Cortland Bancorp or the Bank terminates within one year after a Change in Control (excepting Termination for Cause), the Bank shall pay to the Executive the benefit described in this Section 2.4 instead of any other benefit under this Agreement.

2.4.1 Amount of Benefit. The benefit under this Section 2.4 is the Normal Retirement Age Accrual Balance required by Section 2.1, discounting the Normal Retirement Age Accrual Balance to present value using a discount rate of 6.75%, or a discount rate selected by the Plan Administrator if the Plan Administrator determines that a different discount rate is appropriate; provided, however, that the discount rate selected shall not exceed the discount rate employed at the time of the Change in Control for purposes of calculating the Accrual Balance.

2.4.2 Payment of Benefit. The Bank shall pay the Change-in-Control benefit to the Executive in one lump sum within 3 days after the Executive's Termination of Employment.

2.5 Petition for Payment of Vested Normal Retirement Benefit, Vested Early Termination Benefit or Vested Disability Benefit. If the Executive is entitled to the normal retirement benefit provided by Section 2.1, the Early Termination benefit provided by Section 2.2, or the Disability benefit provided by Section 2.3, the Executive may petition the board of directors to have the Accrual Balance amount corresponding to that particular benefit paid to the Executive in a single lump sum. The board of directors shall have sole and absolute discretion about whether to pay the remaining Accrual Balance in a lump sum. If the remaining Accrual Balance is paid in a single lump sum, the Bank shall have no further obligations under this Agreement.

2.6 Change-in-Control Payout of Vested Normal Retirement Benefit, Vested Early Termination Benefit or Vested Disability Benefit Being Paid to the Executive at the Time of a Change in Control. If a Change in Control occurs at any time during the entire 15-year salary continuation benefit payment period and if at the time of that Change in Control the Executive is receiving the benefit provided by Section 2.1.2, Section 2.2.2, or Section 2.3.2, the Bank shall pay the remaining salary continuation benefits to the Executive in a lump sum within three days after the Change in Control. The lump-sum payment due to the Executive as a result of a Change in Control shall be an amount equal to the Accrual Balance amount corresponding to that particular benefit then being paid to the Executive under Section 2.1.2, Section 2.2.2, or Section 2.3.2.

2.7 Contradiction in Terms of Agreement and Schedule A. If there is a contradiction in the terms of this Agreement and Schedule A attached hereto concerning the benefits due under Section 2.2, 2.3, or 2.4 hereof, then the actual amount of benefits prescribed by this Agreement shall control.

ARTICLE 3
DEATH BENEFITS

3.1 Death During Active Service. If the Executive dies before the Normal Retirement Age while in the active service of the Bank, instead of any other benefit payable under this Agreement the Bank shall pay to the Executive's beneficiary(ies) the benefit described in the Second Amended Split Dollar Agreement and Endorsement dated as of the date hereof and attached to this Agreement as Addendum A.

3.2 Death During Benefit Period. If the Executive dies after benefit payments under Article 2 have commenced but before receiving all such payments, the Bank shall pay the remaining benefits to the Executive's beneficiary(ies) at the same time and in the same amounts they would have been paid to the Executive had the Executive survived. In that case, no death benefit shall be payable under this Article 3.

3.3 Death After Termination of Employment But Before Benefit Payments Commence. If the Executive is entitled to benefit payments under Article 2 but dies before payments commence, the benefits shall be payable to the Executive's beneficiary(ies), but payments shall commence on the last day of the month after the date of the Executive's death, and no death benefit shall be payable under this Article 3.

3.4 Petition for Benefit Payments. If the Executive dies before receiving any or all benefit payments to which he is entitled under Section 2.1, Section 2.2, or Section 2.3, respectively, the Executive's beneficiary(ies) or estate may petition the board of directors to have the Accrual Balance corresponding to that particular benefit paid to the Executive's beneficiary(ies) or estate in a single lump sum. The board of directors shall have sole and absolute discretion about whether to pay the remaining Accrual Balance in a lump sum. If the remaining Accrual Balance is paid in a single lump sum, the Bank shall have no further obligations under this Agreement.

3.5 Change-in-Control Payout of Vested Normal Retirement Benefit, Vested Early Termination Benefit or Vested Disability Benefit Being Paid to the Executive's Estate or Beneficiaries at the Time of a Change in Control. If a Change in Control occurs at any time during the entire 15-year salary continuation benefit payment period and if at the time of that Change in Control the Executive's estate or beneficiary(ies) is receiving the benefit provided by
Section 2.1.2, Section 2.2.2, or Section 2.3.2, the Bank shall pay the remaining salary continuation benefits to the Executive's beneficiary(ies) or estate in a lump sum within three days after the Change in Control. The lump-sum payment due to the Executive's beneficiary(ies) or estate as a result of a Change in Control shall be an amount equal to the Accrual Balance amount corresponding to that particular benefit then being paid to the Executive's estate or beneficiary(ies) under Section 2.1.2, Section 2.2.2, or Section 2.3.2.

ARTICLE 4
BENEFICIARIES

4.1 Beneficiary Designations. The Executive shall designate a beneficiary by filing a written designation with the Bank. The Executive may revoke or modify the designation at any time by filing a new designation. However, designations will only be effective if signed by the Executive and accepted by the Bank during the Executive's lifetime. The Executive's beneficiary designation shall be deemed automatically revoked if the beneficiary predeceases the Executive, or if the Executive names a spouse as beneficiary and the marriage is subsequently dissolved. If the Executive dies without a valid beneficiary designation, all payments shall be made to the Executive's estate.

4.2 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 Bank may pay such benefit to the guardian, legal representative or person having the care or custody of such minor, incapacitated person or incapable person. The Bank may require proof of incapacity, minority or guardianship as it may deem appropriate prior to distribution of the benefit. Such distribution shall completely discharge the Bank from all liability with respect to such benefit.

ARTICLE 5
GENERAL LIMITATIONS

5.1 Termination for Cause and Termination Before Vesting. Notwithstanding any provision of this Agreement to the contrary, the Bank shall not pay any benefit under this Agreement and this Agreement shall terminate if Termination of Employment is a result of Termination for Cause or if Early Termination benefits under Section 2.2 of this Agreement are neither paid nor payable because Early Termination occurred before vesting under Section 2.2 of this Agreement.

5.2 Suicide or Misstatement. The Bank shall not pay any benefit under this Agreement if the Executive commits suicide within two years after the Effective Date of this Agreement, or if the Executive has made any material misstatement of fact on any application for life insurance purchased by the Bank.

5.3 Removal. Notwithstanding any provision of this Agreement to the contrary, if the Executive is removed from office or permanently prohibited from participating in the conduct of the Bank'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 Bank under this Agreement shall terminate as of the effective date of the order.

5.4 Default. Notwithstanding any provision of this Agreement to the contrary, if the Bank is in "default" or "in danger of default", as those terms are defined in of 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 be terminated, except to the extent determined that continuation of the contract is necessary for the continued operation of the Bank, at the time the Federal Deposit Insurance Corporation enters into an agreement to provide assistance to or on behalf of the Bank 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. A person or beneficiary ("claimant") who has not received benefits under the Agreement that he or she believes should be paid shall make a claim for such benefits as follows -

6.1.1 Initiation - Written Claim. The claimant initiates a claim by submitting to the Bank a written claim for the benefits.

6.1.2 Timing of Bank Response. The Bank shall respond to such claimant within 90 days after receiving the claim. If the Bank determines that special circumstances require additional time for processing the claim, the Bank can extend the response period by an additional 90 days by notifying the claimant in writing, prior to 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 Bank expects to render its decision.

6.1.3 Notice of Decision. If the Bank denies part or all of the claim, the Bank shall notify the claimant in writing of such denial. The Bank shall write the notification in a manner calculated to be understood by the claimant. The notification shall set forth -

6.1.3.1 The specific reasons for the denial,

6.1.3.2 A reference to the specific provisions of the Agreement on which the denial is based,

6.1.3.3 A description of any additional information or material necessary for the claimant to perfect the claim and an explanation of why it is needed,

6.1.3.4 An explanation of the Agreement's review procedures and the time limits applicable to such procedures, and

6.1.3.5 A statement of the claimant's right to bring a civil action under ERISA (Employee Retirement Income Security Act) Section 502(a) following an adverse benefit determination on review.

6.2 Review Procedure. If the Bank denies part or all of the claim, the claimant shall have the opportunity for a full and fair review by the Bank of the denial, as follows -

6.2.1 Initiation - Written Request. To initiate the review, the claimant, within 60 days after receiving the Bank's notice of denial, must file with the Bank a written request for review.

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. The Bank shall also provide the claimant, 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.

6.2.3 Considerations on Review. In considering the review, the Bank shall take into account all materials and information the claimant submits relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.

6.2.4 Timing of Bank Response. The Bank shall respond in writing to such claimant within 60 days after receiving the request for review. If the Bank determines that special circumstances require additional time for processing the claim, the Bank can extend the response period by an additional 60 days by notifying the claimant in writing, prior to 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 Bank expects to render its decision.

6.2.5 Notice of Decision. The Bank shall notify the claimant in writing of its decision on review. The Bank shall write the notification in a manner calculated to be understood by the claimant. The notification shall set forth -

6.2.5.1 The specific reason for the denial,

6.2.5.2 A reference to the specific provisions of the Agreement on which the denial is based,

6.2.5.3 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

6.2.5.4 A statement of the claimant's right to bring a civil action under ERISA Section 502(a).

ARTICLE 7
ADMINISTRATION OF AGREEMENT

7.1 Plan Administrator Duties. This Agreement shall be administered by a Plan Administrator consisting of the Board or such committee or person(s) as the Board shall appoint. The Executive may be a member of the Plan Administrator. The Plan Administrator shall also have the discretion and authority to (a) make, amend, interpret and enforce all appropriate rules and regulations for the administration of this Agreement and (b) decide or resolve any and all questions including interpretations of this Agreement, as may arise in connection with the 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 Bank.

7.3 Binding Effect of Decisions. The decision or action of the Plan Administrator with respect to any question arising out of or in connection with 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 Executive 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 Bank 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 Bank Information. To enable the Plan Administrator to perform its functions, the Bank 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 Employment of the Executive, and such other pertinent information as the Plan Administrator may reasonably require.

ARTICLE 8
MISCELLANEOUS

8.1 Amendments. This Agreement may be amended solely by a written agreement signed by the Bank and by the Executive.

8.2 Binding Effect. This Agreement shall bind the Executive and the Bank, their beneficiaries, survivors, executors, successors, administrators, and transferees.

8.3 No Guarantee of Employment. This Agreement is not an employment policy or contract. It 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. It also does not require the Executive to remain an employee nor interfere with the Executive's right to terminate employment at any time.

8.4 Non-Transferability. Benefits under this Agreement cannot be sold, transferred, assigned, pledged, attached, or encumbered in any manner.

8.5 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 if no such succession had occurred. Failure of the Bank to obtain such assumption agreement before effectiveness of any such succession shall be a breach of this Agreement and shall entitle the Executive to the Change-in-Control benefit provided in
Section 2.4.

8.6 Tax Withholding. The Bank 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 Executive and beneficiary are general unsecured creditors of the Bank for the payment of benefits under this Agreement. The benefits represent the mere promise by the Bank to pay such benefits. The rights to benefits are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by creditors. Any insurance on the Executive's life is a general asset of the Bank to which the Executive and beneficiary have no preferred or secured claim.

8.9 Entire Agreement. This Agreement and the Second Amended Split Dollar Agreement and Endorsement attached as Addendum A constitute the entire agreement between the Bank and the Executive as to the

subject matter hereof. No rights are granted to the Executive under this Agreement other than those specifically set forth herein. This Agreement supersedes in its entirety the November 21, 2002 Amended Salary Continuation Agreement, effective immediately.

8.10 Severability. If for any reason any provision of this Agreement is held invalid, such invalidity shall not affect any other provision of this Agreement not held invalid, and to the full extent consistent with law each such other provision shall continue in full force and effect. If any provision of this Agreement is held invalid in part, such invalidity shall not affect the remainder of such provision not held invalid, and to the full extent consistent with law the remainder of such provision, together with all other provisions of this Agreement, shall continue in full force and effect.

8.11 Headings. The headings of sections herein are included solely for convenience of reference and shall not affect the meaning or interpretation of any provision of this Agreement.

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.

(a) If to the Bank, to - Board of Directors The Cortland Savings and Banking Company 194 West Main Street P.O. Box 98 Cortland, Ohio 44410-1466

(b) If to the Executive, to - James M. Gasior The Cortland Savings and Banking Company 194 West Main Street P.O. Box 98 Cortland, Ohio 44410-1466

and to such other or additional person or persons as either party shall have designated to the other party in writing by like notice.

8.13 Payment of Legal Fees. The Bank is aware that upon the occurrence of a Change in Control, management of the Bank may cause or attempt to cause the Bank to refuse to comply with its obligations under this Agreement, or may cause or attempt to cause the Bank to institute, or may institute, litigation seeking to have this Agreement declared unenforceable, or may take, or attempt to take, other action to deny Executive the benefits intended under this Agreement. In these circumstances, the purpose of this Agreement could be frustrated. It is the intent of the Bank that the Executive not be required to incur the expenses associated with the enforcement of his rights under this Agreement by litigation or other legal action because the cost and expense thereof would substantially detract from the benefits intended to be extended to Executive hereunder, nor be bound to negotiate any settlement of his rights hereunder under threat of incurring such expenses. Accordingly, if after a Change in Control it appears to Executive that (a) the Bank has failed to comply with any of its obligations under this Agreement, or (b) the Bank or any other person has taken any action to declare this Agreement void or unenforceable or instituted any litigation or other legal action designed to deny, diminish or to recover from, Executive the benefits intended to be provided to Executive hereunder, the Bank irrevocably authorizes Executive from time to time to retain counsel of his choice at the Bank's expense as provided in this Section 8.13, to represent Executive in connection with the initiation or defense of any litigation or other legal action, whether by or against the Bank or any director, officer, stockholder or other person affiliated with the Bank, in any jurisdiction. The fees and expenses of counsel selected from time to time by Executive as herein above provided shall be paid or reimbursed to Executive by the Bank on a regular, periodic basis upon presentation by Executive of a statement or statements prepared by such counsel in accordance with such counsel's customary practices, up to a maximum aggregate amount of $500,000. The Bank's obligation to pay the Executive's legal fees provided by this Section 8.13 operates separately from, and in addition to, any legal fee reimbursement obligation the Bank or the Bank's parent Cortland Bancorp may have with the Executive by virtue of a Severance Agreement by and among the Executive, the Bank, and Cortland Bancorp.

IN WITNESS WHEREOF, the Executive and a duly authorized Bank officer have executed this Second Amended Salary Continuation Agreement as of the date first written above.

EXECUTIVE:                              BANK:
                                        THE CORTLAND SAVINGS AND BANKING COMPANY


-------------------------------------   By:
James M. Gasior                             ------------------------------------
                                            Rodger W. Platt
                                        Title: President, Chairman of the Board
                                               and Chief Executive Officer

BENEFICIARY DESIGNATION

THE CORTLAND SAVINGS AND BANKING COMPANY
SECOND AMENDED SALARY CONTINUATION AGREEMENT

JAMES M. GASIOR

I designate the following as beneficiary of any death benefits under this Second Amended Salary Continuation 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 Bank. 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.

Date: ___________, 200_

Accepted by the Bank this ____________ day of ______________, 200_.

                                          EARLY
                                       TERMINATION      DISABILITY
                   AGE               ANNUAL BENEFIT   ANNUAL BENEFIT   CHANGE-IN-
         PLAN      AT                  PAYABLE AT       PAYABLE AT       CONTROL
         YEAR     PLAN    ACCRUAL        NORMAL           NORMAL         BENEFIT
PLAN    ENDING    YEAR   BALANCE @   RETIREMENT AGE   RETIREMENT AGE   PAYABLE IN
YEAR   FEBRUARY    END   6.75% (1)         (2)              (2)        A LUMP SUM
----   --------   ----   ---------   --------------   --------------   ----------
  1      2002      42     $  5,462       $     0          $ 3,920       $ 60,751
  2      2003      43     $ 11,377       $     0          $ 7,539       $ 65,794
  3      2004      44     $ 23,045       $     0          $ 9,780       $169,882
  4      2005      45     $ 38,171       $     0          $15,231       $180,694
  5      2006      46     $ 54,351       $     0          $20,275       $193,276
  6      2007      47     $ 71,658       $     0          $24,991       $206,733
  7      2008      48     $ 90,170       $     0          $29,400       $221,128
  8      2009      49     $109,970       $     0          $33,522       $236,524
  9      2010      50     $131,149       $     0          $37,376       $252,993
 10      2011      51     $153,803       $     0          $40,979       $270,608
 11      2012      52     $178,034       $     0          $44,347       $289,450
 12      2013      53     $203,953       $     0          $47,496       $309,604
 13      2014      54     $231,676       $     0          $50,440       $331,161
 14      2015      55     $261,329       $     0          $53,193       $354,219
 15      2016      56     $293,047       $     0          $55,766       $378,883
 16      2017      57     $326,974       $     0          $58,172       $405,264
 17      2018      58     $363,262       $     0          $60,421       $433,481
 18      2019      59     $402,078       $     0          $62,523       $463,664
 19      2020      60     $443,596       $     0          $64,489       $495,948
 20      2021      61     $488,005       $     0          $66,327       $530,479
 21      2022      62     $535,506       $68,045          $68,045       $567,416
 22      2023      63     $586,314       $69,652          $69,652       $606,923
 23      2024      64     $640,660       $71,154          $71,154       $649,182
 24     October
         2024      65     $678,977       $72,100          $72,100       $678,977

(1) Calculations are approximations. Benefit calculations are based on prior year-end accrual balances. The accrual balance reflects payment at the end of each month during retirement, beginning November 30, 2024.

(2) Benefit is based on the present value of the current payment stream of the vested accrual balance using a standard discount rate (6.75%).

Exhibit 10.20

THE CORTLAND SAVINGS AND BANKING COMPANY
AMENDED SALARY CONTINUATION AGREEMENT

THIS AMENDED SALARY CONTINUATION AGREEMENT (this "Agreement") is made and entered into as of this _________ day of __________________, 2002, by and between The Cortland Savings and Banking Company, an Ohio-chartered, FDIC-insured member bank with its main offices in Cortland, Ohio (the "Bank") and Marlene Lenio (the "Executive").

WHEREAS, the Executive has contributed substantially to the success of the Bank and its parent company, Cortland Bancorp, an Ohio corporation, and the Bank desires that the Executive continue in its employ,

WHEREAS, to encourage the Executive to remain an employee of the Bank, the Bank is willing to provide salary continuation benefits to the Executive, payable out of the Bank's general assets,

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 Bank, is contemplated insofar as the Bank is concerned,

WHEREAS, the Bank and the Executive entered into a Salary Continuation Agreement dated as of March 1, 2001, providing for specified retirement benefits for the Executive after termination of her employment,

WHEREAS, regulations promulgated under ERISA (the Employees Retirement Income Security Act) that became effective on January 1, 2002 govern the regulation of claims procedures contained in the Executive's form of Salary Continuation Agreement,

WHEREAS, Clark/Bardes Consulting, a benefits consulting firm involved in the design and administration of the Executive's Salary Continuation Agreement, is recommending to its clients that the definition of disability should not create unwanted burdens under the revised ERISA regulations effective January 1, 2002,

WHEREAS, the revised disability definition in this Agreement, as well as the revised Claims and Review Procedure in Article 6 in this document, were drafted by ERISA counsel retained by Clark/Bardes Consulting, and

WHEREAS, the Bank and the Executive have negotiated and agreed to miscellaneous changes in the terms and conditions of the March 1, 2001 Salary Continuation Agreement, including but not limited to revision of the definition of "disability" and updating of the claims and review provisions of Article 6.

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

Whenever used in this Agreement, the following words and phrases shall have the meanings specified --

1.1 "Accrual Balance" means the amount reflected in Schedule A, which is the amount required to be accrued by the Bank according to generally accepted accounting principles to account for benefits that may become payable to the Executive under this Agreement.

1.2 "Change in Control" means any of the following events occur:

(a) Acquisition of Significant Stock Ownership: a report on Schedule 13D or another form or schedule (other than Schedule 13G) is filed or is required to be filed under Sections 13(d) or 14(d) of the Securities Exchange Act of 1934, if the schedule discloses that the filing person or persons acting in concert has or have become the

beneficial owner of 25% or more of a class of Cortland Bancorp's voting securities (but this clause (a) shall not apply to beneficial ownership of voting shares of Cortland Bancorp held by the Bank or another subsidiary of Cortland Bancorp in a fiduciary capacity). A Change in Control of Cortland Bancorp shall not be deemed to have occurred solely because acquisition by Cortland Bancorp of its own voting securities reduces the number of shares outstanding, causing a person's beneficial ownership to exceed 25% of Cortland Bancorp's voting securities; provided that, if after such acquisition by Cortland Bancorp such person becomes the beneficial owner of additional Cortland Bancorp voting securities, increasing the percentage of outstanding Cortland Bancorp voting securities beneficially owned by such person, a Change in Control of Cortland Bancorp shall be deemed to have occurred,

(b) Acquisition of Control under Federal Banking Law. a person acquires the power to direct Cortland Bancorp's management or policies, if Cortland Bancorp's board of directors determines that such acquisition constitutes or will constitute an acquisition of control of Cortland Bancorp for the purposes of the Bank Holding Company Act or the Change in Bank Control Act and the regulations thereunder,

(c) Change in Board Composition: during any period of two consecutive years, individuals who constitute Cortland Bancorp's board of directors at the beginning of the two-year period cease for any reason to constitute at least a majority thereof, provided, however, that -- for purposes of this clause (c) -- each director who is first elected by the board (or first nominated by the board for election by stockholders) by a vote of at least two-thirds (2/3) of the directors who were directors at the beginning of the two-year period shall be deemed to have been a director at the beginning of the two-year period,

(d) Merger: Cortland Bancorp merges into or consolidates with another corporation, or merges another corporation into Cortland Bancorp, and as a result less than 50% of the total voting power of the surviving corporation immediately after the merger or consolidation is held by persons who were the stockholders of Cortland Bancorp's voting securities immediately before the merger or consolidation, or

(e) Sale of Assets: Cortland Bancorp sells to a third party all or substantially all of Cortland Bancorp's assets. For purposes of this Agreement, sale of all or substantially all of Cortland Bancorp's assets includes sale of the Bank alone.

1.3 "Disability" means the Executive suffers a sickness, accident or injury that is determined by the carrier of any individual or group disability insurance policy covering the Executive, or by the Social Security Administration, to be a disability rendering the Executive totally and permanently disabled. At the Bank's request, the Executive must submit to the Bank proof of the carrier's or Social Security Administration's determination.

1.4 "Early Retirement Age" means the Executive's 62nd birthday.

1.5 "Early Termination" means Termination of Employment before Normal Retirement Age for reasons other than death, Disability, Termination for Cause, or within one year after a Change in Control.

1.6 "Early Termination Date" means the month, day, and year in which Early Termination occurs.

1.7 "Effective Date" means March 1, 2001.

1.8 "Normal Retirement Age" means the Executive's 65th birthday.

1.9 "Normal Retirement Date" means the later of the Normal Retirement Age or Termination of Employment.

1.10 "Person" means an individual, corporation, partnership, trust, association, joint venture, pool, syndicate, sole proprietorship, unincorporated organization or other entity.

1.11 "Plan Year" means a twelve-month period commencing on March 1 and ending on the last day of February of each year. The initial Plan Year shall commence on the Effective Date of this Agreement.

1.12 "Termination for Cause" means the Bank terminates the Executive's employment for any one of the following reasons --

(a) gross negligence or gross neglect of duties,

(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 Bank policy committed in connection with the Executive's employment and resulting in an adverse effect on the Bank.

1.13 "Termination of Employment" means that the Executive ceases to be employed by the Bank for any reason whatsoever, other than because of a leave of absence approved by the Bank. For purposes of this Agreement, if there is a dispute over the employment status of the Executive or the date of the Executive's Termination of Employment, the Bank shall have the sole and absolute right to decide the dispute, unless a Change in Control shall have occurred.

ARTICLE 2
LIFETIME BENEFITS

2.1 Normal Retirement Benefit. For Termination of Employment on or after the Normal Retirement Age for reasons other than death, the Bank shall pay to the Executive the benefit described in this Section 2.1 instead of any other benefit under this Agreement.

2.1.1 Amount of Benefit. The annual benefit under this Section 2.1 is $12,500. In its sole discretion, the Bank's board of directors may increase the annual benefit under this Section 2.1.1, but any increase shall require recalculation of Schedule A.

2.1.2 Payment of Benefit. The Bank shall pay the annual benefit to the Executive in 12 equal monthly installments, payable on the last day of each month, beginning with the month after the Executive's Normal Retirement Date. The annual benefit shall be paid to the Executive for 15 years.

2.2 Early Termination Benefit. For Early Termination on or after the Executive's Early Retirement Age, the Bank shall pay to the Executive the benefit described in this Section 2.2 instead of any other benefit under this Agreement.

2.2.1 Amount of Benefit. The benefit under this Section 2.2 is the Early Termination annual benefit amount set forth in Schedule A for the Plan Year ending immediately before the Early Termination Date (except during the first Plan Year, the benefit is the amount set forth for Plan Year 1). If the Bank's board of directors increases the annual benefit under Section 2.1.1, the increase shall require recalculation of the Early Termination annual benefit on Schedule A.

2.2.2 Payment of Benefit. The Bank shall pay the Early Termination annual benefit to the Executive in 12 equal monthly installments, payable on the last day of each month, beginning with the month after the Normal Retirement Age. The annual benefit shall be paid to the Executive for 15 years.

2.3 Disability Benefit. For Termination of Employment because of Disability before the Normal Retirement Age, the Bank shall pay to the Executive the benefit described in this Section 2.3 instead of any other benefit under this Agreement.

2.3.1 Amount of Benefit. The benefit under this Section 2.3 is the Disability annual benefit amount set forth in Schedule A for the Plan Year ending immediately before the date on which Termination of Employment occurs (except during the first Plan Year, the benefit is the amount set forth for Plan

Year 1). If the Bank's board of directors increases the annual benefit under Section 2.1.1, the increase shall require recalculation of the Disability annual benefit on Schedule A.

2.3.2 Payment of Benefit. The Bank shall pay the Disability annual benefit amount to the Executive in 12 equal monthly installments, payable on the last day of each month, beginning with the month after the Normal Retirement Age. The annual benefit shall be paid to the Executive for 15 years.

2.4 Change-in-Control Benefit. If the Executive's employment with Cortland Bancorp or the Bank terminates within one year after a Change in Control (excepting Termination for Cause), the Bank shall pay to the Executive the benefit described in this Section 2.4 instead of any other benefit under this Agreement.

2.4.1 Amount of Benefit. The benefit under this Section 2.4 is the Change-in-Control benefit set forth in Schedule A for the Plan Year ending immediately before the date on which Termination of Employment occurs (except during the first Plan Year the benefit is the amount set forth for Plan Year 1), determined by vesting the Executive in the Normal Retirement Benefit described in Section 2.1, calculating the present value of said benefit using a discount rate equal to 8% and monthly compounding. If the Bank's board of directors increases the annual benefit under Section 2.1.1, the increase shall require recalculation of the Change-in-Control lump sum benefit on Schedule A.

2.4.2 Payment of Benefit. The Bank shall pay the Change-in-Control benefit to the Executive in one lump sum within 3 days after the Executive's Termination of Employment.

2.5 Petition for Payment of Vested Normal Retirement Benefit, Vested Early Termination Benefit or Vested Disability Benefit. If the Executive is entitled to the normal retirement benefit provided by Section 2.1, the Early Termination benefit provided by Section 2.2, or the Disability benefit provided by Section 2.3, the Executive may petition the board of directors to have the Accrual Balance amount corresponding to that particular benefit paid to the Executive in a single lump sum after (a) deduction of any normal retirement benefits, Early Termination benefits, or Disability benefits already paid, and (b) addition of interest at the rate of 8.0% on the Accrual Balance not yet paid for the period from Termination of Employment to payment of the lump sum amount. The board of directors shall have sole and absolute discretion about whether to pay the remaining Accrual Balance in a lump sum. If the remaining Accrual Balance is paid in a single lump sum, the Bank shall have no further obligations under this Agreement.

2.6 Change-in-Control Payout of Vested Normal Retirement Benefit, Vested Early Termination Benefit or Vested Disability Benefit Being Paid to the Executive at the Time of a Change in Control. If a Change in Control occurs at any time during the entire 15-year salary continuation benefit payment period and if at the time of that Change in Control the Executive is receiving the benefit provided by Section 2.1.2, Section 2.2.2, or Section 2.3.2, the Bank shall pay the remaining salary continuation benefits to the Executive, her beneficiaries, or estate in a lump sum within three days after the Change in Control. The lump-sum payment due to the Executive, her beneficiaries, or estate as a result of a Change in Control shall be an amount equal to the Accrual Balance amount corresponding to that particular benefit then being paid to the Executive, her estate, or beneficiaries under Section 2.1.2, Section 2.2.2, or
Section 2.3.2 after (a) deduction of any normal retirement benefits, Early Termination benefits, or Disability benefits already paid, and (b) addition of interest at the rate of 8.0% on the Accrual Balance not yet paid for the period from Termination of Employment to payment of the lump sum amount.

2.7 Contradiction in Terms of Agreement and Schedule A. If there is a contradiction in the terms of this Agreement and Schedule A attached hereto concerning the benefits due under Section 2.2, 2.3, or 2.4 hereof, then the actual amount of benefits prescribed by this Agreement shall control.

ARTICLE 3
DEATH BENEFITS

3.1 Death During Active Service. If the Executive dies before the Normal Retirement Age while in the active service of the Bank, instead of any other benefit payable under this Agreement the Bank shall pay to the Executive's beneficiary(ies) the benefit described in the Amended Split Dollar Agreement and Endorsement attached to this Agreement as Addendum A.

3.2 Death During Benefit Period. If the Executive dies after benefit payments under Article 2 have commenced but before receiving all such payments, the Bank shall pay the remaining benefits to the Executive's beneficiary(ies) at the same time and in the same amounts they would have been paid to the Executive had the Executive survived. In that case, no death benefit shall be payable under this Article 3.

3.3 Death After Termination of Employment But Before Benefit Payments Commence. If the Executive is entitled to benefit payments under Article 2 but dies before payments commence, the benefits shall be payable to the Executive's beneficiary(ies), but payments shall commence on the last day of the month after the date of the Executive's death.

3.4 Petition for Benefit Payments. If the Executive dies before receiving any or all benefit payments to which she is entitled under Section 2.1, Section 2.2, or Section 2.3, respectively, the Executive's beneficiary(ies) or estate may petition the board of directors to have the Accrual Balance corresponding to that particular benefit paid to the Executive's beneficiary(ies) or estate in a single lump sum after (a) deduction of any normal retirement benefits, Early Termination benefits, or Disability benefits already paid, and (b) addition of interest at the rate of 8.0% on the Accrual Balance not yet paid for the period from the Executive's Termination of Employment to payment of the lump sum amount. The board of directors shall have sole and absolute discretion about whether to pay the remaining Accrual Balance in a lump sum. If the remaining Accrual Balance is paid in a single lump sum, the Bank shall have no further obligations under this Agreement.

3.5 Change-in-Control Payout of Vested Normal Retirement Benefit, Vested Early Termination Benefit or Vested Disability Benefit Being Paid to the Executive's Estate or Beneficiaries at the Time of a Change in Control. If a Change in Control occurs at any time during the entire 15-year salary continuation benefit payment period and if at the time of that Change in Control the Executive's estate or beneficiary(ies) is receiving the benefit provided by
Section 2.1.2, Section 2.2.2, or Section 2.3.2, the Bank shall pay the remaining salary continuation benefits to the Executive's beneficiary(ies) or estate in a lump sum within three days after the Change in Control. The lump-sum payment due to the Executive's beneficiary(ies) or estate as a result of a Change in Control shall be an amount equal to the Accrual Balance amount corresponding to that particular benefit then being paid to the Executive's estate or beneficiary(ies) under Section 2.1.2, Section 2.2.2, or Section 2.3.2 after (a) deduction of any normal retirement benefits, Early Termination benefits, or Disability benefits already paid, and (b) addition of interest at the rate of 8.0% on the Accrual Balance not yet paid for the period from Termination of Employment to payment of the lump sum amount.

ARTICLE 4
BENEFICIARIES

4.1 Beneficiary Designations. The Executive shall designate a beneficiary by filing a written designation with the Bank. The Executive may revoke or modify the designation at any time by filing a new designation. However, designations will only be effective if signed by the Executive and accepted by the Bank during the Executive's lifetime. The Executive's beneficiary designation shall be deemed automatically revoked if the beneficiary predeceases the Executive, or if the Executive names a spouse as beneficiary and the marriage is subsequently dissolved. If the Executive dies without a valid beneficiary designation, all payments shall be made to the Executive's estate.

4.2 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 Bank may pay such benefit to the guardian, legal representative or person having the care or custody of such minor, incapacitated person or incapable person. The Bank may require proof of incapacity, minority or guardianship as it may deem appropriate prior to distribution of the benefit. Such distribution shall completely discharge the Bank from all liability with respect to such benefit.

ARTICLE 5
GENERAL LIMITATIONS

5.1 Termination for Cause. Notwithstanding any provision of this Agreement to the contrary, the Bank shall not pay any benefit under this Agreement if Termination of Employment is a result of Termination for Cause.

5.2 Suicide or Misstatement. The Bank shall not pay any benefit under this Agreement if the Executive commits suicide within two years after the Effective Date of this Agreement, or if the Executive has made any material misstatement of fact on any application for life insurance purchased by the Bank.

5.3 Removal. If the Executive is removed from office or permanently prohibited from participating in the conduct of the Bank'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 Bank under this Agreement shall terminate as of the effective date of the order.

5.4 Insolvency. If the Superintendent of Financial Institutions appoints the Federal Deposit Insurance Corporation as receiver for the Bank pursuant to Ohio Revised Code section 1125.20, all obligations under this Agreement shall terminate as of the date of the Bank's declared insolvency, but vested rights of the contracting parties shall not be affected.

5.5 FDIC Open-Bank Assistance. All obligations under this Agreement shall be terminated, except to the extent determined that continuation of the contract is necessary for the continued operation of the Bank, at the time the Federal Deposit Insurance Corporation enters into an agreement to provide assistance to or on behalf of the Bank 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, however, shall not be affected by such action.

ARTICLE 6
CLAIMS AND REVIEW PROCEDURES

6.1 Claims Procedure. A person or beneficiary ("claimant") who has not received benefits under the Agreement that he or she believes should be paid shall make a claim for such benefits as follows --

6.1.1 Initiation - Written Claim. The claimant initiates a claim by submitting to the Bank a written claim for the benefits.

6.1.2 Timing of Bank Response. The Bank shall respond to such claimant within 90 days after receiving the claim. If the Bank determines that special circumstances require additional time for processing the claim, the Bank can extend the response period by an additional 90 days by notifying the claimant in writing, prior to 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 Bank expects to render its decision.

6.1.3 Notice of Decision. If the Bank denies part or all of the claim, the Bank shall notify the claimant in writing of such denial. The Bank shall write the notification in a manner calculated to be understood by the claimant. The notification shall set forth --

6.1.3.1 The specific reasons for the denial,

6.1.3.2 A reference to the specific provisions of the Agreement on which the denial is based,

6.1.3.3 A description of any additional information or material necessary for the claimant to perfect the claim and an explanation of why it is needed,

6.1.3.4 An explanation of the Agreement's review procedures and the time limits applicable to such procedures, and

6.1.3.5 A statement of the claimant's right to bring a civil action under ERISA (Employees Retirement Income Security Act) Section 502(a) following an adverse benefit determination on review.

6.2 Review Procedure. If the Bank denies part or all of the claim, the claimant shall have the opportunity for a full and fair review by the Bank of the denial, as follows --

6.2.1 Initiation - Written Request. To initiate the review, the claimant, within 60 days after receiving the Bank's notice of denial, must file with the Bank a written request for review.

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. The Bank shall also provide the claimant, 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.

6.2.3 Considerations on Review. In considering the review, the Bank shall take into account all materials and information the claimant submits relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.

6.2.4 Timing of Bank Response. The Bank shall respond in writing to such claimant within 60 days after receiving the request for review. If the Bank determines that special circumstances require additional time for processing the claim, the Bank can extend the response period by an additional 60 days by notifying the claimant in writing, prior to 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 Bank expects to render its decision.

6.2.5 Notice of Decision. The Bank shall notify the claimant in writing of its decision on review. The Bank shall write the notification in a manner calculated to be understood by the claimant. The notification shall set forth --

6.2.5.1 The specific reason for the denial,

6.2.5.2 A reference to the specific provisions of the Agreement on which the denial is based,

6.2.5.3 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

6.2.5.4 A statement of the claimant's right to bring a civil action under ERISA Section 502(a).

ARTICLE 7
MISCELLANEOUS

7.1 Amendment and Termination. This Agreement may be amended or terminated only by a written agreement signed by the Bank and the Executive.

7.2 Binding Effect. This Agreement shall bind the Executive and the Bank, and their beneficiaries, survivors, executors, successors, administrators, and transferees.

7.3 No Guarantee of Employment. This Agreement is not an employment policy or contract. It 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. It also does not require the Executive to remain an employee nor interfere with the Executive's right to terminate employment at any time.

7.4 Non-Transferability. Benefits under this Agreement cannot be sold, transferred, assigned, pledged, attached, or encumbered in any manner.

7.5 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 if no such succession had occurred. Failure of the Bank to obtain such assumption agreement before effectiveness of any such succession shall be a breach of this Agreement and shall entitle the Executive to the Change-in-Control benefit provided in
Section 2.4.

7.6 Tax Withholding. The Bank shall withhold any taxes that are required to be withheld from the benefits provided under this Agreement.

7.7 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.

7.8 Unfunded Arrangement. The Executive and beneficiary are general unsecured creditors of the Bank for the payment of benefits under this Agreement. The benefits represent the mere promise by the Bank to pay such benefits. The rights to benefits are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by creditors. Any insurance on the Executive's life is a general asset of the Bank to which the Executive and beneficiary have no preferred or secured claim.

7.9 Entire Agreement. This Agreement constitutes the entire agreement between the Bank and the Executive as to the subject matter hereof. No rights are granted to the Executive under this Agreement other than those specifically set forth herein.

7.10 Administration. The Bank shall have powers which are necessary to administer this Agreement, including but not limited to --

(a) interpreting the provisions of this Agreement,

(b) establishing and revising the method of accounting for this Agreement,

(c) maintaining a record of benefit payments, and

(d) establishing rules and prescribing any forms necessary or desirable to administer this Agreement.

7.11 Named Fiduciary. The Bank shall be the named fiduciary and plan administrator under this Agreement. The named fiduciary may delegate to others certain aspects of the management and operation responsibilities of the plan, including the employment of advisors and the delegation of ministerial duties to qualified individuals.

7.12 Severability. If for any reason any provision of this Agreement is held invalid, such invalidity shall not affect any other provision of this Agreement not held invalid, and to the full extent consistent with law each such other provision shall continue in full force and effect. If any provision of this Agreement is held invalid in part, such invalidity shall not affect the remainder of such provision not held invalid, and to the full extent consistent with law the remainder of such provision, together with all other provisions of this Agreement, shall continue in full force and effect.

7.13 Headings. The headings of sections herein are included solely for convenience of reference and shall not affect the meaning or interpretation of any provision of this Agreement.

7.14 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.

(a) If to the Bank, to -- Board of Directors The Cortland Savings and Banking Company 194 West Main Street P.O. Box 98 Cortland, Ohio 44410-1466

(b) If to the Executive, to -- Marlene Lenio 326 Russell Avenue Cortland, Ohio 44410

and to such other or additional person or persons as either party shall have designated to the other party in writing by like notice.

7.15 Payment of Legal Fees. The Bank is aware that upon the occurrence of a Change in Control, then current management of the Bank may cause or attempt to cause the Bank to refuse to comply with its obligations under this Agreement, or may cause or attempt to cause the Bank to institute, or may institute, litigation seeking to have this Agreement declared unenforceable, or may take, or attempt to take, other action to deny Executive the benefits intended under this Agreement. In these circumstances, the purpose of this Agreement could be frustrated. It is the intent of the Bank that the Executive not be required to incur the expenses associated with the enforcement of her rights under this Agreement by litigation or other legal action because the cost and expense thereof would substantially detract from the benefits intended to be extended to Executive hereunder, nor be bound to negotiate any settlement of her rights hereunder under threat of incurring such expenses. Accordingly, if after a Change in Control it should appear to Executive that (a) the Bank has failed to comply with any of its obligations under this Agreement, or (b) in the event that the Bank or any other person takes any action to declare this Agreement void or unenforceable, or institutes any litigation or other legal action designed to deny, diminish or to recover from, Executive the benefits intended to be provided to Executive hereunder, the Bank irrevocably authorizes Executive from time to time to retain counsel of her choice at the expense of the Bank as provided in this Section 7.15, to represent Executive in connection with the initiation or defense of any litigation or other legal action, whether by or against the Bank or any director, officer, stockholder or other person affiliated with the Bank, in any jurisdiction. The fees and expenses of counsel selected from time to time by Executive as herein above provided shall be paid or reimbursed to Executive by the Bank on a regular, periodic basis upon presentation by Executive of a statement or statements prepared by such counsel in accordance with such counsel's customary practices, up to a maximum aggregate amount of $500,000. The Bank's obligation to pay the Executive's legal fees provided by this Section 7.15 operates separately from, and in addition to, any legal fee reimbursement obligation the Bank or the Bank's parent Cortland Bancorp may have with the Executive by virtue of a Severance Agreement by and among the Executive, the Bank, and Cortland Bancorp.

IN WITNESS WHEREOF, the Executive and a duly authorized Bank officer have signed this Amended Salary Continuation Agreement as of the date first written above.

                                        THE CORTLAND SAVINGS AND BANKING COMPANY


                                        By:
-------------------------------------       ------------------------------------
Marlene Lenio                               Rodger W. Platt
                                        Title: President, Chairman of the Board
                                               and Chief Executive Officer

BENEFICIARY DESIGNATION

THE CORTLAND SAVINGS AND BANKING COMPANY
AMENDED SALARY CONTINUATION AGREEMENT

MARLENE LENIO

I designate the following as beneficiary of any death benefits under this Amended Salary Continuation 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 Bank. 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.

Date: _________, 2002

Accepted by the Bank this _________ day of ________________, 2002.

                                 EARLY
                              TERMINATION     DISABILITY
                    VESTED       ANNUAL         ANNUAL        CHANGE-IN-CONTROL
PLAN    ACCRUAL    ACCRUAL      BENEFIT         BENEFIT        LUMP SUM BENEFIT
YEAR    BALANCE    BALANCE   PAYABLE AT 65   PAYABLE AT 65   PAYABLE IMMEDIATELY
----   --------   --------   -------------   -------------   -------------------
  1    $  2,827   $      0      $     0         $ 1,257            $ 28,103
  2    $  5,888   $      0      $     0         $ 2,418            $ 30,435
  3    $  9,203   $      0      $     0         $ 3,490            $ 32,961
  4    $ 12,794   $      0      $     0         $ 4,480            $ 35,697
  5    $ 16,682   $      0      $     0         $ 5,394            $ 38,660
  6    $ 20,894   $      0      $     0         $ 6,238            $ 41,869
  7    $ 25,455   $      0      $     0         $ 7,017            $ 45,344
  8    $ 30,394   $      0      $     0         $ 7,737            $ 49,108
  9    $ 35,743   $      0      $     0         $ 8,401            $ 53,183
 10    $ 41,537   $      0      $     0         $ 9,014            $ 57,598
 11    $ 47,811   $      0      $     0         $ 9,581            $ 62,378
 12    $ 54,606   $      0      $     0         $10,104            $ 67,556
 13    $ 61,965   $      0      $     0         $10,587            $ 73,163
 14    $ 69,935   $ 69,935      $11,033         $11,033            $ 79,235
 15    $ 78,566   $ 78,566      $11,445         $11,445            $ 85,812
 16    $ 87,913   $ 87,913      $11,825         $11,825            $ 92,934
 17    $ 98,037   $ 98,037      $12,176         $12,176            $100,647
 18    $109,001   $109,001      $12,500         $12,500            $109,001

EXHIBIT 10.21

THE CORTLAND SAVINGS AND BANKING COMPANY
SALARY CONTINUATION AGREEMENT

THIS SALARY CONTINUATION AGREEMENT (this "Agreement") is made and entered into as of this day of _____________, 200__, by and between The Cortland Savings and Banking Company, an Ohio-chartered, FDIC-insured member bank with its main offices in Cortland, Ohio (the "Bank") and Craig Phythyon, Vice President of the Bank (the "Executive").

WHEREAS, the Executive has contributed substantially to the success of the Bank and its parent company, Cortland Bancorp, an Ohio corporation, and the Bank desires that the Executive continue in its employ,

WHEREAS, to encourage the Executive to remain an employee of the Bank, the Bank is willing to provide salary continuation benefits to the Executive, payable out of the Bank's general assets,

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 Bank, is contemplated insofar as the Bank is concerned, and

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

Whenever used in this Agreement, the following words and phrases shall have the meanings specified -

1.1 "Accrual Balance" means the liability that should be accrued by the Bank under generally accepted accounting principles ("GAAP") for the Bank's obligation to the Executive 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 shall be calculated assuming a level principal amount and interest as the discount rate is accrued each period. The principal accrual is determined such that when it is credited with interest each month, the Accrual Balance at Normal Retirement Age equals 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 initial discount rate is 6.75%. However, the Plan Administrator, in its sole discretion, may adjust the discount rate to maintain the rate within reasonable standards according to GAAP.

1.2 "Change in Control" means any of the following events occur:

(a) Acquisition of Significant Stock Ownership: a report on Schedule 13D or another form or schedule (other than Schedule 13G) is filed or is required to be filed under Sections 13(d) or 14(d) of the Securities Exchange Act of 1934, if the schedule discloses that the filing person or persons acting in concert has or have become the beneficial owner of 25% or more of a class of Cortland Bancorp's voting securities (but this clause (a) shall not apply to beneficial ownership of voting shares of Cortland Bancorp held by the Bank or another subsidiary of Cortland Bancorp in a fiduciary capacity). A Change in Control of Cortland Bancorp shall not be deemed to have occurred solely because acquisition by Cortland Bancorp of its own voting securities reduces the number of shares outstanding, causing a person's beneficial ownership to exceed 25% of Cortland Bancorp's voting securities; provided that, if after such acquisition by Cortland Bancorp such person becomes the beneficial owner of additional Cortland Bancorp voting securities, increasing the percentage of outstanding Cortland Bancorp voting securities beneficially owned by such person, a Change in Control of Cortland Bancorp shall be deemed to have occurred,

(b) Change in Board Composition: during any period of two consecutive years, individuals who constitute Cortland Bancorp's board of directors at the beginning of the two-year period cease for any reason to constitute at least a majority thereof, provided, however, that - for purposes of this clause (b) - each director who is first elected by the board (or first nominated by the board for election by stockholders) by a vote of at least two-thirds (2/3) of the directors who were directors at the beginning of the two-year period shall be deemed to have been a director at the beginning of the two-year period,

(c) Merger: Cortland Bancorp merges into or consolidates with another corporation, or merges another corporation into Cortland Bancorp, and as a result less than 50% of the total voting power of the surviving corporation immediately after the merger or consolidation is held by persons who were the holders of Cortland Bancorp's voting securities immediately before the merger or consolidation, or

(d) Sale of Assets: Cortland Bancorp sells to a third party all or substantially all of Cortland Bancorp's assets. For purposes of this Agreement, sale of all or substantially all of Cortland Bancorp's assets includes sale of the Bank alone.

1.3 "Disability" means the Executive suffers a sickness, accident or injury that is determined by the carrier of any individual or group disability insurance policy covering the Executive, or by the Social Security Administration, to be a disability rendering the Executive totally and permanently disabled. At the Bank's request, the Executive must submit to the Bank proof of the carrier's or Social Security Administration's determination.

1.4 "Early Retirement Age" means the Executive's 62nd birthday.

1.5 "Early Termination" means Termination of Employment before Normal Retirement Age for reasons other than death, Disability, Termination for Cause, or within one year after a Change in Control.

1.6 "Early Termination Date" means the month, day, and year in which Early Termination occurs.

1.7 "Effective Date" means July 1, 2003.

1.8 "Normal Retirement Age" means the Executive's 65th birthday.

1.9 "Normal Retirement Date" means the later of the Normal Retirement Age or Termination of Employment.

1.10 "Person" means an individual, corporation, partnership, trust, association, joint venture, pool, syndicate, sole proprietorship, unincorporated organization or other entity.

1.11 "Plan Administrator" means the plan administrator described in Article 7.

1.12 "Plan Year" means a twelve-month period commencing on March 1 and ending on the last day of February of each year. The initial Plan Year shall commence on the Effective Date of this Agreement.

1.13 "Termination for Cause" means the Bank terminates the Executive's employment for any one of the following reasons -

(a) gross negligence or gross neglect of duties,

(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 Bank policy committed in connection with the Executive's employment and resulting in an adverse effect on the Bank.

1.14 "Termination of Employment" means that the Executive ceases to be employed by the Bank for any reason whatsoever, other than because of a leave of absence approved by the Bank. For purposes of this Agreement, if there is a dispute over the employment status of the Executive or the date of the Executive's Termination of Employment, the Bank shall have the sole and absolute right to decide the dispute, unless a Change in Control shall have occurred.

ARTICLE 2
LIFETIME BENEFITS

2.1 Normal Retirement Benefit. For Termination of Employment on or after the Normal Retirement Age for reasons other than death, the Bank shall pay to the Executive the benefit described in this Section 2.1 instead of any other benefit under this Agreement.

2.1.1 Amount of Benefit. The annual benefit under this Section 2.1 is $20,300.

2.1.2 Payment of Benefit. The Bank shall pay the annual benefit to the Executive in 12 equal monthly installments, payable on the last day of each month, beginning with the month after the Executive's Normal Retirement Date. The annual benefit shall be paid to the Executive for 15 years.

2.2 Early Termination Benefit. For Early Termination on or after the Executive's Early Retirement Age, the Bank shall pay to the Executive the benefit described in this Section 2.2 instead of any other benefit under this Agreement.

2.2.1 Amount of Benefit. The benefit under this Section 2.2 is the Early Termination annual benefit amount set forth in Schedule A for the Plan Year ending immediately before the Early Termination Date (except during the first Plan Year, the benefit is the amount set forth for Plan Year 1).

2.2.2 Payment of Benefit. The Bank shall pay the Early Termination annual benefit to the Executive in 12 equal monthly installments, payable on the last day of each month, beginning with the month after the Normal Retirement Age. The annual benefit shall be paid to the Executive for 15 years.

2.3 Disability Benefit. For Termination of Employment because of Disability before the Normal Retirement Age, the Bank shall pay to the Executive the benefit described in this Section 2.3 instead of any other benefit under this Agreement.

2.3.1 Amount of Benefit. The benefit under this Section 2.3 is the Disability annual benefit amount set forth in Schedule A for the Plan Year ending immediately before the date on which Termination of Employment occurs (except during the first Plan Year, the benefit is the amount set forth for Plan Year 1).

2.3.2 Payment of Benefit. The Bank shall pay the Disability annual benefit amount to the Executive in 12 equal monthly installments, payable on the last day of each month, beginning with the month after the Normal Retirement Age. The annual benefit shall be paid to the Executive for 15 years.

2.4 Change-in-Control Benefit. If the Executive's employment terminates within one year after a Change in Control (excepting Termination for Cause), the Bank shall pay to the Executive the benefit described in this Section 2.4 instead of any other benefit under this Agreement.

2.4.1 Amount of Benefit. The benefit under this Section 2.4 is the Normal Retirement Age Accrual Balance required by Section 2.1, discounting the Normal Retirement Age Accrual Balance to present value using a discount rate of 6.75%, or a discount rate selected by the Plan Administrator

if the Plan Administrator determines that a different discount rate is appropriate; provided, however, that the discount rate selected shall not exceed the discount rate employed at the time of the Change in Control for purposes of calculating the Accrual Balance.

2.4.2 Payment of Benefit. The Bank shall pay the Change-in-Control benefit to the Executive in one lump sum within 3 days after the Executive's Termination of Employment.

2.5 Petition for Payment of Vested Normal Retirement Benefit, Vested Early Termination Benefit or Vested Disability Benefit. If the Executive is entitled to the normal retirement benefit provided by Section 2.1, the Early Termination benefit provided by Section 2.2, or the Disability benefit provided by Section 2.3, the Executive may petition the board of directors to have the Accrual Balance amount corresponding to that particular benefit paid to the Executive in a single lump sum. The board of directors shall have sole and absolute discretion about whether to pay the remaining Accrual Balance in a lump sum. If the remaining Accrual Balance is paid in a single lump sum, the Bank shall have no further obligations under this Agreement.

2.6 Change-in-Control Payout of Vested Normal Retirement Benefit, Vested Early Termination Benefit or Vested Disability Benefit Being Paid to the Executive at the Time of a Change in Control. If a Change in Control occurs at any time during the entire 15-year salary continuation benefit payment period and if at the time of that Change in Control the Executive is receiving the benefit provided by Section 2.1.2, Section 2.2.2, or Section 2.3.2, the Bank shall pay the remaining salary continuation benefits to the Executive in a lump sum within three days after the Change in Control. The lump-sum payment due to the Executive as a result of a Change in Control shall be an amount equal to the Accrual Balance amount corresponding to that particular benefit then being paid to the Executive under Section 2.1.2, Section 2.2.2, or Section 2.3.2.

2.7 Contradiction in Terms of Agreement and Schedule A. If there is a contradiction in the terms of this Agreement and Schedule A attached hereto concerning the benefits due under Section 2.2, 2.3, or 2.4 hereof, then the actual amount of benefits prescribed by this Agreement shall control.

ARTICLE 3
DEATH BENEFITS

3.1 Death During Active Service. If the Executive dies before the Normal Retirement Age while in the active service of the Bank, instead of any other benefit payable under this Agreement the Bank shall pay to the Executive's beneficiary(ies) the benefit described in the Split Dollar Agreement and Endorsement attached to this Agreement as Addendum A.

3.2 Death During Benefit Period. If the Executive dies after benefit payments under Article 2 have commenced but before receiving all such payments, the Bank shall pay the remaining benefits to the Executive's beneficiary(ies) at the same time and in the same amounts they would have been paid to the Executive had the Executive survived. In that case, no death benefit shall be payable under this Article 3.

3.3 Death After Termination of Employment But Before Benefit Payments Commence. If the Executive is entitled to benefit payments under Article 2 but dies before payments commence, the benefits shall be payable to the Executive's beneficiary(ies), but payments shall commence on the last day of the month after the date of the Executive's death, and no death benefit shall be payable under this Article 3.

3.4 Petition for Benefit Payments. If the Executive dies before receiving any or all benefit payments to which he is entitled under Section 2.1, Section 2.2, or Section 2.3, respectively, the Executive's beneficiary(ies) or estate may petition the board of directors to have the Accrual Balance corresponding to that particular benefit paid to the Executive's beneficiary(ies) or estate in a single lump sum. The board of directors shall have sole and absolute discretion about whether to pay the remaining Accrual Balance in a lump sum. If the remaining Accrual Balance is paid in a single lump sum, the Bank shall have no further obligations under this Agreement.

3.5 Change-in-Control Payout of Vested Normal Retirement Benefit, Vested Early Termination Benefit or Vested Disability Benefit Being Paid to the Executive's Estate or Beneficiaries at the Time of a Change in Control. If a Change in Control occurs at any time during the entire 15-year salary continuation benefit payment period and if at the time of that Change in Control the Executive's estate or beneficiary(ies) is receiving the benefit provided by
Section 2.1.2, Section 2.2.2, or Section 2.3.2, the Bank shall pay the remaining salary continuation benefits to the Executive's beneficiary(ies) or estate in a lump sum within three days after the Change in Control. The lump-sum payment due to the Executive's beneficiary(ies) or estate as a result of a Change in Control shall be an amount equal to the Accrual Balance amount corresponding to that particular benefit then being paid to the Executive's estate or beneficiary(ies) under Section 2.1.2, Section 2.2.2, or Section 2.3.2.

ARTICLE 4
BENEFICIARIES

4.1 Beneficiary Designations. The Executive shall designate a beneficiary by filing a written designation with the Bank. The Executive may revoke or modify the designation at any time by filing a new designation. However, designations will only be effective if signed by the Executive and accepted by the Bank during the Executive's lifetime. The Executive's beneficiary designation shall be deemed automatically revoked if the beneficiary predeceases the Executive, or if the Executive names a spouse as beneficiary and the marriage is subsequently dissolved. If the Executive dies without a valid beneficiary designation, all payments shall be made to the Executive's estate.

4.2 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 Bank may pay such benefit to the guardian, legal representative or person having the care or custody of such minor, incapacitated person or incapable person. The Bank may require proof of incapacity, minority or guardianship as it may deem appropriate prior to distribution of the benefit. Such distribution shall completely discharge the Bank from all liability with respect to such benefit.

ARTICLE 5
GENERAL LIMITATIONS

5.1 Termination for Cause and Termination Before Vesting. Notwithstanding any provision of this Agreement to the contrary, the Bank shall not pay any benefit under this Agreement and this Agreement shall terminate if Termination of Employment is a result of Termination for Cause or if Early Termination benefits under Section 2.2 of this Agreement are neither paid nor payable because Early Termination occurred before vesting under Section 2.2 of this Agreement.

5.2 Suicide or Misstatement. The Bank shall not pay any benefit under this Agreement if the Executive commits suicide within two years after the Effective Date of this Agreement, or if the Executive has made any material misstatement of fact on any application for life insurance purchased by the Bank.

5.3 Removal. Notwithstanding any provision of this Agreement to the contrary, if the Executive is removed from office or permanently prohibited from participating in the Bank'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 Bank under this Agreement shall terminate as of the effective date of the order.

5.4 Default. Notwithstanding any provision of this Agreement to the contrary, if the Bank is in "default" or "in danger of default", as those terms are defined in of 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 Bank, at the time the Federal Deposit Insurance Corporation enters into an agreement to provide assistance to or on behalf of the Bank

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. A person or beneficiary ("claimant") who has not received benefits under the Agreement that he or she believes should be paid shall make a claim for such benefits as follows -

6.1.1 Initiation - Written Claim. The claimant initiates a claim by submitting to the Bank a written claim for the benefits.

6.1.2 Timing of Bank Response. The Bank shall respond to such claimant within 90 days after receiving the claim. If the Bank determines that special circumstances require additional time for processing the claim, the Bank can extend the response period by an additional 90 days by notifying the claimant in writing, prior to 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 Bank expects to render its decision.

6.1.3 Notice of Decision. If the Bank denies part or all of the claim, the Bank shall notify the claimant in writing of such denial. The Bank shall write the notification in a manner calculated to be understood by the claimant. The notification shall set forth -

6.1.3.1 The specific reasons for the denial,

6.1.3.2 A reference to the specific provisions of the Agreement on which the denial is based,

6.1.3.3 A description of any additional information or material necessary for the claimant to perfect the claim and an explanation of why it is needed,

6.1.3.4 An explanation of the Agreement's review procedures and the time limits applicable to such procedures, and

6.1.3.5 A statement of the claimant's right to bring a civil action under ERISA (Employee Retirement Income Security Act) section 502(a) following an adverse benefit determination on review.

6.2 Review Procedure. If the Bank denies part or all of the claim, the claimant shall have the opportunity for a full and fair review by the Bank of the denial, as follows -

6.2.1 Initiation - Written Request. To initiate the review, the claimant, within 60 days after receiving the Bank's notice of denial, must file with the Bank a written request for review.

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. The Bank shall also provide the claimant, 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.

6.2.3 Considerations on Review. In considering the review, the Bank shall take into account all materials and information the claimant submits relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.

6.2.4 Timing of Bank Response. The Bank shall respond in writing to such claimant within 60 days after receiving the request for review. If the Bank determines that special circumstances require additional time for processing the claim, the Bank can extend the response period by an additional 60 days by notifying the claimant in writing, prior to 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 Bank expects to render its decision.

6.2.5 Notice of Decision. The Bank shall notify the claimant in writing of its decision on review. The Bank shall write the notification in a manner calculated to be understood by the claimant. The notification shall set forth -

6.2.5.1 The specific reason for the denial,

6.2.5.2 A reference to the specific provisions of the Agreement on which the denial is based,

6.2.5.3 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

6.2.5.4 A statement of the claimant's right to bring a civil action under ERISA section 502(a).

ARTICLE 7
ADMINISTRATION OF AGREEMENT

7.1 Plan Administrator Duties. This Agreement shall be administered by a Plan Administrator consisting of the Board or such committee or person(s) as the Board shall appoint. The Executive may be a member of the Plan Administrator. The Plan Administrator shall also have the discretion and authority to (a) make, amend, interpret and enforce all appropriate rules and regulations for the administration of this Agreement and (b) decide or resolve any and all questions including interpretations of this Agreement, as may arise in connection with the 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 Bank.

7.3 Binding Effect of Decisions. The decision or action of the Plan Administrator with respect to any question arising out of or in connection with 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 Executive 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 Bank 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 Bank Information. To enable the Plan Administrator to perform its functions, the Bank 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 Employment of the Executive, and such other pertinent information as the Plan Administrator may reasonably require.

ARTICLE 8
MISCELLANEOUS

8.1 Amendments. This Agreement may be amended solely by a written agreement signed by the Bank and by the Executive.

8.2 Binding Effect. This Agreement shall bind the Executive and the Bank, their beneficiaries, survivors, executors, successors, administrators, and transferees.

8.3 No Guarantee of Employment. This Agreement is not an employment policy or contract. It 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. It also does not require the Executive to remain an employee nor interfere with the Executive's right to terminate employment at any time.

8.4 Non-Transferability. Benefits under this Agreement cannot be sold, transferred, assigned, pledged, attached, or encumbered in any manner.

8.5 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 if no such succession had occurred. Failure of the Bank to obtain such assumption agreement before effectiveness of any such succession shall be a breach of this Agreement and shall entitle the Executive to the Change-in-Control benefit provided in
Section 2.4.

8.6 Tax Withholding. The Bank 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 Executive and beneficiary are general unsecured creditors of the Bank for the payment of benefits under this Agreement. The benefits represent the mere promise by the Bank to pay such benefits. The rights to benefits are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by creditors. Any insurance on the Executive's life is a general asset of the Bank to which the Executive and beneficiary have no preferred or secured claim.

8.9 Entire Agreement. This Agreement and the Split Dollar Agreement and Endorsement attached as Addendum A constitute the entire agreement between the Bank and the Executive as to the subject matter hereof. No rights are granted to the Executive under this Agreement other than those specifically set forth herein.

8.10 Severability. If for any reason any provision of this Agreement is held invalid, such invalidity shall not affect any other provision of this Agreement not held invalid, and to the full extent consistent with law each such other provision shall continue in full force and effect. If any provision of this 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 Agreement, shall continue in full force and effect to the full extent consistent with law.

8.11 Headings. The headings of sections herein are included solely for convenience of reference and shall not affect the meaning or interpretation of any provision of this Agreement.

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.

(a) If to the Bank, to - Board of Directors The Cortland Savings and Banking Company 194 West Main Street P.O. Box 98 Cortland, Ohio 44410-1466

(b) If to the Executive, to - Craig Phythyon The Cortland Savings and Banking Company 194 West Main Street P.O. Box 98 Cortland, Ohio 44410-1466

and to such other or additional person or persons as either party shall have designated to the other party in writing by like notice.

8.13 Payment of Legal Fees. The Bank is aware that upon the occurrence of a Change in Control, management of the Bank may cause or attempt to cause the Bank to refuse to comply with its obligations under this Agreement, or may cause or attempt to cause the Bank to institute, or may institute, litigation seeking to have this Agreement declared unenforceable, or may take, or attempt to take, other action to deny Executive the benefits intended under this Agreement. In these circumstances, the purpose of this Agreement could be frustrated. It is the intent of the Bank that the Executive not be required to incur the expenses associated with the enforcement of his rights under this Agreement by litigation or other legal action because the cost and expense thereof would substantially detract from the benefits intended to be extended to Executive hereunder, nor be bound to negotiate any settlement of his rights hereunder under threat of incurring such expenses. Accordingly, if after a Change in Control it appears to Executive that (a) the Bank has failed to comply with any of its obligations under this Agreement, or (b) the Bank or any other person has taken any action to declare this Agreement void or unenforceable, or instituted any litigation or other legal action designed to deny, diminish or to recover from, Executive the benefits intended to be provided to Executive hereunder, the Bank irrevocably authorizes Executive from time to time to retain counsel of his choice at the Bank's expense as provided in this Section 8.13, to represent Executive in connection with the initiation or defense of any litigation or other legal action, whether by or against the Bank or any director, officer, stockholder or other person affiliated with the Bank, in any jurisdiction. The fees and expenses of counsel selected from time to time by Executive as herein above provided shall be paid or reimbursed to Executive by the Bank on a regular, periodic basis upon presentation by Executive of a statement or statements prepared by such counsel in accordance with such counsel's customary practices, up to a maximum aggregate amount of $500,000. The Bank's obligation to pay the Executive's legal fees provided by this Section 8.13 operates separately from, and in addition to, any legal fee reimbursement obligation the Bank or the Bank's parent Cortland Bancorp may have with the Executive by virtue of a severance or employment agreement by and among the Executive, the Bank, and Cortland Bancorp.

IN WITNESS WHEREOF, the Executive and a duly authorized Bank officer have executed this Salary Continuation Agreement as of the date first written above.

EXECUTIVE:                              BANK:
                                        THE CORTLAND SAVINGS AND BANKING COMPANY


                                        By:
-------------------------------------       ------------------------------------
Craig Phythyon                              Rodger W. Platt
                                        Title: President, Chairman of the Board
                                               and Chief Executive Officer

BENEFICIARY DESIGNATION

THE CORTLAND SAVINGS AND BANKING COMPANY
SALARY CONTINUATION AGREEMENT

CRAIG PHYTHYON

I designate the following as beneficiary of any death benefits under this Salary Continuation Agreement:

Primary: __________________________________________________________________

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 Bank. 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.

Date: ____________________, 200_

Accepted by the Bank this _____ day of __________________, 200_.

                                         EARLY
                                      TERMINATION        DISABILITY
                    AGE               ANNUAL BENEFIT   ANNUAL BENEFIT
                    AT                  PAYABLE AT       PAYABLE AT
       PLAN YEAR   PLAN    ACCRUAL        NORMAL           NORMAL       CHANGE-IN-CONTROL
PLAN     ENDING    YEAR   BALANCE @   RETIREMENT AGE   RETIREMENT AGE    BENEFIT PAYABLE
YEAR    FEBRUARY    END   6.75% (1)         (2)              (2)          IN A LUMP SUM
----   ---------   ----   ---------   --------------   --------------   -----------------
  1       2004      42     $  2,271       $     0          $ 1,121           $ 41,109
  2       2005      43     $  5,874       $     0          $ 2,712           $ 43,971
  3       2006      44     $  9,728       $     0          $ 4,199           $ 47,033
  4       2007      45     $ 13,850       $     0          $ 5,589           $ 50,308
  5       2008      46     $ 18,260       $     0          $ 6,889           $ 53,810
  6       2009      47     $ 22,976       $     0          $ 8,104           $ 57,557
  7       2010      48     $ 28,021       $     0          $ 9,239           $ 61,565
  8       2011      49     $ 33,417       $     0          $10,301           $ 65,851
  9       2012      50     $ 39,189       $     0          $11,294           $ 70,436
 10       2013      51     $ 45,363       $     0          $12,223           $ 75,341
 11       2014      52     $ 51,966       $     0          $13,090           $ 80,587
 12       2015      53     $ 59,029       $     0          $13,902           $ 86,198
 13       2016      54     $ 66,584       $     0          $14,660           $ 92,199
 14       2017      55     $ 74,666       $     0          $15,369           $ 98,619
 15       2018      56     $ 83,310       $     0          $16,032           $105,486
 16       2019      57     $ 92,555       $     0          $16,652           $112,830
 17       2020      58     $102,445       $     0          $17,232           $120,687
 18       2021      59     $113,023       $     0          $17,773           $129,090
 19       2022      60     $124,337       $     0          $18,280           $138,078
 20       2023      61     $136,440       $     0          $18,753           $147,692
 21       2024      62     $149,385       $19,196          $19,196           $157,976
 22       2025      63     $163,231       $19,610          $19,610           $168,975
 23       2026      64     $178,042       $19,997          $19,997           $180,740
 24     December    65     $191,168       $20,300          $20,300           $191,168
          2026

(1) Calculations are approximations. Benefit calculations are based on prior year-end accrual balances. The accrual balance reflects payment at the end of each month during retirement, beginning January 31, 2027.

(2) Benefit is based on the present value of the current payment stream of the vested accrual balance using a standard discount rate (6.75%).

EXHIBIT 10.22

THE CORTLAND SAVINGS AND BANKING COMPANY
SECOND AMENDED SALARY CONTINUATION AGREEMENT

THIS SECOND AMENDED SALARY CONTINUATION AGREEMENT (this "Agreement") is made and entered into as of this ___ day of ________, 200 __, by and between The Cortland Savings and Banking Company, an Ohio-chartered, FDIC-insured member bank with its main offices in Cortland, Ohio (the "Bank") and Stephen A. Telego, Sr., Senior Vice President of the Bank (the "Executive").

WHEREAS, the Executive has contributed substantially to the success of the Bank and its parent company, Cortland Bancorp, an Ohio corporation, and the Bank desires that the Executive continue in its employ,

WHEREAS, to encourage the Executive to remain an employee of the Bank, the Bank is willing to provide salary continuation benefits to the Executive, payable out of the Bank's general assets,

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 Bank, is contemplated insofar as the Bank is concerned,

WHEREAS, the Bank and the Executive entered into an Amended Salary Continuation Agreement dated as of August 8, 2002, providing for specified retirement benefits for the Executive after termination of his employment,

WHEREAS, the Bank and the Executive have negotiated and agreed to miscellaneous changes in the terms and conditions of the August 8, 2002 Amended Salary Continuation Agreement, effective immediately.

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

Whenever used in this Agreement, the following words and phrases shall have the meanings specified -

1.1 "Accrual Balance" means the liability that should be accrued by the Bank under generally accepted accounting principles ("GAAP") for the Bank's obligation to the Executive 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 shall be calculated assuming a level principal amount and interest as the discount rate is accrued each period. The principal accrual is determined such that when it is credited with interest each month, the Accrual Balance at Normal Retirement Age equals 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 initial discount rate is 6.75%. However, the Plan Administrator, in its sole discretion, may adjust the discount rate to maintain the rate within reasonable standards according to GAAP.

1.2 "Change in Control" means any of the following events occur:

(a) Acquisition of Significant Stock Ownership: a report on Schedule 13D or another form or schedule (other than Schedule 13G) is filed or is required to be filed under Sections 13(d) or 14(d) of the Securities Exchange Act of 1934, if the schedule discloses that the filing person or persons acting in concert has or have become the beneficial owner of 25% or more of a class of Cortland Bancorp's voting securities (but this clause (a) shall not apply to beneficial ownership of voting shares of Cortland Bancorp held by the Bank or another subsidiary of Cortland Bancorp in a fiduciary capacity). A Change in Control of Cortland Bancorp shall not be deemed to have occurred solely because acquisition by Cortland Bancorp of its own voting securities reduces the number of shares outstanding, causing a person's beneficial ownership to exceed 25% of Cortland Bancorp's voting securities; provided that, if after such acquisition by Cortland Bancorp such person becomes the beneficial owner of additional

Cortland Bancorp voting securities, increasing the percentage of outstanding Cortland Bancorp voting securities beneficially owned by such person, a Change in Control of Cortland Bancorp shall be deemed to have occurred,

(b) Change in Board Composition: during any period of two consecutive years, individuals who constitute Cortland Bancorp's board of directors at the beginning of the two-year period cease for any reason to constitute at least a majority thereof, provided, however, that - for purposes of this clause (b) - each director who is first elected by the board (or first nominated by the board for election by stockholders) by a vote of at least two-thirds (2/3) of the directors who were directors at the beginning of the two-year period shall be deemed to have been a director at the beginning of the two-year period,

(c) Merger: Cortland Bancorp merges into or consolidates with another corporation, or merges another corporation into Cortland Bancorp, and as a result less than 50% of the total voting power of the surviving corporation immediately after the merger or consolidation is held by persons who were the holders of Cortland Bancorp's voting securities immediately before the merger or consolidation, or

(d) Sale of Assets: Cortland Bancorp sells to a third party all or substantially all of Cortland Bancorp's assets. For purposes of this Agreement, sale of all or substantially all of Cortland Bancorp's assets includes sale of the Bank alone.

1.3 "Disability" means the Executive suffers a sickness, accident or injury that is determined by the carrier of any individual or group disability insurance policy covering the Executive, or by the Social Security Administration, to be a disability rendering the Executive totally and permanently disabled. At the Bank's request, the Executive must submit to the Bank proof of the carrier's or Social Security Administration's determination.

1.4 "Early Retirement Age" means the Executive's 62nd birthday.

1.5 "Early Termination" means Termination of Employment before Normal Retirement Age for reasons other than death, Disability, Termination for Cause, or within one year after a Change in Control.

1.6 "Early Termination Date" means the month, day, and year in which Early Termination occurs.

1.7 "Effective Date" means March 1, 2001.

1.8 "Normal Retirement Age" means the Executive's 65th birthday.

1.9 "Normal Retirement Date" means the later of the Normal Retirement Age or Termination of Employment.

1.10 "Person" means an individual, corporation, partnership, trust, association, joint venture, pool, syndicate, sole proprietorship, unincorporated organization or other entity.

1.11 "Plan Administrator" means the plan administrator described in Article 7.

1.12 "Plan Year" means a twelve-month period commencing on March 1 and ending on the last day of February of each year. The initial Plan Year shall commence on the Effective Date of this Agreement.

1.13 "Termination for Cause" means the Bank terminates the Executive's employment for any one of the following reasons -

(a) gross negligence or gross neglect of duties,

(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 Bank policy committed in connection with the Executive's employment and resulting in an adverse effect on the Bank.

1.14 "Termination of Employment" means that the Executive ceases to be employed by the Bank for any reason whatsoever, other than because of a leave of absence approved by the Bank. For purposes of this Agreement, if there is a dispute over the employment status of the Executive or the date of the Executive's Termination of Employment, the Bank shall have the sole and absolute right to decide the dispute, unless a Change in Control shall have occurred.

ARTICLE 2
LIFETIME BENEFITS

2.1 Normal Retirement Benefit. For Termination of Employment on or after the Normal Retirement Age for reasons other than death, the Bank shall pay to the Executive the benefit described in this Section 2.1 instead of any other benefit under this Agreement.

2.1.1 Amount of Benefit. The annual benefit under this Section 2.1 is $74,500.

2.1.2 Payment of Benefit. The Bank shall pay the annual benefit to the Executive in 12 equal monthly installments, payable on the last day of each month, beginning with the month after the Executive's Normal Retirement Date. The annual benefit shall be paid to the Executive for 15 years.

2.2 Early Termination Benefit. For Early Termination on or after the Executive's Early Retirement Age, the Bank shall pay to the Executive the benefit described in this Section 2.2 instead of any other benefit under this Agreement.

2.2.1 Amount of Benefit. The benefit under this Section 2.2 is the Early Termination annual benefit amount set forth in Schedule A for the Plan Year ending immediately before the Early Termination Date.

2.2.2 Payment of Benefit. The Bank shall pay the Early Termination annual benefit to the Executive in 12 equal monthly installments, payable on the last day of each month, beginning with the month after the Normal Retirement Age. The annual benefit shall be paid to the Executive for 15 years.

2.3 Disability Benefit. For Termination of Employment because of Disability before the Normal Retirement Age, the Bank shall pay to the Executive the benefit described in this Section 2.3 instead of any other benefit under this Agreement.

2.3.1 Amount of Benefit. The benefit under this Section 2.3 is the Disability annual benefit amount set forth in Schedule A for the Plan Year ending immediately before the date on which Termination of Employment occurs.

2.3.2 Payment of Benefit. The Bank shall pay the Disability annual benefit amount to the Executive in 12 equal monthly installments, payable on the last day of each month, beginning with the month after the Normal Retirement Age. The annual benefit shall be paid to the Executive for 15 years.

2.4 Change-in-Control Benefit. If the Executive's employment with Cortland Bancorp or the Bank terminates within one year after a Change in Control (excepting Termination for Cause), the Bank shall pay to the Executive the benefit described in this Section 2.4 instead of any other benefit under this Agreement.

2.4.1 Amount of Benefit. The benefit under this Section 2.4 is the Normal Retirement Age Accrual Balance required by Section 2.1, discounting the Normal Retirement Age Accrual Balance to present value using a discount rate of 6.75%, or a discount rate selected by the Plan Administrator if the Plan Administrator determines that a different discount rate is appropriate; provided, however, that the discount rate selected shall not exceed the discount rate employed at the time of the Change in Control for purposes of calculating the Accrual Balance.

2.4.2 Payment of Benefit. The Bank shall pay the Change-in-Control benefit to the Executive in one lump sum within 3 days after the Executive's Termination of Employment.

2.5 Petition for Payment of Vested Normal Retirement Benefit, Vested Early Termination Benefit or Vested Disability Benefit. If the Executive is entitled to the normal retirement benefit provided by Section 2.1, the Early Termination benefit provided by Section 2.2, or the Disability benefit provided by Section 2.3, the Executive may petition the board of directors to have the Accrual Balance amount corresponding to that particular benefit paid to the Executive in a single lump sum. The board of directors shall have sole and absolute discretion about whether to pay the remaining Accrual Balance in a lump sum. If the remaining Accrual Balance is paid in a single lump sum, the Bank shall have no further obligations under this Agreement.

2.6 Change-in-Control Payout of Vested Normal Retirement Benefit, Vested Early Termination Benefit or Vested Disability Benefit Being Paid to the Executive at the Time of a Change in Control. If a Change in Control occurs at any time during the entire 15-year salary continuation benefit payment period and if at the time of that Change in Control the Executive is receiving the benefit provided by Section 2.1.2, Section 2.2.2, or Section 2.3.2, the Bank shall pay the remaining salary continuation benefits to the Executive in a lump sum within three days after the Change in Control. The lump-sum payment due to the Executive as a result of a Change in Control shall be an amount equal to the Accrual Balance amount corresponding to that particular benefit then being paid to the Executive under Section 2.1.2, Section 2.2.2, or Section 2.3.2.

2.7 Contradiction in Terms of Agreement and Schedule A. If there is a contradiction in the terms of this Agreement and Schedule A attached hereto concerning the benefits due under Section 2.2, 2.3, or 2.4 hereof, then the actual amount of benefits prescribed by this Agreement shall control.

ARTICLE 3
DEATH BENEFITS

3.1 Death During Active Service. If the Executive dies before the Normal Retirement Age while in the active service of the Bank, instead of any other benefit payable under this Agreement the Bank shall pay to the Executive's beneficiary(ies) the benefit described in the Second Amended Split Dollar Agreement and Endorsement dated as of the date hereof and attached to this Agreement as Addendum A.

3.2 Death During Benefit Period. If the Executive dies after benefit payments under Article 2 have commenced but before receiving all such payments, the Bank shall pay the remaining benefits to the Executive's beneficiary(ies) at the same time and in the same amounts they would have been paid to the Executive had the Executive survived. In that case, no death benefit shall be payable under this Article 3.

3.3 Death After Termination of Employment But Before Benefit Payments Commence. If the Executive is entitled to benefit payments under Article 2 but dies before payments commence, the benefits shall be payable to the Executive's beneficiary(ies), but payments shall commence on the last day of the month after the date of the Executive's death, and no death benefit shall be payable under this Article 3.

3.4 Petition for Benefit Payments. If the Executive dies before receiving any or all benefit payments to which he is entitled under Section 2.1, Section 2.2, or Section 2.3, respectively, the Executive's beneficiary(ies) or estate may petition the board of directors to have the Accrual Balance corresponding to that particular benefit paid to the Executive's beneficiary(ies) or estate in a single lump sum. The board of directors shall have sole and absolute discretion about whether to pay the remaining Accrual Balance in a lump sum. If the remaining Accrual Balance is paid in a single lump sum, the Bank shall have no further obligations under this Agreement.

3.5 Change-in-Control Payout of Vested Normal Retirement Benefit, Vested Early Termination Benefit or Vested Disability Benefit Being Paid to the Executive's Estate or Beneficiaries at the Time of a Change in Control. If a Change in Control occurs at any time during the entire 15-year salary continuation benefit payment period and if at the time of that Change in Control the Executive's estate or beneficiary(ies) is receiving the benefit provided by
Section 2.1.2, Section 2.2.2, or Section 2.3.2, the Bank shall pay the remaining salary continuation benefits to the Executive's beneficiary(ies) or estate in a lump sum within three days after the Change in Control. The lump-sum payment due to the Executive's beneficiary(ies) or estate as a result of a Change in Control shall be an amount equal to the Accrual Balance amount corresponding to that particular benefit then being paid to the Executive's estate or beneficiary(ies) under Section 2.1.2, Section 2.2.2, or Section 2.3.2.

ARTICLE 4
BENEFICIARIES

4.1 Beneficiary Designations. The Executive shall designate a beneficiary by filing a written designation with the Bank. The Executive may revoke or modify the designation at any time by filing a new designation. However, designations will only be effective if signed by the Executive and accepted by the Bank during the Executive's lifetime. The Executive's beneficiary designation shall be deemed automatically revoked if the beneficiary predeceases the Executive, or if the Executive names a spouse as beneficiary and the marriage is subsequently dissolved. If the Executive dies without a valid beneficiary designation, all payments shall be made to the Executive's estate.

4.2 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 Bank may pay such benefit to the guardian, legal representative or person having the care or custody of such minor, incapacitated person or incapable person. The Bank may require proof of incapacity, minority or guardianship as it may deem appropriate prior to distribution of the benefit. Such distribution shall completely discharge the Bank from all liability with respect to such benefit.

ARTICLE 5
GENERAL LIMITATIONS

5.1 Termination for Cause and Termination Before Vesting. Notwithstanding any provision of this Agreement to the contrary, the Bank shall not pay any benefit under this Agreement and this Agreement shall terminate if Termination of Employment is a result of Termination for Cause or if Early Termination benefits under Section 2.2 of this Agreement are neither paid nor payable because Early Termination occurred before vesting under Section 2.2 of this Agreement.

5.2 Suicide or Misstatement. The Bank shall not pay any benefit under this Agreement if the Executive commits suicide within two years after the Effective Date of this Agreement, or if the Executive has made any material misstatement of fact on any application for life insurance purchased by the Bank.

5.3 Removal. Notwithstanding any provision of this Agreement to the contrary, if the Executive is removed from office or permanently prohibited from participating in the conduct of the Bank'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 Bank under this Agreement shall terminate as of the effective date of the order.

5.4 Default. Notwithstanding any provision of this Agreement to the contrary, if the Bank is in "default" or "in danger of default", as those terms are defined in of 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 be terminated, except to the extent determined that continuation of the contract is necessary for the continued operation of the Bank, at the time the Federal Deposit Insurance Corporation enters into an agreement to provide assistance to or on behalf of the Bank 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. A person or beneficiary ("claimant") who has not received benefits under the Agreement that he or she believes should be paid shall make a claim for such benefits as follows -

6.1.1 Initiation - Written Claim. The claimant initiates a claim by submitting to the Bank a written claim for the benefits.

6.1.2 Timing of Bank Response. The Bank shall respond to such claimant within 90 days after receiving the claim. If the Bank determines that special circumstances require additional time for processing the claim, the Bank can extend the response period by an additional 90 days by notifying the

claimant in writing, prior to 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 Bank expects to render its decision.

6.1.3 Notice of Decision. If the Bank denies part or all of the claim, the Bank shall notify the claimant in writing of such denial. The Bank shall write the notification in a manner calculated to be understood by the claimant. The notification shall set forth -

6.1.3.1 The specific reasons for the denial,

6.1.3.2 A reference to the specific provisions of the Agreement on which the denial is based,

6.1.3.3 A description of any additional information or material necessary for the claimant to perfect the claim and an explanation of why it is needed,

6.1.3.4 An explanation of the Agreement's review procedures and the time limits applicable to such procedures, and

6.1.3.5 A statement of the claimant's right to bring a civil action under ERISA (Employee Retirement Income Security Act) Section 502(a) following an adverse benefit determination on review.

6.2 Review Procedure. If the Bank denies part or all of the claim, the claimant shall have the opportunity for a full and fair review by the Bank of the denial, as follows -

6.2.1 Initiation - Written Request. To initiate the review, the claimant, within 60 days after receiving the Bank's notice of denial, must file with the Bank a written request for review.

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. The Bank shall also provide the claimant, 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.

6.2.3 Considerations on Review. In considering the review, the Bank shall take into account all materials and information the claimant submits relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.

6.2.4 Timing of Bank Response. The Bank shall respond in writing to such claimant within 60 days after receiving the request for review. If the Bank determines that special circumstances require additional time for processing the claim, the Bank can extend the response period by an additional 60 days by notifying the claimant in writing, prior to 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 Bank expects to render its decision.

6.2.5 Notice of Decision. The Bank shall notify the claimant in writing of its decision on review. The Bank shall write the notification in a manner calculated to be understood by the claimant. The notification shall set forth -

6.2.5.1 The specific reason for the denial,

6.2.5.2 A reference to the specific provisions of the Agreement on which the denial is based,

6.2.5.3 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

6.2.5.4 A statement of the claimant's right to bring a civil action under ERISA Section 502(a).

ARTICLE 7
ADMINISTRATION OF AGREEMENT

7.1 Plan Administrator Duties. This Agreement shall be administered by a Plan Administrator consisting of the Board or such committee or person(s) as the Board shall appoint. The Executive may be a member of the Plan Administrator. The Plan Administrator shall also have the discretion and authority to (a) make, amend, interpret and enforce all appropriate rules and regulations for the administration of this Agreement and (b) decide or resolve any and all questions including interpretations of this Agreement, as may arise in connection with the 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 Bank.

7.3 Binding Effect of Decisions. The decision or action of the Plan Administrator with respect to any question arising out of or in connection with 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 Executive 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 Bank 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 Bank Information. To enable the Plan Administrator to perform its functions, the Bank 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 Employment of the Executive, and such other pertinent information as the Plan Administrator may reasonably require.

ARTICLE 8
MISCELLANEOUS

8.1 Amendments. This Agreement may be amended solely by a written agreement signed by the Bank and by the Executive.

8.2 Binding Effect. This Agreement shall bind the Executive and the Bank, and their beneficiaries, survivors, executors, successors, administrators, and transferees.

8.3 No Guarantee of Employment. This Agreement is not an employment policy or contract. It 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. It also does not require the Executive to remain an employee nor interfere with the Executive's right to terminate employment at any time.

8.4 Non-Transferability. Benefits under this Agreement cannot be sold, transferred, assigned, pledged, attached, or encumbered in any manner.

8.5 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 if no such succession had occurred. Failure of the Bank to obtain such assumption agreement before effectiveness of any such succession shall be a breach of this Agreement and shall entitle the Executive to the Change-in-Control benefit provided in
Section 2.4.

8.6 Tax Withholding. The Bank 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 Executive and beneficiary are general unsecured creditors of the Bank for the payment of benefits under this Agreement. The benefits represent the mere promise by the Bank to pay such benefits. The rights to benefits are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by creditors. Any insurance on the Executive's life is a general asset of the Bank to which the Executive and beneficiary have no preferred or secured claim.

8.9 Entire Agreement. This Agreement and the Second Amended Split Dollar Agreement and Endorsement attached to this Agreement as Addendum A constitute the entire agreement between the Bank and the Executive as to the subject matter hereof. No rights are granted to the Executive under this Agreement other than those specifically set forth herein. This Agreement supersedes in its entirety the August 8, 2002 Amended Salary Continuation Agreement, effective immediately.

8.10 Severability. If for any reason any provision of this Agreement is held invalid, such invalidity shall not affect any other provision of this Agreement not held invalid, and to the full extent consistent with law each such other provision shall continue in full force and effect. If any provision of this Agreement is held invalid in part, such invalidity shall not affect the remainder of such provision not held invalid, and to the full extent consistent with law the remainder of such provision, together with all other provisions of this Agreement, shall continue in full force and effect.

8.11 Headings. The headings of sections herein are included solely for convenience of reference and shall not affect the meaning or interpretation of any provision of this Agreement.

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.

(a) If to the Bank, to - Board of Directors The Cortland Savings and Banking Company 194 West Main Street P.O. Box 98 Cortland, Ohio 44410-1466

(b) If to the Executive, to - Stephen A. Telego, Sr.
The Cortland Savings and Banking Company 194 West Main Street
P.O. Box 98
Cortland, Ohio 44410-1466

and to such other or additional person or persons as either party shall have designated to the other party in writing by like notice.

8.13 Payment of Legal Fees. The Bank is aware that upon the occurrence of a Change in Control, management of the Bank may cause or attempt to cause the Bank to refuse to comply with its obligations under this Agreement, or may cause or attempt to cause the Bank to institute, or may institute, litigation seeking to have this Agreement declared unenforceable, or may take, or attempt to take, other action to deny Executive the benefits intended under this Agreement. In these circumstances, the purpose of this Agreement could be frustrated. It is the intent of the Bank that the Executive not be required to incur the expenses associated with the enforcement of his

rights under this Agreement by litigation or other legal action because the cost and expense thereof would substantially detract from the benefits intended to be extended to Executive hereunder, nor be bound to negotiate any settlement of his rights hereunder under threat of incurring such expenses. Accordingly, if after a Change in Control it appears to Executive that (a) the Bank has failed to comply with any of its obligations under this Agreement, or (b) the Bank or any other person has taken any action to declare this Agreement void or unenforceable or instituted any litigation or other legal action designed to deny, diminish or to recover from, Executive the benefits intended to be provided to Executive hereunder, the Bank irrevocably authorizes Executive from time to time to retain counsel of his choice at the Bank's expense as provided in this Section 7.13, to represent Executive in connection with the initiation or defense of any litigation or other legal action, whether by or against the Bank or any director, officer, stockholder or other person affiliated with the Bank, in any jurisdiction. The fees and expenses of counsel selected from time to time by Executive as herein above provided shall be paid or reimbursed to Executive by the Bank on a regular, periodic basis upon presentation by Executive of a statement or statements prepared by such counsel in accordance with such counsel's customary practices, up to a maximum aggregate amount of $500,000. The Bank's obligation to pay the Executive's legal fees provided by this Section 8.13 operates separately from, and in addition to, any legal fee reimbursement obligation the Bank or the Bank's parent Cortland Bancorp may have with the Executive by virtue of a Severance Agreement by and among the Executive, the Bank, and Cortland Bancorp.

IN WITNESS WHEREOF, the Executive and a duly authorized Bank officer have executed this Second Amended Salary Continuation Agreement as of the date first written above.

EXECUTIVE:                              BANK:
                                        THE CORTLAND SAVINGS AND BANKING COMPANY


                                        By:
-------------------------------------       ------------------------------------
Stephen A. Telego, Sr.                      Rodger W. Platt
                                        Title: President, Chairman of the Board
                                               and Chief Executive Officer

BENEFICIARY DESIGNATION

THE CORTLAND SAVINGS AND BANKING COMPANY
SECOND AMENDED SALARY CONTINUATION AGREEMENT

STEPHEN A. TELEGO, SR.

I designate the following as beneficiary of any death benefits under this Second Amended Salary Continuation 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 Bank. 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.

Date: _________, 200__

Accepted by the Bank this ___ day of ___________, 200__.

                                                 EARLY
                                              TERMINATION      DISABILITY
                          AGE               ANNUAL BENEFIT   ANNUAL BENEFIT   CHANGE-IN-
                          AT                  PAYABLE AT       PAYABLE AT       CONTROL
                         PLAN    ACCRUAL        NORMAL           NORMAL         BENEFIT
PLAN      PLAN YEAR      YEAR   BALANCE @   RETIREMENT AGE   RETIREMENT AGE   PAYABLE IN
YEAR   ENDING FEBRUARY    END   6.75% (1)         (2)              (2)        A LUMP SUM
----   ---------------   ----   ---------   --------------   --------------   ----------
  1          2002         49     $ 13,025       $     0          $ 5,794       $129,497
  2          2003         50     $ 27,132       $     0          $11,143       $140,246
  3          2004         51     $ 50,446       $     0          $13,669       $274,950
  4          2005         52     $ 79,396       $     0          $20,226       $292,449
  5          2006         53     $110,363       $     0          $26,284       $312,812
  6          2007         54     $143,485       $     0          $31,948       $334,592
  7          2008         55     $178,914       $     0          $37,244       $357,889
  8          2009         56     $216,810       $     0          $42,194       $382,808
  9          2010         57     $257,344       $     0          $46,823       $409,463
 10          2011         58     $300,701       $     0          $51,150       $437,973
 11          2012         59     $347,076       $     0          $55,195       $468,468
 12          2013         60     $396,681       $     0          $58,977       $501,086
 13          2014         61     $449,739       $     0          $62,513       $535,976
 14          2015         62     $506,491       $65,819          $65,819       $573,295
 15          2016         63     $567,196       $68,909          $68,909       $613,212
 16          2017         64     $632,126       $71,799          $71,799       $655,909
 17          2018         65     $701,578       $74,500          $74,500       $701,578

(1) Calculations are approximations. Benefit calculations are based on prior year-end accrual balances. The accrual balance reflects payment at the end of each month during retirement, beginning March 31, 2018.

(2) Benefit is based on the present value of the current payment stream of the vested accrual balance using a standard discount rate (6.75%).

Exhibit 10.23

THE CORTLAND SAVINGS AND BANKING COMPANY
SECOND AMENDED SALARY CONTINUATION AGREEMENT

THIS SECOND AMENDED SALARY CONTINUATION AGREEMENT (this "Agreement") is made and entered into as of this _____ day of ________________, 200__, by and between The Cortland Savings and Banking Company, an Ohio-chartered, FDIC-insured member bank with its main offices in Cortland, Ohio (the "Bank") and Danny L. White, Vice President of the Bank (the "Executive").

WHEREAS, the Executive has contributed substantially to the success of the Bank and its parent company, Cortland Bancorp, an Ohio corporation, and the Bank desires that the Executive continue in its employ,

WHEREAS, to encourage the Executive to remain an employee of the Bank, the Bank is willing to provide salary continuation benefits to the Executive, payable out of the Bank's general assets,

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 Bank, is contemplated insofar as the Bank is concerned,

WHEREAS, the Bank and the Executive entered into an Amended Salary Continuation Agreement dated as of September 4, 2002, providing for specified retirement benefits for the Executive after termination of his employment,

WHEREAS, the Bank and the Executive have negotiated and agreed to miscellaneous changes in the terms and conditions of the September 4, 2002 Amended Salary Continuation Agreement, effective immediately.

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

Whenever used in this Agreement, the following words and phrases shall have the meanings specified -

1.1 "Accrual Balance" means the liability that should be accrued by the Bank under generally accepted accounting principles ("GAAP") for the Bank's obligation to the Executive 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 shall be calculated assuming a level principal amount and interest as the discount rate is accrued each period. The principal accrual is determined such that when it is credited with interest each month, the Accrual Balance at Normal Retirement Age equals 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 initial discount rate is 6.75%. However, the Plan Administrator, in its sole discretion, may adjust the discount rate to maintain the rate within reasonable standards according to GAAP.

1.2 "Change in Control" means any of the following events occur:

(a) Acquisition of Significant Stock Ownership: a report on Schedule 13D or another form or schedule (other than Schedule 13G) is filed or is required to be filed under Sections 13(d) or 14(d) of the Securities Exchange Act of 1934, if the schedule discloses that the filing person or persons acting in concert has or have become the beneficial owner of 25% or more of a class of Cortland Bancorp's voting securities (but this clause (a) shall not apply to beneficial ownership of voting shares of Cortland Bancorp held by the Bank or another subsidiary of Cortland Bancorp in a fiduciary capacity). A Change in Control of Cortland Bancorp shall not be deemed to have

occurred solely because acquisition by Cortland Bancorp of its own voting securities reduces the number of shares outstanding, causing a person's beneficial ownership to exceed 25% of Cortland Bancorp's voting securities; provided that, if after such acquisition by Cortland Bancorp such person becomes the beneficial owner of additional Cortland Bancorp voting securities, increasing the percentage of outstanding Cortland Bancorp voting securities beneficially owned by such person, a Change in Control of Cortland Bancorp shall be deemed to have occurred,

(b) Change in Board Composition: during any period of two consecutive years, individuals who constitute Cortland Bancorp's board of directors at the beginning of the two-year period cease for any reason to constitute at least a majority thereof, provided, however, that - for purposes of this clause (b) - each director who is first elected by the board (or first nominated by the board for election by stockholders) by a vote of at least two-thirds (2/3) of the directors who were directors at the beginning of the two-year period shall be deemed to have been a director at the beginning of the two-year period,

(c) Merger: Cortland Bancorp merges into or consolidates with another corporation, or merges another corporation into Cortland Bancorp, and as a result less than 50% of the total voting power of the surviving corporation immediately after the merger or consolidation is held by persons who were the holders of Cortland Bancorp's voting securities immediately before the merger or consolidation, or

(d) Sale of Assets: Cortland Bancorp sells to a third party all or substantially all of Cortland Bancorp's assets. For purposes of this Agreement, sale of all or substantially all of Cortland Bancorp's assets includes sale of the Bank alone.

1.3 "Disability" means the Executive suffers a sickness, accident or injury that is determined by the carrier of any individual or group disability insurance policy covering the Executive, or by the Social Security Administration, to be a disability rendering the Executive totally and permanently disabled. At the Bank's request, the Executive must submit to the Bank proof of the carrier's or Social Security Administration's determination.

1.4 "Early Retirement Age" means the Executive's 62nd birthday.

1.5 "Early Termination" means Termination of Employment before Normal Retirement Age for reasons other than death, Disability, Termination for Cause, or within one year after a Change in Control.

1.6 "Early Termination Date" means the month, day, and year in which Early Termination occurs.

1.7 "Effective Date" means March 1, 2001.

1.8 "Normal Retirement Age" means the Executive's 65th birthday.

1.9 "Normal Retirement Date" means the later of the Normal Retirement Age or Termination of Employment.

1.10 "Person" means an individual, corporation, partnership, trust, association, joint venture, pool, syndicate, sole proprietorship, unincorporated organization or other entity.

1.11 "Plan Administrator" means the plan administrator described in Article 7.

1.12 "Plan Year" means a twelve-month period commencing on March 1 and ending on the last day of February of each year. The initial Plan Year shall commence on the Effective Date of this Agreement.

1.13 "Termination for Cause" means the Bank terminates the Executive's employment for any one of the following reasons -

(a) gross negligence or gross neglect of duties,

(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 Bank policy committed in connection with the Executive's employment and resulting in an adverse effect on the Bank.

1.14 "Termination of Employment" means that the Executive ceases to be employed by the Bank for any reason whatsoever, other than because of a leave of absence approved by the Bank. For purposes of this Agreement, if there is a dispute over the employment status of the Executive or the date of the Executive's Termination of Employment, the Bank shall have the sole and absolute right to decide the dispute, unless a Change in Control shall have occurred.

ARTICLE 2
LIFETIME BENEFITS

2.1 Normal Retirement Benefit. For Termination of Employment on or after the Normal Retirement Age for reasons other than death, the Bank shall pay to the Executive the benefit described in this Section 2.1 instead of any other benefit under this Agreement.

2.1.1 Amount of Benefit. The annual benefit under this Section 2.1 is $41,500.

2.1.2 Payment of Benefit. The Bank shall pay the annual benefit to the Executive in 12 equal monthly installments, payable on the last day of each month, beginning with the month after the Executive's Normal Retirement Date. The annual benefit shall be paid to the Executive for 15 years.