Document:

EX-10.10

 

Exhibit 10.10

Cortland Bancorp

Amended Director Retirement Agreement

     This Amended Director Retirement Agreement (this “Agreement”) is entered into as of
this 18th day of December, 2007, by and between Cortland Bancorp (the “Company”), a bank
holding company located in Cortland, Ohio, and Richard B. Thompson, a director of the Company (the
“Director”).

     Whereas, to encourage the Director to remain a member of the Company’s board of
directors, the Company entered into a Director Retirement Agreement with the Director dated as of
October 1, 2001, as amended February 24, 2004, providing for specified retirement benefits for the
Director after termination of director service, payable from the Company’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 Company, is
contemplated insofar as the Company or the Cortland Savings and Banking Company is concerned, and

     Whereas, the Company and the Director intend that this Agreement shall amend and
restate in its entirety the October 1, 2001 Director Retirement Agreement, as amended February 24,
2004.

     Now Therefore, in consideration of the foregoing premises and other good and valuable
consideration, the receipt and acceptance of which are hereby acknowledged, the Director and the
Company hereby agree as follows.

Article 1

Definitions

     1.1 “Accrual Balance” means the liability that should be accrued by the Company under
generally accepted accounting principles (“GAAP”) for the Company’s obligation to the Director
under this Agreement, by applying Accounting Principles Board Opinion No. 12, as amended by
Statement of Financial Accounting Standards No. 106, and the calculation method and discount rate
specified hereinafter. The Accrual Balance at Normal Retirement Age shall equal the present value
of the normal retirement benefits. The discount rate means the rate used by the Plan Administrator
for determining the Accrual Balance. The rate is based on the yield on a 20-year corporate bond
rated Aa by Moody’s, rounded to the nearest 1/4%. The Plan Administrator may adjust the discount
rate to maintain the rate within reasonable standards according to GAAP.

     1.2 “Beneficiary” means each designated person, determined according to Article 4, or the
estate of the deceased Director, entitled to benefits, if any, at the Director’s death.

 

 

     1.3 “Beneficiary Designation Form” means the form established from time to time by the Plan
Administrator that the Director completes, signs, and returns to the Plan Administrator to
designate one or more Beneficiaries.

     1.4 “Change in Control” means a change in control as defined in Code section 409A and rules,
regulations, and guidance of general application thereunder issued by the Department of the
Treasury, including —

     (a) Change in ownership: a change in ownership of the Company occurs on the date any
one person or group accumulates ownership of Company stock constituting more than 50% of the
total fair market value or total voting power of Company stock,

     (b) Change in effective control: (x) any one person, or more than one person acting as
a group, acquires within a 12-month period ownership of Company stock possessing 30% or more
of the total voting power of Company stock, or (y) a majority of the Company’s board of
directors is replaced during any 12-month period by directors whose appointment or election
is not endorsed in advance by a majority of the Company’s board of directors, or

     (c) Change in ownership of a substantial portion of assets: a change in ownership of a
substantial portion of the Company’s assets occurs if in a 12-month period any one person or
more than one person acting as a group acquires from the Company assets having a total gross
fair market value equal to or exceeding 40% of the total gross fair market value of all of
the Company’s assets immediately before the acquisition or acquisitions. For this purpose,
gross fair market value means the value of the Company’s assets, or the value of the assets
being disposed of, determined without regard to any liabilities associated with the assets.

     1.5 “Code” means the Internal Revenue Code of 1986, as amended, and rules, regulations, and
guidance of general application issued by the Department of the Treasury under the Internal Revenue
Code of 1986, as amended.

     1.6 “Disability” means, because of a medically determinable physical or mental impairment that
can be expected to result in death or that can be expected to last for a continuous period of at
least 12 months, (x) the Director is unable to engage in any substantial gainful activity, or (y)
the Director is receiving income replacement benefits for a period of at least three months under
an accident and health plan. Medical determination of disability may be made either by the Social
Security Administration or by the provider of an accident or health plan covering employees of the
Company or its subsidiaries. Upon request of the Plan Administrator, the Director must submit
proof to the Plan Administrator of the Social Security Administration’s or provider’s
determination.

     1.7 “Early Termination” means Separation from Service before Normal Retirement Age for reasons
other than death, Disability, or Termination for Cause. Early Termination excludes a Separation
from Service governed by section 2.4.

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     1.8 “Effective Date” means October 1, 2001.

     1.9 “Normal Retirement Age” means the Director’s 70th birthday.

     1.10 “Plan Administrator” or “Administrator” means the plan administrator described in Article
7.

     1.11 “Plan Year” means each 12-month period from the Effective Date of this Agreement.

     1.12 “Separation from Service” means the Director’s service as a director and independent
contractor to the Company and any member of a controlled group, as defined in Code section 414,
terminates for any reason, other than because of a leave of absence approved by the Company or the
Director’s death. For purposes of this Agreement, if there is a dispute about the status of the
Director or the date of the Director’s Separation from Service, the Company shall have the sole and
absolute right to decide the dispute unless a Change in Control shall have occurred.

     1.13 “Termination for Cause” or “Cause” means the Director is not nominated by the board or
nominating committee for reelection as a director after the expiration of his current term, or the
Director is removed from the board of directors, in either case —

     (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)].

Article 2

Lifetime Benefits

     2.1 Normal Retirement. For Separation from 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. However, no benefits shall be payable if this Agreement terminates
under Article 5.

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

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     2.1.2 Payment of benefit. Beginning with the month immediately after the month in
which the Director’s Separation from Service occurs, the Company shall pay the annual
benefit to the Director in 12 equal monthly installments on the first day of each month.
The annual benefit shall be paid to the Director for ten years.

     2.2 Early Termination. After Early Termination, the Company shall pay to the Director the
benefit described in this section 2.2 instead of any other benefit under this Agreement. However,
no benefits shall be payable if this Agreement terminates under Article 5. Neither the Director
nor the Company shall be entitled to elect in the 12-month period after a Change in Control between
the benefit under this section 2.2 versus the benefit under section 2.4. If the Director’s
Separation from Service occurs within 12 months after a Change in Control, no benefit shall be
payable under this section 2.2 and the Director shall instead be entitled to the benefit under
section 2.4 or, if the Director first attained Normal Retirement Age, section 2.1.

     2.2.1 Amount of benefit. The annual benefit under this section 2.2 is calculated as
the amount that fully amortizes the Accrual Balance existing at the end of the month
immediately before the month in which Separation from Service occurs, amortizing that
Accrual Balance over ten years and taking into account interest at the discount rate or
rates established by the Plan Administrator.

     2.2.2 Payment of benefit. Beginning with the month immediately after the month in
which the Director attains Normal Retirement Age, the Company shall pay the annual benefit
to the Director in 12 equal monthly installments on the first day of each month. The annual
benefit shall be paid to the Director for ten years.

     2.3 Disability Benefit. If the Director’s Separation from Service occurs because of
Disability before Normal Retirement Age, the Company shall pay to the Director the benefit
described in this section 2.3 instead of any other benefit under this Agreement.

     2.3.1 Amount of benefit. The annual benefit under this section 2.3 is calculated as
the amount that fully amortizes the Accrual Balance existing at the end of the month
immediately before the month in which Separation from Service occurs, amortizing that
Accrual Balance over ten years and taking into account interest at the discount rate or
rates established by the Plan Administrator.

     2.3.2 Payment of benefit. Beginning with the month immediately after the month in
which the Director attains Normal Retirement Age, the Company shall pay the annual benefit
to the Director in 12 equal monthly installments on the first day of each month. The annual
benefit shall be paid to the Director for ten years.

     2.4 Change in Control. If the Director’s Separation from Service occurs within 12 months
after a Change in Control, the Company shall pay to the Director the benefit described in this
section 2.4 instead of any other benefit under this Agreement. However, no benefits shall be
payable under this Agreement if this Agreement terminates under Article 5. Neither the Director
nor the Company shall be entitled to elect in the 12-month period after a Change in Control between
the benefit under this section 2.4 versus the Early Termination benefit under section 2.2.

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If the Director’s Separation from Service occurs within 12 months after a Change in Control, no
benefit shall be payable under section 2.2 and the Director shall instead be entitled to the
benefit under this section 2.4. But if the Director shall have attained Normal Retirement Age when
Separation from Service within 12 months after a Change in Control occurs, the Director shall be
entitled solely to the benefit provided by section 2.1, not this section 2.4.

     2.4.1 Amount of benefit. The benefit under this section 2.4 is the Accrual Balance on
the date of the Director’s Separation from Service.

     2.4.2 Payment of benefit. The Company shall pay this benefit to the Director in a
single lump sum three days after the Director’s Separation from Service.

     2.5 Lump-Sum Payout of Remaining Normal Retirement Benefit, Early Termination Benefit, or
Disability Benefit When a Change in Control Occurs. If a Change in Control occurs while the
Director is receiving the Normal Retirement Age benefit under section 2.1, the Company shall pay
the remaining salary continuation benefits to the Director in a single lump sum three days after
the Change in Control. If a Change in Control occurs after Separation from Service but while the
Director is receiving or is entitled at Normal Retirement Age to receive the Early Termination
benefit under section 2.2 or the Disability benefit under section 2.3, the Company shall pay the
remaining salary continuation benefits to the Director in a single lump sum three days after the
Change in Control. The lump-sum payment due to the Director as a result of a Change in Control
shall be an amount equal to the Accrual Balance amount corresponding to the particular benefit when
the Change in Control occurs.

     2.6 Annual Benefit Statement. Within 120 days after the end of each Plan Year the Plan
Administrator shall provide or cause to be provided to the Director an annual benefit statement
showing benefits payable or potentially payable to the Director under this Agreement. Each annual
benefit statement shall supersede the previous year’s annual benefit statement. If there is a
contradiction between this Agreement and the annual benefit statement concerning the amount of a
particular benefit payable or potentially payable to the Director under sections 2.2, 2.3, or 2.4
hereof, the amount of the benefit determined under the Agreement shall control.

     2.7 Savings Clause Relating to Compliance with Code Section 409A. If any provision of this
Agreement would subject the Director to additional tax or interest under Code section 409A, the
Company shall reform the provision. However, the Company shall maintain to the maximum extent
practicable the original intent of the applicable provision without subjecting the Director to
additional tax or interest, and the Company shall not be required to incur any additional
compensation expense as a result of the reformed provision.

     2.8 One Benefit Only. Despite anything to the contrary in this Agreement, the Director and
Beneficiary are entitled to one benefit only under this Agreement, which shall be determined by the
first event to occur that is dealt with by this Agreement. Except as provided in section 2.5 or
Article 3, subsequent occurrence of events dealt with by this Agreement shall not entitle the
Director or Beneficiary to other or additional benefits under this Agreement.

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Article 3

Death Benefits

     3.1 Death Before Normal Retirement Age and Before Separation from Service. If the Director
dies before Normal Retirement Age and before Separation from Service, 30 days after the Director’s
death the Company shall pay to the Director’s Beneficiary in a single lump sum an amount equal to
the Accrual Balance on the date of the Director’s death.

     3.2 Death After Normal Retirement Age but Before Separation from Service. If the Director
dies after Normal Retirement Age but before Separation from Service, the Company shall for a period
of ten years pay to the Director’s Beneficiary the Normal Retirement Benefit specified in section
2.1.

     3.3 Death Before Normal Retirement Age but After Separation from Service. (a) After payments
begin. If, a Separation from Service before Normal Retirement Age having previously occurred, the
Director dies after Early Termination benefits under section 2.2 or Disability benefits under
section 2.3 begin but before receiving all such payments, the Company shall pay the remaining
benefits to the Director’s Beneficiary at the same time and in the same amounts the payments would
have been made to the Director had the Director survived.

     (b) Before payments begin. If, a Separation from Service before Normal Retirement Age having
previously occurred, the Director is entitled at Normal Retirement Age to the Early Termination
benefit under section 2.2 or the Disability benefit under section 2.3 but dies before the benefit
payments begin, the Company shall pay to the Director’s Beneficiary the Early Termination benefit
under section 2.2 or the Disability benefit under section 2.3, as the case may be, but the benefit
payments shall begin on the first day of the month immediately after the month in which the
Director’s death occurs.

     3.4 Death After Separation from Service After Normal Retirement Age. (a) After payments
begin. If, a Separation from Service on or after Normal Retirement Age having previously occurred,
the Director dies after benefit payments under section 2.1 begin but before receiving all such
payments, the Company shall pay the remaining benefits to the Director’s Beneficiary at the same
time and in the same amounts the payments would have been made to the Director had the Director
survived.

     (b) Before payments begin. If, a Separation from Service on or after Normal Retirement Age
having previously occurred, the Director is entitled to the benefit under section Article 2.1 but
dies before the benefit payments begin, beginning with the month immediately after the month in
which the Director’s death occurs the Company shall pay to the Director’s Beneficiary the Normal
Retirement benefit under section 2.1.

Article 4

Beneficiaries

     4.1 Beneficiary Designations. The Director shall have the right to designate at any time a
Beneficiary to receive any benefits payable under this Agreement after the Director’s

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death. The Beneficiary designated under this Agreement may be the same as or different from the
beneficiary designation under any other benefit plan of the Company in which the Director
participates.

     4.2 Beneficiary Designation: Change. The Director shall designate a Beneficiary by completing
and signing the Beneficiary Designation Form and delivering it to the Plan Administrator or its
designated agent. The Director’s Beneficiary designation shall be deemed automatically revoked if
the Beneficiary predeceases the Director or if the Executive names a spouse as Beneficiary and the
marriage is subsequently dissolved. The Director shall have the right to change a Beneficiary by
completing, signing, and otherwise complying with the terms of the Beneficiary Designation Form and
the Plan Administrator’s rules and procedures, as in effect from time to time. Upon the acceptance
by the Plan Administrator of a new Beneficiary Designation Form, all Beneficiary designations
previously filed shall be cancelled. The Plan Administrator shall be entitled to rely on the last
Beneficiary Designation Form filed by the Executive and accepted by the Plan Administrator before
the Director’s death.

     4.3 Acknowledgment. No designation or change in designation of a Beneficiary shall be
effective until received, accepted, and acknowledged in writing by the Plan Administrator or its
designated agent.

     4.4 No Beneficiary Designation. If the Director dies without a valid beneficiary designation,
or if all designated Beneficiaries predecease the Director, then the Director’s spouse shall be the
designated Beneficiary. If the Director has no surviving spouse, the benefits shall be made to the
personal representative of the Director’s estate.

     4.5 Facility of Payment. If a benefit is payable to a minor, to a person declared
incapacitated, or to a person incapable of handling the disposition of his or her property, the
Company may pay such benefit to the guardian, legal representative, or person having the care or
custody of the minor, incapacitated person, or incapable person. The Company may require proof of
incapacity, minority, or guardianship as it may deem appropriate before distribution of the
benefit. Distribution shall completely discharge the Company from all liability for the benefit.

Article 5

General Limitations

     5.1 Termination for Cause. Despite any contrary provision of this Agreement, the Company
shall not pay any benefit under this Agreement and this Agreement shall terminate if the Director’s
Separation from Service is the result of Termination for Cause. Likewise, no benefits shall be
paid under the Split Dollar Agreement and Endorsement, as amended, between the Company and the
Director and the Split Dollar Agreement and Endorsement, as amended, also shall terminate if
Separation from Service is 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.

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     5.2 Misstatement. The Company shall not pay any benefit under this Agreement if the Director
has made any material misstatement of fact on any application for life insurance purchased by the
Company.

     5.3 Removal. If the Director is removed or permanently prohibited from participating in the
Company’s or the Cortland Savings and Banking Company’s affairs by an order issued under section
8(e)(4) or (g)(1) of the Federal Deposit Insurance Act, 12 U.S.C. 1818(e)(4) or (g)(1), all
obligations of the Company under this Agreement shall terminate as of the effective date of the
order, and the Split Dollar Agreement and Endorsement, as amended, also shall terminate.

     5.4 Default. Despite any contrary provision of this Agreement, if the Company or the Cortland
Savings and Banking Company is in “default” or “in danger of default,” as those terms are defined
in section 3(x) of the Federal Deposit Insurance Act, 12 U.S.C. 1813(x), all obligations under this
Agreement shall terminate.

     5.5 FDIC Open-Bank Assistance. All obligations under this Agreement shall terminate, except
to the extent determined that continuation of the contract is necessary for the continued operation
of the Cortland Savings and Banking Company, when the Federal Deposit Insurance Corporation enters
into an agreement to provide assistance to or on behalf of the Cortland Savings and Banking Company
under the authority contained in section 13(c) of the Federal Deposit Insurance Act. 12 U.S.C.
1823(c). Any rights of the parties that have already vested shall not be affected by such action,
however.

Article 6

Claims and Review Procedures

     6.1 Claims Procedure. The Company shall notify any person or entity that makes a claim for
benefits under this Agreement (the “Claimant”) in writing, within 90 days 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 (w) the specific reasons for such denial, (x) a specific
reference to the provisions of the Agreement on which the denial is based, (y) a description of any
additional information or material necessary for the Claimant to perfect his or her claim, and a
description of why it is needed, and (z) an explanation of the Agreement’s claims review procedure
and other appropriate information as to the steps to be taken if the Claimant wishes to have the
claim reviewed. If the Company determines that there are special circumstances requiring
additional time to make a decision, the Company shall notify the Claimant of the special
circumstances and the date by which a decision is expected to be made, and may extend the time for
up to an additional 90 days.

     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

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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 (x) make, amend, interpret, and enforce all appropriate
rules and regulations for the administration of this Agreement and (y) decide or resolve any and
all questions, 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 about any
question arising out of the administration, interpretation, and application of the Agreement and
the rules and regulations promulgated hereunder shall be final and conclusive and binding upon all
persons having any interest in the Agreement. No Director or Beneficiary shall be deemed to have
any right, vested or nonvested, regarding the continued use of any previously adopted assumptions,
including but not limited to the discount rate and calculation method employed in the determination
of the Accrual Balance.

     7.4 Indemnity of Plan Administrator. The Company shall indemnify and hold harmless the
members of the Plan Administrator against any and all claims, losses, damages, expenses, or
liabilities arising from any action or failure to act with respect to this Agreement, except in the
case of willful misconduct by the Plan Administrator or any of its members.

     7.5 Company Information. To enable the Plan Administrator to perform its functions, the
Company shall supply full and timely information to the Plan Administrator on all matters relating
to the date and circumstances of the retirement, Disability, death, or Separation from Service of
the Director, and such other pertinent information as the Plan Administrator may reasonably
require.

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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 it interfere with the right of
the Company’s shareholders not to re-elect the Director or the right of shareholders or the Board
to remove an individual as a director of the Company. The Agreement also does not require the
Director to remain a director or interfere with the Director’s right to terminate service at any
time.

     8.4 Non-Transferability. Benefits under this Agreement may not be sold, transferred,
assigned, pledged, attached, or encumbered.

     8.5 Successors; Binding Agreement. By an assumption agreement in form and substance
satisfactory to the Director, the Company shall require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of the business or
assets of the Company to expressly assume and agree to perform this Agreement in the same manner
and to the same extent that the Company would be required to perform this Agreement had no
succession occurred.

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

     8.7 Applicable Law. The Agreement and all rights hereunder shall be governed by the laws of
the State of Ohio, except to the extent preempted by the laws of the United States of America.

     8.8 Unfunded Arrangement. The Director and Beneficiary are general unsecured creditors of the
Company for the payment of benefits under this Agreement. The benefits represent the mere promise
by the Company to pay benefits. The rights to benefits are not subject to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by
creditors. Any insurance on the Director’s life is a general asset of the Company to which the
Director and Beneficiary have no preferred or secured claim.

     8.9 Entire Agreement. This Agreement and the Split Dollar Agreement and Endorsement, as
amended, constitute the entire agreement between the Company and the Director concerning the
subject matter hereof. No rights are granted to the Director under this Agreement other than those
specifically set forth herein. This Agreement amends and restates in

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its entirety the Director Retirement Agreement dated as of October 1, 2001, as amended February 24,
2004.

     8.10 Severability. If any provision of this Agreement is held invalid, such invalidity shall
not affect any other provision of this Agreement not held invalid, and each such other provision
shall continue in full force and effect to the full extent consistent with law. If any provision
of this Agreement is held invalid in part, such invalidity shall not affect the remainder of such
provision, and the remainder of such provision, together with all other provisions of this
Agreement, shall continue in full force and effect to the full extent consistent with law.

     8.11 Captions and Counterparts. Captions and section headings in this Agreement are included
solely for convenience of reference and shall not affect the meaning or interpretation of any
provision of this Agreement. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which together shall constitute one and the same
instrument.

     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 Amended Director Retirement Agreement as of the date first written above.

	 	 	 	 	 	 	 	 	 
	Director	 	 	 	Cortland Bancorp	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

Richard B. Thompson

	 	 	 	 	 	 

	 	 
	 

	 	 	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 

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Beneficiary Designation

Cortland Bancorp

Amended Director Retirement Agreement

     I, Richard B. Thompson, designate the following as beneficiary of any death benefits under
this Amended Director Retirement Agreement:

	 	 	 
	Primary:
	 	 
	 

	 	 
	 
	 
	 	 
	 
	 
	 	 
	Contingent:
	 	 
	 

	 	 
	 
	 
	 	 
	 

			
	Note:	 	To name a trust as beneficiary, please provide the name of the trustee(s) and the
exact name and date of the trust agreement.

          I understand that I may change these beneficiary designations by filing a new written
designation with the Company. I further understand that the designations will be automatically
revoked if the beneficiary predeceases me, or, if I have named my spouse as beneficiary and our
marriage is subsequently dissolved.

	 	 	 	 	 
	Signature:
	 	 	 	 
	 

	 	 

     Richard B. Thompson
	 	 
	 
	 	 	 	 
	Date:

	 	 	,	 200___
	 

	 	 

	 	 
	 
	 	 	 	 
	          Received by the Company this         
           
day of  
                 
               
      , 200____.
	 
	 	 	 	 
	          By:                                                             
	 
	 	 	 	 
	          Title:                                                             

12EX-10.11

 

Exhibit 10.11

Cortland Bancorp

Amended Director Retirement Agreement

     This Amended Director Retirement Agreement (this “Agreement”) is entered into as of
this 18th day of December, 2007, by and between Cortland Bancorp (the “Company”), a bank holding
company located in Cortland, Ohio, and Timothy K. Woofter, a director of the Company (the
“Director”).

     Whereas, to encourage the Director to remain a member of the Company’s board of
directors, the Company entered into a Director Retirement Agreement with the Director dated as of
March 1, 2001, as amended February 24, 2004, providing for specified retirement benefits for the
Director after termination of director service, payable from the Company’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 Company, is
contemplated insofar as the Company or the Cortland Savings and Banking Company is concerned, and

     Whereas, the Company and the Director intend that this Agreement shall amend and
restate in its entirety the March 1, 2001 Director Retirement Agreement, as amended February 24,
2004.

     Now Therefore, in consideration of the foregoing premises and other good and valuable
consideration, the receipt and acceptance of which are hereby acknowledged, the Director and the
Company hereby agree as follows.

Article 1

Definitions

     1.1 “Accrual Balance” means the liability that should be accrued by the Company under
generally accepted accounting principles (“GAAP”) for the Company’s obligation to the Director
under this Agreement, by applying Accounting Principles Board Opinion No. 12, as amended by
Statement of Financial Accounting Standards No. 106, and the calculation method and discount rate
specified hereinafter. The Accrual Balance at Normal Retirement Age shall equal the present value
of the normal retirement benefits. The discount rate means the rate used by the Plan Administrator
for determining the Accrual Balance. The rate is based on the yield on a 20-year corporate bond
rated Aa by Moody’s, rounded to the nearest 1/4%. The Plan Administrator may adjust the discount
rate to maintain the rate within reasonable standards according to GAAP.

     1.2 “Beneficiary” means each designated person, determined according to Article 4, or the
estate of the deceased Director, entitled to benefits, if any, at the Director’s death.

 

 

     1.3 “Beneficiary Designation Form” means the form established from time to time by the Plan
Administrator that the Director completes, signs, and returns to the Plan Administrator to
designate one or more Beneficiaries.

     1.4 “Change in Control” means a change in control as defined in Code section 409A and rules,
regulations, and guidance of general application thereunder issued by the Department of the
Treasury, including –

     (a) Change in ownership: a change in ownership of the Company occurs on the date any
one person or group accumulates ownership of Company stock constituting more than 50% of the
total fair market value or total voting power of Company stock,

     (b) Change in effective control: (x) any one person, or more than one person acting as
a group, acquires within a 12-month period ownership of Company stock possessing 30% or more
of the total voting power of Company stock, or (y) a majority of the Company’s board of
directors is replaced during any 12-month period by directors whose appointment or election
is not endorsed in advance by a majority of the Company’s board of directors, or

     (c) Change in ownership of a substantial portion of assets: a change in ownership of a
substantial portion of the Company’s assets occurs if in a 12-month period any one person or
more than one person acting as a group acquires from the Company assets having a total gross
fair market value equal to or exceeding 40% of the total gross fair market value of all of
the Company’s assets immediately before the acquisition or acquisitions. For this purpose,
gross fair market value means the value of the Company’s assets, or the value of the assets
being disposed of, determined without regard to any liabilities associated with the assets.

     1.5 “Code” means the Internal Revenue Code of 1986, as amended, and rules, regulations, and
guidance of general application issued by the Department of the Treasury under the Internal Revenue
Code of 1986, as amended.

     1.6 “Disability” means, because of a medically determinable physical or mental impairment that
can be expected to result in death or that can be expected to last for a continuous period of at
least 12 months, (x) the Director is unable to engage in any substantial gainful activity, or (y)
the Director is receiving income replacement benefits for a period of at least three months under
an accident and health plan. Medical determination of disability may be made either by the Social
Security Administration or by the provider of an accident or health plan covering employees of the
Company or its subsidiaries. Upon request of the Plan Administrator, the Director must submit
proof to the Plan Administrator of the Social Security Administration’s or provider’s
determination.

     1.7 “Early Termination” means Separation from Service before Normal Retirement Age for reasons
other than death, Disability, or Termination for Cause. Early Termination excludes a Separation
from Service governed by section 2.4.

2

 

     1.8 “Effective Date” means March 1, 2001.

     1.9 “Normal Retirement Age” means the Director’s 63rd birthday.

     1.10 “Plan Administrator” or “Administrator” means the plan administrator described in Article
7.

     1.11 “Plan Year” means each 12-month period from the Effective Date of this Agreement.

     1.12 “Separation from Service” means the Director’s service as a director and independent
contractor to the Company and any member of a controlled group, as defined in Code section 414,
terminates for any reason, other than because of a leave of absence approved by the Company or the
Director’s death. For purposes of this Agreement, if there is a dispute about the status of the
Director or the date of the Director’s Separation from Service, the Company shall have the sole and
absolute right to decide the dispute unless a Change in Control shall have occurred.

     1.13 “Termination for Cause” or “Cause” means the Director is not nominated by the board or
nominating committee for reelection as a director after the expiration of his current term, or the
Director is removed from the board of directors, in either case –

     (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)].

Article 2

Lifetime Benefits

     2.1 Normal Retirement. For Separation from 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. However, no benefits shall be payable if this Agreement terminates
under Article 5.

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

3

 

     2.1.2 Payment of benefit. Beginning with the month immediately after the month in
which the Director’s Separation from Service occurs, the Company shall pay the annual
benefit to the Director in 12 equal monthly installments on the first day of each month.
The annual benefit shall be paid to the Director for ten years.

     2.2 Early Termination. After Early Termination, the Company shall pay to the Director the
benefit described in this section 2.2 instead of any other benefit under this Agreement. However,
no benefits shall be payable if this Agreement terminates under Article 5. Neither the Director
nor the Company shall be entitled to elect in the 12-month period after a Change in Control between
the benefit under this section 2.2 versus the benefit under section 2.4. If the Director’s
Separation from Service occurs within 12 months after a Change in Control, no benefit shall be
payable under this section 2.2 and the Director shall instead be entitled to the benefit under
section 2.4 or, if the Director first attained Normal Retirement Age, section 2.1.

     2.2.1 Amount of benefit. The annual benefit under this section 2.2 is calculated as
the amount that fully amortizes the Accrual Balance existing at the end of the month
immediately before the month in which Separation from Service occurs, amortizing that
Accrual Balance over ten years and taking into account interest at the discount rate or
rates established by the Plan Administrator.

     2.2.2 Payment of benefit. Beginning with the month immediately after the month in
which the Director attains Normal Retirement Age, the Company shall pay the annual benefit
to the Director in 12 equal monthly installments on the first day of each month. The annual
benefit shall be paid to the Director for ten years.

     2.3 Disability Benefit. If the Director’s Separation from Service occurs because of
Disability before Normal Retirement Age, the Company shall pay to the Director the benefit
described in this section 2.3 instead of any other benefit under this Agreement.

     2.3.1 Amount of benefit. The annual benefit under this section 2.3 is calculated as
the amount that fully amortizes the Accrual Balance existing at the end of the month
immediately before the month in which Separation from Service occurs, amortizing that
Accrual Balance over ten years and taking into account interest at the discount rate or
rates established by the Plan Administrator.

     2.3.2 Payment of benefit. Beginning with the month immediately after the month in
which the Director attains Normal Retirement Age, the Company shall pay the annual benefit
to the Director in 12 equal monthly installments on the first day of each month. The annual
benefit shall be paid to the Director for ten years.

     2.4 Change in Control. If the Director’s Separation from Service occurs within 12 months
after a Change in Control, the Company shall pay to the Director the benefit described in this
section 2.4 instead of any other benefit under this Agreement. However, no benefits shall be
payable under this Agreement if this Agreement terminates under Article 5. Neither the Director
nor the Company shall be entitled to elect in the 12-month period after a Change in Control between
the benefit under this section 2.4 versus the Early Termination benefit under section 2.2.

4

 

If the Director’s Separation from Service occurs within 12 months after a Change in Control, no
benefit shall be payable under section 2.2 and the Director shall instead be entitled to the
benefit under this section 2.4. But if the Director shall have attained Normal Retirement Age when
Separation from Service within 12 months after a Change in Control occurs, the Director shall be
entitled solely to the benefit provided by section 2.1, not this section 2.4.

     2.4.1 Amount of benefit. The benefit under this section 2.4 is the Accrual Balance on
the date of the Director’s Separation from Service.

     2.4.2 Payment of benefit. The Company shall pay this benefit to the Director in a
single lump sum three days after the Director’s Separation from Service.

     2.5 Lump-Sum Payout of Remaining Normal Retirement Benefit, Early Termination Benefit, or
Disability Benefit When a Change in Control Occurs. If a Change in Control occurs while the
Director is receiving the Normal Retirement Age benefit under section 2.1, the Company shall pay
the remaining salary continuation benefits to the Director in a single lump sum three days after
the Change in Control. If a Change in Control occurs after Separation from Service but while the
Director is receiving or is entitled at Normal Retirement Age to receive the Early Termination
benefit under section 2.2 or the Disability benefit under section 2.3, the Company shall pay the
remaining salary continuation benefits to the Director in a single lump sum three days after the
Change in Control. The lump-sum payment due to the Director as a result of a Change in Control
shall be an amount equal to the Accrual Balance amount corresponding to the particular benefit when
the Change in Control occurs.

     2.6 Annual Benefit Statement. Within 120 days after the end of each Plan Year the Plan
Administrator shall provide or cause to be provided to the Director an annual benefit statement
showing benefits payable or potentially payable to the Director under this Agreement. Each annual
benefit statement shall supersede the previous year’s annual benefit statement. If there is a
contradiction between this Agreement and the annual benefit statement concerning the amount of a
particular benefit payable or potentially payable to the Director under sections 2.2, 2.3, or 2.4
hereof, the amount of the benefit determined under the Agreement shall control.

     2.7 Savings Clause Relating to Compliance with Code Section 409A. If any provision of this
Agreement would subject the Director to additional tax or interest under Code section 409A, the
Company shall reform the provision. However, the Company shall maintain to the maximum extent
practicable the original intent of the applicable provision without subjecting the Director to
additional tax or interest, and the Company shall not be required to incur any additional
compensation expense as a result of the reformed provision.

     2.8 One Benefit Only. Despite anything to the contrary in this Agreement, the Director and
Beneficiary are entitled to one benefit only under this Agreement, which shall be determined by the
first event to occur that is dealt with by this Agreement. Except as provided in section 2.5 or
Article 3, subsequent occurrence of events dealt with by this Agreement shall not entitle the
Director or Beneficiary to other or additional benefits under this Agreement.

5

 

Article 3

Death Benefits

     3.1 Death Before Normal Retirement Age and Before Separation from Service. If the Director
dies before Normal Retirement Age and before Separation from Service, 30 days after the Director’s
death the Company shall pay to the Director’s Beneficiary in a single lump sum an amount equal to
the Accrual Balance on the date of the Director’s death.

     3.2 Death After Normal Retirement Age but Before Separation from Service. If the Director
dies after Normal Retirement Age but before Separation from Service, the Company shall for a period
of ten years pay to the Director’s Beneficiary the Normal Retirement Benefit specified in section
2.1.

     3.3 Death Before Normal Retirement Age but After Separation from Service. (a) After payments
begin. If, a Separation from Service before Normal Retirement Age having previously occurred, the
Director dies after Early Termination benefits under section 2.2 or Disability benefits under
section 2.3 begin but before receiving all such payments, the Company shall pay the remaining
benefits to the Director’s Beneficiary at the same time and in the same amounts the payments would
have been made to the Director had the Director survived.

     (b) Before payments begin. If, a Separation from Service before Normal Retirement Age having
previously occurred, the Director is entitled at Normal Retirement Age to the Early Termination
benefit under section 2.2 or the Disability benefit under section 2.3 but dies before the benefit
payments begin, the Company shall pay to the Director’s Beneficiary the Early Termination benefit
under section 2.2 or the Disability benefit under section 2.3, as the case may be, but the benefit
payments shall begin on the first day of the month immediately after the month in which the
Director’s death occurs.

     3.4 Death After Separation from Service After Normal Retirement Age. (a) After payments
begin. If, a Separation from Service on or after Normal Retirement Age having previously occurred,
the Director dies after benefit payments under section 2.1 begin but before receiving all such
payments, the Company shall pay the remaining benefits to the Director’s Beneficiary at the same
time and in the same amounts the payments would have been made to the Director had the Director
survived.

     (b) Before payments begin. If, a Separation from Service on or after Normal Retirement Age
having previously occurred, the Director is entitled to the benefit under section Article 2.1 but
dies before the benefit payments begin, beginning with the month immediately after the month in
which the Director’s death occurs the Company shall pay to the Director’s Beneficiary the Normal
Retirement benefit under section 2.1.

Article 4

Beneficiaries

     4.1 Beneficiary Designations. The Director shall have the right to designate at any time a
Beneficiary to receive any benefits payable under this Agreement after the Director’s

6

 

death. The Beneficiary designated under this Agreement may be the same as or different from the
beneficiary designation under any other benefit plan of the Company in which the Director
participates.

     4.2 Beneficiary Designation: Change. The Director shall designate a Beneficiary by completing
and signing the Beneficiary Designation Form and delivering it to the Plan Administrator or its
designated agent. The Director’s Beneficiary designation shall be deemed automatically revoked if
the Beneficiary predeceases the Director or if the Executive names a spouse as Beneficiary and the
marriage is subsequently dissolved. The Director shall have the right to change a Beneficiary by
completing, signing, and otherwise complying with the terms of the Beneficiary Designation Form and
the Plan Administrator’s rules and procedures, as in effect from time to time. Upon the acceptance
by the Plan Administrator of a new Beneficiary Designation Form, all Beneficiary designations
previously filed shall be cancelled. The Plan Administrator shall be entitled to rely on the last
Beneficiary Designation Form filed by the Executive and accepted by the Plan Administrator before
the Director’s death.

     4.3 Acknowledgment. No designation or change in designation of a Beneficiary shall be
effective until received, accepted, and acknowledged in writing by the Plan Administrator or its
designated agent.

     4.4 No Beneficiary Designation. If the Director dies without a valid beneficiary designation,
or if all designated Beneficiaries predecease the Director, then the Director’s spouse shall be the
designated Beneficiary. If the Director has no surviving spouse, the benefits shall be made to the
personal representative of the Director’s estate.

     4.5 Facility of Payment. If a benefit is payable to a minor, to a person declared
incapacitated, or to a person incapable of handling the disposition of his or her property, the
Company may pay such benefit to the guardian, legal representative, or person having the care or
custody of the minor, incapacitated person, or incapable person. The Company may require proof of
incapacity, minority, or guardianship as it may deem appropriate before distribution of the
benefit. Distribution shall completely discharge the Company from all liability for the benefit.

Article 5

General Limitations

     5.1 Termination for Cause. Despite any contrary provision of this Agreement, the Company
shall not pay any benefit under this Agreement and this Agreement shall terminate if the Director’s
Separation from Service is the result of Termination for Cause. Likewise, no benefits shall be
paid under the Split Dollar Agreement and Endorsement, as amended, between the Company and the
Director and the Split Dollar Agreement and Endorsement, as amended, also shall terminate if
Separation from Service is 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.

7

 

     5.2 Misstatement. The Company shall not pay any benefit under this Agreement if the Director
has made any material misstatement of fact on any application for life insurance purchased by the
Company.

     5.3 Removal. If the Director is removed or permanently prohibited from participating in the
Company’s or the Cortland Savings and Banking Company’s affairs by an order issued under section
8(e)(4) or (g)(1) of the Federal Deposit Insurance Act, 12 U.S.C. 1818(e)(4) or (g)(1), all
obligations of the Company under this Agreement shall terminate as of the effective date of the
order, and the Split Dollar Agreement and Endorsement, as amended, also shall terminate.

     5.4 Default. Despite any contrary provision of this Agreement, if the Company or the Cortland
Savings and Banking Company is in “default” or “in danger of default,” as those terms are defined
in section 3(x) of the Federal Deposit Insurance Act, 12 U.S.C. 1813(x), all obligations under this
Agreement shall terminate.

     5.5 FDIC Open-Bank Assistance. All obligations under this Agreement shall terminate, except
to the extent determined that continuation of the contract is necessary for the continued operation
of the Cortland Savings and Banking Company, when the Federal Deposit Insurance Corporation enters
into an agreement to provide assistance to or on behalf of the Cortland Savings and Banking Company
under the authority contained in section 13(c) of the Federal Deposit Insurance Act. 12 U.S.C.
1823(c). Any rights of the parties that have already vested shall not be affected by such action,
however.

Article 6

Claims and Review Procedures

     6.1 Claims Procedure. The Company shall notify any person or entity that makes a claim for
benefits under this Agreement (the “Claimant”) in writing, within 90 days 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 (w) the specific reasons for such denial, (x) a specific
reference to the provisions of the Agreement on which the denial is based, (y) a description of any
additional information or material necessary for the Claimant to perfect his or her claim, and a
description of why it is needed, and (z) an explanation of the Agreement’s claims review procedure
and other appropriate information as to the steps to be taken if the Claimant wishes to have the
claim reviewed. If the Company determines that there are special circumstances requiring
additional time to make a decision, the Company shall notify the Claimant of the special
circumstances and the date by which a decision is expected to be made, and may extend the time for
up to an additional 90 days.

     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

8

 

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 (x) make, amend, interpret, and enforce all appropriate
rules and regulations for the administration of this Agreement and (y) decide or resolve any and
all questions, 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 about any
question arising out of the administration, interpretation, and application of the Agreement and
the rules and regulations promulgated hereunder shall be final and conclusive and binding upon all
persons having any interest in the Agreement. No Director or Beneficiary shall be deemed to have
any right, vested or nonvested, regarding the continued use of any previously adopted assumptions,
including but not limited to the discount rate and calculation method employed in the determination
of the Accrual Balance.

     7.4 Indemnity of Plan Administrator. The Company shall indemnify and hold harmless the
members of the Plan Administrator against any and all claims, losses, damages, expenses, or
liabilities arising from any action or failure to act with respect to this Agreement, except in the
case of willful misconduct by the Plan Administrator or any of its members.

     7.5 Company Information. To enable the Plan Administrator to perform its functions, the
Company shall supply full and timely information to the Plan Administrator on all matters relating
to the date and circumstances of the retirement, Disability, death, or Separation from Service of
the Director, and such other pertinent information as the Plan Administrator may reasonably
require.

9

 

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 it interfere with the right of
the Company’s shareholders not to re-elect the Director or the right of shareholders or the Board
to remove an individual as a director of the Company. The Agreement also does not require the
Director to remain a director or interfere with the Director’s right to terminate service at any
time.

     8.4 Non-Transferability. Benefits under this Agreement may not be sold, transferred,
assigned, pledged, attached, or encumbered.

     8.5 Successors; Binding Agreement. By an assumption agreement in form and substance
satisfactory to the Director, the Company shall require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of the business or
assets of the Company to expressly assume and agree to perform this Agreement in the same manner
and to the same extent that the Company would be required to perform this Agreement had no
succession occurred.

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

     8.7 Applicable Law. The Agreement and all rights hereunder shall be governed by the laws of
the State of Ohio, except to the extent preempted by the laws of the United States of America.

     8.8 Unfunded Arrangement. The Director and Beneficiary are general unsecured creditors of the
Company for the payment of benefits under this Agreement. The benefits represent the mere promise
by the Company to pay benefits. The rights to benefits are not subject to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by
creditors. Any insurance on the Director’s life is a general asset of the Company to which the
Director and Beneficiary have no preferred or secured claim.

     8.9 Entire Agreement. This Agreement and the Split Dollar Agreement and Endorsement, as
amended, constitute the entire agreement between the Company and the Director concerning the
subject matter hereof. No rights are granted to the Director under this Agreement other than those
specifically set forth herein. This Agreement amends and restates in

10

 

\

its entirety the Director Retirement Agreement dated as of March 1, 2001, as amended February 24,
2004.

     8.10 Severability. If any provision of this Agreement is held invalid, such invalidity shall
not affect any other provision of this Agreement not held invalid, and each such other provision
shall continue in full force and effect to the full extent consistent with law. If any provision
of this Agreement is held invalid in part, such invalidity shall not affect the remainder of such
provision, and the remainder of such provision, together with all other provisions of this
Agreement, shall continue in full force and effect to the full extent consistent with law.

     8.11 Captions and Counterparts. Captions and section headings in this Agreement are included
solely for convenience of reference and shall not affect the meaning or interpretation of any
provision of this Agreement. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which together shall constitute one and the same
instrument.

     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 Amended Director Retirement Agreement as of the date first written above.

	 	 	 	 	 	 	 	 	 
	Director	 	 	 	Cortland Bancorp  
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	Timothy K. Woofter
	 	 	 	 	 	 	 	 
	 

	 	 	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 	 	 

11

 

Beneficiary Designation

Cortland Bancorp

Amended Director Retirement Agreement

     I, Timothy K. Woofter, designate the following as beneficiary of any death benefits under this
Amended Director Retirement Agreement:

	 	 	 
	Primary:
	 	 
	 

	 	 
	 
	 
	 	 
	 

	 	 	 
	Contingent:
	 	 
	 

	 	 
	 
	 
	 	 
	 

Note: To name a trust as beneficiary, please provide the name of the trustee(s) and the
exact name and date of the trust agreement.

          I understand that I may change these beneficiary designations by filing a new written
designation with the Company. I further understand that the designations will be automatically
revoked if the beneficiary predeceases me, or, if I have named my spouse as beneficiary and our
marriage is subsequently dissolved.

Signature:                                         

                    Timothy K. Woofter

Date:                                         , 200___

     Received
by the Company this                      day of                                         ,
200 ___.

     By:                                         

     Title:                                         

12

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