AGREEMENT AND GENERAL RELEASE

Exhibit 10.1

AGREEMENT AND GENERAL RELEASE

Cortland Bancorp and Cortland Savings and Banking Company (collectively referred to hereafter as “Employer”), and Lawrence A. Fantauzzi (referred to hereafter as “Employee”), enter into this Agreement and General Release (referred to hereafter as “Agreement”), as of the date of the last signature appearing below and agree that in consideration of the mutual promises and provisions of this Agreement:

1.  Last Day of Employment . Employee has previously been employed by Employer as President and Chief Executive Officer, as well as Vice-President of New Resources Leasing Corporation, a subsidiary of Cortland Bancorp. Employee has tendered his resignation to Employer, dated September 4, 2009 and effective October 2, 2009. The Board of Directors, at its meeting on September 8, 2009, accepted Employee’s resignation. Therefore, Employee understands and acknowledges that, pursuant to Employee’s resignation tendered to Employer on September 4, 2009, Employee’s employment with Employer shall cease in all employment capacities including, and without limitation as officer, director, employee and/or agent of Employer and any and all affiliates and subsidiaries of Employer including, but not limited to New Resources Leasing Corporation, as of October 2, 2009. Employee further understands and acknowledges that Employee’s duties and responsibilities as President and Chief Executive Officer (“CEO”) of Employer ceased as of September 8, 2009 and Employee hereby tenders Employee’s resignation as a director of Employer as provided in the attached Exhibit A-1 . Employee also hereby waives any and all participatory rights of Employee in Employer’s Director Emeritus program. Specifically, while Employee will remain an employee of Employer until October 2, 2009, Employee has been relieved of all duties and responsibilities as President and CEO in advance of Employee’s October 2, 2009 early retirement date.

2.  Consideration . The parties desire to enter into this Agreement to provide for the terms of the Employee’s separation, including the termination of Employee’s responsibilities. The parties further wish to avoid litigation and controversy and fully resolve any and all past, present and future disputes they may have relating to Employee’s employment with, or separation from service with the Employer. In consideration for entering into this Agreement and for complying with the promises made herein, Employer agrees:

a) to pay Employee $5,000.00 per month for twenty-four (24) months, which shall be subject to all lawful deductions and withholdings such as income tax, social security tax, etc. The Employer shall pay the above monthly payment in advance on the first day of each month, except that the first six monthly payments shall not be paid until the later of six (6) months after the expiration of the revocation period, described more fully in Section 3 below, or April 15, 2010 and shall be paid in one lump sum, as required by Internal Revenue Code Section 409A. These payments will occur only if the Revocation Period described more fully in Section “3” below passes without revocation of this Agreement by Employee.

b) To reimburse Employee for Employee’s healthcare premiums for family insurance coverage substantially similar to the coverage maintained for the Employee and his family before September 8, 2009, including but not limited to the cost of family coverage under the provisions of COBRA, up to a maximum of $15,000 per year until the earlier of Employee’s sixty-fifth (65 ^th ) birthday or the date Employee procures other employment that offers health insurance coverage. Such provision of healthcare coverage reimbursement is contingent upon Employee’s entry into this Agreement. Provision of such healthcare coverage reimbursement shall not commence until after expiration of the Revocation Period described more fully below in paragraph 3, without revocation of this Agreement by Employee. Such reimbursement will be provided within thirty (30) days of Employee tendering to Employer proof of Employee’s payment of said healthcare premiums.

If a Change in Control, as defined in Exhibit D to the Agreement, occurs before the Employee has fully received the consideration delineated in subsections 2a and 2b above, then the Employer shall pay the remaining benefits to the Employee in a single lump sum within three (3) days after the later of (x) the Change in Control or (y) the first day of the seventh month after the effective date of the Employee’s resignation. The lump-sum payment due the Employee as a result of a Change in Control shall be an amount equal to the sum of the remaining unpaid balances corresponding to each particular benefit at the time the Change in Control occurs, including for purposes of subsection 2a the unpaid balance of the money for the 24 months, for purposes of subsection 2b the maximum amount of healthcare premium reimbursement amounts remaining for the maximum years. However, Employee shall reimburse Employer for any excess payment of healthcare premium reimbursement amounts to Employee under this Paragraph that represents reimbursement of healthcare premiums for any period of time prior to Employee’s sixty-fifth (65 ^th ) birthday for that period of time whereby the Employee had other employment that offers health insurance coverage.

The Employer shall cease providing any and all other perquisites to Employee as of Employee’s last day of employment, October 2, 2009, including, but not limited to, any leased automobile, credit cards, etc., except as otherwise provided in this Agreement. Please see Section 10 for further information.

3.  No Consideration Absent Execution of this Agreement . Employee understands and agrees that Employee will not and would not receive the monies and/or benefits specified in Section “2” above, except for Employee’s execution of this Agreement and the fulfillment by Employee of the promises of Employee contained herein.

The attached Exhibit A provides those severance benefits that you will receive regardless of whether or not you execute this Agreement.

Revocation . Employee may revoke this Agreement for a period of seven (7) calendar days following the day Employee executes this Agreement (“Revocation Period”). Any revocation within this Revocation Period must be in writing, signed, and submitted to Stephen A. Telego, Sr., Senior Vice President, Chief of Corporate Administration, Director of Human Resources and state, “I hereby revoke my acceptance of our Agreement and General Release.” The revocation must be personally delivered or mailed to Stephen A. Telego, Sr., Senior Vice President, Chief of Corporate Administration, Director of Human Resources, Cortland Banks, 194 West Main Street, Cortland, Ohio 44410, postmarked within seven (7) calendar days of execution by Employee of this Agreement. This Agreement shall not become effective or enforceable until the Revocation Period has expired. If the last day of the Revocation Period is a Saturday, Sunday, or legal holiday in Ohio , then the Revocation Period shall not expire until the next following day which is not a Saturday, Sunday, or legal holiday.

4.  General Release of Claim . PLEASE READ CAREFULLY. THIS SECTION OF THE AGREEMENT INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS. In consideration of the premises contained in this Agreement and Employer’s promises and covenants set forth in this Agreement, the sufficiency of which is hereby acknowledged, Employee for himself, his heirs, executors, administrators, fiduciaries, successors, and/or assigns, hereby irrevocably and unconditionally releases, waives and extinguishes, and covenants not to sue or initiate any legal or other proceedings with respect to any and all rights, liabilities, claims or actions relating in any manner to his employment or separation from employment by Employer (but, despite the generality of the language anywhere in this section, this release does not include any rights, liabilities, claims or actions arising under and regarding the enforcement of terms of this Agreement or with respect to any benefits to which Employee is entitled without regard to this Agreement as described in Exhibit A to this Agreement) which he has or may have from the beginning of time to the date of this Agreement against the Employer, any employee benefit plans maintained by the Employer, Employer’s successors and assigns, and any of the directors, officers, employees, attorneys, agents, successors, assigns, or shareholders, parent, affiliates or subsidiaries of the Employer (collectively the “Released Party ” or “Released Parties”) and the Employee hereby forever releases and discharges all such Released Parties from any and all actions, causes of action, suits, debts, charges, complaints, claims, liabilities, obligations, promises, agreements, controversies, damages and expenses (including attorneys’ fees and other costs actually incurred) of any nature whatsoever, in law or in equity, which he ever had, now has, or his heirs, executors and administrators may have, particularly against each or any of the Released Parties arising from the beginning of time to the end of Employee’s employment with Employer, but without limitation of the above general terms, by reason of any claims against Employer and the other Released Parties, arising from, or related to, his employment, including any claims in tort or in contract, or arising from any alleged violation by Employer of any Federal, State or Local Statutes, Rules, Regulations, Ordinances, or Common Laws including, but not limited to, the laws contained in Exhibit B to this Agreement and any alleged violation of:

Employee understands this Release includes all claims related in any manner to Employee’s employment or the cessation of that employment, except for any claims arising under and regarding the enforcement of this Agreement or with respect to any benefits to which Employee is entitled without regard to this Agreement as described in Exhibit A to this Agreement. Employee further understands that Employee is hereby releasing any known or unknown claim for or alleged right to discovery of information or documents of Released Parties in regard to and to the extent of only the released claims, but is not releasing any claim or right to discovery if the information or documents are relevant to or may lead to the discovery of evidence relevant to a claim, liability, action, or right that is related to the enforcement of rights arising under this Agreement. Despite anything in this Agreement to the contrary, this Release by Employee is expressly conditional on Employee’s actually receiving on time and in full the consideration stated in Section 2 of this Agreement.

5. Affirmations . Employee affirms that Employee is not a party to, and that Employee has not filed or caused to be filed, any claim, complaint, charge or action against Released Parties in any forum or form. Employee further affirms that Employee has been paid and/or has received all leave (paid or unpaid), compensation, wages, bonuses, commissions, and/or benefits to which Employee may be entitled and that no other leave (paid or unpaid), compensation, wages, bonuses, commissions and/or benefits are due to Employee except as provided in this Agreement and except Employee’s final pay through October 2, 2009 and unused and accrued vacation and personal time that have not yet been received and are due on or before October 31, 2009, and other benefits to which Employee is entitled without regard to this Agreement as described in Exhibit A to this Agreement.

Employee furthermore affirms that Employee has no known workplace injuries or occupational diseases and has been provided and/or has not been denied any leave requested under the Family and Medical Leave Act and/or any other federal, state or local leave law. Employee further affirms Employee has not complained of and is not aware of any fraudulent activity or any act(s) which would form the basis of a claim of fraudulent or illegal activity of Employer.

6. Confidentiality and Compliance .

Employee agrees that during the cour