Form of Issuance. The Committee may require, as a condition to receiving an Option Award, that the Participant enter into an Option Award Agreement, setting forth the terms and conditions of the Award. In lieu of an Option Award Agreement, the Committee may provide the terms and conditions of an Option Award in a notice to the Participant, in the resolution approving the Award, or in such other manner as it deems appropriate. Such terms and conditions shall include the Exercise Price, the duration of the Option, the number of Shares to which an Option pertains (unless otherwise provided by the Committee, each Option may be exercised to purchase one Share), and such other provisions as the Committee shall determine.

Form of Payment. Payment, if any, with respect to an SAR settled in accordance with Section 7.6 of the Plan shall be made in accordance with the terms of the applicable Award Agreement, in cash, Shares, or a combination thereof, as the Committee determines.

Form of Settlement. In its sole discretion, the Committee may provide that the Shares to be issued upon an Option’s exercise shall be in the form of Restricted Stock or other similar securities.

Form of Payment. On or around the Closing Date (as defined below), the Buyer shall pay the purchase price for the first tranche of the Note, which is equal to $34,000.00 (the “Purchase Price”) by wire transfer of immediately available funds, in accordance with the Company’s written wiring instructions, against delivery of the Note, and # the Company shall deliver such duly executed Note on behalf of the Company, to the Buyer. If the Buyer decides to pay, in their sole discretion, additional amounts (additional tranches) under the Note, as further described in the Note, then such additional amounts shall be paid in accordance with the Company’s written wiring instructions as well. The Company shall issue to Buyer on the Closing Date, as a commitment fee, 450,000 shares of its common stock.

Form of Distribution. The Participant may elect among the following forms of distribution.

Form of Payment. Each Actual Award will generally be paid in cash (or its equivalent) in a single lump sum.

Form 8-K. [[Organization C:Organization]] and [[Organization B:Organization]] agree that, prior to the opening of the NYSE MKT in New York City on the business day immediately after the date hereof, [[Organization C:Organization]] shall file a Current Report on Form 8-K with the Commission disclosing all material information regarding the Offering and including the Placement Agreement and a form of this Agreement as exhibits thereto. From and after the filing of such Current Report on Form 8-K, [[Organization C:Organization]] shall have publicly disclosed all material, non-public information delivered to any of the Investors by [[Organization C:Organization]] or any person acting on its behalf, including, without limitation, the Placement Agent, in connection with the transactions contemplated by this Agreement, the Placement Agreement and any other documents or agreements contemplated hereby or thereby. [[Organization C:Organization]] shall not identify the name of any [[Organization B:Organization]] or any affiliate of any investment adviser of such [[Organization B:Organization]] in any press release or public filing, or otherwise publicly disclose the name of any [[Organization B:Organization]] or any affiliate of investment adviser of such [[Organization B:Organization]], without such [[Organization B:Organization]]’s prior written consent, unless required by law or the rules and regulations of a national securities exchange, provided, however, that, if permitted by applicable law, regulation, legal or judicial process, promptly after becoming aware of any request or requirement to so disclose (a “Disclosure Requirement”), and in any event prior to any such disclosure, [[Organization C:Organization]] will provide such [[Organization B:Organization]] with notice of such request or requirement so that such [[Organization B:Organization]] may at its election seek a protective order or other appropriate remedy and [[Organization C:Organization]] will fully cooperate with such [[Organization B:Organization]]’s efforts to obtain the same; provided, further, however, if, absent the entry of such a protective order or other remedy, [[Organization C:Organization]] is compelled by applicable law, rule or regulation or a court order, subpoena, similar judicial process, regulatory agency or stock exchange rule to disclose such [[Organization B:Organization]]’s name, [[Organization C:Organization]] may disclose only that portion of such information that [[Organization C:Organization]] is so compelled to disclose and will use its reasonable efforts to obtain assurance that confidential treatment will be accorded to that portion of such information that is being disclosed. As of the date hereof, [[Organization C:Organization]] is not aware of any Disclosure Requirement.

I certify that if I transfer the stock purchased by this exercise I will not do so in a manner that violates Cortland Bancorp’s policy on insider trading.

Exercise Procedures. The form of Notice of Exercise included in the Warrants set forth the totality of the procedures required of the Purchasers in order to exercise the Warrants. No additional legal opinion, other information or instructions shall be required of the Purchasers to exercise their Warrants. Without limiting the preceding sentences, no ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise form be required in order to exercise the Warrants. The Company shall honor exercises of the Warrants and shall deliver Warrant Shares in accordance with the terms, conditions and time periods set forth in the Transaction Documents.

Exercise Price. The exercise price of an Option shall be determined by the Committee in its sole discretion and shall be set forth in the Award Agreement, provided that: