ALLIANCE FINANCIAL CORP /NY/
EXCESS BENEFIT PLAN
<DOCUMENT>
<TYPE>EX-10.13
<SEQUENCE>2
<FILENAME>d25118_ex10-13.txt
<DESCRIPTION>EXCESS BENEFIT PLAN
<TEXT>

                         FIRST NATIONAL BANK OF CORTLAND

                               EXCESS BENEFIT PLAN

                                       FOR

                                 DAVID R. ALVORD

     This sets forth the FIRST NATIONAL BANK OF CORTLAND EXCESS BENEFIT PLAN FOR
DAVID R. ALVORD (the "Plan"), established by FIRST NATIONAL BANK OF CORTLAND, a
banking organization organized under the laws of the State of New York, having
its principal place of business at 65 Main Street, Cortland, New York
("Employer"), for the benefit of DAVID R. ALVORD, residing at 781 Sleepy Hollow,
Cortland, New York ("Employee").

                                    RECITALS

     It is the intention of this Plan to create a reserve and fund for a benefit
for Employee in excess of the benefits payable under Employer's qualified
pension and profit sharing plans, and to pay Employee and his Beneficiaries the
benefit so calculated, all as provided herein.

     NOW, THEREFORE, effective January 1, 1991 ("Effective Date"), Employer
hereby establishes the FIRST NATIONAL BANK OF CORTLAND EXCESS BENEFIT PLAN FOR
DAVID R. ALVORD (the "Plan") for the exclusive benefit of Employee and his
beneficiaries, in accordance with the following terms and conditions:

                                    ARTICLE I

                                   DEFINITIONS

     As used in this Plan, the following terms shall have the following
meanings, unless a different meaning is stated and clearly indicated in the
context where the term is used:

    1.01 "Accumulation Fund" shall be the amount determined by crediting to a
bookkeeping account the amount in any year which Employer would have contributed
to its Pension Plan for Employee's benefit in accordance with the contribution
formula expressed therein, but for the limitation imposed under Code Section
401(a)(4) of the Code and the regulations thereunder. The crediting of any
deemed contribution to the Accumulation Fund for any year shall occur on the
last day of the Plan Year. Interest shall be credited at the end of each year by
multiplying the Appreciation Rate (described in Paragraph 1.02) for the Plan
Year by the balance in the Accumulation Fund as of the beginning of the Plan
Year.

     1.02 "Actuarial Assumptions" of the Plan are as follows:

<PAGE>

Mortality           (1)  Valuation - no mortality factor.

                    (2)  Post--retirement mortality determined by reference to
                         IAM--983 tables.

Discount Rate/      (1)  Present value (discount)factor of 8.0% per year.
Appreciation Rate
                    (2)  Future value (appreciation or interest) factor of 8.0%
                         per year.

                    (3)  Pre-retirement and post-retirement interest assumption
                         of 8.0% per year.

                    (4)  The Appreciation Rate to be applied in any Plan Year
                         for amounts credited to the Accumulation Fund shall be
                         the same rate of return as actually experienced under
                         Employer's Pension Plan for the same Plan Year.




Age                 (1)  Where age is a determining factor, it will be based on
                         the nearest birthday.

Determination Date  (1)  The determination date for each year shall be December
                         31.

Service             (1)  Service (for this Plan only) shall be deemed to
                         commence December 9, 1963.

                    Service shall be determined for full years of service only;
                    fractions of years will be disregarded.

Dates               (1)  Date of Birth-- 08/26/40

                    (2)  Date of Hire-- 12/09/63

                    (3)  Normal Retirement Date -09/01/2005.

Annual Benefit or        When the term "annual benefit" or "annual payment" is
                         used Annual Payment herein, it shall mean 12 months of
                         the actuarially determined monthly benefit or payment.

Reserve Calculation      The value of the Reserve, as of a particular Valuation
                         Date, shall be determined by calculating the actuarial
                         value of the amounts needed, as of such date, to fully
                         fund for a hypothetical straight life annuity payment
                         to Employee in the amount determined under this Plan,
                         such payment

<PAGE>

                         commencing as of the Early, Normal or Late Retirement
                         Date.

     1.03 "Average Base Compensation" shall mean the Employee's average Salary
for the thirty--six month period ending on the Determination Date coinciding
with or next following the date of separation from Service. For purposes of
determining Average Base Compensation, if Employee's effective separation from
Service occurs other than on December 31 of any Plan Year, his Salary for the
year of separation shall be calculated by annualizing for that year his Salary
through the date of separation.

     1.04 "Benefit" means Employee's annual benefit determined under the Plan
expressed in the form of an annuity payable during the life of Employee,
commencing at his Early, Normal or Late Retirement Date or the date of his
death, and paid in the manner set forth in Article VII.

     1.05 "Change of Authority of Employee" shall mean a change of duties and
responsibilities of Employee with the result that Employee has materially less
authority than would normally be attributable to the President, Chief Operating
Officer, and Chief Executive Officer of Employer as those duties,
responsibilities and authority have been historically performed and exercised by
the Chief Executive Officer of Employer.

     1.06 "Change of Control of Employer" shall mean any individual,
corporation, partnership, trust, association, pool, syndicate or any other form
of entity acquiring by sale or transfer, in one or more transactions, voting
shares or voting securities of Employer possessing at least 25% of the voting
power for the election of Directors. The acquisition of voting shares or voting
securities by any person or entity when issued in an exchange in connection with
an acquisition by Employer shall be taken into account in determining Change of
Control only if such voting shares or securities are issued in exchange for
voting shares or securities that would themselves be taken into account in
determining Change of Control.

     1.07 "Code" shall mean the Internal Revenue Code of 1986, as amended, and
any successor provision thereto.

     1.08 "Date of Hire" shall mean December 9, 1963.

     1.09 "Determination Date" shall mean December 31 of each Plan Year.

     1.10 "Early Retirement Date" shall be the first day of the month coinciding
with or next following the date on which Employee separates from Service with
Employer prior to Normal Retirement Date under any of the circumstances
described in Paragraph 5.02.

     1.11 "Effective Date" shall be January 1, 1991.

     1.12 "Employee" shall mean DAVID R. ALVORD.

     1.13 "Employer" shall mean FIRST NATIONAL BANK OF CORTLAND.

<PAGE>

     1.14 "401(k) Profit Sharing Plan" shall mean the Employer's profit sharing
plan qualified under Section 401(a) of the Code and containing a feature
allowing elective deferrals of compensation that is governed under Section
401(k) of the Code.

     1.15 "Investment Manager" shall mean the comptroller's office of Employer.

     1.16 "Late Retirement Date" shall mean the first day of the month
coinciding with or next following Employee's actual retirement date after his
Normal Retirement Date.

     1.17 "Normal Retirement Date" shall mean September 1, 2005.

     1.18 "Pension Plan" shall mean Employer's defined contribution pension plan
qualified under Code Section 401(a).

     1.19 "Plan" shall mean the excess benefit plan established by the Employer
as set forth in this document, and as hereafter amended.

     1.20 "Plan Year" initially means the period beginning with the Effective
Date and ending on December 31, 1991. Thereafter, the Plan Year shall mean the
twelve (12) month period beginning on January 1.

     1.21 "Primary Social Security Benefit" means the estimated annual amount
payable to Employee at the age at which he becomes eligible to receive unreduced
Social Security benefits under Title II of the Social Security Act, and
amendments thereto, determined as of the date Employee terminates employment or
attains his Normal Retirement Date, whichever occurs first. Employee's Primary
Social Security Benefit is determined by assuming that his Salary will continue
at the same rate until he reaches the age at which he becomes eligible to
receive unreduced Social Security benefits.

     1.22 "Reserve" shall mean, as of the Effective Date and as of any Valuation
Date thereafter, the actuarial value of the amounts needed as of such date
(using the Actuarial Assumptions for the Plan) to fully fund for a hypothetical
straight life annuity benefit to Employee providing the Benefit payable to
Employee under this Plan, such payment commencing as of the Early, Normal or
Late Retirement Date. The Reserve shall be calculated initially, and shall be
redetermined annually, assuming that Employee will retire at the Normal
Retirement Date.

     1.23 "Retirement Annuity" shall mean the hypothetical annual straight life
annuity payable to Employee until his death which, if it were to commence as of
the Early, Normal or Late Retirement Date (whichever is applicable), would
require (using the Actuarial Assumptions of the Plan), as of the Valuation Date,
a fund equal to the value of the Reserve in order for full funding of the
Retirement Annuity to be achieved by the applicable Retirement Date.

     1.24 "Retirement Date" shall mean the date Employee separates from service
with Employer on account of his Early, Normal or Late Retirement.

<PAGE>

     1.25 "Salary" shall mean Employee's W--2 wages for services rendered on
behalf of Employer during the Plan Year, or for periods prior to the Effective
Date of the Plan, the twelve month period corresponding to such Plan Year. Such
amount shall be increased or decreased by the following amounts:

          (a) There shall be added to Employee's W-2 wages the amount of
Employee's elective contributions for the Plan Year to the Employer's 401(k)
Profit Sharing Plan which contributions are otherwise excludable from Employee's
gross income under Code Section 402(a)(8).

          (b) There shall be subtracted from Employee's W-2 wages the amount of
any bonuses paid during the Plan Year pursuant to Employer's Executive Incentive
Compensation Plan, but not Employee's annual bonus as historically paid to
Employee.

          (c) Salary shall not include contributions made by Employer under the
Plan, payments made by Employer for group life insurance, hospitalization or
like benefits, nor contributions made by Employer under any other employee
benefit plan it maintains.

     1.26 "Service" means any period of time Employee is in the employ of
Employer. Employee shall be entitled to a credit for all Service after his Date
of Hire and continuing through the date of Employee's separation from Service
with Employer. Employee will be credited with full years of Service only.
Fractions of years will be disregarded,

     1.27 "Trust" shall mean the FIRST NATIONAL BANK OF CORTLAND EXCESS BENEFIT
TRUST FOR THE BENEFIT OF DAVID R. ALVORD.

     1.28 "Trustee" shall mean the currently acting Trustee of the Trust.

     1.29 "Valuation Date" shall mean any date on which an actuarial valuation
is to be made including, without limitation, each Determination Date, arid the
Early, Normal and Late Retirement Dates.

                                   ARTICLE II

                                 THE TRUST FUND

     2.01 Reserve Account. Employer shall establish an account (the "Reserve
Account") to which will be credited, as of the Effective Date", an amount equal
to the then value of the Reserve. The Reserve Account shall be restated as of
each subsequent Valuation Date to reflect the value of the Reserve as of such
date.

     2.02 Trust Fund. Employer shall establish a Trust Fund to receive the
contributions required under the Plan. The Trust Fund shall be managed by the
Investment Manager, and shall be held by the Trustee under the provisions of the
Trust.

<PAGE>

     2.03 Employer Contributions. Employer shall, as of the Effective Date,
contribute to the Trust liquid and marketable having a fair market value equal
to the then value of the Reserve. As of each subsequent Determination Date,
Employer shall calculate and contribute an additional contribution to the Trust
equal to the difference between the value of the hypothetical Retirement Annuity
as of the Determination Date and the balance in the Trust Fund.

     2.04 No Right To Trust Assets. The assets of the Trust Fund shall be held
separate and apart from other funds of Employer, and shall be used exclusively
for the uses and purposes set forth in this Plan. However, neither Employee, any
Beneficiary, nor the Plan shall have any preferred claim on, or any title to or
beneficial ownership interest in, any assets of the Trust Fund or Trust prior to
the time such assets are paid as Benefits under the Plan. All rights created
under the Plan and Trust shall be mere unsecured contractual rights of Employee
or his Beneficiary against Employer. The Plan is intended to constitute an
unfunded deferred compensation arrangement maintained by Employer for the
purpose of providing deferred compensation for a key executive of Employer, and
shall be construed accordingly.

                                   ARTICLE III

                                NORMAL RETIREMENT

     3.01 Normal Retirement Benefit. Employee shall be entitled to receive, if
he retires as of his Normal Retirement Date, a Normal Retirement Benefit in an
amount determined as follows:

          (a) An amount equal to eighty percent (80%) of Employee's Average Base
Compensation calculated as of his Normal Retirement Date, shall be determined.

          (b) The amount determined under subparagraph (a) above shall be
reduced by the sum of the following "Subtraction Entries":

               (i) An amount equal to the annual benefit to be provided Employee
by Employer's Pension Plan (other than amounts attributable to Employee's own
contribution to the Pension Plan), determined as of the Normal Retirement Date
and converted (if necessary) to its actuarial equivalent (using the Actuarial
Assumptions for this Plan) as a straight life annuity payable as an annual
benefit commencing as of his Normal Retirement Date;

               (ii) An amount equal to the annual benefit at Normal Retirement
Date to be provided Employee from the vested portion of Employee's account
balance in Employer's 401(k) Profit Sharing Plan that is attributable to all
Employer contributions other than Employee's elective contributions as described
in Code Section 402(a)(8). Such benefit shall be expressed in the form of a
straight life annuity (and calculated using the Actuarial Assumptions for this
Plan) payable during Employee's life and commencing as of his Normal Retirement
Date.

<PAGE>

               (iii) Beginning on the first day of the month coinciding with or
next following the date Employee becomes eligible for his (unreduced) Primary
Social Security Benefit, an amount equal to his Primary Social Security Benefit
expressed in the form of an actuarially equivalent single life annuity paying
annual benefits to Employee, or the pro rata portion thereof payable for the
balance of the calendar year in which the reduction under this Paragraph
3.0l(b)(iii) takes effect. No such reduction shall apply to any payment prior to
the date Employer becomes eligible for his (unreduced) Primary Social Security
Benefit.

          (c) There shall be added to the amount determined under subparagraph
(a), as reduced by the Subtraction Entries under subparagraph (b), an amount
equal to the annual benefit to be provided Employee by the Accumulation Fund,
determined as of the Normal Retirement Date and converted to its actuarial
equivalent (using the Actuarial Assumption for this Plan) as a straight life
annuity payable as an annual benefit commencing as of his Normal Retirement
Date. In no event shall Employee's Normal Retirement Benefit be less than the
annual benefit as determined under this subparagraph (c).

     3.02 Payment. Employee's Normal Retirement Benefit shall be paid in the
manner set forth in Article VII.

                                   ARTICLE IV

                                 LATE RETIREMENT

     4.01 Late Retirement Benefit. Employer and Employee may agree to continue
Employee's employment beyond the Normal Retirement Date. In such event, Employee
shall be entitled to receive, following his actual retirement, a Late Retirement
Benefit in an amount equal to the actuarial equivalent, as of his Late
Retirement Date, of Employee's Normal Retirement Benefit payable as of his
Normal Retirement Date, but in no event shall such annual Benefit exceed one
hundred percent (100%) of Employee's Average Base Compensation. The Late
Retirement Benefit shall be expressed in the form of a straight life annuity
payable in annual amounts commencing as of his Late Retirement Date, and shall
be paid in the manner set forth in Article VII.

                                    ARTICLE V

                                EARLY RETIREMENT

     5.01 Early Retirement Benefit. If he qualifies under Paragraph 5.02 and
separates from Service with the Employer, Employee shall be entitled to receive
an Early Retirement Benefit determined as follows:

          (a) An amount equal to eighty percent (80%) of Employee's Average Base
Compensation, calculated as of his Early Retirement Date, shall be determined.
This amount shall be multiplied by a fraction, the numerator of which is
Employee's total years of Service as of his Early Retirement Date, and the
denominator of which is the total years of Service

<PAGE>

Employee would have were he to continue in Service continuously through his
Normal Retirement Date, and converted to its actuarial equivalent straight life
annuity payable to Employee in equal annual amounts commencing as of the Early
Retirement Date.

          (b) The amount determined under subparagraph (a) above shall be
reduced by the sum of the following "Subtraction Entries":

               (i) An amount equal to the annual benefit to be provided by
Employer's Pension Plan (other than amounts attributable to Employee's own
contributions to the Pension Plan), determined as of Employee's Early Retirement
Date as if Employee were to retire on such date, and converted (if necessary) to
its actuarial equivalent straight life annuity (using the Actuarial Assumptions
for this Plan) payable to Employee in annual amounts commencing as of the Early
Retirement Date. If Employee's Early Retirement Date hereunder precedes the
earliest date on which retirement benefits may be paid to Employee under the
Pension Plan, there shall be no reduction under this Paragraph 5.0l(b)(i) in the
Early Retirement Benefit payable to Employee during the time period preceding
the payment of retirement benefits under the Pension Plan; however, upon
commencement of payment of retirement benefits under the Pension Plan, the Early
Retirement Benefit shall thereupon be recalculated and reduced for all future
years (but not retroactively) by taking into account the reduction under this
Paragraph 5.01(b)(i);

               (ii) An amount equal to the annual benefit at Early Retirement
Date that would be provided Employee from the vested portion of Employee's
account balance in Employer's 401(k) Profit Sharing Plan which is attributable
to all Employer contributions other than Employee's elective contributions as
described in Code Section 402(a)(8). Such benefit shall be expressed in the form
of a straight life annuity payable in annual amounts for the rest of employee's
life commencing as of his Early Retirement Date; and

                  (iii) Beginning on the first day of the month coinciding with
or next following the date Employee becomes eligible for his (unreduced) Primary
Social Security Benefit, an amount equal to his Primary Social Security Benefit
expressed as an actuarial equivalent single life annuity paying annual benefits
to Employee, or the pro rata portion thereof payable for the balance of the
calendar year in which the reduction under this Paragraph 5.0l(b)(iii) takes
effect. No reduction under this Paragraph 5O1(b)(iii) shall apply to any payment
prior to the date Employee becomes eligible for his (unreduced) Primary Social
Security Benefit.

          (c) There shall be added to the amount determined under subparagraph
(a), as reduced by the "Subtraction Entries" under subparagraph (b), an amount
equal to the annual benefit to be provided Employee by the Accumulation Fund,
determined as of the Early Retirement Date and converted to its actuarial
equivalent (using the Actuarial Assumptions for this Plan) as a single life
annuity payable as an annual benefit commencing as of his Early Retirement Date.
In no event shall Employee's Early Retirement Benefit be less than the annual
benefit as determined under this subparagraph (c).

     5.02 Early Retirement. Employee shall be entitled to an Early Retirement
Benefit if, prior to his Normal Retirement Date, he separates from Service:

<PAGE>

          (a) on his sixtieth (60th) birthday;

          (b) on account of a Change of Control of Employer;

          (c) on account of a Change of Authority of Employer;

          (d) by reason of Employee's suffering a disability, illness or injury
which, in the sole opinion of Employer's Board of Directors, prevents Employee
from fulfilling substantially all of his duties and responsibilities as
President and Chief Executive Officer of Employer (hereinafter, "Disability");
or

          (e) by action of Employer's Board of Directors other than "for cause".
For purposes of this Plan, "for cause" shall mean termination by a majority vote
of Employer's Board of Directors upon its determination that Employee has
committed a fraud against or embezzled from Employer or is guilty of gross
negligence that has resulted in irreparable harm to Employer. Pending Employer's
final determination, all payments schedule to be paid Employee hereunder shall
be held by the Trustee in escrow.

     5.03 Payment. The Early Retirement Benefit shall be paid in the manner set
forth in Article VII.

                                   ARTICLE VI

                                  DEATH BENEFIT

     6.01 Pre-Retirement Death Benefit. Upon the death of Employee while in the
employ of Employer, or during an authorized leave of absence, Employee's
surviving spouse shall be entitled to receive a pre--retirement death Benefit in
an amount equal to the survivor annuity portion of the Early, Normal or Late
Retirement Benefit which Employee would have been entitled to receive had
Employee separated from Service as of the date immediately preceding the date of
his death and had begun to receive his Benefit in the form of a joint and 100%
survivor annuity payable to Employee and his spouse commencing on the date of
his death. If Employee's death occurs prior to the date he is otherwise eligible
for an Early Retirement Benefit hereunder, it shall be assumed for purposes of
this Article VI that Employee had met the requirements for receipt of his Early
Retirement Benefit, and his date of death shall be considered his Early
Retirement Date. If Employee is not married as of the date of his death, no
Benefit shall be paid under this Article.

     6.02 Payment. The death Benefit under this Article shall be paid in equal
monthly amounts equal to one-twelfth (1/12th) of the annual Benefit, commencing
within thirty (30) days following Employee's death and ending immediately upon
the spouse's death.

<PAGE>

                                   ARTICLE VII

                               PAYMENT OF BENEFIT

     7.01 Normal Form of Payment.

          (a) If Employee is not married at his Early, Normal or Late Retirement
Date, the normal form for payment of his retirement Benefit shall be a single
life annuity providing for equal monthly payments equal to one-twelfth (1/12th)
of the annual retirement Benefit, with payments ceasing upon Employee's death.

          (b) If Employee is married at his Early, Normal or Late Retirement
Date, the normal form of 1-its retirement Benefit shall be a joint and 100%
survivor annuity that provides the same annual amount to Employee and, following
his death, his surviving spouse as the annual amount that would be payable to
Employee in accordance with subparagraph (a) were Employee not married, Such
annuity shall provide monthly payments to Employee for the rest of his life and,
if Employee's spouse survives him, monthly payments to his spouse thereafter for
the rest of her life equal to one hundred percent (3.00%) of the amount of the
monthly benefit paid to Employee.

     7.02 Deferral of Benefit. Employee shall have the option to defer receipt
of any part or all of his Benefit following his Retirement Date by an election
made in writing anytime prior to January 1 of the year in which the first
installment of the Benefit would otherwise be paid. The election shall state the
specific date on which payment of the deferred Benefit will commence and whether
death prior to such date will cause the deferred Benefit to earlier commence.
The deferred payments shall accrue interest until paid, such interest to be
calculated annually and credited during the year by applying the rate for
1--Year U.S. Treasury Notes as published in the Wall Street Journal as of
December 31 of the preceding year.

     7.03 Acceleration of Deferred Payments. In the discretion of Employer, but
only with Employee's or his Beneficiary's consent, the payment of any remaining
Benefits to Employee or his Beneficiary as a deferred payment may be
accelerated, or the unpaid balance of such Benefits may be distributed to
Employee or his Beneficiary in a lump sum.

     7.04 Commencement of Payment. Employer shall commence distribution of
Employee's Benefit not later than thirty (30) days after the applicable
Retirement Date.

     7.05 Forfeiture.

          (a) Notwithstanding anything herein to the contrary, no benefit (other
than the benefit described in subparagraph (b) below) shall be paid to Employee
or his spouse, and Employee shall forfeit, for himself and his spouse, all right
to receive benefits hereunder, if Employee's employment with Employer is
terminated by Employee prior to his sixtieth (60th) birthday other than by
reason of a Change in Control of Employer or Change in Authority of

<PAGE>

Employee or Disability, or if Employee's termination is by Employer "for cause"
as defined in Paragraph 5.02.

          (b) Notwithstanding the provisions of subparagraph (a), the benefit
derived from the Accumulation Fund as determined under Paragraphs 3.01(c) or
5.01(c), whichever applies, shall be payable to Employee following his severance
from Service for whatever reason.

                                  ARTICLE VIII

                            ADMINISTRATIVE PROVISIONS

     8.01 Payments to Persons Other Than Employee. If the Employer shall find
that any person to whom any amount is payable under the Plan is unable to care
for his affairs because of illness or accident, or is a minor, or has died, then
any payment due him or his estate (unless a prior claim therefor has been made
by a duly appointed legal representative), may, if Employer so determines, be
paid to his spouse, a child, a relative, an institution maintaining or having
custody of such person, or any other person deemed by Employer to be a proper
recipient on behalf of such person otherwise entitled to payment. Any such
payment shall be a complete discharge of the liability of Employer therefor.

     8.02 No Alienation of Benefits. Except insofar as may otherwise be required
by law, no amount payable at any time under the Plan shall be subject in any
manner to alienation by anticipation, sale, transfer, assignment, bankruptcy,
pledge, attachment, charge, or encumbrance of any kind, nor in any manner be
subject to the debts or liabilities of any person, and any attempt to so
alienate or subject any such amount, whether presently or thereafter payable,
shall be void. If any person shall attempt to, or shall alienate, sell transfer,
assign, pledge, attach, charge or otherwise encumber any amount payable under
the Plan, or any part thereof, or if by reason of his bankruptcy or other event
happening at any such time such amount would be made subject to his debts or
liabilities or would otherwise not be enjoyed by him, then Employer, if it so
selects, may direct that such amount be withheld and that the same or any part
thereof be paid or applied to or for the benefit of such person, his spouse,
children or other dependents, or any of them in such manner and proportion as
Employer may deem proper.

     8.03 Employment Status. Nothing contained in this Plan shall be construed
to give Employee the right to be retained as an Employee of Employer or to
impair the right of Employer to terminate the services of Employee.

     8.04 Administration Expense. The entire expense of administering this Plan
shall be borne by Employer and shall not be charged against the Trust Fund.

     8.05 Withholding. Employer shall be entitled to reduce any payment pursuant
to this Plan by an amount which Employer deems reasonably required to comply
with any federal or state withholding requirements.

<PAGE>

     8.06 Successors. The Plan shall be binding upon all persons entitled to
benefits under the Plan, their respective heirs and legal representatives, upon
the Employer, its successors and assigns, and upon the Trustee, and its
successors.

     8.07 Administration. The Plan shall be administered by Employer, which may
appoint or employ any agents it deems advisable to assist Employer in
interpreting and administering the Plan. Employer, as Plan administrator, shall
make all determinations as to Employee's right to benefits hereunder, and shall
have complete discretion in making all decisions with respect to the Plan. All
such decisions shall be final and bind all parties.

     8.08 Claims Procedure. Employer shall provide adequate notice in writing to
any Employee or to any Beneficiary ("Claimant") whose claim for benefits under
the Plan has been denied. Employer's notice to the Claimant shall set forth:

          (a) The specific reason for the denial;

          (b) Specific references to pertinent Plan provisions on which Employer
based its denial;

          (c) A description of any additional material and information needed
for the Claimant to perfect his claim and an explanation of why the material or
information is needed; and

          (d) That any appeal the Claimant wishes to make of the adverse
determination must be in writing to Employer within 75 days after receipt of
Employer's notice of denial of benefits. The notice must further advise the
Claimant that his failure to appeal the action to Employer in writing within the
75 day period will render Employer's determination final, binding and
conclusive.

          If the Claimant should appeal to Employer, he, or his duly authorized
representative, may submit, in writing, whatever issues and comments he, or his
duly authorized representative, feels are pertinent. The Claimant, or his duly
authorized representative, may review pertinent Plan documents. Employer shall
re-examine all facts related to the appeal and make a final determination as to
whether the denial of benefits is justified under the circumstances. Employer
shall advise the Claimant of its decision within 60 days of the Claimant's
written request for review, unless special circumstances (such as a hearing)
would make the rendering of a decision within the 60 day limit infeasible, but
in no event shall Employer render a decision respecting a denial of a claim for
benefits later than 120 days after its receipt of a request for review. If any
dispute remains after Employer renders its decision following review, such
dispute shall be settled by arbitration, conducted in Syracuse, New York, in
accordance with the rules of the American Arbitration Association, and Employer
and Employee shall be bound by any award or decision made by the arbitrators

     8.09 Construction and Interpretation. This Plan shall be construed in
accordance with arid governed by the laws of the State of New York, except to
the extent superseded by Federal law. If any provision of the Plan shall be held
illegal or invalid for any reason, such

<PAGE>

determination shall not affect the remaining provisions of the Plan, and it
shall be construed as if said illegal or invalid provision had never been
included.

      8.10 Amendments. No amendment of any of the provisions of this Plan shall
be effective unless in writing signed by both Employer and Employee.

          IN WITNESS WHEREOF, this Plan has been executed this 31st day of
December, 1991.


                                    FIRST NATIONAL BANK OF CORTLAND


                                    By: /s/ William H. Schiller, VP
                                        ----------------------------

                                    Attest:  /s/ James H. Sarvay
                                             -------------------
                                             Secretary

Agreed to this 31st day of
December, 1991.


/s/ David R. Alvord
-------------------
David R. Alvord, Employee

<PAGE>

                                 FIRST AMENDMENT
                                       to
                         FIRST NATIONAL BANK OF CORTLAND
                               EXCESS BENEFIT PLAN
                                       for
                                 DAVID R. ALVORD

     This sets forth an Amendment to the First national Bank of Cortland Excess
Benefit Plan for David R. Alvord (the "Plan") established by the FIRST NATIONAL
BANK OF CORTLAND ("Employer") on 6/25/92.

                                    RECITALS

     Employer desires to amend the Plan to provide Employer the right to
purchase life insurance on Employee's life, and to provide an optional form for
payment of retirement benefits provided under the Plan, all as provided herein.

     NOW, THEREFORE, the Plan is amended as follows;

     1. New Paragraph 2.05 is added to the Plan to read as follows:

          2.05 Life Insurance. The Employer may, but shall have no obligation to
purchase life insurance on the life of Employee to assist Employer in paying all
benefits hereunder. The Employer shall be the sole owner and beneficiary of any
such policy. The Employer's right under this Paragraph shall be separate and
apart from the Trustee's right to purchase life insurance as an asset of the
Trust Fund, and any policy purchased under the authority of this Paragraph shall
not be considered an asset of the Trust Fund nor subject to any trust for the
benefit of Employee or his Beneficiaries.

     2. New Paragraph 7.06 is added to the Plan to read as follows:

          7.06 Optional Forms of Benefit. At the time the Employee elects to
retire and receive his retirement Benefit hereunder, the Employee may elect to
receive his Benefit in either of the following optional forms, provided,
however, that the Employer's Board of Directors consents to such election prior
to payment:

               (i) an actuarial equivalent lump sum, determined using this
Plan's Actuarial Assumptions;

               (ii) one hundred twenty (120) equal monthly installment payments
of the lump sum actuarial equivalent amount determined under subparagraph (i)
above, plus interest on the unpaid balance computed at an annual rate each year
equal to the rate in effect on January 1 of such year for one-year U.S. Treasury
Notes.

<PAGE>

     If the Employee should die prior to his receipt of all such installment
payments, the balance of such payments shall be paid to his surviving spouse,
and on the death of the survivor of the Employee and his spouse, to the estate
of the survivor.

     IN WITNESS WHEREOF, this Amendment has been executed this 25th day of June,
1992.


                                    FIRST NATIONAL BANK OF CORTLAND


                                    By: /s/ David R. Alvord, President
                                        ------------------------------

                                    Attest:  /s/ James H. Sarvay
                                             -------------------
                                                  Secretary


Agreed to this 25th day of June, 1992.


/s/ David R. Alvord
-------------------
David R. Alvord, Employee

<PAGE>

                                SECOND AMENDMENT
                                       to
                         FIRST NATIONAL BANK OP CORTLAND
                               EXCESS BENEFIT PLAN
                                       for
                                 DAVID R. ALVORD

     This sets forth an Amendment, effective January 1, 1994, to the First
National Bank of Cortland Excess Benefit Plan for David R. Alvord (the "Plan")
established by the FIRST NATIONAL BANK OF CORTLAND ("Employer").

                                    RECITALS

     Employer desires to amend the Plan to provide no actuarial reduction in
Employee's benefit for early retirement under certain circumstances, all as
provided herein and in Employee's Employment Agreement.

     NOW, THEREFORE, the Plan is amended as follows:

     1. Paragraph 5.01 is amended by adding the following new subparagraph (d)
thereto:

          (d) Notwithstanding the foregoing provisions of subparagraphs (a)
through (c) above, the actuarial reductions otherwise required under such
subparagraphs to reflect commencement of payments before Employee's Normal
Retirement Date shall not be made if Employee has not attained at least age
sixty-five (65) (i) at the expiration of the term of Employee's Employment
Agreement effective January 1, 1994, ("Agreement") pursuant to Section 4(a)
thereof, or pursuant to Section 4(c) thereof if the Agreement is extended, or
(ii) at the time the Agreement is terminated pursuant to Section 4(b) (i) (B)
(disability), Section 4(b) (i) (C) (without cause), Section 4(b)(ii) (at
Employee's option), or Section 4(b)(iii) (Employee's death) thereof .

          IN WITNESS WHEREOF, the Employer, by its duly authorized officer, has
executed this Amendment this 30th day of March, 1994.


                                    FIRST NATIONAL BANK OF CORTLAND


                                    By: /s/ Bob Derksen, Vice President and CFO
                                        ---------------------------------------


Agreed to this 30th day of March, 1994.


/s/ David R. Alvord
-------------------
David R. Alvord, Employee

<PAGE>

                                 THIRD AMENDMENT
                                       to
                         FIRST NATIONAL BANK OF CORTLAND
                               EXCESS BENEFIT PLAN
                                       for
                                 DAVID R. ALVORD

     This sets forth an Amendment, effective January 1, 1995, to the First
National Bank of Cortland Excess Benefit Plan for David R. Alvord (the "Plan')
established by the FIRST NATIONAL BANK OF CORTLAND ("Employer").

                                    RECITALS

     Employer desires to amend the Plan to provide no actuarial reduction in
Employee's benefit for early retirement under certain circumstances, all as
provided herein and in Employee's Employment Agreement.

     NOW, THEREFORE, the Plan is amended as follows;

     1. Paragraph 5.01(d) is amended to read as follows:

          (d) Notwithstanding the foregoing provisions of subparagraphs (a)
through (c) above, if Employee has not attained at least age sixty-five

          (i) at the expiration of the term of Employee's Employment Agreement
effective January 1, 1994, ("Agreement") pursuant to Section 4(a) thereof, or
pursuant to Section 4(c) thereof if the Agreement is extended, or

          (ii) at the time the Agreement is terminated pursuant to Section
4(b)(i)(B) (disability), Section 4(b)(i)(C) (without cause), Section 4(b)(ii)
(at Employee's option), or Section 4(b)(iii) (Employee's death) thereof,

the fraction referenced in the second sentence of subparagraph (a) shall be
deemed "1", and the actuarial reductions otherwise required under such
subparagraphs to reflect commencement of payments before Employee's Normal
Retirement Date shall not be made.

<PAGE>

     IN WITNESS WHEREOF, the Employer, by its duly authorized officer, has
executed this Amendment this 1st day of March, 1995.


                                    FIRST NATIONAL BANK OF CORTLAND


                                    By: /s/ Bob Derksen
                                       ----------------


Agreed to this 1st day of March, 1995.


/s/ David R. Alvord
-------------------
David R. Alvord, Employee

<PAGE>

                                    AGREEMENT

     This sets out an Agreement dated the 20th day of December, 2000, by and
among ALLIANCE BANK, NA., a banking organization organized under the laws of the
State of New York ("Bank"), ALLIANCE FINANCIAL CORPORATION, a New York
corporation and registered bank holding company ("Corporation"), both having
offices located in Cortland, New York (the Corporation and the Bank are referred
to collectively herein as "Employer") and DAVID R. ALVORD, who resides at 4034
Highland Road, Cortland, New York ("Employee").

                                    RECITALS

     A. THE FIRST NATIONAL BANK OF CORTLAND, a predecessor to the Bank ("FNB"),
established a certain supplemental retirement plan for the benefit of Employee,
effective January 1, 1991 (the "Plan").

     B. Pursuant to the terms of Employee's employment agreement with the
Employer executed in conjunction with the reorganization of FNB ("Employment
Agreement")7 the Plan has remained in effect at all times following such
reorganization.

     C. Under the terms of the Plan, Employee is entitled to receive an annual
retirement benefit beginning immediately upon his retirement from service after
attaining age 65 (his "Normal Retirement Age") or upon attaining age 60 (his
"Early Retirement Age").

     D. Employee has attained his Early Retirement Age.

     E. Under the terms of the Plan, the Employer has contributed to a trust
fund maintained for the exclusive purpose of providing Employee's annual
retirement benefit under the Plan ("Trust Fund").

     F. The Employer desires that Employee continue his employment with the
Employer and not terminate his employment pursuant to the early retirement
provisions of the Plan.

     G. Employee has agreed not to exercise as yet his right to terminate
employment pursuant to the early retirement provisions of the Plan, provided
certain modifications are made to the Plan, including provisions involving the
Trust Fund, and Employer has agreed to such modifications.

     H. The parties now desire to set their agreement to writing.

<PAGE>

                                      TERMS

     NOW, THEREFORE, in consideration of the above premises, the covenants and
agreements set out in this Agreement, and other good and valuable consideration
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:

     2. Early Retirement Preserved. Employee acknowledges his decision not to
retire yet from service with the Employer; however, Employee shall retain the
right under his Employment Agreement to terminate his employment upon sixty (60)
days prior written notice, in which case Employee shall be entitled to receive:

          (a) if termination is effective prior to September 1, 2005, an Early
Retirement Benefit unless termination is "for cause" as defined in Paragraph
5.02(a) of the Plan; or

          (b) if termination is effective on September 1, 2005, the Normal
Retirement Benefit; or

          (c) if termination is effective any time after September 1. 2005, a
Late Retirement Benefit;

          each of which shall be calculated under the terms of the Plan as
modified by this Agreement.

     3. Floor Annual Benefit. Notwithstanding anything in the Plan to the
contrary, upon his ultimate retirement from service with the Employer and
regardless of when such retirement may occur, Employee shall be entitled to an
annual retirement benefit that is not less than the annual benefit that has
accrued under the Plan calculated as of December 31, 2000. Without limiting the
generality of the foregoing, the sum of the Subtraction Entries (as defined in
the Plan) shall not be greater than their sum as of December 31, 2000.

     4. Floor Lump Sum Benefit. Notwithstanding anything in the Plan to the
contrary, the single sum present value of Employee's annual retirement benefit
to which Employee may be entitled, should he elect a lump sum payment of his
benefit, shall not be less than the single sum present value of his early
retirement benefit calculated as of December 31, 2000.

     5. Effect of Growth of Trust Fund Assets. Notwithstanding anything in the
Plan to the contrary, if as of the date of Employee's retirement the aggregate
fair market value of all assets in the Trust Fund exceeds the single sum present
value of Employee's retirement benefit calculated as of the date of his
retirement, the following shall apply:

          (a) If Employee elects to receive a lump sum amount in lieu of an
annual retirement benefit, Employee shall be entitled to receive, in lieu of the
single sum present value of his retirement benefit, an amount equal to the
aggregate fair market value of the Trust Fund assets; and

<PAGE>

          (b) If Employee elects to receive an annual retirement benefit under
the Plan, Employee shall be entitled to such amount of annual retirement benefit
as may be purchased by an amount equal to the aggregate fair market value of the
assets in the Trust Fund as of the date of Employee's retirement.

     6. Medical Insurance. Notwithstanding the terms of his Employment Agreement
Employer shall continue to provide to Employee and to Employee's spouse health
insurance at all times following Employee's termination of service with Employer
provided that termination is not for "cause" as defined in Paragraph 5(e) of his
Employment Agreement. Such health insurance shall be identical in coverage,
deductibles, limits, ceilings and all other material respects as the insurance
being provided to Employee's successors as Employer's Chief Executive Office or
Co-Chief Executive Officer, but in no event shall such benefits be less than
those provided to Employee as of December 31,2000.

     7. Agreement's Effect. Except as modified by the terms of this Agreement,
the Plan and the Employment Agreement shall remain in full force and effect.

     8. Governing Law. This Agreement shall be construed and governed in
accordance with the laws of the State of New York, except to the extent
superceded by federal law.

     9. Binding Effect. This Agreement shall be binding on and shall inure to
the benefit of any successor of the Employer

     10. Amendment; Termination. This Agreement cannot be amended, modified or
terminated except by a subsequent written agreement entered into by the parties
hereto.

     The parties have executed this Agreement the day and year first above
written.


                                          ALLIANCE BANK, N.A.

                                          By: /s/ Donald S. Ames
                                              ------------------
                                              Chairman, Compensation Committee


                                          ALLIANCE FINANCIAL CORPORATION

                                          By: /s/ Donald S. Ames
                                              ------------------
                                              Chairman, Compensation Committee


                                          /s/ David R. Alvord
                                          -------------------
                                          David R. Alvord
</TEXT>
</DOCUMENT>
