Document:

GUARANTY AGREEMENT

 Exhibit 10.3 
 GUARANTY AGREEMENT 
 THIS GUARANTY AGREEMENT (this
“Guaranty”) is made effective as of October 1, 2012, by GLADSTONE COMMERCIAL CORPORATION, a Maryland corporation, whose address is 1521 Westbranch Drive, Suite 200, McLean, Virginia 22102 (“Guarantor”)
in favor of KEYBANK NATIONAL ASSOCIATION, a national banking association, having a place of business at 11501 Outlook, Suite 300, Overland Park, Kansas 66211, its successors and assigns (“Lender”). 

Recitals 

The following recitals are a material part of this instrument: 
 A. Lender is making a loan in the principal sum of $34,000,000.00 (the “Loan”) to NH10 CUMMING GA LLC, a Delaware limited liability company (“Cumming”), D08
MARIETTA OH LLC, a Delaware limited liability company (“Marietta”), MPI06 MASON OH LLC, a Delaware limited liability company (“Mason”), SRFF08 READING PA, L.P., a Delaware limited partnership
(“Reading”), RPT08 PINEVILLE NC, L.P., a Delaware limited partnership (“Pineville”), IPA12 ASHBURN VA SPE LLC, a Delaware limited liability company (“Ashburn”), and FTCHI07 GRAND
RAPIDS MI LLC, a Delaware limited liability company (“Grand Rapids”) (Cumming, Marietta, Mason, Reading, Pineville, Ashburn and Grand Rapids are hereinafter referred to individually, collectively, jointly and severally, as the
“Borrower”), on or about the date of this Guaranty. Guarantor has a significant financial interest in Lender’s making of the Loan to Borrower, and will realize significant financial benefit from the Loan. The Loan is evidenced
by a Loan Agreement of even date herewith between Borrower and Lender (the “Loan Agreement”) and a Promissory Note (the “Note”) of even date herewith in the principal amount of the Loan from Borrower to Lender and
is secured in part by one or more mortgages/deeds of trust, assignments of leases and rents, security agreements and fixture filings, dated as of the date hereof (as the same may hereafter be amended, restated, replaced, supplemented, renewed,
extended or otherwise modified from time to time, individually and collectively, the “Security Instrument”) encumbering Borrower’s interest in certain properties at the following addresses: (i) 28305 State Route 7,
Marietta, Ohio; (ii) 10021 Rodney Street, Pineville, North Carolina; (iii) 425 Gateway Drive (also known as 466 Tulpehocken Street), Reading, Pennsylvania; (iv) 44426 Atwater Drive, Ashburn, Virginia; (v) 1055 Haw Creek Parkway,
Cumming, Georgia; (vi) 1515 Arboretum Drive, SE (also known as 5420 Cascade Road, SE), Grand Rapids, Michigan; and (vii) 4690 Parkway Drive, Mason, Ohio (the real estate, together with all improvements thereon and personal property
associated therewith, is hereinafter collectively called the “Property”). The Loan Agreement, Note, Security Instrument, and all other documents and instruments existing now or after the date hereof that evidence, secure or
otherwise relate to the Loan, including this Guaranty, any assignments of leases and rents, other assignments, security agreements, financing statements, other guaranties, indemnity agreements (including environmental indemnity agreements), letters
of credit, or escrow/holdback or similar agreements or arrangements, together with all 

 
amendments, modifications, substitutions or replacements thereof, are sometimes herein collectively referred to as the “Loan Documents” or individually as a “Loan
Document.” The Loan Documents are hereby incorporated by this reference as if fully set forth in this Guaranty. 
 B.
Lender has required that Guarantor guaranty to Lender the payment of the Liabilities (as such term is defined in Section 2.1 hereof). 
 C. Lender is unwilling to make the Loan to Borrower absent this Guaranty. 

Agreement 

In consideration of Lender’s agreement to make the Loan to Borrower and other good and valuable consideration, the receipt and legal
sufficiency of which is hereby acknowledged, Guarantor hereby states and agrees as follows: 
 1. Request to Make Loan.
Guarantor hereby requests that Lender make the Loan to Borrower and that Lender extend credit and give financial accommodations to Borrower, as Borrower may desire and as Lender may grant, from time to time, whether to the Borrower alone or to the
Borrower and others, and specifically to make the Loan described in the Loan Documents. 
 2. Guaranty of Liabilities.

 2.1 Guarantor hereby absolutely and unconditionally guarantees full and punctual payment and performance when due of the
following (collectively, the “Liabilities”): 
 (a) all amounts that shall become due and owing
to Lender at any time by virtue of or arising out of any of the acts, omissions, circumstances or conditions included in any of the Nonrecourse Carve-Outs (as hereinafter defined), including all renewals or extensions of any amount owing or
obligation under the Nonrecourse Carve-Outs, all liability under the Nonrecourse Carve-Outs whether arising under the original Loan or any extension, modification, future advance, increase, amendment or modification thereof, interest due on amounts
owing under the Nonrecourse Carve-Outs at the Default Rate specified in the Note, all expenses, including attorneys’ fees, incurred by Lender in connection with the enforcement of any of Lender’s rights under this Guaranty and all
Administration and Enforcement Expenses (as hereinafter defined), to the extent the same relate to amounts or obligations owing under the Nonrecourse Carve-Outs (the foregoing are sometimes hereinafter collectively referred to as the
“Nonrecourse Carve-Out Liabilities”). As used herein, the term “Nonrecourse Carve Outs” means any loss, damage, cost, expense or liability incurred by Lender (including attorneys’ fees and expenses and other
collection and litigation expenses) arising out of or in connection with any of the following: 
 (i) fraud or
willful misrepresentation by Borrower or any of its affiliates, Principal (as defined in the Loan Agreement) or Guarantor or any agent, employee or other person with actual or apparent authority to make statements or representations on behalf of
Borrower, any affiliate of Borrower, Principal or Guarantor in connection with the Loan (“apparent authority” meaning such authority as the principal knowingly or negligently permits the agent to assume, or which he holds the agent out as
possessing); 

  
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 (ii) the gross negligence or willful misconduct of Borrower, Principal or
Guarantor, or any affiliate, agent, or employee of the foregoing; 
 (iii) material physical waste of the
Property (or any portion thereof); 
 (iv) the removal or disposal of any portion of the Property in violation
of the terms of the Loan Documents; 
 (v) the misapplication, misappropriation, or conversion by Borrower, any
of its affiliates, Principal or Guarantor of (A) any Insurance Proceeds (as defined in the Loan Agreement) paid by reason of any loss, damage or destruction to the Property (or any portion thereof), (B) any Awards (as defined in the Loan
Agreement) received in connection with a Condemnation (as defined in the Loan Agreement) of all or a portion of the Property, (C) any Rents (as defined in the Loan Agreement) or other Property income or collateral proceeds, or (D) any
Rents paid more than one month in advance (including, but not limited to, security deposits); 
 (vi) following
the occurrence of an Event of Default (as defined in the Loan Agreement), the failure to either apply rents or other Property income, whether collected before or after such Event of Default, to the ordinary, customary, and necessary expenses of
operating the Property or, upon demand, to deliver such rents or other Property income to Lender; 
 (vii)
failure to maintain insurance or to pay taxes and assessments, or to pay charges for labor or materials or other charges or judgments that can create Liens (as defined in the Loan Agreement) on any portion of the Property (unless Lender is escrowing
funds therefor and fails to make such payments or has taken possession of the Property following an Event of Default, has received all Rents from the Property applicable to the period for which such insurance, taxes or other items are due, and
thereafter fails to make such payments); 
 (viii) any security deposits, advance deposits or any other deposits
collected with respect to the Property (or any portion thereof) which are not delivered to Lender upon a foreclosure of the Property (or any portion thereof) or action in lieu thereof, except to the extent any such security deposits were applied in
accordance with the terms and conditions of any of the Leases prior to the occurrence of the Event of Default that gave rise to such foreclosure or action in lieu thereof; 

(ix) the breach of the representation by Borrower that on the Closing Date (as defined in the Loan Agreement), the
Property and all Improvements (as defined in the Loan Agreement) at the Property were in material compliance with applicable laws; or 

  
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 (x) any failure by Borrower to comply with any of the representations,
warranties, or covenants set forth in Sections 4.1.37 or 5.1.19 of the Loan Agreement. 
 (b) (i) all
payments due under the Note, including the repayment of all additional advances of any kind that may be made by Lender to Borrower, whether at stated maturity, by acceleration or otherwise, (ii) any and all renewals or extensions of any such
item of indebtedness or obligation or any part thereof; (iii) all obligations and indebtedness of any kind or nature arising under any of the Loan Documents; (iv) any future advances that may be made by Lender related to the Loan or the
Property, whether made to protect the security or otherwise, and whether or not evidenced by additional promissory notes or other evidences of indebtedness; (v) all interest due on all of the same; (vi) all expenses, including
attorney’s fees, incurred by Lender in connection with the enforcement of Lender’s rights under this Guaranty and all Administration and Enforcement Expenses. PROVIDED HOWEVER, notwithstanding anything herein to the contrary, Lender shall
not demand payment or commence any action to enforce Guarantor’s liability under this Section 2.1(b) (but in no event shall this provision apply to, or limit, restrict, or prohibit any demand by Lender or action to enforce
Guarantor’s liability under Section 2.1(a) hereof, notwithstanding that obligations under said Section 2.1(a) may be included in obligations under this Section 2.1(b)) unless and until (A) Borrower fails
to obtain Lender’s prior written consent to any Transfer as required by the Loan Agreement or the Security Instrument; (B) Borrower fails to obtain Lender’s prior written consent to any Indebtedness (as defined in the Loan Agreement)
or voluntary Lien encumbering the Property (or any portion thereof); (C) Borrower shall at any time hereafter make an assignment for the benefit of its creditors; (D) Borrower fails to permit on-site inspections of any Individual Property,
fails to maintain its status as a Special Purpose Entity (as defined in the Loan Agreement) or comply with any representation, warranty or covenant set forth in Section 4.1.30 of the Loan Agreement or fails to appoint a new property
manager upon the request of Lender as permitted under the Loan Agreement, each as required by, and in accordance with, the terms and provisions of the Loan Agreement or the Security Instrument; (E) Borrower or any Principal admits, in writing
or in any legal proceeding, its insolvency or inability to pay its debts as they become due; (F) Borrower fails to make the first full monthly payment of principal and interest on or before the first Payment Date (as defined in the Note);
(G) Borrower files, consents to, or acquiesces in a petition for bankruptcy, insolvency, dissolution or liquidation under the Bankruptcy Code or any other Federal or State bankruptcy or insolvency law, or there is a filing of an involuntary
petition against Borrower or any Principal under the Bankruptcy Code or any other Federal or state bankruptcy or insolvency law in which Borrower or Guarantor or any Principal colludes with, or otherwise assists any party in connection with such
filing, or solicits or causes to be solicited petitioning creditors for any involuntary petition against Borrower or such Principal from any party; or (H) the Property or any part thereof shall at any time hereafter become property of the
estate or an asset in (1) a voluntary bankruptcy, insolvency, receivership, liquidation, winding up, or other similar type of proceeding, or (2) an involuntary bankruptcy or insolvency proceeding (other than one filed by Lender) that is
not dismissed within sixty (60) days of filing. 

  
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 2.2 Upon the request of Lender, Guarantor shall immediately pay or perform the Liabilities
when they or any of them become due or are to be paid or performed under the term of any of the Loan Documents. Any amounts received by Lender from any sources and applied by Lender towards the payment of the Liabilities shall be applied in such
order of application as Lender may from time to time elect. All Liabilities shall conclusively be presumed to have been created, extended, contracted, or incurred by Lender in reliance upon this Guaranty and all dealings between Borrower and Lender
shall likewise be presumed to be in reliance upon this Guaranty. 
 2.3 For the purpose of this Guaranty,
“Administration and Enforcement Expenses” shall mean all fees and expenses incurred at any time or from time to time by Lender, including legal (whether for the purpose of advice, negotiation, documentation, defense, enforcement or
otherwise), accounting, financial advisory, auditing, rating agency, appraisal, valuation, title or title insurance, engineering, environmental, collection agency, or other expert or consulting or similar services, in connection with: (a) the
origination of the Loan, including the negotiation and preparation of the Loan Documents and any amendments or modifications of the Loan or the Loan Documents, whether or not consummated; (b) the administration, servicing or enforcement of the
Loan or the Loan Documents, including any request for interpretation or modification of the Loan Documents or any matter related to the Loan or the servicing thereof (which shall include the consideration of any requests for consents, waivers,
modifications, approvals, lease reviews or similar matters and any proposed transfer of the Property or any interest therein), (c) any litigation, contest, dispute, suit, arbitration, mediation, proceeding or action (whether instituted by or
against Lender, including actions brought by or on behalf of Borrower or Borrower’s bankruptcy estate or any indemnitor or guarantor of the Loan or any other person) in any way relating to the Loan or the Loan Documents including in connection
with any bankruptcy, reorganization, insolvency, or receivership proceeding; (d) any attempt to enforce any rights of Lender against Borrower or any other person that may be obligated to Lender by virtue of any Loan Document or otherwise
whether or not litigation is commenced in pursuance of such rights; and (e) protection, enforcement against, or liquidation of the Property or any other collateral for the Loan, including any attempt to inspect, verify, preserve, restore,
collect, sell, liquidate or otherwise dispose of or realize upon the Loan, the Property or any other collateral for the Loan. Provided no Event of Default has occurred, fees and expenses related solely to origination and administration of the Loan
shall be limited to reasonable fees and expenses, but charges of rating agencies, governmental entities or other third parties that are outside of the control of Lender shall not be subject to the reasonableness standard. 

3. Additional Advances, Renewals, Extensions and Releases. Guarantor hereby agrees and consents that, without notice to or further
consent by Guarantor, Lender may make additional advances with respect to the Loan or the Property, and the obligations of Borrower or any other party in connection with the Loan may be renewed, extended, modified, accelerated or released by Lender
as Lender may deem advisable, and any collateral the Lender may hold or in which the Lender may have an interest may be exchanged, sold, released or surrendered by it, as it may deem advisable, without impairing or affecting the obligations of
Guarantor hereunder in any way whatsoever. 

  
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 4. Waivers. 

4.1 Guarantor hereby waives each of the following: (a) any and all notice of the acceptance of this Guaranty or of the creation,
renewal or accrual of any Liabilities or the Debt (as defined in the Loan Agreement), present or future (including any additional advances made by Lender under the Loan Documents); (b) the reliance of Lender upon this Guaranty; (c) notice
of the existence or creation of any Loan Document or of any of the Liabilities or the Debt; (d) protest, presentment, demand for payment, notice of default or nonpayment, notice of dishonor to or upon Guarantor, Borrower or any other party
liable for any of the Liabilities or the Debt; (e) any and all other notices or formalities to which Guarantor may otherwise be entitled, including notice of Lender’s granting the Borrower any indulgences or extensions of time on the
payment of any Liabilities or the Debt; and (f) promptness in making any claim or demand hereunder. 
 4.2 No delay or
failure on the part of Lender in the exercise of any right or remedy against either Borrower or Guarantor shall operate as a waiver thereof, and no single or partial exercise by Lender of any right or remedy herein shall preclude other or further
exercise thereof or of any other right or remedy whether contained herein or in the Note or any of the other Loan Documents. No action of Lender permitted hereunder shall in any way impair or affect this Guaranty. 

4.3 Guarantor acknowledges and agrees that Guarantor shall be and remain absolutely and unconditionally liable for the full amount of all
Liabilities notwithstanding any of the following, and Guarantor waives any defense or counterclaims to which Guarantor may be entitled, based upon any of the following, in any proceeding (without prejudice to assert the same in a separate cause of
action at a later time): 
 (a) Any or all of the Liabilities being or hereafter becoming invalid or otherwise
unenforceable for any reason whatsoever or being or hereafter becoming released or discharged, in whole or in part, whether pursuant to a proceeding under any bankruptcy or insolvency laws or otherwise; or 

(b) Lender failing or delaying to properly perfect or continue the perfection of any security interest or lien on any
property which secures any of the Liabilities, or to protect the property covered by such security interest or enforce its rights respecting such property or security interest; or 

(c) Lender failing to give notice of any disposition of any property serving as collateral for any Liabilities or failing
to dispose of such collateral in a commercially reasonable manner; or 
 (d) Any other circumstance that might
otherwise constitute a defense other than payment in full of the Liabilities. 
 5. Guaranty of Payment. Guarantor agrees
that Guarantor’s liability hereunder is primary, absolute and unconditional without regard to the liability of any other party. This Guaranty shall be construed as an absolute, irrevocable and unconditional guaranty of payment and performance
(and not a guaranty of collection), without regard to the validity, regularity or enforceability of any of the Liabilities. 

  
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 6. Guaranty Effective Regardless of Collateral. This Guaranty is made and shall
continue as to any and all Liabilities without regard to any liens or security interests in any collateral, the validity, effectiveness or enforceability of such liens or security interests, or the existence or validity of any other guaranties or
rights of Lender against any other obligors. Any and all such collateral, security, guaranties and rights against other obligors, if any, may from time to time without notice to or consent of Guarantor, be granted, sold, released, surrendered,
exchanged, settled, compromised, waived, subordinated or modified, with or without consideration, on such terms or conditions as may be acceptable to Lender, without in any manner affecting or impairing the liabilities of Guarantor. Without limiting
the generality of the foregoing, it is acknowledged that Guarantor’s liability hereunder shall survive any foreclosure proceeding, any foreclosure sale, any delivery of a deed in lieu of foreclosure, and any release of record of the Security
Instrument. 
 7. Additional Credit. Credit or financial accommodation may be granted or continued from time to time by
Lender to Borrower regardless of Borrower’s financial or other condition at the time of any such grant or continuation, without notice to or the consent of Guarantor and without affecting Guarantor’s obligations hereunder. Lender shall
have no obligation to disclose or discuss with Guarantor its assessment of the financial condition of Borrower. 
 8.
Rescission of Payments. If at any time payment of any of the Liabilities or any part thereof is rescinded or must otherwise be restored or returned by Lender upon the insolvency, bankruptcy or reorganization of Borrower or under any other
circumstances whatsoever, this Guaranty shall, upon such rescission, restoration or return, continue to be effective or shall (if previously terminated) be reinstated, as the case may be, as if such payment had not been made. 

9. Additional Waivers. So long as any portion of the Liabilities or Debt remains unpaid or any portion of the Liabilities or Debt
(or any security therefor) that has been paid to Lender remains subject to invalidation, reversal or avoidance as a preference, fraudulent transfer or for any other reason whatsoever (whether under bankruptcy or non-bankruptcy law) to being set
aside or required to be repaid to Borrower as a debtor in possession or to any trustee in bankruptcy, Guarantor irrevocably waives (a) any rights which it may acquire against Borrower by way of subrogation under this Guaranty or by virtue of
any payment made hereunder (whether contractual, under the Bankruptcy Code or similar state or federal statute, under common law, or otherwise), (b) all contractual, common law, statutory or other rights of reimbursement, contribution,
exoneration or indemnity (or any similar right) from or against Borrower that may have arisen in connection with this Guaranty, (c) any right to participate in any way in the Loan Documents or in the right, title and interest in any collateral
securing the payment of Borrower’s obligations to Lender, and (d) all rights, remedies and claims relating to any of the foregoing. If any amount is paid to Guarantor on account of subrogation rights or otherwise, such amount shall be held
in trust for its benefit and shall forthwith be paid to Lender to be applied to the Debt, whether matured or unmatured, in such order as Lender shall determine. 

  
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 10. Independent Obligations. The obligations of Guarantor are independent of the
obligations of Borrower, and a separate action or actions for payment, damages or performance may be brought and prosecuted against Guarantor, whether or not an action is brought against Borrower or the security for Borrower’s obligations, and
whether or not Borrower is joined in any such action or actions. Guarantor expressly waives any requirement that Lender institute suit against Borrower or any other persons, or exercise or exhaust its remedies or rights against Borrower or against
any other person, other guarantor, or other collateral securing all or any part of the Liabilities, prior to enforcing any rights Lender has under this Guaranty or otherwise. Lender may pursue all or any such remedies at one or more different times
without in any way impairing its rights or remedies hereunder. Guarantor hereby further waives the benefit of any statute of limitations affecting its liability hereunder or the enforcement hereof. If there shall be more than one guarantor with
respect to any of the Liabilities, then the obligations of each such guarantor shall be joint and several. 
 11.
Subordination of Indebtedness of Borrower to Guarantor. Any indebtedness of Borrower to Guarantor now or hereafter existing is hereby subordinated to the prior payment in full of the Liabilities. Guarantor agrees that following the occurrence
and during the continuance of an Event of Default, until the Liabilities and Debt have been paid in full, Guarantor will not seek, accept or retain for Guarantor’s own account, any payment (whether for principal, interest, or otherwise) from
Borrower for or on account of such subordinated debt. Following the occurrence and during the continuance of an Event of Default, any payments to Guarantor on account of such subordinated debt shall be collected and received by Guarantor in trust
for Lender and shall be paid over to Lender on account of the Liabilities or Debt, as Lender determines in its discretion, without impairing or releasing the obligations of Guarantor hereunder. Guarantor hereby unconditionally and irrevocably agrees
that (a) Guarantor will not at any time while the Liabilities remain unpaid, assert against Borrower (or Borrower’s estate in the event that Borrower becomes the subject of any case or proceeding under any federal or state bankruptcy or
insolvency laws) any right or claim to indemnification, reimbursement, contribution or payment for or with respect to any and all amounts Guarantor may pay or be obligated to pay Lender, including the Liabilities, and any and all obligations which
Guarantor may perform, satisfy or discharge, under or with respect to the Guaranty, and (b) Guarantor subordinates to the Debt all such rights and claims to indemnification, reimbursement, contribution or payment that Guarantor may have now or
at any time against Borrower (or Borrower’s estate in the event that Borrower becomes the subject of any case or proceeding under any federal or state bankruptcy or insolvency laws). 

12. Claims in Bankruptcy. Guarantor shall file all claims against Borrower in any bankruptcy or other proceeding in which the
filing of claims is required by law upon any indebtedness of Borrower to Guarantor and will assign to Lender all right of Guarantor thereunder. Guarantor hereby irrevocably appoints Lender its attorney-in-fact, which appointment is coupled with an
interest, to file any such claim that Guarantor may fail to file, in the name of Guarantor or, in Lender’s discretion, to assign the claim and to cause proof of claim to be filed in the name of Lender’s nominee. In all such cases, whether
in administration, bankruptcy or otherwise, the person or persons authorized to pay such claim shall pay to Lender the full amount thereof and, to the full extent necessary for that purpose, Guarantor hereby assigns to Lender all of Guarantor’s
rights to any such payments or distributions to which Guarantor would otherwise be entitled. 

  
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 13. Guarantor’s Representations and Warranties. Guarantor represents, warrants
and covenants to and with Lender that: 
 13.1 There is no action or proceeding pending or to the knowledge of Guarantor,
threatened against Guarantor before any court or administrative agency which might result in any material adverse change in the business or financial condition of Guarantor or in the property of Guarantor; 

13.2 Guarantor has filed all Federal and State income tax returns which Guarantor has been required to file, and has paid all taxes as
shown on said returns and on all assessments received by Guarantor to the extent that such taxes have become due; 
 13.3
Neither the execution nor delivery of this Guaranty nor fulfillment of nor compliance with the terms and provisions hereof will conflict with, or result in a breach of the terms, conditions or provisions of, or constitute a default under, or result
in the creation of any lien, charge or encumbrance upon any property or assets of Guarantor under any agreement or instrument to which Guarantor is now a party or by which Guarantor may be bound; 

13.4 This Guaranty is a valid and legally binding agreement of Guarantor and is enforceable against Guarantor in accordance with its
terms; 
 13.5 Guarantor has either (i) examined the Loan Documents or (ii) has had an opportunity to examine the Loan
Documents and has waived the right to examine them; and 
 13.6 Guarantor has the full power, authority, and legal right to
execute and deliver this Guaranty. If Guarantor is not an individual, (i) Guarantor is duly organized, validly existing and in good standing under the laws of the state of its formation, and (ii) the execution, delivery and performance of
this Guaranty by Guarantor has been duly and validly authorized and the person(s) signing this Guaranty on Guarantor’s behalf has been validly authorized and directed to sign this Guaranty. 

14. Notice of Litigation. Guarantor shall promptly give Lender notice of all litigation or proceedings before any court or
Governmental Authority affecting Guarantor or its property, except litigation or proceedings which, if adversely determined, would not have a material adverse effect on the financial condition or operations of Guarantor or its ability to perform any
of its obligations hereunder. 
 15. Access to Records. Guarantor shall give Lender and its representatives access to,
and permit Lender and such representatives to examine, copy or make extracts from, any and all books, records and documents in the possession of Guarantor relating to the performance of Guarantor’s obligations hereunder and under any of the
Loan Documents, all at such times and as often as Lender may reasonably request. If Guarantor is not an individual, Guarantor shall continuously maintain its existence and shall not dissolve or permit its dissolution. 

16. Assignment by Lender. In connection with any sale, assignment or transfer of the Loan, Lender may sell, assign or transfer
this Guaranty and all or any of its rights, privileges, interests and remedies hereunder to any other person or entity whatsoever without notice to or consent by Guarantor, and in such event the assignee shall be entitled to the benefits of this
Guaranty and to exercise all rights, interests and remedies as fully as Lender. 

  
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 17. Termination. This Guaranty shall terminate only when all of the Liabilities and
the Debt have been paid in full, including all interest thereon, late charges and other charges and fees included within the Liabilities and the Debt. When the conditions described above have been fully met, Lender will, upon request, furnish to
Guarantor a written cancellation of this Guaranty. 
 18. Notices. All notices, consents, approvals and requests required
or permitted hereunder shall be given in writing and shall be effective for all purposes if hand delivered or sent by (a) certified or registered United States mail, postage prepaid, return receipt requested or (b) expedited prepaid
delivery service, either commercial or United States Postal Service, with proof of attempted delivery, or (c) by telecopier (with answer back acknowledged), addressed as follows (or at such other address and Person as shall be designated from
time to time by any party hereto, as the case may be, in a written notice to the other parties hereto in the manner provided for in this Section): 
  

			
	If to Lender:	 	 KeyBank National Association
 11501 Outlook, Suite 300
 Overland Park, Kansas 66211

Facsimile No.: 877-379-1625
 Attention: Loan Servicing

		
	with a copy to:	 	
		
		 	 Daniel Flanigan, Esq.
 Polsinelli Shughart PC
 700 W. 47th Street, Suite 1000

Kansas City, Missouri 64112
 Facsimile No.: (816) 753-1536

		
	If to Guarantor:	 	 c/o Gladstone Commercial Corporation
 1521 Westbranch Drive, Suite 200
 McLean, Virginia 22102

Attention: Portfolio Management
 Facsimile No.: (703) 287-5801

		
	With a copy to:	 	 Dickstein Shapiro LLP
 1825 Eye Street NW
 Washington, DC 20006

Attention: James D. Kelly
 Facsimile No.: (202) 420-2201

 A notice shall be deemed to have been given: in the case of hand delivery, at the time of delivery; in
the case of registered or certified mail, when delivered or the first attempted delivery on a Business Day (as defined in the Loan Agreement); or in the case of expedited prepaid 

  
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delivery, upon the first attempted delivery on a Business Day; or in the case of telecopy, upon sender’s receipt of a machine-generated confirmation of successful transmission after advice
by telephone to recipient that a telecopy notice is forthcoming. 
 19. Waiver of Jury Trial. TO THE EXTENT NOW OR
HEREAFTER PERMITTED BY APPLICABLE LAW, GUARANTOR AND LENDER EACH HEREBY AGREE NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVE ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER
EXIST WITH REGARD TO THIS GUARANTY, THE NOTE, THE SECURITY INSTRUMENT OR THE OTHER LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY
BY GUARANTOR AND LENDER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH RIGHT TO TRIAL BY JURY WOULD OTHERWISE ACCRUE. GUARANTOR AND LENDER EACH ARE HEREBY AUTHORIZED TO FILE A COPY OF THIS SECTION IN ANY
PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY EACH OTHER. 
 20. Miscellaneous. This Guaranty shall be a
continuing guaranty. This Guaranty shall bind the heirs, successors and assigns of Guarantor (except that Guarantor may not assign his, her, or its liabilities under this Guaranty without the prior written consent of Lender, which consent Lender may
in its discretion withhold), and shall inure to the benefit of Lender, its successors, transferees and assigns. Each provision of this Guaranty shall be interpreted in such manner as to be effective and valid under applicable law. Neither this
Guaranty nor any of the terms hereof, including the provisions of this Section, may be terminated, amended, supplemented, waived or modified orally, but only by an instrument in writing executed by the party against which enforcement of the
termination, amendment, supplement, waiver or modification is sought, and the parties hereby: (a) expressly agree that it shall not be reasonable for any of them to rely on any alleged, non-written amendment to this Guaranty;
(b) irrevocably waive any and all right to enforce any alleged, non-written amendment to this Guaranty; and (c) expressly agree that it shall be beyond the scope of authority (apparent or otherwise) for any of their respective agents to
agree to any non-written modification of this Guaranty. This Guaranty may be executed in several counterparts, each of which counterpart shall be deemed an original instrument and all of which together shall constitute a single Guaranty. The failure
of any party hereto to execute this Guaranty, or any counterpart hereof, shall not relieve the other signatories from their obligations hereunder. As used in this Guaranty, (i) the terms “include,” “including” and similar
terms shall be construed as if followed by the phrase “without being limited to,” (ii) any pronoun used herein shall be deemed to cover all genders, and words importing the singular number shall mean and include the plural number, and
vice versa, (iii) all captions to the Sections hereof are used for convenience and reference only and in no way define, limit or describe the scope or intent of, or in any way affect, this Guaranty, (iv) no inference in favor of, or
against, Lender or Guarantor shall be drawn from the fact that such party has drafted any portion hereof or any other Loan Document, (v) the term “Borrower” shall mean individually and collectively, jointly and severally, each
Borrower (if more than one) and shall include the successors (including any subsequent owner or owners of the Property or any part thereof or any interest therein and Borrower in its capacity as debtor-in-possession after the commencement of

  
 11 

 
any bankruptcy proceeding), assigns, heirs, personal representatives, executors and administrators of Borrower, (vi) the term “or” has, except where otherwise indicated, the
inclusive meaning represented by the phrase “and/or,” (vii) the words “hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Guaranty refer to this Guaranty as a whole and not to
any particular provision or section of this Guaranty, (viii) an Event of Default shall “continue” or be “continuing” until such Event of Default has been waived in writing by Lender, and (ix) references herein to
“the Property or any portion thereof” and words of similar import shall be deemed to refer, as applicable, to any portion of the Property taken as a whole (including any Individual Property) and any portion of any Individual Property. Any
capitalized term used herein that is defined in any other Loan Document and not otherwise defined herein shall have the same meaning when used in this Guaranty. Wherever Lender’s judgment, consent, approval or discretion is required under this
Guaranty or Lender shall have an option, election, or right of determination or any other power to decide any matter relating to the terms of this Guaranty, including any right to determine that something is satisfactory or not (“Decision
Power”), such Decision Power shall be exercised in the sole and absolute discretion of Lender except as may be otherwise expressly and specifically provided herein. Such Decision Power and each other power granted to Lender upon this
Guaranty or any other Loan Document may be exercised by Lender or by any authorized agent of Lender (including any servicer and/or attorney-in-fact), and Guarantor hereby expressly agrees to recognize the exercise of such Decision Power by such
authorized agent. If any provision of this Guaranty is held invalid or unenforceable by final and unappealable judgment of the court having jurisdiction over the matter and persons, such provisions shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision, its application in other circumstances, or the remaining provisions of this Guaranty. 
 21. Applicable Law; Jurisdiction and Venue 
 (a) LENDER HAS OFFICES IN THE
STATE OF NEW YORK AND THE PROCEEDS OF THE LOAN DELIVERED PURSUANT HERETO WERE DISBURSED FROM THE STATE OF NEW YORK (“GOVERNING STATE”), WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE
UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS GUARANTY, THE NOTE AND THE OTHER LOAN DOCUMENTS AND THE OBLIGATIONS
ARISING HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE (WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS) AND ANY
APPLICABLE LAW OF THE UNITED STATES OF AMERICA, EXCEPT THAT AT ALL TIMES THE PROVISIONS FOR THE CREATION, PERFECTION, AND ENFORCEMENT OF THE LIEN AND SECURITY INTEREST CREATED PURSUANT TO THE LOAN DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED
ACCORDING TO THE LAW OF THE STATE IN WHICH THE PROPERTY IS LOCATED, IT BEING UNDERSTOOD THAT, TO THE FULLEST EXTENT PERMITTED BY THE LAW OF SUCH STATE, THE LAW OF THE STATE OF NEW YORK SHALL GOVERN THE CONSTRUCTION, VALIDITY AND ENFORCEABILITY OF
ALL LOAN DOCUMENTS AND ALL OF THE OBLIGATIONS 

  
 12 

 
ARISING HEREUNDER OR THEREUNDER. TO THE FULLEST EXTENT PERMITTED BY LAW, GUARANTOR HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS
THIS GUARANTY, THE NOTE AND THE OTHER LOAN DOCUMENTS, AND THIS GUARANTY, THE NOTE AND THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW. 
 (b) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR GUARANTOR ARISING OUT OF OR RELATING TO THIS
GUARANTY OR THE OTHER LOAN DOCUMENTS (“ACTION”) MAY AT LENDER’S OPTION BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN THE CITY OF NEW YORK, COUNTY OF NEW YORK, PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW
AND GUARANTOR WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH ACTION, AND GUARANTOR HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY ACTION. 

22. OFAC. Guarantor hereby represents, warrants and covenants that Guarantor is not (nor will be) a person with whom Lender
is restricted from doing business under regulations of the Office of Foreign Asset Control (“OFAC”) of the Department of the Treasury of the United States of America (including, those Persons named on OFAC’s Specially
Designated and Blocked Persons list) or under any statute, executive order (including, the September 24, 2001 Executive Order Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism), or
other governmental action and is not and shall not engage in any dealings or transactions or otherwise be associated with such persons. In addition, Guarantor hereby covenants to provide Lender with any additional information that Lender deems
necessary from time to time in order to ensure compliance with all applicable laws concerning money laundering and similar activities. 
 23. Local Law Provisions. In the event of any inconsistencies between the terms and conditions of this Section and any other terms and conditions of this Guaranty (other than the terms and
conditions of Section 24), the terms and conditions of this Section shall be binding. 
 NONE. 

24. Additional Provisions. In the event of any inconsistencies between the terms and conditions of this Section and any
other terms and conditions of this Guaranty, the terms and conditions of this Section shall be binding. 
 24.1 Guaranty of
Liabilities. 
  

	 	(a)	The 11th line of Section 2.1(a) is hereby modified by inserting “solely” between “relate” and “to”. 

 

	 	(b)	The second and third lines of Section 2.1(a)(i) are hereby modified by deleting “or any agent, employee”. 

  
 13 

	 	(c)	The second line of Section 2.1(a)(ii) is hereby modified by deleting “agent, or employee”. 

 

	 	(d)	Section 2.1(a)(iii) is hereby modified by adding the following to the end thereof: “, provided that for the purposes of this Section 2.1(a)(iii), waste
shall not include the failure to pay any taxes or assessments assessed against the Property or to pay any premiums payable with respect to any insurance policy covering the Property (or to pay to Lender any amounts owing hereunder), but such
exclusion shall not impact Lender’s rights under any other provision of Section 2.1 hereof, including, but not limited to, Section 2.1(a)(vii)”. 

 

	 	(e)	The third line of Section 2.1(a)(vii) is hereby modified by inserting “to the extent that Borrower, Principal or Guarantor has received Rents or other funds
for the payment of the foregoing items and fails to use such funds for such purposes” between “Property” and “(unless”. The last parenthetical in Section 2.1(a)(vii) is hereby deleted and the following is substituted
therefor: “(unless Lender is escrowing funds therefor and fails to make such payments or has received all Rents from the Property applicable to the period for which such insurance, taxes or other items are due, is directed, pursuant to the Loan
Documents, to apply said Rents to the foregoing items, and thereafter fails to make such payments)”. 

  

	 	(f)	Section 2.1(a)(ix) is hereby deleted and the following is substituted therefor: “[Intentionally Deleted].” 

 

	 	(g)	The third line of Section 2.1(a)(x) is hereby modified by deleting “.” and substituting “;” therefor. 

 

	 	(h)	The following are hereby added as Sections 2.1(a)(xi) and 2.1(a)(xii): 

  

	 	a.	“(xi) any failure of Borrower to maintain its status as a Special Purpose Entity or comply with any representation, warranty or covenant set forth in
Section 4.1.30 of the Loan Agreement (notwithstanding the foregoing, Borrower’s failure to satisfy a specific subsection of the definition of Special Purpose Entity due solely to inadequate cash flow from the Property shall not constitute
a failure of Borrower to maintain its status as a Special Purpose entity contemplated by this subsection), as required by, and in accordance with, the terms and provisions of the Loan Agreement or the Security Instrument; or”

  

	 	b.	“(xii) any failure of Borrower to appoint a new property manager upon the request of Lender as permitted under the Loan Agreement, as required by, and in
accordance with, the terms and provisions of the Loan Agreement or the Security Instrument.” 

  

	 	(i)	Sections 2.1(b)(B) and (D) are hereby deleted and the following is substituted therefor: “[Intentionally Deleted]”. 

  
 14 

	 	(j)	The sixth line of Section 2.1(b)(G) is hereby modified by inserting “knowingly and intentionally” between “Principal” and “colludes”.
The sixth and seventh lines of Section 2.1(b)(G) are hereby modified by deleting “or otherwise assists”. 

  

	 	(k)	Section 2.1(b)(H)(2) is hereby modified by adding the following to the end thereof: “and in which Borrower or Guarantor or any Principal has knowingly and
intentionally colluded with any party in connection with such filing.” 

 The last sentence of
Section 2.3 is hereby deleted and the following is substituted therefor: “Provided no Event of Default exists, fees and expenses related solely to origination and administration of the Loan shall be limited as follows: (i) if Lender
is acting upon a request of Borrower or in response to a notice relating to the Property, Borrower, any guarantor or indemnitor or as a result of failure of any party to perform its obligations under the Loan Documents, such fees and expenses shall
be limited to reasonable and customary fees and expenses; (ii) otherwise, such fees and expenses shall be limited to reasonable, out of pocket fees and expenses. Notwithstanding the foregoing, charges of rating agencies, governmental entities
or other third parties that are outside of the control of Lender shall not be subject to the reasonableness standard.” 

24.2 Guarantor’s Representations and Warranties. Section 13.1 is hereby deleted and the following is substituted
therefor: “There are no actions, suits or proceedings at law or in equity, arbitrations, or governmental investigations by or before any Governmental Authority or other agency now pending, filed, or, to Guarantor’s knowledge, threatened
against or affecting Guarantor, which actions, suits or proceedings, or governmental investigations, if determined against Guarantor would reasonably be expected to materially adversely affect (a) title to the Property or any portion thereof;
(b) the validity or enforceability of each Security Instrument; (c) Borrower’s business or financial condition, or ability to perform under the Loan; (d) Guarantor’s ability to perform under the Guaranty; (e) the use,
operation or value of the Property or any portion thereof; (f) the principal benefit of the security intended to be provided by the Loan Documents; (g) the current ability of the Property to generate net cash flow sufficient to service the
Loan; or (h) the current principal use of the Property or any portion thereof.” 
 Section 13.2 is hereby
modified by adding the following to the end thereof: “, excluding any taxes or filings which, if not filed or paid, would not reasonably be expected to have a material adverse effect on Guarantor’s ability to perform its obligations
hereunder”. 
 Section 13.3 is hereby deleted and the following is substituted therefor: “if Guarantor is a
corporation, a limited liability company, a trust or partnership, its execution of, and compliance with, this Guaranty is in the ordinary course of business of Guarantor and will not (i) result in the breach of any term or provision of the
charter, by-laws, partnership, operating or trust agreement, or other governing instrument of Guarantor or (ii) result in the breach of any term or provision of, or conflict with or constitute a default under, or (iii) result in the
acceleration of any obligation under, any agreement, indenture or loan or credit agreement or other instrument to which Guarantor or its property or assets (or any portion thereof) is subject, or (iv) result in the violation of any law, rule,
regulation, order, judgment or decree to which Guarantor or its property or assets (or any portion thereof) is subject, except, in each case referred to in clause (ii), clause (iii) or clause (iv), to the extent that the failure to do so would
not reasonably be expected to have, either individually or in the aggregate, a material adverse effect on Guarantor’s ability to perform its obligations hereunder;”. 

  
 15 

 Section 13.4 is hereby modified by adding the following to the end thereof: “,
except as such enforceability is limited by the effect of bankruptcy, moratorium, insolvency or similar laws of general application affecting creditor’s rights”. 
 24.3 Notice of Litigation. The fourth line of Section 14 is hereby modified by deleting “financial condition or operations of Guarantor or its” and substituting
“Guarantor’s” therefor. 
 24.3.1 Access to Records. Section 15 is hereby modified by adding
the following to the beginning thereof: “Upon reasonable prior written notice and during normal business hours,”. Section 15 is hereby further modified by adding the following to the end thereof: “Notwithstanding the foregoing,
so long as securities of the Guarantor are publicly traded, Lender shall not disclose financial information relating to the Guarantor to the extent that such information is not generally available to the public.” 

24.4 Termination. The first sentence of Section 17 is hereby modified by adding the following to the end thereof: “(or
all of the foregoing are fully and voluntarily waived by Lender, provided that Lender has no obligation to waive any such amounts)”. 
 24.5 Miscellaneous. Section 20(viii) is hereby modified by adding the following to the end thereof: “or cured, as determined by Lender in its discretion.” 

24.6 OFAC. The eighth line of Section 22 is hereby modified by inserting “knowingly” between “not” and
“engage”. The ninth line of Section 22 is hereby modified by inserting “(with respect to Guarantor, such information shall be public information)” between “information” and “that”. The next to last line
of Section 22 is hereby modified by inserting “reasonably” between “Lender” and “deems”. 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 

  
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 IN WITNESS WHEREOF, the Guarantor has executed or caused this Guaranty to be executed
effective as of the day and year first above written. 
  

							
	Guarantor:	 		 	GLADSTONE COMMERCIAL CORPORATION, a Maryland corporation
				
		 		 	By:	 	  

							
		 		 	Name:	 	  

		 		 	Title:	 	  

  
 Signature
Page to Guaranty AgreementEX-10.31.1

 Exhibit 10.31.1 

SEVERANCE AGREEMENT 
 This SEVERANCE AGREEMENT (this “Agreement”) is entered into effective as of
this             day of                        , 2012, by and between
Cortland Bancorp, an Ohio corporation, and Timothy Carney (the “Executive”), Executive Vice President and Chief Operating Officer of Cortland Bancorp and The Cortland Savings and Banking Company (the “Bank”), an Ohio-chartered
bank and wholly owned subsidiary of Cortland Bancorp. 
 WHEREAS, recognizing the
contributions to the profitability, growth, and financial strength of Cortland Bancorp and the Bank that the Executive has made and is expected to continue to make, intending to assure itself of the current and future continuity of management and
establish minimum severance benefits for certain officers and other key employees and ensure that officers and other key employees are not practically disabled from discharging their duties if a proposed or actual transaction involving a change in
control arises, and finally desiring to provide additional inducement for the Executive to remain in the employ of Cortland Bancorp and the Bank, Cortland Bancorp entered into a Severance Agreement dated as of December 3, 2008 with the
Executive, 
 WHEREAS, Cortland Bancorp and the Executive intend that this Agreement
supersede and replace in its entirety the December 3, 2008 Severance Agreement and that from and after the date hereof the December 3, 2008 Severance Agreement shall be of no further force or effect, and 

WHEREAS, as of the effective date of this Agreement 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 Cortland Bancorp, is contemplated insofar as Cortland Bancorp or any of its subsidiaries is concerned. 
 NOW THEREFORE, in consideration of these premises and other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows. 
 1. Cash Benefit after a Change in Control. (a) Cash
benefit. If a Change in Control occurs, Cortland Bancorp shall make a lump-sum payment to the Executive in an amount in cash equal to 2.5 times the Executive’s compensation. For this purpose, the Executive’s compensation means
(x) the sum of the Executive’s base salary when the Change in Control occurs, including salary deferred at the Executive’s election, plus (y) any bonus awarded for the most recent whole calendar year before the year
in which the Change in Control occurs, regardless of whether the bonus is paid in the year earned and regardless of whether the bonus is vested or subject to elective deferral. The term bonus means cash or non-cash compensation of the type that is
required to be reported as bonus by Securities and Exchange Commission rules governing tabular disclosure of executive compensation, specifically Regulation S-K Item 402 (17 CFR 229.402, currently Item 402(c)(2)(iv)). The amount payable to
the Executive hereunder shall not be reduced to account for the time value of money or discounted to present value. Subject to section 17 of this Agreement, the payment required under this section 1(a) shall be made within five business days after
the Change in Control occurs. The Executive shall be entitled to a payment under this section 1(a) on no more than one occasion during the term of this Agreement. 

 (b) Change in Control defined. For purposes of this Agreement, the term Change in
Control means a change in control as defined in Internal Revenue Code section 409A and rules, regulations, and guidance of general application thereunder issued by the Department of the Treasury, including – 

(1) Change in ownership: a change in ownership of Cortland Bancorp occurs on the date any one person or group
accumulates ownership of Cortland Bancorp stock constituting more than 50% of the total fair market value or total voting power of Cortland Bancorp stock, 
 (2) 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 Cortland Bancorp stock possessing 30% or more of
the total voting power of Cortland Bancorp stock, or (y) a majority of Cortland Bancorp’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
Cortland Bancorp’s board of directors, or 
 (3) Change in ownership of a substantial portion of
assets: a change in ownership of a substantial portion of Cortland Bancorp’s assets occurs if in a 12-month period any one person or more than one person acting as a group acquires from Cortland Bancorp assets having a total gross fair
market value equal to or exceeding 40% of the total gross fair market value of all of Cortland Bancorp’s assets immediately before the acquisition or acquisitions. For this purpose, gross fair market value means the value of Cortland
Bancorp’s assets or the value of the assets being disposed of, determined without regard to any liabilities associated with the assets. 
 2. Additional Benefits after Employment Termination. (a) Continued insurance benefits. Subject to section 2(b), if the Executive’s employment terminates involuntarily but without
Cause or voluntarily but with Good Reason within 24 months after a Change in Control, Cortland Bancorp shall cause to be continued medical, dental, accident, disability, and life insurance coverage substantially identical to the coverage maintained
for the Executive before employment termination, in accordance with the same schedule prevailing before employment termination, and on substantially the same terms and conditions prevailing before employment termination (including cost of coverage
to Cortland Bancorp and the Bank). The insurance coverage shall continue until the first to occur of (x) the Executive’s return to employment with Cortland Bancorp, the Bank, or another employer, (y) the Executive’s death, or
(z) the end of the term remaining under this Agreement when the Executive’s employment terminates. 
 (b)
Alternative lump-sum cash payment. If (x) under the terms of the applicable policy or policies for the insurance benefits specified in section 2(a) it is not possible to continue the Executive’s coverage on the terms specified in
section 2(a), or (y) if when employment termination occurs the Executive is a specified employee within the meaning of section 409A of the Internal Revenue Code of 1986, if any of the continued insurance coverage benefits specified in section
2(a) would be considered deferred compensation under section 409A, and finally if an exemption from the six-month delay requirement of section 409A(a)(2)(B)(i) is not available for that particular insurance benefit, instead of continued insurance
coverage under section 2(a) Cortland Bancorp shall pay or cause to be paid to the Executive in a single lump sum an amount in cash equal to the present value of Cortland Bancorp’s projected cost to maintain that particular insurance benefit had
the Executive’s employment not terminated, assuming continued coverage for the lesser of 36 months or the number of months until the Executive attains age 65. The lump-sum payment shall be made within five business days after employment
termination or, if the Executive is a specified employee within the meaning of section 409A and an exemption from the six-month delay requirement of section 409A(a)(2)(B)(i) is not available, on the first day of the seventh month after the month in
which the Executive’s employment terminates. 

  
 2 

 (c) Miscellaneous benefits. Subject to section 2(d), if the Executive’s
employment terminates involuntarily but without Cause or voluntarily but with Good Reason within 24 months after a Change in Control – 
 (1) Cortland Bancorp shall for three years after termination pay or cause to be paid the Executive’s initiation and membership assessments and dues in a civic or social club of the Executive’s
choice. The Executive shall be solely responsible for personal expenses for use of the club, 
 (2) Cortland
Bancorp shall for three years after termination and at no cost to the Executive provide or cause to be provided to the Executive financial planning services, including, but not limited to, tax preparation and financial planning having to do with
receipt of benefits under this Agreement, 
 (3) Cortland Bancorp shall for one year after termination and at no
cost to the Executive provide or cause to be provided to the Executive reasonable outplacement services, including, but not limited, to employment counseling, resume services, and executive placement services. 

(d) Alternative lump-sum cash payment. If when employment termination occurs the Executive is a specified employee within the
meaning of section 409A of the Internal Revenue Code of 1986, if any of the miscellaneous benefits specified in section 2(c) would be considered deferred compensation under section 409A, and finally if an exemption from the six-month delay
requirement of section 409A(a)(2)(B)(i) is not available for that particular benefit, instead of the miscellaneous benefits under section 2(c) Cortland Bancorp shall pay or cause to be paid to the Executive in a single lump sum an amount in cash
equal to the present value of Cortland Bancorp’s projected cost to maintain that particular benefit had the Executive’s employment not terminated. The lump-sum payment shall be made within five business days after employment termination
or, if the Executive is a specified employee within the meaning of section 409A and an exemption from the six-month delay requirement of section 409A(a)(2)(B)(i) is not available, on the first day of the seventh month after the month in which the
Executive’s employment terminates. 
 (e) Involuntary termination with Cause defined. For purposes of this
Agreement, involuntary termination of the Executive’s employment shall be considered involuntary termination with Cause if the Executive shall have committed any of the following acts – 

(1) an act of fraud, embezzlement, or theft while employed by Cortland Bancorp or the Bank, or conviction of the Executive
of or plea of no contest to a felony or conviction of or plea of no contest to a misdemeanor involving moral turpitude, or the actual incarceration of the Executive for 45 consecutive days or more, or 

(2) gross negligence, insubordination, disloyalty, or dishonesty in the performance of the Executive’s duties as an
officer of Cortland Bancorp or the Bank; willful or reckless failure by the Executive to adhere to Cortland Bancorp’s or the Bank’s written policies; intentional wrongful damage by the Executive to the business or property of Cortland
Bancorp or the Bank, including, without limitation, its reputation, which in Cortland Bancorp’s sole judgment causes material harm to Cortland Bancorp or the Bank; breach by the Executive of fiduciary duties to Cortland Bancorp and its
stockholders, whether in the Executive’s capacity as an officer or as a director of Cortland Bancorp or the Bank, 

  
 3 

 (3) removal of the Executive from office or permanent prohibition of the
Executive from participating in the Bank’s affairs by an order issued under section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act, 12 U.S.C. 1818(e)(4) or (g)(1), or 

(4) intentional wrongful disclosure of secret processes or confidential information of Cortland Bancorp or the Bank, which
in Cortland Bancorp’s sole judgment causes material harm to Cortland Bancorp or the Bank, or 
 (5) any
actions that cause the Executive to be terminated for cause under any employment agreement existing on the date hereof or hereafter entered into between the Executive and Cortland Bancorp or the Bank, or 

(6) the occurrence of any event that results in the Executive being excluded from coverage, or having coverage limited for
the Executive as compared to other executives of Cortland Bancorp or the Bank, under a blanket bond or other fidelity or insurance policy covering directors, officers, or employees. 

For purposes of this Agreement, no act or failure to act on the Executive’s part shall be deemed to have been intentional if it was
due primarily to an error in judgment or negligence. An act or failure to act on the Executive’s part shall be considered intentional if it is not in good faith and if it is without a reasonable belief that the action or failure to act is in
Cortland Bancorp’s best interests. Any act or failure to act based upon authority granted by resolutions duly adopted by the board of directors or based upon the advice of counsel for Cortland Bancorp shall be conclusively presumed to be in
good faith and in Cortland Bancorp’s best interests. 
 (f) Voluntary termination with Good Reason defined. For
purposes of this Agreement, a voluntary termination by the Executive shall be considered a voluntary termination with Good Reason if the conditions stated in both clauses (x) and (y) are satisfied – 

(x) a voluntary termination by the Executive shall be considered a voluntary termination with Good Reason if any of
the following occur without the Executive’s advance written consent, and the term Good Reason shall mean the occurrence of any of the following without the Executive’s advance written consent – 

1) a material diminution of the Executive’s base salary, 

2) a material diminution of the Executive’s authority, duties, or responsibilities, 

3) a material diminution in the authority, duties, or responsibilities of the supervisor to whom the Executive is required
to report, 
 4) a material diminution in the budget over which the Executive retains authority, 

5) a material change in the geographic location at which the Executive must perform services, or 

  
 4 

 6) any other action or inaction that constitutes a material breach by
Cortland Bancorp of this Agreement. 
 (y) the Executive must give notice to Cortland Bancorp of the existence of
one or more of the conditions described in clause (x) within 90 days after the initial existence of the condition, and Cortland Bancorp shall have 30 days thereafter to remedy the condition. In addition, the Executive’s voluntary
termination because of the existence of one or more of the conditions described in clause (x) must occur within 24 months after the initial existence of the condition. 
 3. Gross-Up for Taxes. (a) Additional payment to account for excise taxes. If the Executive receives change-in-control benefits under this Agreement and acceleration of benefits under
any other benefit, compensation, or incentive plan or arrangement with Cortland Bancorp or the Bank (collectively, the “Total Benefits”), and if any part of the Total Benefits is subject to the Excise Tax under Internal
Revenue Code sections 280G and 4999 (the “Excise Tax”), Cortland Bancorp shall pay to the Executive the following additional amounts, consisting of (x) a payment equal to the Excise Tax payable by the Executive under
section 4999 on the Total Benefits (the “Excise Tax Payment”) and (y) a payment equal to 80% of the difference between (w) a full gross-up amount (including the Excise Tax Payment) that would provide to the
Executive the Excise Tax Payment net of all income, payroll, and excise taxes and (v) the Excise Tax Payment. Together, the additional amounts described in clauses (x) and (y) are referred to in this Agreement as the
“Gross-Up Payment Amount.” Payment of the Gross-Up Payment Amount shall be in addition to the benefits set forth in section 1 and section 2. 
 Calculating the excise tax. For purposes of determining whether any of the Total Benefits are subject to the Excise Tax and for purposes of determining the amount of the Excise Tax –

  

	 	1)	Determination of “parachute payments” subject to the Excise Tax: any other payments or benefits received or to be received by the Executive in
connection with a Change in Control or the Executive’s termination of employment (whether under the terms of this Agreement or any other agreement or any other benefit plan or arrangement with Cortland Bancorp, the Bank, any person whose
actions result in a Change in Control, or any person affiliated with Cortland Bancorp, the Bank, or such person) shall be treated as “parachute payments” within the meaning of Internal Revenue Code section 280G(b)(2) and all
“excess parachute payments” within the meaning of section 280G(b)(1) shall be treated as subject to the Excise Tax, unless in the opinion of the certified public accounting firm that is retained by Cortland Bancorp as of the
date immediately before the Change in Control (the “Accounting Firm”) such other payments or benefits do not constitute (in whole or in part) parachute payments, or such excess parachute payments represent (in whole or in
part) reasonable compensation for services actually rendered within the meaning of Internal Revenue Code section 280G(b)(4) in excess of the “base amount” (as defined in Internal Revenue Code section 280G(b)(3)), or are otherwise not
subject to the Excise Tax, 

  

	 	2)	Calculation of benefits subject to the Excise Tax: the amount of the Total Benefits that shall be treated as subject to the Excise Tax shall be equal to the
lesser of (x) the total amount of the Total Benefits reduced by the amount of such Total Benefits that in the opinion of the Accounting Firm are not parachute payments, or (y) the amount of excess parachute payments within the meaning of
section 280G(b)(1) (after applying clause (1), above), and 

  
 5 

	 	3)	Value of noncash benefits and deferred payments: the value of any noncash benefits or any deferred payment or benefit shall be determined by the Accounting Firm
according to the principles of Internal Revenue Code sections 280G(d)(3) and (4). 

 Assumed marginal income
tax rate. For purposes of determining the Gross-Up Payment Amount, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar years in which the Gross-Up Payment Amount is to
be made and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive’s residence on the date of termination of employment, net of the reduction in federal income taxes that can be obtained
from deduction of state and local taxes (calculated by assuming that any reduction under Internal Revenue Code section 68 in the amount of itemized deductions allowable to the Executive applies first to reduce the amount of state and local income
taxes that would otherwise be deductible by the Executive, and applicable federal FICA and Medicare withholding taxes). 

Return of reduced Excise Tax payment or payment of additional Excise Tax. If the Excise Tax is later determined to be less than
the amount taken into account hereunder when the Executive’s employment terminated, the Executive shall repay to Cortland Bancorp – when the amount of the reduction in Excise Tax is finally determined – the portion of the Gross-Up
Payment Amount attributable to the reduction (plus that portion of the Gross-Up Payment Amount attributable to the Excise Tax, federal, state, and local income taxes and FICA and Medicare withholding taxes imposed on the Gross-Up Payment Amount
being repaid by the Executive to the extent that the repayment results in a reduction in Excise Tax, FICA and Medicare withholding taxes and/or a federal, state, or local income tax deduction). 

If the Excise Tax is later determined to be more than the amount taken into account hereunder when the Executive’s employment
terminated (due, for example, to a payment whose existence or amount cannot be determined at the time of the Gross-Up Payment Amount), Cortland Bancorp shall make an additional payment to the Executive for that excess (plus any interest, penalties
or additions payable by the Executive for the excess) when the amount of the excess is finally determined. 
 (b)
Responsibilities of the Accounting Firm and Cortland Bancorp. Determinations shall be made by the Accounting Firm. Subject to the provisions of section 3(a), all determinations required to be made under this section 3(b) –
including whether and when a Gross-Up Payment Amount is required, the amount of the Gross-Up Payment Amount, and the assumptions to be used to arrive at the determination (collectively, the “Determination”) – shall be
made by the Accounting Firm, which shall provide detailed supporting calculations both to Cortland Bancorp and the Executive within 15 business days after receipt of notice from Cortland Bancorp or the Executive that there has been a Gross-Up
Payment Amount, or such earlier time as is requested by Cortland Bancorp. 
 Fees and expenses of the Accounting Firm and
agreement with the Accounting Firm. All fees and expenses of the Accounting Firm shall be borne solely by Cortland Bancorp. Cortland Bancorp shall enter into any agreement requested by the Accounting Firm in connection with the performance of
its services hereunder. 

  
 6 

 Accounting Firm’s opinion. If the Accounting Firm determines that no Excise Tax
is payable by the Executive, the Accounting Firm shall furnish the Executive with a written opinion to that effect and to the effect that failure to report Excise Tax, if any, on the Executive’s applicable federal income tax return will not
result in the imposition of a negligence or similar penalty. 
 Accounting Firm’s Determination is binding; underpayment
and overpayment. The Determination by the Accounting Firm shall be binding on Cortland Bancorp and the Executive. Because of the uncertainty when the Determination is made about whether any of the Total Benefits will be subject to the Excise
Tax, it is possible that a Gross-Up Payment Amount that should have been made will not have been made by Cortland Bancorp (“Underpayment”), or that a Gross-Up Payment Amount will be made that should not have been made by
Cortland Bancorp (“Overpayment”). If after a Determination by the Accounting Firm the Executive is required to make a payment of additional Excise Tax, the Accounting Firm shall determine the amount of the Underpayment. The
Underpayment (together with interest at the rate provided in Internal Revenue Code section 1274(d)(2)(B)) shall be paid promptly by Cortland Bancorp to or for the benefit of the Executive. If the Gross-Up Payment Amount exceeds the amount necessary
to reimburse the Executive for the Excise Tax according to section 2(a), the Accounting Firm shall determine the amount of the Overpayment. The Overpayment (together with interest at the rate provided in Internal Revenue Code section 1274(d)(2)(B))
shall be paid promptly by the Executive to or for the benefit of Cortland Bancorp. Provided that the Executive’s expenses are reimbursed by Cortland Bancorp, the Executive shall cooperate with any reasonable requests by Cortland Bancorp in any
contests or disputes with the Internal Revenue Service relating to the Excise Tax. 
 Accounting Firm conflict of
interest. If the Accounting Firm is serving as accountant or auditor for the individual, entity, or group effecting the Change in Control, the Executive may appoint another nationally recognized public accounting firm to make the Determinations
required hereunder (in which case the term “Accounting Firm” as used in this Agreement shall be deemed to refer to the accounting firm appointed by the Executive). 
 4. Termination for Which No Benefits Are Payable. The Executive shall not be entitled to benefits under this Agreement if the Executive’s employment terminates with Cause, if the Executive
dies while actively employed by Cortland Bancorp or the Bank, or if the Executive becomes totally disabled while actively employed by Cortland Bancorp or the Bank. For purposes of this Agreement, the term totally disabled means that because of
injury or sickness the Executive is unable to perform the Executive’s duties. The benefits, if any, payable to the Executive or the Executive’s beneficiary or estate relating to the Executive’s death or disability shall be determined
solely by such benefit plans or arrangements as Cortland Bancorp or the Bank may have with the Executive relating to death or disability, not by this Agreement. This section 4 shall not apply to or operate to prevent payment of special compensation
to which the Executive is entitled under section 19 after employment termination. 
 5. Term of Agreement. The initial
term of this Agreement shall be for a period of three years, commencing on the effective date of this Agreement first written above. On the first anniversary of the effective date of this Agreement and on each anniversary thereafter this Agreement
shall be extended automatically for one additional year, unless Cortland Bancorp’s board of directors gives notice to the Executive in writing at least 90 days before the anniversary that the term of this Agreement will not be extended. If the
board of directors determines not to extend the term, it shall promptly notify the Executive. References herein to the term of this Agreement mean the initial term and extensions of the initial term. Unless terminated earlier, this Agreement shall
terminate when the Executive attains age 65. If the board of directors decides not to extend the term of this Agreement, this Agreement shall nevertheless remain in force until its term expires. 

  
 7 

 6. This Agreement Is Not an Employment Contract. The parties hereto acknowledge and
agree that this Agreement is not a management or employment agreement and that nothing in this Agreement shall give the Executive any rights or impose any obligations to continued employment by Cortland Bancorp or the Bank or successor of Cortland
Bancorp. 
 7. Payment of Legal Fees. Cortland Bancorp is aware that after a Change in Control management could cause or
attempt to cause Cortland Bancorp to refuse to comply with its obligations under this Agreement, or could institute or cause or attempt to cause Cortland Bancorp to institute litigation seeking to have this Agreement declared unenforceable, or could
take or attempt to take other action to deny Executive the benefits intended under this Agreement. In these circumstances, the purpose of this Agreement would be frustrated. Cortland Bancorp desires that the Executive not be required to incur the
expenses associated with the enforcement of rights under this Agreement, whether by litigation or other legal action, because the cost and expense thereof would substantially detract from the benefits intended to be granted to the Executive
hereunder. Cortland Bancorp desires that the Executive not be forced to negotiate settlement of rights under this Agreement under threat of incurring expenses. Accordingly, if after a Change in Control occurs it appears to the Executive that
(x) Cortland Bancorp has failed to comply with any of its obligations under this Agreement or (y) Cortland Bancorp or any other person has taken any action to declare this Agreement void or unenforceable, or instituted any litigation or
other legal action designed to deny, diminish, or to recover from the Executive the benefits intended to be provided to the Executive hereunder, Cortland Bancorp irrevocably authorizes the Executive from time to time to retain counsel of the
Executive’s choice, at Cortland Bancorp’s expense as provided in this section 7, to represent the Executive in the initiation or defense of any litigation or other legal action, whether by or against Cortland Bancorp or any director,
officer, stockholder, or other person affiliated with Cortland Bancorp, in any jurisdiction. Despite any existing or previous attorney-client relationship between Cortland Bancorp and any counsel chosen by the Executive under this section 7,
Cortland Bancorp irrevocably consents to the Executive entering into an attorney-client relationship with that counsel, and Cortland Bancorp and the Executive agree that a confidential relationship shall exist between the Executive and that counsel.
The fees and expenses of counsel selected from time to time by the Executive as provided in this section shall be paid or reimbursed to the Executive by Cortland Bancorp on a regular, periodic basis upon presentation by the Executive of a statement
or statements prepared by counsel in accordance with counsel’s customary practices, up to a maximum aggregate amount of $500,000, whether suit be brought or not, and whether or not incurred in trial, bankruptcy, or appellate proceedings.
Cortland Bancorp’s obligation to pay the Executive’s legal fees under this section 7 operates separately from and in addition to any legal fee reimbursement obligation Cortland Bancorp may have with the Executive under any separate salary
continuation or other agreement. Despite anything in this Agreement to the contrary, however, Cortland Bancorp shall not be required to pay or reimburse the Executive’s legal expenses if doing so would violate section 18(k) of the Federal
Deposit Insurance Act [12 U.S.C. 1828(k)] and Rule 359.3 of the Federal Deposit Insurance Corporation [12 CFR 359.3]. 
 8.
Withholding of Taxes. Cortland Bancorp may withhold from any benefits payable under this Agreement all federal, state, local or other taxes as may be required by law, governmental regulation, or ruling. 

  
 8 

 9. Successors and Assigns. (a) This Agreement is binding on Cortland
Bancorp’s successors. This Agreement shall be binding upon and enforceable by Cortland Bancorp and any successor to Cortland Bancorp, including any persons acquiring directly or indirectly all or substantially all of the business or assets
of Cortland Bancorp by purchase, merger, consolidation, reorganization, or otherwise. But this Agreement and Cortland Bancorp’s obligations under this Agreement are not otherwise assignable, transferable, or delegable by Cortland Bancorp. By
agreement in form and substance satisfactory to the Executive, Cortland Bancorp shall require any successor to all or substantially all of the business or assets of Cortland Bancorp expressly to assume and agree to perform this Agreement in the same
manner and to the same extent Cortland Bancorp would be required to perform had no succession occurred. 
 (b) This Agreement
is enforceable by the Executive’s heirs. This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributes, and legatees.

 (c) This Agreement is personal. This Agreement is personal in nature. The Executive’s right to receive payments
hereunder is not assignable or transferable, whether by pledge, creation of a security interest, or otherwise, except for a transfer by Executive’s will or by the laws of descent and distribution. If the Executive attempts an assignment or
transfer that is contrary to this section 9, Cortland Bancorp shall have no liability to pay any amount to the assignee or transferee. 
 10. Notices. Any notice under this Agreement shall be deemed to have been effectively made or given if in writing and personally delivered, delivered by mail properly addressed in a sealed
envelope, postage prepaid by certified or registered mail, delivered by a reputable overnight delivery service, or sent by facsimile. Unless otherwise changed by notice, notice shall be properly addressed to the Executive if addressed to the address
of the Executive on the books and records of Cortland Bancorp at the time of the delivery of the notice, and properly addressed to Cortland Bancorp if addressed to the Board of Directors, Cortland Bancorp, 194 West Main Street, Cortland, Ohio 44410,
Attention: Corporate Secretary. 
 11. Captions and Counterparts. The headings and subheadings used in this Agreement are
included solely for convenience and shall not affect the interpretation of this Agreement. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and
the same agreement. 
 12. Amendments and Waivers. No provision of this Agreement may be modified, waived, or discharged
unless the waiver, modification, or discharge is agreed to in a writing signed by the Executive and by Cortland Bancorp. No waiver by either party hereto at any time of any breach by the other party hereto or waiver of compliance with any condition
or provision of this Agreement to be performed by the other party shall be deemed a waiver of other provisions or conditions at the same or at any other time. 
 13. Severability. The provisions of this Agreement are severable. The invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions of this
Agreement. Any provision held to be invalid or unenforceable shall be reformed to the extent (and only to the extent) necessary to make it valid and enforceable. 

  
 9 

 14. Governing Law. The validity, interpretation, construction, and performance of
this Agreement shall be governed by and construed in accordance with the substantive laws of the State of Ohio, without giving effect to the principles of conflict of laws of the State of Ohio. 

15. Entire Agreement. This Agreement constitutes the entire agreement between Cortland Bancorp and the Executive concerning the
subject matter. No rights are granted to the Executive under this Agreement other than those specifically set forth. No agreements or representations, oral or otherwise, expressed or implied concerning the subject matter have been made by either
party that are not set forth expressly in this Agreement. This Agreement supersedes and replaces in its entirety the December 3, 2008 Severance Agreement, and from and after the date of this Agreement the December 3, 2008 Severance
Agreement shall be of no further force or effect. 
 16. No Mitigation Required. Cortland Bancorp hereby acknowledges
that it will be difficult and could be impossible (x) for the Executive to find reasonably comparable employment after termination and (y) to measure the amount of damages the Executive suffers because of termination. Additionally,
Cortland Bancorp acknowledges that its general severance pay plans do not provide for mitigation, offset, or reduction of any severance payment received thereunder. Cortland Bancorp further acknowledges that the payment of benefits by Cortland
Bancorp under this Agreement is reasonable and shall be liquidated damages. The Executive shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise, nor shall any profits,
income, earnings, or other benefits from any source whatsoever create any mitigation, offset, reduction, or any other obligation on the part of the Executive hereunder or otherwise. 

17. Internal Revenue Code Section 409A. Cortland Bancorp and the Executive intend that their exercise of authority or
discretion under this Agreement shall comply with section 409A of the Internal Revenue Code of 1986. If when the Executive’s employment terminates the Executive is a specified employee, as defined in section 409A of the Internal Revenue Code of
1986, and if any payments or benefits under this Agreement will result in additional tax or interest to the Executive because of section 409A, then despite any provision of this Agreement to the contrary the Executive shall not be entitled to the
payments or benefits until the earliest of (x) the date that is at least six months after termination of the Executive’s employment for reasons other than the Executive’s death, (y) the date of the Executive’s
death, or (z) any earlier date that does not result in additional tax or interest to the Executive under section 409A. As promptly as possible after the end of the period during which payments or benefits are delayed under this
provision, the entire amount of the delayed payments shall be paid to the Executive in a single lump sum. If any provision of this Agreement does not satisfy the requirements of section 409A, the provision shall nevertheless be applied in a manner
consistent with those requirements. If any provision of this Agreement would subject the Executive to additional tax or interest under section 409A, Cortland Bancorp shall reform the provision. However, Cortland Bancorp shall maintain to the maximum
extent practicable the original intent of the applicable provision without subjecting the Executive to additional tax or interest, and Cortland Bancorp shall not be required to incur any additional compensation expense as a result of the reformed
provision. References in this Agreement to section 409A of the Internal Revenue Code of 1986 include rules, regulations, and guidance of general application issued by the Department of the Treasury under Internal Revenue Code section 409A.

  
 10 

 18. No Violation of Golden Parachute Rules. Cortland Bancorp, the Bank, and the
Executive acknowledge and agree that any payment to the Executive under this Agreement and any agreement to make a payment to the Executive are or may be subject to the golden parachute limitations of 12 U.S.C. 1828(k) and FDIC rules at 12 C.F.R.
Part 359. Cortland Bancorp, the Bank, and the Executive acknowledge and agree that if any payment or agreement to make a payment under this Agreement would be considered a golden parachute payment under 12 C.F.R. 359.1(f), neither Cortland Bancorp
nor the Bank shall have a contractual or other obligation to make the payment to the Executive, and the agreement to make the payment shall be void, unless (x) the payment receives the prior approval of the appropriate Federal banking agency,
if required at that time by 12 U.S.C. section 1828(k), 12 C.F.R. Part 359, or other federal or state laws, rules or regulations, and (y) the obligation and the payment comply in all other respects with 12 U.S.C. section 1828(k), 12 C.F.R. Part
359, and other federal and state laws, rules or regulations, to the extent applicable at the time. 
 19. Restrictions on the
Executive’s Post-Employment Activities. The restrictions in this section 19 have been negotiated, presented to, and accepted by the Executive contemporaneous with the offer and acceptance by the Executive of this Agreement. Cortland
Bancorp’s decision to enter into this Agreement is conditioned upon the Executive’s agreement to be bound by the restrictions contained in this section 19. 
 (a) Promise of no solicitation. The Executive promises and agrees that during the Restricted Period (as defined below) and in the Restricted Territory (as defined below) the Executive shall1:

 1. not directly or indirectly solicit or attempt to solicit any Customer (as defined below) to accept or purchase
Financial Products or Services (as defined below) of the same nature, kind, or variety as provided to the Customer by the Bank during the two years immediately before the Executive’s employment termination with the Bank, 

2. not directly or indirectly influence or attempt to influence any Customer, joint venturer, or other business partner of the Bank
to alter that person or entity’s business relationship with the Bank in any respect, and 
 3. not accept the
Financial Products or Services business of any Customer or provide Financial Products or Services to any Customer on behalf of anyone other than the Bank. 
 (b) Promise of no competition. The Executive promises and agrees that during the Restricted Period in the Restricted Territory the Executive shall not engage, undertake, or participate in
the business of providing, selling, marketing, or distributing Financial Products or Services of a similar nature, kind, or variety (x) as offered by the Bank to Customers during the two years immediately before the Executive’s
employment termination with the Bank, or (y) as offered by the Bank to any of its Customers during the Restricted Period.2 Subject to the above provisions and conditions of this subparagraph (b), the Executive promises that during the
Restricted Period the Executive shall not become employed by or serve as a director, partner, consultant, agent, or owner of 5% or more of the outstanding stock of or contractor to any entity providing these prohibited Financial Products or
Services that is located in or conducts business in the Restricted Territory. 
  

	1 	 For example, the promise of no solicitation applies if the Executive is conducting prohibited business in the Restricted Territory or if the
entity with, for, or to whom the Executive is conducting prohibited business is located within the Restricted Territory. 

	2 	 For example, the promise of no competition applies if the Executive is conducting prohibited business in the Restricted Territory or if the
entity with, for, or to whom the Executive is conducting prohibited business is located within the Restricted Territory. 

  
 11 

 (c) Promise of no raiding/hiring. The Executive promises and agrees that during the
Restricted Period the Executive shall not solicit or attempt to solicit and shall not encourage or induce in any way any employee, joint venturer, or business partner of Cortland Bancorp or the Bank to terminate an employment or
contractual relationship with Cortland Bancorp or the Bank. The Executive agrees that the Executive shall not hire any person employed by Cortland Bancorp or the Bank during the two-year period before the Executive’s employment
termination with the Bank or any person employed by Cortland Bancorp or the Bank during the Restricted Period. 
 (d) Promise
of no disparagement. The Executive promises and agrees that during the Restricted Period the Executive shall not cause statements to be made (whether written or oral) that reflect negatively on the business reputation of Cortland Bancorp
or the Bank. Cortland Bancorp and the Bank likewise promise and agree that during the Restricted Period Cortland Bancorp and the Bank shall not cause statements to be made (whether written or oral) that reflect negatively on the reputation of
the Executive. 
 (e) Acknowledgment. The Executive and Cortland Bancorp acknowledge and agree that the provisions of
this section 19 have been negotiated and carefully determined to be reasonable and necessary for the protection of legitimate business interests of Cortland Bancorp and the Bank. Both parties agree that a violation of section19 is likely to cause
immediate and irreparable harm that will give rise to the need for court ordered injunctive relief. In the event of a breach or threatened breach by the Executive of any provision of this Agreement, Cortland Bancorp, including its successors and
assigns, shall be entitled to obtain an injunction without bond restraining the Executive from violating the terms of this Agreement and to institute an action against the Executive to recover damages from the Executive for the breach. These
remedies for default or breach are in addition to any other remedy or form of redress provided under Ohio law. The parties acknowledge that the provisions of this section 19 survive termination of the employment relationship and are enforceable by
Cortland Bancorp and Cortland Bancorp’s successors and assigns. The parties agree that if any of the provisions of this section 19 are deemed unenforceable by a court of competent jurisdiction, the unenforceable provisions may be stricken as
independent clauses by the court in order to enforce the remaining territory restrictions and that the intent of the parties is to afford the broadest restriction on post-employment activities as set forth in this Agreement. Without limiting the
generality of the foregoing, without limiting the remedies available to Cortland Bancorp for violation of this Agreement, and without constituting an election of remedies, if the Executive violates any of the terms of section 19 the Executive shall
forfeit on the Executive’s own behalf and that of beneficiary(ies) any rights to and interest in any severance or other benefits under this Agreement or other contract the Executive has with Cortland Bancorp or the Bank. 

(f) Definitions: 1. “Restricted Period,” as used herein, means the one-year period immediately after the
Executive’s termination and/or separation of employment with Cortland Bancorp or the Bank, regardless of the reason for termination and/or separation and regardless of whether the term of this Agreement has expired before the Executive’s
employment termination or expires under section 5 during the one-year period immediately after the Executive’s termination and/or separation of employment with the Bank. The Restricted Period shall be extended in an amount equal to any time
period during which a violation of section 19 of this Agreement is proven. 
 2. “Restricted
Territory,” as used herein, means all of Trumbull, Portage, and Mahoning Counties in Ohio. 

  
 12 

 3. “Customer,” as used herein, means any individual, joint
venturer, entity of any sort, or other business partner of Cortland Bancorp or the Bank with, for, or to whom Cortland Bancorp or the Bank has provided Financial Products or Services during the last two years of the Executive’s employment with
Cortland Bancorp or the Bank, or any individual, joint venturer, entity of any sort, or business partner whom Cortland Bancorp or the Bank has identified as a prospective customer of Financial Products or Services within the last two years of the
Executive’s employment with Cortland Bancorp or the Bank. 
 4. “Financial Products or Services,”
as used herein, means any product or service that a financial institution or a financial holding company could offer by engaging in any activity that is financial in nature or incidental to such a financial activity under section 4(k) of the Bank
Holding Company Act of 1956 and that is offered by Cortland Bancorp or the Bank or an affiliate on the date of the Executive’s employment termination, including, but not limited, to banking activities and activities that are closely related and
a proper incident to banking, or other products or services of the type of which the Executive was involved during the Executive’s employment with Cortland Bancorp or the Bank. 

(g) Special compensation. The Executive and Cortland Bancorp acknowledge and agree that the post-employment restrictions in this
section 19 apply in the Restricted Period without regard to whether a Change in Control has previously occurred. Because the Executive may be subject to the post-employment restrictions of this section 19 without also being entitled to
Change-in-Control benefits under this Agreement, Cortland Bancorp hereby agrees that the Executive shall be entitled to one times compensation, as the term compensation is defined in section 1(a), under this section 19(g), payable in a single lump
sum, without reduction to account for the time value of money or discounting to present value, except that the Executive shall not be entitled to any compensation under this section 19(g) if (x) the Executive is entitled to receive or has
received Change-in-Control compensation under this Agreement or (y) the Executive’s employment termination is on account of retirement or occurs after the Executive attains age 65. The provisions of section 4, prohibiting payment of
severance in specified cases, shall not apply to or operate to prevent payment of special compensation to which the Executive is entitled under this section 19 after employment termination. 

The special compensation payable under this section 19(g) shall be paid to the Executive within five days after the Executive’s
employment termination, but if when the Executive’s employment terminates the Executive is a specified employee, as defined in section 409A of the Internal Revenue Code of 1986, and if the special compensation payable under this section 19(g)
would be considered nonqualified deferred compensation under section 409A, and finally if an exemption from the six-month delay requirement of section 409A(a)(2)(B)(i) is not available, rather than being payable within five days after employment
termination the special compensation payable under this section 19(g) shall be paid to the Executive in a single lump sum without interest on the first day of the seventh month after the month in which the Executive’s employment terminates.

 (h) Enforcement by successors. This provisions of this section shall be binding upon and enforceable by Cortland
Bancorp and any successor to Cortland Bancorp, including any person acquiring directly or indirectly all or substantially all of the business, assets, or stock of Cortland Bancorp by purchase, merger, consolidation, reorganization, or otherwise. The
Executive’s consent is not necessary for any assignment or transfer of the rights and obligations of this section that occurs or is deemed to occur as the result of any person acquiring directly or indirectly all or substantially all of the
business, assets, or stock of Cortland Bancorp by purchase, merger, consolidation, reorganization, or otherwise. 

  
 13 

 IN WITNESS WHEREOF, the
parties have executed this Severance Agreement as of the date first written above. 
  

					
	EXECUTIVE	 	CORTLAND BANCORP
			
	 	 	By:	 	 
	Timothy Carney	 		 	James M. Gasior
		 	Its:	 	President and Chief Executive Officer

  
 14

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