Exhibit 10.2

SUBSCRIPTION ESCROW AGREEMENT

THIS SUBSCRIPTION ESCROW AGREEMENT, dated as of February 20, 2020 (this
“Agreement”), is entered into between Gladstone Commercial Corporation (the
“Company”) and UMB Bank, National Association, a national banking association,
as escrow agent (the “Escrow Agent”).

WHEREAS, the Company intends to raise cash funds from Investors (as defined
below) pursuant to a public offering (the “Offering”) of up to 26,000,000 shares
of our Series F Preferred Stock, par value $0.001 per share, having a purchase
price of $25.00 per share (for an aggregate offering amount of $650,000,000)
(the “Securities”), pursuant to the registration statement on Form S-3 of the
Company (No. 333-236143) (as amended, the “Offering Document”);

WHEREAS, the Escrow Agent is willing to accept appointment as escrow agent only
for the express duties set forth herein.

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants
and agreements contained herein, the parties hereto, intending to be legally
bound, hereby agree as follows:

1. Proceeds to be Escrowed. Subject to the Escrow Agent’s prior receipt of all
required documentation necessary to comply with the Bank Secrecy Act, the
Company shall establish an escrow account with the Escrow Agent to be invested
in accordance with Section 7 entitled “ESCROW ACCOUNT FOR THE BENEFIT OF
INVESTORS OF SHARES OF GLADSTONE COMMERCIAL CORP.” (including such abbreviations
as are required for the Escrow Agent’s systems) (the “Escrow Account”). All
checks, wire transfers and other funds received from subscribers of Securities
via “Direct Registration Settlement” (as described in the Offering Document)
(“Investors”) in payment for the Securities (“Investor Funds”) will be delivered
to the Escrow Agent within one business day following the day upon which such
Investor Funds are received by the Company or its agents, and shall, upon
receipt by the Escrow Agent, be retained in escrow by the Escrow Agent. During
the term of this Agreement, the Company or its agents shall cause all checks
received by and made payable to it for payment for the Securities to be endorsed
in favor of the Escrow Agent and delivered to the Escrow Agent for deposit in
the Escrow Account.

The initial escrow period shall commence upon the effectiveness of this
Agreement and shall continue until the Termination Date (as defined in
Section 4). The Escrow Account shall not be an interest-bearing account.

The Escrow Agent shall have no duty to make any disbursement, investment or
other use of Investor Funds until and unless it has good and collected funds. If
any checks deposited in the Escrow Account are returned or prove uncollectible
after the funds represented thereby have been released by the Escrow Agent, then
the Company shall promptly reimburse the Escrow Agent for any and all costs
incurred for such, upon request, and the Escrow Agent shall deliver the returned
checks to the Company. The Escrow Agent shall be under no duty or responsibility
to enforce collection of any check delivered to it hereunder.

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2. Investors. Investors will be instructed by the dealer manager for the
Offering, Gladstone Securities, LLC (the “Dealer Manager”) or any soliciting
dealers retained by the Dealer Manager (the “Soliciting Dealers”) to remit the
purchase price in the form of checks (“instruments of payment”) payable to the
order of, or funds wired in favor of, “UMB BANK, N.A., ESCROW AGENT FOR
GLADSTONE COMMERCIAL CORP.” Any checks made payable to a party other than the
Escrow Agent shall be sent to the Company or returned to the Soliciting Dealer
that submitted the check.

If any subscription agreement for the purchase of Securities solicited by a
Soliciting Dealer is rejected by the Company, then the subscription agreement
and check for the purchase of Securities will be returned to the rejected
subscriber within ten business days from the date of rejection. The Company
shall provide any necessary documentation to the Escrow Agent as the Escrow
Agent may request, upon which it may rely, to enable the Escrow Agent to return
amounts to rejected subscribers.

All Investor Funds deposited in the Escrow Account shall not be subject to any
liens or charges by the Company or the Escrow Agent, or judgments or creditors’
claims against the Company, until and unless released to the Company as
hereinafter provided. The Company understands and agrees that the Company shall
not be entitled to any Investor Funds on deposit in the Escrow Account and no
such funds shall become the property of the Company, or any other entity except
as released to the Company pursuant to Section 3. The Escrow Agent will not use
the information provided to it by the Company for any purpose other than to
fulfill its obligations as Escrow Agent hereunder. The Escrow Agent will treat
all Investor information as confidential; provided the Escrow Agent may disclose
Investor information to the extent required to a supervisory or governmental
authority or a self-regulatory organization in the course of any examination,
inquiry, or audit of the Escrow Agent or any of its representatives or
businesses or as otherwise required by law; provided further, the Escrow Agent
shall, to the extent permitted by law, promptly notify the Company of the
existence, terms and circumstances surrounding such disclosure request, so that
the Company may seek an appropriate protective order or other remedy, at its
sole expense.

3. Disbursement of Funds. The Escrow Agent, upon receipt of Escrow Release
Notice, attached hereto as Exhibit C, shall periodically transfer any portion of
the Investor Funds to the Company or such other parties as set forth in the
applicable Escrow Release Notice. The Escrow Agent shall effect such transfer by
the close of business on the date the Escrow Agent receives the applicable
Escrow Release Notice; provided, however, if the Escrow Agent receives the
applicable Escrow Release Notice after 2pm Central Time, then the Escrow Agent
shall effect such transfer by the close of business on the next succeeding
business day. If the Escrow Agent has not previously received an Escrow Release
Notice by the Termination Date, the Escrow Agent shall return any Investor Funds
held to the Investors. Notwithstanding the foregoing, except for a return of
Investor Funds to the applicable Investor, the Escrow Agent shall not transfer
Investor Funds to any party until after it has received an executed and valid
IRS Form W-9, or valid substitute thereto, from such party.

 

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4. Term of Escrow. The “Termination Date” shall be the earliest of: (a) all
funds held in the Escrow Account are distributed to the Company or to Investors
pursuant to Section 3 and the Company has informed the Escrow Agent in writing
to close the Escrow Account; (b) the date the Escrow Agent receives written
notice from the Company that it is abandoning the sale of the Securities; and
(c) the date the Escrow Agent receives written notice from the Securities and
Exchange Commission or any other federal or state regulatory authority that a
stop or similar order has been issued with respect to the Offering Document and
has remained in effect for at least 20 days. After the Termination Date, the
Company and its agents shall not deposit, and the Escrow Agent shall not accept,
any additional amounts representing payments by prospective Investors.

5. Duty and Liability of the Escrow Agent. The sole duty of the Escrow Agent
shall be to receive Investor Funds and subscription agreements and hold them
subject to release, in accordance herewith, and the Escrow Agent shall be under
no duty to determine whether the Company, the Dealer Manager or any Soliciting
Dealer is complying with requirements of this Agreement, the Offering or
applicable securities or other laws in tendering the Investor Funds to the
Escrow Agent. No other agreement entered into between the parties, or any of
them, shall be considered as adopted or binding, in whole or in part, upon the
Escrow Agent notwithstanding that any such other agreement may be referred to
herein or deposited with the Escrow Agent or the Escrow Agent may have knowledge
thereof, including specifically but without limitation the Offering Document or
any other document related to the Offering (including the subscription agreement
and exhibits thereto), and the Escrow Agent’s rights and responsibilities shall
be governed solely by this Agreement. The Escrow Agent shall not be responsible
for or be required to enforce any of the terms or conditions of the Offering
Document or any other document related to the Offering (including the
subscription agreement and exhibits thereto) or other agreement between the
Company and any other party. The Escrow Agent may conclusively rely upon and
shall be protected in acting upon any statement, certificate, notice, request,
consent, order or other document believed by it to be genuine and to have been
signed or presented by the proper party or parties. The Escrow Agent shall have
no duty or liability to verify any such statement, certificate, notice, request,
consent, order or other document, and its sole responsibility shall be to act
only as expressly set forth in this Agreement. Concurrent with the execution of
this Agreement, the Company shall deliver to the Escrow Agent an authorized
signers form in the form of Exhibit A or Exhibit A-1 to this Agreement, as
applicable. The Escrow Agent shall be under no obligation to institute or defend
any action, suit or proceeding in connection with this Agreement unless first
indemnified to its satisfaction. The Escrow Agent may consult counsel of its own
choice with respect to any question arising under this Agreement and the Escrow
Agent shall not be liable for any action taken or omitted in good faith upon
advice of such counsel. The Escrow Agent shall not be liable for any action
taken or omitted by it in good faith except to the extent that a court of
competent jurisdiction determines that the Escrow Agent’s gross negligence or
willful misconduct was the primary cause of loss. The Escrow Agent is acting
solely as escrow agent hereunder and owes no duties, covenants or obligations,
fiduciary or otherwise, to any other person by reason of this Agreement, except
as otherwise stated herein, and no implied duties, covenants or obligations,
fiduciary or otherwise, shall be read into this Agreement against the Escrow
Agent. If any disagreement between any of the parties to this Agreement, or
between any of them and any other person, including any Investor, resulting in
adverse claims or demands being made in connection with the matters covered by
this Agreement, or if the Escrow Agent is in doubt as to what action it should
take hereunder, the Escrow Agent may, at its option, refuse to comply with any
claims or demands on it, or refuse to take any other action hereunder, so long
as such disagreement continues or such doubt exists, and in any such event, the
Escrow Agent shall not be or become liable in any way or to any person for its
failure or refusal to act, and the Escrow Agent shall be entitled to

 

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continue so to refrain from acting until (a) the rights of all interested
parties shall have been fully and finally adjudicated by a court of competent
jurisdiction, or (b) all differences shall have been adjudged and all doubt
resolved by agreement among all of the interested persons, and the Escrow Agent
shall have been notified thereof in writing signed by all such persons.
Notwithstanding the foregoing, the Escrow Agent may in its discretion obey the
order, judgment, decree or levy of any court, whether with or without
jurisdiction and the Escrow Agent is hereby authorized in its sole discretion to
comply with and obey any such orders, judgments, decrees or levies. If any
controversy should arise with respect to this Agreement the Escrow Agent shall
have the right, at its option, to institute an interpleader action in any court
of competent jurisdiction to determine the rights of the parties. IN NO EVENT
SHALL THE ESCROW AGENT BE LIABLE, DIRECTLY OR INDIRECTLY, FOR ANY SPECIAL,
INDIRECT OR CONSEQUENTIAL LOSSES OR DAMAGES OF ANY KIND WHATSOEVER (INCLUDING
WITHOUT LIMITATION LOST PROFITS), EVEN IF THE ESCROW AGENT HAS BEEN ADVISED OF
THE POSSIBILITY OF SUCH LOSSES OR DAMAGES AND REGARDLESS OF THE FORM OF ACTION.
The parties hereto agree that the Escrow Agent has no role in the preparation of
the Offering Document (including the subscription agreement and other exhibits
thereto) and makes no representations or warranties with respect to the
information contained therein or omitted therefrom. The Escrow Agent shall have
no obligation, duty or liability with respect to compliance with any federal or
state securities, disclosure or tax laws concerning the Offering Document or any
other document related to the Offering (including the subscription agreement and
other exhibits thereto) or the issuance, offering or sale of the Securities. The
Escrow Agent shall have no duty or obligation to monitor the application and use
of the Investor Funds once transferred to the Company, that being the sole
obligation and responsibility of the Company.

6. Escrow Agent’s Fee. The Escrow Agent shall be entitled to compensation for
its services as stated in the fee schedule attached hereto as Exhibit B, which
compensation shall be paid by the Company. The fee agreed upon for the services
rendered hereunder is intended as full compensation for the Escrow Agent’s
services as contemplated by this Agreement; provided, however, that if (a) the
conditions for the disbursement of funds under this Agreement are not fulfilled,
(b) the Escrow Agent renders any material service not contemplated in this
Agreement, (c) there is any assignment of interest in the subject matter of this
Agreement, (d) there is any material modification hereof, (e) any material
controversy arises hereunder, or (f) the Escrow Agent is made a party to any
litigation pertaining to this Agreement or the subject matter hereof, then the
Escrow Agent shall be reasonably compensated for such extraordinary services and
reimbursed for all costs and expenses, including reasonable attorney’s fees,
occasioned by any delay, controversy, litigation or event, and the same shall be
recoverable from the Company. The Company’s obligations under this Section 6
shall survive the resignation or removal of the Escrow Agent and the assignment
or termination of this Agreement.

7. Investment of Investor Funds. Investor Funds shall be deposited in the Escrow
Account in accordance with Section 1 and held un-invested in the Escrow Account,
which shall be non-interest bearing.

8. Notices. All notices, requests, demands, and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given (a) on
the date of service if served personally on the party to whom notice is to be
given, (b) on the day of transmission if sent by facsimile/email transmission
bearing an authorized signature to the

 

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facsimile number/email address given below, and written confirmation of receipt
is obtained promptly after completion of transmission, (c) on the day after
delivery to Federal Express or similar overnight courier or the Express Mail
service maintained by the United States Postal Service, or (d) on the fifth day
after mailing, if mailed to the party to whom notice is to be given, by first
class mail, registered or certified, postage prepaid, and properly addressed,
return receipt requested, to the party as follows:

If to the Company:

Mike Sodo

Chief Financial Officer

Gladstone Commercial Corporation

1521 Westbranch Drive

McLean, VA 22102

If to Escrow Agent:

UMB Bank, National Association

1010 Grand Blvd. 4th Floor

Mail Stop: 1020409

Kansas City, Missouri 64106

Attention: Lara Stevens, Corporate Trust & Escrow Services Dept.

Telephone: (816) 860-3017

Fax: (816) 860-3029

Email: lara.stevens@umb.com

Any party may change its address for purposes of this Section by giving the
other party written notice of the new address in the manner set forth above.

9. Indemnification of Escrow Agent. The Company hereby agrees to indemnify,
defend and hold harmless the Escrow Agent from and against, any and all losses,
liabilities, costs, damages and expenses, including, without limitation,
reasonable counsel fees and expenses, which the Escrow Agent may suffer or incur
by reason of any action, claim or proceeding brought against the Escrow Agent
arising out of or relating in any way to this Agreement or any transaction to
which this Agreement relates unless such loss, liability, cost, damage or
expense is finally determined by a court of competent jurisdiction to have been
primarily caused by the gross negligence or willful misconduct of the Escrow
Agent. The terms of this Section shall survive the termination of this Agreement
and the resignation or removal of the Escrow Agent.

10. Successors and Assigns. Except as otherwise provided in this Agreement, no
party hereto shall assign this Agreement or any rights or obligations hereunder
without the prior written consent of the other parties hereto and any such
attempted assignment without such prior written consent shall be void and of no
force and effect. This Agreement shall inure to the benefit of and shall be
binding upon the successors and permitted assigns of the parties hereto. Any
corporation or association into which the Escrow Agent may be converted or
merged, or with which it may be consolidated, or to which it may sell or
transfer all or substantially all of its corporate trust business and assets as
a whole or substantially as a whole, or any corporation or

 

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association resulting from any such conversion, sale, merger, consolidation or
transfer to which the Escrow Agent is a party, shall be and become the successor
Escrow Agent under this Agreement and shall have and succeed to the rights,
powers, duties, immunities and privileges as its predecessor, without the
execution or filing of any instrument or paper or the performance of any further
act.

11. Governing Law; Jurisdiction. This Agreement shall be construed, performed,
and enforced in accordance with, and governed by, the internal laws of the State
of Delaware, without giving effect to the principles of conflicts of laws
thereof.

12. Severability. If any provision of this Agreement is declared by any court or
other judicial or administrative body to be null, void, or unenforceable, said
provision shall survive to the extent it is not so declared, and all of the
other provisions of this Agreement shall remain in full force and effect.

13. Amendments; Waivers. This Agreement may be amended or modified, and any of
the terms, covenants, representations, warranties, or conditions hereof may be
waived, only by a written instrument executed by the parties hereto, or in the
case of a waiver, by the party waiving compliance. Any waiver by any party of
any condition, or of the breach of any provision, term, covenant,
representation, or warranty contained in this Agreement, in any one or more
instances, shall not be deemed to be nor construed as further or continuing
waiver of any such condition, or of the breach of any other provision, term,
covenant, representation, or warranty of this Agreement. The Company agrees that
any requested waiver, modification or amendment of this Agreement shall be
consistent with the terms of the Offering.

14. Entire Agreement. This Agreement contains the entire agreement and
understanding among the parties hereto with respect to the escrow contemplated
hereby and supersedes and replaces all prior and contemporaneous agreements and
understandings, oral or written, with regard to such escrow.

15. Section Headings. The section headings in this Agreement are for reference
purposes only and shall not affect the meaning or interpretation of this
Agreement.

16. Counterparts. This Agreement may be executed (including by facsimile
transmission) with counterpart signature pages or in counterparts, each of which
shall be deemed an original, but all of which shall constitute the same
instrument. Copies, telecopies, facsimiles, electronic files and other
reproductions of original executed documents shall be deemed to be authentic and
valid counterparts of such original documents for all purposes, including the
filing of any claim, action or suit in the appropriate court of law. The parties
hereto agree that the transactions described herein may be conducted and related
documents may be stored by electronic means.

17. Resignation. The Escrow Agent may resign upon 30 days’ advance written
notice to the parties hereto. If a successor escrow agent is not appointed by
the Company within the 30-day period following such notice, the Escrow Agent may
petition any court of competent jurisdiction to name a successor escrow agent,
or may interplead the Investor Funds with such court, whereupon the Escrow
Agent’s duties hereunder shall terminate.

 

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18. References to Escrow Agent. Other than the Offering Document, any of the
other documents related to the Offering (including the subscription agreement
and exhibits thereto) and any amendments thereof or supplements thereto, no
printed or other matter in any language (including, without limitation, notices,
reports and promotional material) which mentions the Escrow Agent’s name or the
rights, powers, or duties of the Escrow Agent shall be issued by the Company or
the Dealer Manager, or on the Company’s or the Dealer Manager’s behalf, unless
the Escrow Agent shall first have given its specific written consent thereto.
Notwithstanding the foregoing, any amendment or supplement to the Offering
Document or any other document related to the Offering (including the
subscription agreement and exhibits thereto) that revises, alters, modifies,
changes or adds to the description of the Escrow Agent or its rights, powers or
duties hereunder shall not be issued by the Company or the Dealer Manager, or on
the Company’s or the Dealer Manager’s behalf, unless the Escrow Agent has first
given specific written consent thereto.

19. Patriot Act and Bank Secrecy Act Compliance. The Company and the Dealer
Manager shall provide to the Escrow Agent upon the execution of this Agreement
any documentation requested and any information reasonably requested by the
Escrow Agent to comply with the USA Patriot Act of 2001, as amended from time to
time or the Bank Secrecy Act, as amended from time to time.

[Signature page follows.]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
the date and year first set forth above.

 

COMPANY By:   /s/ David J. Gladstone   Name: David J. Gladstone   Title:
  Chairman, CEO and President

 

UMB BANK, NATIONAL ASSOCIATION,

as Escrow Agent

By:   /s/ Lara L. Stevens   Name: Lara L. Stevens   Title:   Vice President

Signature Page to Subscription Escrow Agreement

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Exhibit A

CERTIFICATE AS TO AUTHORIZED SIGNATURES

The specimen signatures shown below are the specimen signatures of the
individuals who have been designated as Authorized Representatives of Gladstone
Commercial Corporation and are authorized to initiate and approve transactions
of all types for the above-mentioned account.

 

Name/Title   

Specimen Signature

David Gladstone, Chairman, CEO and President         Signature Mike Sodo, CFO
and Assistant Treasurer         Signature Michael LiCalsi, General Counsel     
   Signature

 

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Exhibit B

ESCROW FEES AND EXPENSES

 

Acceptance Fee

  

Review/draft escrow agreement, establish account

   $ 3,000  

Annual Fee

   $ 3,000  

Transactional Fees, if applicable

  

Outgoing Wire Transfer

   $ 35 each  

Overnight Delivery/Mailings

   $ 16.50 each  

IRS Tax Reporting

   $ 10 per 1099  

Subscription Document Processing

   $ 25 each  

Acceptance and first year Annual Fee will be due and payable prior to execution
of the Escrow Agreement.

The Annual Fee will be billed annually in advance and Transactional Fees will be
billed quarterly in arrears and at termination and due prior to final
disbursement of escrow funds.

Fees specified are for the regular, routine services contemplated by the Escrow
Agreement, and any additional or extraordinary services, including, but not
limited to disbursements involving a dispute or arbitration, or administration
while a dispute, controversy or adverse claim is in existence, will be charged
based upon time required at the then standard hourly rate.

All expenses related to the administration of the Escrow Agreement such as, but
not limited to, travel, postage, shipping, courier, telephone, facsimile,
supplies, legal fees, accounting fees, etc., will be reimbursable.

 

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Exhibit C

FORM OF ESCROW RELEASE NOTICE

Date:

UMB Bank, National Association

1010 Grand Blvd. 4th Floor

Mail Stop: 1020409

Kansas City, Missouri 64106

Ladies and Gentlemen:

In accordance with the terms of Section 3 of the Subscription Escrow Agreement
dated as of ___________, 20__ (as the same may be amended from time to time,
the “Escrow Agreement”), among Gladstone Commercial Corporation (the “Company”)
and UMB Bank, National Association (the “Escrow Agent”), the Company hereby
notifies the Escrow Agent that the ________ closing will be held on ___________
for gross proceeds of $_________.

PLEASE DISTRIBUTE FUNDS BY WIRE TRANSFER (or as indicated) AS FOLLOWS (wire
instructions attached):

 

$ $ Very truly yours, GLADSTONE COMMERCIAL CORPORATION as the Company

By:           Name:       Title:    

 

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